Durka-Durka-Muhammed-Jihad!!
Democrats turn up heat on US pump pricesWell, I'm no expert on the 'inner workings' of the oil industry, but I did hear something that made sense.WASHINGTON (Reuters) - U.S. Senate Democrats turned up the heat on the White House on Friday to act in the face of record-high U.S gasoline pump prices.
The same day, the Senate Energy Committee set a September 8 hearing on what's behind the prices, which hit a record $2.55 a gallon this week.
That's about 68 cents higher than just a year ago and the biggest weekly increase on record, which has triggered fears that high energy costs could hurt U.S. economic growth.
Lawmakers admit there is no short-term fix to pain at the pump, but are nervous about political fall-out. Gasoline prices are sure to be a hot topic when Congress returns from its recess next month.
[...]
Meanwhile, Democrats urged the White House to act.
Senate Minority Leader Harry Reid on Friday said the Bush administration should require U.S. oil companies to disclose their fuel pricing policies and production costs.
In a letter to the White House, Reid also said the Federal Trade Commission should investigate instances where a state's retail prices rise 20 percent in any given week "to determine if the price of gasoline is being artificially manipulated."
Past FTC probes into U.S. oil company pricing policies have found no sign of abuse.
I'm lying in bed last night trying to go to sleep (insomnia sucks ass) and I'm listening to the Lars Larson Show on the radio. He was talking about this very subject - semi-hyperinflated gas prices - and he mentioned the following analogy; I'll try to write it as accurately as possible (Lars, don't sue me!):
Let's say that I sell 10 houses for $200,000 each and I reap the selling bonus of say 6%.It's a hypothetical situation but the principle is the same for the oil industry: their cost(s) of refiniing the oil into gasoline hasn't really changed. If anything, it's increased because of increasing demand for cleaner-burning fuels.That would mean that in a year, I've transacted $2 million in real estate and reaped $120,000 in earnings.
Now let's say that because of an increase in housing prices, the next year I sell another 10 houses that sell for $300,000 each; I make $180,000 in earnings while the cost of doing so hasn't increased.
Should I be punished for making MORE money even though I haven't changed my selling strategy?
The only thing that's really changed is that OPEC is partially/mostly setting the price per barrel of crude. You also have to factor in the increasing demand for oil, mostly from China.
More demand means that the highest bidder wins. It isn't rocket science - it's basic market 'laws'.
I hate to say it, but IMHO it isn't the fault of 'big oil' companies - blame the world market for this crap. Those 1 billion people in China alone are looking to all drive at one point or another and as such, they're gonna want gas.
One major factor that I see as a problem is the lack of refining capability in the United States.
From a Department of Energy overview:
The United States experienced a steep decline in refining capacity between 1981 and the mid-1990s. Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million bbl/d in operable capacity (from 18.6 million bbl/d to 15.7 million bbl/d), while refining capacity utilization increased from 69% to 87%. Much of the decline in U.S. refining capacity resulted from the 1981 deregulation (elimination of price controls and allocations), which effectively removed the major prop from underneath many marginally profitable, often smaller, refineries.There's an increase of refining capability (more 'bang' for your refining buck), but it isn't keeping up with demand which should be topping out around 20.7 million barrels per day. It's a deficit of gasoline 'on demand' (at the gas pumps) and that's creating the increase in price.....not totally, but it sure as Hell adds to it.[...]
While some refineries have closed, and no new refineries have been built in nearly 30 years, many existing refineries have expanded their capacities. As a result of capacity creep," whereby existing refineries create additional refining capacity from the same physical structure, capacity per operating refinery increased by 28% over the 1990 to 1998 period, for example. Overall, since the mid-1990s, U.S. refinery capacity has increased from 15.0 million bbl/d in 1994 to 16.9 million bbl/d in September 2004.
Now I don't know about the rest of the nation, but I do know this about California: everytime someone wanted to build a new refinery, the eco-psychos would start foaming-at-the-mouth about the 'ecological impact' and the risk of refinery explosions. It would all come down to NIMBYism - no one wanted it near their little slice of heaven. (That link is about locations of toxic waste sites, but the reaction to it - like refineries - is still the same).
