Jul
11
Solving the Price of Gasoline
July 11, 2007 | 2 Comments
Everyone is aghast at the price paid at the pump for gas. With good reason, too, because the distance one can go per dollar has shortened up quite a lot since the hurricane Katrina smashed up a big part of the US refining infrastructure. The problem is in the question “Why?” and getting factual answers past the bias and prejudicial screens everyone seems to have.
The hard facts are:
1. Far more than half, some say 77% of the oil wells, are run by government controlled “oil companies” and the history of government run anything isn’t real encouraging.
2. No one wants a new oil refinery in their neighborhood, anywhere, worldwide, even if there are governments and companies trying to get them built. What increases we get are coming from improvements at existing facilities.
3. More people across the world want and can pay for more energy in their standard of living.
So the soft facts are:
1. There is a finite amount of crude oil pumped and gasoline refined on any given day. The market works in setting a price by making it high enough to go around to most all of the day’s buyers or lowering it to get the stock on hand sold.
2. People being people are looking to make a buck, thus the price of crude oil is pushed to higher prices by speculators that base their gambles lately on refined gasoline prices, a rather slippery basis for the risk.
3. People ignore the obvious, pump up the tires, get regular tune-ups, and operate vehicles sensibly.
Solutions then are personal, economic, and political. Everyone can check the tires, or help someone get it done. There used to be a lot of charity car washes, I’d love to see a charity tire check by a church group, civic organization, fraternity or sorority. Might even see the car washes come back again. Tune-ups are very cheap compared to the days when a professional mechanic had to set points and timing. Spark plugs, maybe an ignition rotor and cap, air and fuel filters likely cost less than a fill up. And the ‘tip’ to driving is gain and lose speed gradually. Stopping converts paid for momentum into heat with the brakes and gathering speed again drains off extra fuel by wrenching the mass of the vehicle back to the previous momentum.
Economics in the gasoline market work astonishingly well in the face of so much political disturbance. The shortage of oil refining is a political problem because the support to get a location and into operation isn’t – it’s a set of barriers instead. Companies have the money to build and we as buyers will obviously be customers thus the problem is in the barriers. And the solution, if it ever comes, will be political.
The market’s daily pricing will always have to be in place. It’s the only way for there to be enough to go around on any given day. Market speculation isn’t a good or bad thing because just as they prompt higher prices now they will prompt lower prices someday, too. The market for gasoline is just bigger, and that’s a good thing because the new gasoline buyer is richer and will have already bought and will buy ever more things in support of a higher standard of living. Its far better to engage the new gas buyers in trading for things that improve both our lives than to wish ill fortune upon them.
The political arena is a confused mass of conflicting interests in the free nations and in the unfree nations self-serving, greedy, or simply lost in the economic woods. In the US there are consumer groups advocating for lower prices, environmentalists advocating for no more fossil fuels emitting CO2 into the atmosphere, special interest groups of citizens and corporate interests all the pulling the political policy their way. This same situation exists across the globe. The basic premise of maintaining or improving lives and standards of living gets lost and seldom is ever a part of media reports, or used to call politicians on their comments or choices.
That makes a long blog. Please make your comments, as I need to know where this work needs to go. With a blog title of New Energy and Fuel you might wonder what this piece has to do with that. I just want my readers to know where we’re at to help get where we’re going.
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Our government has kept us in a perpetual state of fear – kept us in a continuous stampede of patriotic fervor – with the cry of grave national emergency — General Douglas MacArthur
[...] The parts of the market that make gasoline so expensive New Posted by root 33 minutes ago (http://newenergyandfuel.com) Jul 11 2007 and the solution if it ever comes will be political special interest groups of citizens and corporate interests all the pulling the political policy their way 1 comment so far quailing scholar on october 22 2007 11 04 pm copyright 2007 new ene Discuss | Bury | News | The parts of the market that make gasoline so expensive New [...]