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Opinion |
23 Jun. 04 |
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The price of gasoline It seems like every time the price of gasoline goes up, someone in Washington wants to hold another Senate investigation. As many investigations as they’ve had, you’d think they would have figured it out. The truth is they know exactly how fuel prices are set and that their investigations are nothing more than grandstanding for their more ignorant constituents back home. The standard drill is to haul up executives from the major oil companies and beat them up in front of television cameras. The myth is that oil companies set the price of gas and they are sticking it to the American consumer. The price of gasoline, jet fuel, heating oil and various other petroleum derivatives are set by several factors. The largest factor, about 50%, is the price of crude oil. Its price is set by oil exporting countries and to a large extent by OPEC, The Organization of Petroleum Exporting Countries. This cartel is made up of Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. They are able to raise the price of oil by reducing production. You can see from the list that several of these countries are not friendly to the United States and can use their oil as a weapon against us. Apart from OPEC, there are a number of other major oil producing and exporting countries: The United States, Mexico, Canada, Equatorial Guinea, Russia and China. Every day we hear on the news that oil prices closed at a certain price per barrel. This takes place not at Exxon headquarters, but at the New York Mercantile Exchange (NYMEX). That’s where the price is set--by speculators. The price of crude goes up and down on the basis of rumors, OPEC announcements and speeches from various lunatic dictators in oil rich countries such as Iran and Venezuela. Refining costs amount to about 28% of the price of gasoline. We are limited in the amount of gasoline we can produce by a shortage of refineries. Environmentalists and government restrictions have played a significant role in preventing the construction of new refineries. There hasn’t been a new one built in 29 years. It doesn’t matter how much crude oil is on the market; the quantity of available gasoline is governed by the number of refineries able to produce it. Something needs to be done to remove the roadblocks so more refineries can be built. Any time a refinery goes down, the price of gasoline goes up. Distribution and marketing amounts to 8% of gasoline costs. This is mostly transportation from the refineries to the gas stations. The greater the distance, the higher the price at the pump. Gas station owners get the smallest piece of the pie but usually take the cussing from the motoring public. For the few cents they add per gallon, they have to listen to the complaints and threats from their customers. The federal and state governments add a whopping 14% to the price of a gallon of gas. We’re told they spend the money on roads. In Texas, a nickel of the state gas tax, by law, goes for schools. The United States still has plenty of untapped oil. The Arctic National Wildlife Refuge (ANWR) has an estimated 7 billion barrels of oil under it. But ecology activists and politics have prevented a drop of it being extracted. Caribou could be inconvenienced, you see. We’re paying $3 a gallon for gas so we don’t stress the critters in the frozen north, does that make any sense? Congressional Democrats have sided with the tree huggers, for no really good reason except that Republicans are in favor of drilling there. It isn’t as though ANWR is going to become a tourist attraction. Most people couldn’t find it on a map. We have a lot more oil offshore that we aren’t drilling for because of environmental regulations and more politics. A new oil field discovery in the Gulf of Mexico was announced last month. While the full extent has not been assessed, it’s estimated at between 3 and 15 billion barrels. That’s enough potential gasoline to last for a long time, but we’re letting it stay in the ground. Conservationists demand alternate energy sources, but the technology is not yet there for efficient electric or hydrogen powered vehicles. I’m convinced that there will be no serious effort to perfect alternate energy sources for our vehicles until the earth’s oil is almost gone. Clearly that isn’t the case now. Until sufficient pressure is put on congress to allow drilling in places currently off limits, we’re going to be paying more and more for gasoline, while our federal legislators continue to blame the oil companies in order to placate the leftist activists.
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