Thursday, September 01, 2005

Blame Game on Gas Prices

I have no time for knee-jerk, emotion-based responses to rising gas prices. If you don't want to spend the time to discover why they are so high, quit whining! If you want some education, you have found it.

Some folks are trying to boycott buying gas for a day to “stick it to the evil oil companies.” Don’t fall for this nonsense, folks. If you don't buy gas that day, you'll fill up the day before or the day after...still buying the same amount of gas! Quit buying gas for a week. Drive slower. Ride a bicycle.

When you are ready to make a real difference, call your US Representative and Senators and tell them to let the oil companies EXPAND. It is next to impossible to drill for oil in our own country! We haven't built a new refinery in 29 years! There are so many governmental regulations and lawsuits by environmental extremists that it simply isn’t cost effective to build a new pumping station or refinery.

As far as gouging, it is purely supply and demand. If the world is craving more oil and gas and plastics...the price goes up. It is a fact that we rely on too much foreign oil. As China and India grow their economies, they consume more oil from OPEC countries and drive the price up.

It is a fact that we aren't refining enough fuel. After Katrina, we are simply unable to shift production to other facilities. As a result, prices jump. Needless to say, the halt in extraction and refinery in the Gulf region is killing price right now. We were running at 95% capacity before we lost a huge percentage of our capabilities when Katrina hit. If we aren't refining enough gas...the price goes up.

Another reason why gas refineries are at capacity is because there are approximately 40 different types of gas that have to be formulated for different parts of the country. Gas isn't gas. Some states and cities require different blends for environmental reasons. Chicago uses 4 different types....

Thankfully, the EPA is relaxing the "special blend" standards for a limited time. With the relaxation of standards, gas will be gas and it can be produced more efficiently and prices will drop.

So, why do gas stations keep raising the price so much for the gas they already have (and bought at a lower price)?

This one is simple...the price at the pump is based upon the cost to replace what is in the tanks. If the station owner sold his gas at $2.75 a gallon, but market forces drove the value of gas to $2.99 a gallon, he would not have the cash to replace it.

He has to sell it at $2.99 so he can turn around and buy another gallon.


Now, quit whining!

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