Fine - great. We'll try some place else. Go someplace else and it's the same thing: NIMBY!!
So now it's 20 or 25 years later and the results are in: you pay through the nose at the pump if you want to drive.
The suck part of that is that here in California, the state was built from the ground up since the 1940s to be a 'car-based' culture; everything is spread out and those trying to introduce mass transit are (for the moment) living in La-La Land.
So what is the moral of this story? Don't be the freakin ant that lives for here-and-now and instead start planning smartly like the grasshopper.
And I can tell you that insisting that the government release portions of the Strategic Oil Reserve to 'alleviate' the price of gasoline isn't going to help. Oh....there might be a momentary dip in gas prices, but that will be very short-lived. The price(s) of oil on the open market will continue to be what they will be: what the market will bear.
Here's a thought: how about drilling in ANWR? What about the caribou!?! is what's heard immediately.
As I said earlier, I'm no expert on the oil industry, but I did find something that (dispite being biased for it) sheads some light on the ANWR possibility:
DOI estimates that "in-place resources" range from 4.8 billion to 29.4 billion barrels of oil. Recoverable oil estimates ranges from 600 million barrels at the low end to 9.2 billion barrels at the high end. They also reported identifying 26 separate oil and gas prospects in the Coastal Plain that could each contain "super giant" fields (500 million barrels or more).I've only really glanced at this site, but I'll be reading some more on it.....
We can't drill there!! It would be a ecological disaster!! I remember hearing this crap back when I was a kid when the Alaskan Pipeline was being proposed/built. They said it would kill animals - it didn't. In fact, the caribou population around the pipeline grew.
I know that I don't have all the answers for this type of discussion, but I do know this: if there's a sudden absence of oil on the world market and prices for a gallon of gas go through the roof ($4.00 a gallon? $5.00 a gallon?) those same folks that would go red-in-the-face over the mere discussion of drilling in ANWR or more off-shore drilling off the Santa Barbara will probably be the loudest people screaming when a the price of basic groceries increases as rapidly as the price of gas. What a typical family could buy for $100 at Vons and hold them for a week would now only suffice for two, maybe three days - and that doesn't include the family burning it's own gas to get to the store; those will be the people screaming about 'how could this have happened!?!....
And those that will start to accuse 'big oil' of screwing people for profit, take a look at the BIG picture before you shoot your mouths off....not everything in the world is about profit. The world isn't perfect and it certainly isn't simple as some would think.
Think outside-the-box for a clear look at the world in which we live in today. You're spend less money on antacids and asprin...
It's not the NIMBY effect so much as the BANANA effect—Build Absolutely Nothing Anywhere Nea
Read more in Those 'Evil' O-I-L Companies
Mad Mikey said:
Those were points that Lars Larson also brought up. By reducing the various different 'blends' d
Read more in Those 'Evil' O-I-L Companies
Tetzman said:
Evil OIL companies??? How about the taxes added to every gallon of gas? (State & Federal)
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Yogimus said:
Damn, you futzed that grasshopper thing up.
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Damn, you futzed that grasshopper thing up.
|| Posted by Yogimus, August 19, 2005 07:29 PM ||Evil OIL companies??? How about the taxes added to every gallon of gas? (State & Federal)
How about all the different blends required by each state to satisfy environmental laws?
|| Posted by Tetzman, August 20, 2005 08:46 AM ||If the blends were standardized down to say 2, production costs would drop significantly, and supply would increase!
Those were points that Lars Larson also brought up. By reducing the various different 'blends' down to two or three it would drop the price of a gallon of gas by about 20 cents.
Take out the Federal, State, and (I'm certain they're around) local taxes, you'd drop gas by about a buck a gallon.
|| Posted by Mad Mikey, August 20, 2005 09:36 AM ||It's not the NIMBY effect so much as the BANANA effect—Build Absolutely Nothing Anywhere Near Anyone. The eco-fascists are not satisfied with preventing refineries being built near them (or power plants, or landfills, or anything else that might injure Gaia), they want to prevent them from being built, PERIOD. They are a bunch of luddites who are angered by the prospect of progress, because such progress will require the use of natural resources to one extent or another.
|| Posted by timekeeper, August 22, 2005 10:58 AM ||