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8.01.06: Raleigh News & Observer: "Who's to blame for gas prices? Not just oil companies" By Jeff Donn, The Associated Press

"U.S. oil companies blame the global oil market for high gasoline parides, but5 a close analysis of pricing suggests that it's not so simple. The run-up also comes from domestic refining, which is largely controlled by Big Oil. ... The suspicion of frustrated drivers is correct. After moving up, the price of gasoline drops more slowly than the price of oil."

Well, Duh, Jeff! Of course domestic refining is largely controlled by the major US oil companies. Who else? Unlike the simplistic answers offered by the AP, it really is a complex issue. For one, gas retailers have to have enough money from their current sales to buy the next load of gas for their stations' tanks. If supplies are constrained (remember, refining capacity in the US hasn't gone up for about 20 years, while demand has), if the retail dealer is afraid of another gas price spike, they have little choice but to maintain prices a little higher, just for insurance that if another spike comes along, they'll be able to pay for the next, higher-priced tanker load of oil.

I learned this from a friend of mine who owned a hobby shop in the early 80s, during the first "Oil Crisis" when crude's price jumped and prices for all petrochemical derivatives jumped, too. He sold plastic models in his shop. When his suppliers raised prices of the "next shipment" of kits, he went through his store, repricing nearly every item upward. Why? So that he could afford to buy the next shipment and keep his electric bills and rent paid.

What's different between his hobby shop and your local gas merchant? Less than the Associated Press might want you to think.

And finally, for now, if it's Jeff Donn's job to write an article about "Who's to blame for gas prices," who's job is it to write the next logical articles, entitled "Who's to blame for toilet paper prices?" and "Who's to blame for bread prices?" and "Who's to blame for milk prices?" ??? And why isn't Jeff writing those articles? And you thought the "media" doesn't have its own agenda? Ha!

08.28.2006: To recent writers to the News and Observer who argued for increased mass transit in the Triangle Area of North Carolina:
Do you support Mass Transit? Buses, light rail, trains, etc.? Do you oppose expanding highway systems? If so, please complete this questionnaire before wasting our time or your breath:

  • List all of the costs involved in acquiring the land for mass transit routes for trains, etc.
  • List all costs for buying rolling stock of trains, buses, etc.
  • List all maintenance costs of rolling stock
  • List all salary and benefit costs for all needed drivers, workers, administrators, etc.
  • List all costs of bonds, loans, etc., necessary for implementation.
  • Describe all private businesses who have been contacted as participants in implementation, operation, etc.
  • Describe why no private businesses are willing to even TRY to make money on such projects.
  • Show the difference between all expected revenues and all expenses, which will define the degree of subsidies needed for ongoing operations.
  • Show where the subsidies will come from to make up the differences, initially, and on an ongoing basis.
From the Raleigh, NC News & Observer, September 7, 2006 Editorial page:

"U.S. oil production has been declining, according to the federal Energy Information Agency, while domestic oil use has been on the rise. As things stand, only a fraction of the 6 billion barrels of oil used every year in this country come from domestic wells. Importing the Middle East's plentiful oil has been cheaper and more profitable for producers. New oil from the Gulf of Mexico would be unlikely to break our addiction to imported oil.

For that, consumers are going to need a range of transportation options. Ethanol made from switchgrass sounds good, as do cars that can run on electricity. Gasoline will remain an option for many, particularly those who can move closer to their jobs and use less. More people should have the choice of public transportation. The only foolish choice would be counting on some new gusher to bring back cheap gas."


From the Washington Post, Tuesday, July 26, 2005:

Despite repeated calls by President Bush and members of Congress to decrease U.S. dependence on oil imports, a major energy bill that appears headed for passage this week would not significantly reduce the country's need for foreign oil, according to analysts and interest groups.

The United States imports 58 percent of the oil it consumes. Federal officials project that by 2025, the country will have to import 68 percent of its oil to meet demand. At best, analysts say, the energy legislation would slightly slow that rate of growth of dependence.

"We'll be dependent on the global market for more than half our oil for as long as we're using oil, and the energy bill isn't going to change that," said Ben Lieberman, who follows energy issues for the conservative Heritage Foundation in Washington. "There's a few measures to increase domestic production . . . and that would not do much."

I'm embarrassed for the sake of the Editors of the N&O. Here's why:

  • "....only a fraction of the 6 billion barrels...." What fraction?
  • "Importing the Middle East's plentiful oil has been cheaper and more profitable for producers." Thus cheaper for you and me. You'd prefer more expensive domestic supplies??? Thanks a lot!
  • "New oil ... would be unlikely to break our addiction to imported oil." Why do you use the word "addiction?" It's a business fact of life, and if we didn't import the cheap-to-lift-and-buy imported oil, gasoline in the US would probably be in excess of $8 a gallon today. You'd prefer that? Why? Please Explain!
  • "Consumers are going to need a range of transportation options." Like what? We already have a range of transportation options. Using them is another story. Why aren't they used? Because in the last thirty or so years, no alternative options have been able to prove themselves capable of competing with that nasty, cheap, imported oil? Just maybe? Ethanol made from switchgrass...." So, which companies are doing that, and can they compete with "cheap imported oil" without us all paying taxes to subsidize them? Pay at the pump or pay at the deduction from your paycheck level? Which do you suggest?
  • "Gasoline will remain an option...." Such a silly suggestion as to not even warrant a comment.
  • "More people should have the choice of public transportation." None of which have ever made a profit. Again, pay at the ticket booth or pay the driver and pay your taxed subsidy to pay for the mass transit. And which people do not have the choice of public transportation? Those that live in rural areas which can't support the infrastructure because of the low population density of potential customers?? Back to Economics 101, please, Editors...

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