Fuel Prices

[Capri306]

Yes, I believe I may have been right about the fuel prices rising; $3.00/gal might be a 'deal' in a week's time from tonight if things go as bad as they appear to be.

Getting back on the thread topic, yes, this may happen (~$5.00/gal) as long as no more refineries are built in the United States. We haven't built a single refinery since the 1970's, yet we're using more fuel as time goes on.

Here's a novel idea: try not to think of fuel in terms of gasoline alone. Fuel, in the form of refined petroleum, powers EVERYTHING: our cars, trucks (both gasoline and diesel come from petroleum), many of our power plants, etc. All of the things we take for granted in the 21st Century depend upon refined petroleum.

Today I heard that something like 23 refineries were closing temporarily due to Hurricane Rita coming, and that this would cripple our refining capacity by 26%!!! WTF?!?

Here's a quote from one of the online papers I read (emphasis mine):

Together with the 5 percent of U.S. refinery capacity shut since Katrina, the four closed Texas refineries add up to 11.5 percent of U.S. oil refining.

How sad is this? We need more fuel, yet the supply is more crippled than ever before.

Demand is outpacing supply. This is Economics 101, folks. Of course you're going to see high gasoline prices; there simply isn't enough to go around in great abundance. If the laws prohibiting the building of refineries were repealed or removed altogether, you'd have sub-$2.00/gal gasoline almost as soon as they were built.

As for those people who believe that the oil companies are "gouging" us, you're half right. They charge what they do because no one will stop them. However, don't you think that they'd be making more of a profit if they could produce more gasoline? It's better to sell 10 billion gallons of gas at $2.00/gal than 2 billion gallons at $3.20/gal, no? The long-standing economics of the auto industry do not apply here; not everyone needs a new car, but everyone needs petroleum.

Personally, I think the price per gallon is 'shocking' to people, but they're not really spending much more at the pump. They're just limiting their spending on gasoline, and perhaps making less trips than they would otherwise.

I live in Grand Rapids right now, because I'm going to college. I will honestly claim that I don't go home on weekends as often as I did last year, and that it's mostly because of the gasoline cost. However, I don't think I spend much more money at the gas station because of the higher prices. I simply cut down on the number of trips that I make, only using the car when NECESSARY. Perhaps I'm spending LESS than I did last year on gasoline, but I can't say that and be sure of it. I do know that I am absolutely more conscientious of how much I drive and how much gasoline I use.

[Mr 5 0]

Originally Posted by Capri306

As for those people who believe that the oil companies are "gouging" us, you're half right. They charge what they do because no one will stop them. However, don't you think that they'd be making more of a profit if they could produce more gasoline? It's better to sell 10 billion gallons of gas at $2.00/gal than 2 billion gallons at $3.20/gal, no? The long-standing economics of the auto industry do not apply here; not everyone needs a new car, but everyone needs petroleum.

Personally, I think the price per gallon is 'shocking' to people, but they're not really spending much more at the pump. They're just limiting their spending on gasoline, and perhaps making less trips than they would otherwise.

Thanks for underlining my contention that while gas prices are clearly high, relative to a few months or a year ago, drivers are far from being 'gouged' in the ridiculous way some folks seem to believe. Why do some people assume that that cheap gas is somehow a constitutional right? It is not. It is a commodity and subject to all the vicissitudes of any commodity sold on the open market. Of course pump prices will rise when the gasoline supply is falling below demand, as you clearly stated. That is a given, to any rational person.

Do we like it? Of course not! Higher gas prices take more out of our personal budgets - and no one wants that. However, we still pay a relatively low price for our gas and considering the lack of refineries and the increase in cars and drivers on the roads over the past 30 years, the U.S. is doing pretty darn good as far as the price - and availability - of gas goes. That two oil companies merged, are more efficient and - due tpo demand - sell more gas and oil and thus, make more profits is not the sinister situation some people seem to want to believe. I am pleased that you seem to understand that. Pass the word.

It's easy to demonize 'big oil' and whine about gas prices, making accusations about 'gouging' and 'rip-offs', etc. A whole lot easier than actually considering some of the realities associated with the pumping, refining and selling of gas and oil, looking at the relative price of gas at the pump, which is still reasonable, and understanding that while the oil companies make big profits, they sell a lot of product, have huge expenses and are already well-regulated.