Gas prices are on a mysterious climb


#1

Gas prices are on a mysterious climb
By Steven Mufson


Published: February 19

The average price of a gallon of regular gasoline has jumped 45 cents in the past 31 days, according to AAA, the fastest run-up since 2005.

Retail gasoline prices have climbed for 33 days in a row. A month ago, a gallon of regular gasoline cost $3.30; on Tuesday it stood at $3.75 nationwide.

The prices in the District are among the highest in the country, outstripped only by New York, Connecticut, California and Hawaii.

But some analysts also pointed to refinery issues. Several refineries have been shut down for routine maintenance, and in the eastern United States, several refineries simply went out of business in the past year.

“Atlantic Basin capacity closures have improved refining fundamentals,” the nation’s biggest refiner, Valero, said in a slide presentation at a Credit Suisse conference this month. It estimated that nearly 1 million barrels a day of refinery capacity has been closed on the East Coast or in the U.S. Virgin Islands in the past two years, which Valero said allowed it to increase profit margins.

If you read to the last two paragraphs of this article, there is no mystery at all. Government makes building new refineries economically impossible. Government makes increasing capacity of existing refineries difficult or economically impossible. Government prevention of replacement and upgraded facilities forces the use of aging and worn (= high maintenance and high failure rate!) equipment. Government mandates seasonally changed “boutique” (different from region to region and/or state to state) gasoline blends. Government regulations force some refineries out of business. What two things do all these factors have in common? 1.) Arbitrary government interference. 2.) Supply of gasoline is artificially (= governmentally!) decreased, resulting in increased prices. It’s Econ 101, but the WashPost has to hide it in the last two paragraphs of the article, withhold facts therefrom, and spin what it admits to blame refiners.

Welcome, East Coasters, to CA’s gas price reality of the past decade or two!


#2

Lets not forget also the millions in fees that the government hits the oil companies with when they aren’t able to meet those impossibly high, let alone unproven, enviromental standards to satisfy the overly out-of-touch enviromentalist whackos and their hippie beliefs. Those fees are also being tacked on to the price of the oil the companies put out, which in turn, gets passed on to us.

And I agree that we need to take care of the environment. But not by pushing useless garbage that has no proof that it works.


#3

Gas her in m area is at a all time high of 3.69 which is outrageous.


#4

It’s been around and over $4 here for a week or two (or three?)


#5

I don’t buy the regulation is causing price soaring reasoning, mostly because gas prices were over $4.00/gallon in 2007 and 2008, remember? And then they fell again when the crash hit? Gas prices have more to do with the economy and inflation and deflation than environmental regulations. For some more evidence, Britain’s gas prices tend to follower our’s pretty closely as well as their economy suffers the same difficulties as ours. I don’t think anyone’s going to claim their regulations have followed ours exactly the way the economy has. And further, crude oil production is up in the U.S., so it doesn’t seem like they’re hurting from over-regulation.


#6

Trekky, there are a large number of factors in the marketplace - on the supply side and on the demand side - that affect the balance of supply and demand, and thereby the price. In 2006, 2007 and into 2008, the US and world economies were booming, and on top of that China was aggressively developing its economy plus even more building in preparation for the 2008 Olympics. Demand had been growing faster than supply for some time, ergo higher prices. Starting in 2008 the bad economic times hit the US and the rest of the world, demand shrank and prices fell. In both situations the price driver was demand.

Now, however, the price driver is on the supply side. It may be a new thing East of the Sierra Nevadas, but CA has suffered many a price spike due to government regulations limiting and constricting gasoline supplies in CA. One major refinery fire, one or two refineries closing for maintenance, refineries change over from one seasonal formulation to another, and CA gas prices go up 5%-20%; that is not hyperbole, that’s been life in CA for 2, possibly more, decades. Face the facts, Trekky. Government regulations are a large factor in the marketplace, and very often not a good factor (get RET started about CA regs and diesel engine trucks … keep in mind that that is how he makes a living … which kind of makes his opinions a bit strong).


#7

But yet crude oil production in the states is up? How can there be regulations on gas causing an increase in prices while at the same time production is up, seemingly defying these regulations?


#8

It is? Where, Trekky? Obama says HE has increased oil production, but it’s beyond me where, when his minions are crawling all ver themselves trying to either shut down oil production, or taxing the he double toothpicks out of it or regulating it, and yes company refining is shut down for " Upgrades" in other words as Obama promised, America will pay a premium for her energy sins, this is so badly screwed up and he plays golf with Tiger Woods?


#9

Production has gone up. It has nothing to do with Obama though. It’s because we have better drilling technology that allows us into the reserves.

United States Crude Oil Production by Year (Thousand Barrels per Day)


#10

Where, BOP? also where does the crude go?


#11

Everywhere. There’s more drilling because of the technology to reach reserves like never before.

My brother owns a business selling oil pipe hahaha


#12

ok, then where exactly is the production higher? Technology is fine I agree about tha,t but where is the production increase? and again you do realize that much of American crude does not stay here, the oil industry is a tangled mess.controlled by OPEC wherever oil is drilled.


#13

Ha hang on, I’ll find out. And yes I know that we export some. We are not in OPEC though so our increased production should increase supply and decrease prices. So obviously something is up.

I’ll find your info