[*BCM*] The price of gasoline has lots of inputs

[TSmith4918 at aol.com]

this posting should be voted "best of* of the last week's discussion.
Thanks Tom.
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In a message dated 6/7/2006 10:30:28 A.M. Eastern Standard Time,  
tjvitolo at bu.edu writes:

Gas  prices are up, but it's not as simple as the two reasons you cite.

It's  true that global demand (China and to a lesser extend, India) is up.   
It's true that the MTBE additive was banned -- but the rest of that claim  is
wrong.  The MTBE additive was banned because it poisions ground  water and has
been linked to cancer.  It wasn't banned with three  months lead time -- it 
was
banned with *years* of lead time -- the first  legislation bassed in the year
2000.  The reality is that the  refineries didn't bother to make sure that 
they
were prepared, knowing full  well that they had a rather captive audience. 
Additionally, ethanol  absorbs water and so can't be shipped by pipeline
pre-mixed with gasoline  (unlike MTBE), and there were transportation issues. 
The fault doesn't lie  with a Congress interested in preventing health risks. 
The fault lies with  the refiners who didn't secure the necessary supply  
chain
capacity.

Some other reasons why price is higher:
* GWB's  war in Iraq reducing available supply from Iraq.
* GWB's squabbling with  Iran resulting in jitters on the market, a market
concerned that Iran will  both cut its supply and slow up the Strait of 
Hormuz.
* GWB's squabbling  with Chavez in Venezuela, resulting in more jitters.
* tUSA's high tax on  imported ethanol ($0.54/gallon) restricting supplies of
gasoline  alternatives.
* Gas prices always go up around Memorial day, because people  like to drive
more in the summer, particularly on vacation weekends.
*  There was that small rainstorm in New Orleans which tUSA's FEMA  wasn't
prepared for, resulting in a dramatic reduction in the ability for  tUSA to
convert crude to gasoline.
* Congress' policies on autos and  SUVs/trucks over the past few years,
including the subsidy of vehicles more  than 6,000 lbs GVW, as well as a 
refusal
to improve CAFE substantially for  many years.
* tUSA still using oil to make electricity -- including 26% of  MAs 
electricity.
Pushing alternative energy sources in New England,  Florida, and Hawaii would
reduce the amount of oil used in tUSA to generate  electricity (about 2.5% of
tUSA's oil use), freeing up some more  supply.
* tUSA's increasing of the speed limit from 55 to 65 to 70, 75, or  80. 
Reducing back to 55 (and enforcing) would save about 15% of all  gasoline
consumed in tUSA.


It's far more complicated than you  make it out to be, and it's the result of 
bad
energy policy for many many  years -- particularly the constant massive oil, 
gas,
and coal subsidies  while completely ignoring the chances to encourage growth 
in
the ag &  tech industries of alternative (read: green) energy.  That  civil
engineers and city planners think progress is measured in the number  of lanes
the local highway has doesn't help, nor does Congress' insistence  that Amtrak
break even financially even though their services do lots of  good in tUSA
(including reduce demand on oil).

But it's always  easier to blame the Commies than to take responsibility for 
our
own actions  as a society, isn't it.


- stomv


 
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