Why does gasoline cost so much?
Tue, 05/08/2007
Here is a recent headline from a national news service. "Wallets Run on Fumes as Gas Hits $3.00."
If you are like me, you are grinding your teeth each time you pull into a station to fuel your car.
Not only will Exxon make more money, but your dentist may get some extra business.
Gas company talking heads have a number or explanations for why they are still recording record profits, but cannot seem to keep fuel costs under control. Their laundry list of woes is all interconnected, but to make it sound more problematic, they create separate categories.
It goes something like this:
Geopolitical instabilities
We import far too much crude oil and when a middle eastern country gets some sand in their craw, we pay for it at the pump.
Refinery and Pipeline problems
Maintenance and "unplanned shutdowns" seem to happen, though for some reason they cannot predict that they will, so the supply gets interrupted.
Lack of Production Capacity
Our reserve capacity is only a couple of million barrels a day while the world uses something like eighty five million barrels.
The Formula has changed
The feds mandated that an additive called MTBE is bad and that Ethanol is better. Refineries have to charge more to make the switch. Upshot- Feds bad, Refineries good, environmentalists win, consumers suffer.
Hurricanes
Oil production facilities in the Gulf of Mexico got hammered by Katrina. Ok, we can understand that. Hurricanes happen. In fact, they happen EVERY YEAR. Maybe they should factor this in, or move.
Growing Demand
Another tough thing to predict I guess. India and China need gas for their economies, and they are clamoring for more fuel every day. But according the ConocoPhillips, the U.S. is still the largest petroleum consumer of all.
It is understandable, too, that building more refineries is not a slam dunk. Most people don't want them near their neighborhoods and due to new environmental laws, the gas made by other countries like Venezuela no longer meets our standards of cleanliness. This, coupled with the fact that even if we could build more refineries, it would take years to get them online and the demand is not likely to soften. It all adds up to a crisis in the wings.
This is a complex set of factors, so to simplify things, I decided to ask Federal Way motorists themselves what they think is the cause of spiraling fuel costs. I broke the query down into two separate questions.
Why do you think gas costs so much?
What should we do about it?
Kelly Camoza -Commercial R.E. Agent- "I think we need more commuter responsibility...our best defense is to decrease demand and use more mass transit."
Mickey Coleman - Serviceman- "I'm in the military, I've been all over the place, it's gas gouging plain and simple...because they know they can get away with it!"
John Billard -Business man- "It's just supply and demand...the best thing we can do is to stop driving so much."
Phyllis Medina - "Why is the price so high when barrels (of crude) haven't gone up that much...we need to buy it where it's cheapest and drive as little as possible."
One way or another, this set of events is going to affect all of us in a negative way.
Even if we all mothballed our SUVs and trucks and drove vehicles that drank small amounts of fuel, we might manage to skirt the rationing of gas that happened in the seventies, but growing demand and limited supply are more likely to force us to curtail our driving habits much more severely.
I believe all of us are coming to a pole shift in basic lifestyle. The freedom of driving aimlessly around the country has reached its zenith and the concept of "I am my car" will have to be broken and reassembled.
As a global community, we all want the same things.
Unfortunately, as far as gasoline goes, it seems that there is just not enough to go around. I don't know what will happen or what you will do, but as for me, that dusty mountain bike hanging on the garage wall is looking better all the time.