[*BCM*] The price of gasoline has lots of inputs
TSmith4918 at aol.com
TSmith4918 at aol.com
Wed Jun 7 10:32:59 EDT 2006
this posting should be voted "best of* of the last week's discussion.
In a message dated 6/7/2006 10:30:28 A.M. Eastern Standard Time,
tjvitolo at bu.edu writes:
Gas prices are up, but it's not as simple as the two reasons you cite.
It's true that global demand (China and to a lesser extend, India) is up.
It's true that the MTBE additive was banned -- but the rest of that claim is
wrong. The MTBE additive was banned because it poisions ground water and has
been linked to cancer. It wasn't banned with three months lead time -- it
banned with *years* of lead time -- the first legislation bassed in the year
2000. The reality is that the refineries didn't bother to make sure that
were prepared, knowing full well that they had a rather captive audience.
Additionally, ethanol absorbs water and so can't be shipped by pipeline
pre-mixed with gasoline (unlike MTBE), and there were transportation issues.
The fault doesn't lie with a Congress interested in preventing health risks.
The fault lies with the refiners who didn't secure the necessary supply
Some other reasons why price is higher:
* GWB's war in Iraq reducing available supply from Iraq.
* GWB's squabbling with Iran resulting in jitters on the market, a market
concerned that Iran will both cut its supply and slow up the Strait of
* GWB's squabbling with Chavez in Venezuela, resulting in more jitters.
* tUSA's high tax on imported ethanol ($0.54/gallon) restricting supplies of
* Gas prices always go up around Memorial day, because people like to drive
more in the summer, particularly on vacation weekends.
* There was that small rainstorm in New Orleans which tUSA's FEMA wasn't
prepared for, resulting in a dramatic reduction in the ability for tUSA to
convert crude to gasoline.
* Congress' policies on autos and SUVs/trucks over the past few years,
including the subsidy of vehicles more than 6,000 lbs GVW, as well as a
to improve CAFE substantially for many years.
* tUSA still using oil to make electricity -- including 26% of MAs
Pushing alternative energy sources in New England, Florida, and Hawaii would
reduce the amount of oil used in tUSA to generate electricity (about 2.5% of
tUSA's oil use), freeing up some more supply.
* tUSA's increasing of the speed limit from 55 to 65 to 70, 75, or 80.
Reducing back to 55 (and enforcing) would save about 15% of all gasoline
consumed in tUSA.
It's far more complicated than you make it out to be, and it's the result of
energy policy for many many years -- particularly the constant massive oil,
and coal subsidies while completely ignoring the chances to encourage growth
the ag & tech industries of alternative (read: green) energy. That civil
engineers and city planners think progress is measured in the number of lanes
the local highway has doesn't help, nor does Congress' insistence that Amtrak
break even financially even though their services do lots of good in tUSA
(including reduce demand on oil).
But it's always easier to blame the Commies than to take responsibility for
own actions as a society, isn't it.
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