Viewpoint: Why is Gasoline so Expensive?
?Between Wednesday of last week and Sunday, Lori and I had the opportunity to drive thru a number of Colorado communities.?Gasoline prices varied from $3.29/gallon to $4.19/gallon.?In one Montrose community, gasoline varied from $3.39/gallon to $4.05/gallon.?Why in the world would gasoline prices vary by nearly 20% in the same community??Why are gas prices so high to begin with??How did they shoot up to the five-dollar range and then go back down?
?The candidates for the cause of high gas prices are numerous:?the Russian invasion of the Ukraine, lower US production combined with OPEC decisions, increased demand because people are traveling more now that COVID anxiety is lessened, the Republicans are the problem, the Democrats are the problem, or Joe Biden is the problem. The list goes on.
?Of all the stories I read, an article in the Bauman Letter, by Ted Bauman, entitled “The Truth Behind Rising Gas Prices” and dated June 24 made the most sense to me.?Unless otherwise noted, the statistics are from that publication.
?Although Bauman did indicate in his article that the Russian invasion of the Ukraine effected gas prices, he states that is not the major issue.
?I quote from his transcript, “Basically, green policies threaten the oil industry so the oil industry won’t invest and so that’s why we have high gas prices. Democrats blame the oil industry for exploiting the situation to reap windfall profits, fattening their margins, pocketing lots of money at everybody else’s expense. Some like me actually blame bigger pictures, longer-term trends and in particular, the role that the financial sector plays in determining whether or not investments happen in a big, expensive industry like oil.”
?Bauman continues, “Remember, Wall Street controls the money that finances things like oil refineries and drilling. And if they don’t want to play ball, it’s not going to happen. Now, let’s talk about a couple of facts that most people are unaware of. When I researched this, I kept surprising myself. I kept going, ‘Wow, is this true?’ Well, let’s start with one. The real cost of gasoline is actually lower than it was during the Great Financial Crisis.”
领英推荐
?
??When you adjust for inflation, Bauman finds that the highest gas prices actually occurred in 2008.?He also debunks the idea that consumption is higher than usual.?His research shows that the millions of barrels consumed every day was actually lower than they were in 2021, 2019, 2018 and 2017.
????Bauman continues, “Now, the last new oil refinery or refinery was built in the United States in 1997. Since the COVID crisis started, six US oil refineries have closed, including one that was damaged by Hurricane Ida in the Gulf last year. Two others have converted to produce renewable diesel. In other words, diesel that is made from renewable feedstocks like oils and things like that, cooking oils.”?The U.S. oil refining industry cut back on capacity, 5.5% since 2019.
?“Now there’s a final issue, which you never see discussed anywhere except in the trade news which is the real story. And that is that Wall Street does not want to see U.S. oil producers invest in new production.”
?Bauman says global oil projections are down because of increased efficiency in gas and diesel engines and the market is interested in electrical and hydrogen driven vehicles.?Major fracking operations also have caused a glut in gasoline according to Bauman.
?Bauman’s conclusion is that prices will drop some in the not to distant future but only so much as to become compatible with U.S. refining capability.?Because of the green movement, gas and oil companies are reluctant to increase capacity and until more money is invested in gas and oil, things will stay up.
?So basically, I didn’t find answers to any of my original questions.?Just looks rough for a while.?Any of you have more insight?
Writer at Angel's Alaska Media
2 年It’s not a puzzle and really quite simple. In a Capitolist economy prices will rise on anything and everything until there is a surplus of whatever commodity or service is being priced out. If that’s a puzzle then go back to school. I found two butcher shops that were selling ground beef. It was $2.49 at one and $3.79 at the other. I went to less expensive store and asked for three pounds. I was told “sorry, we are sold out”. So, and this is a certainty.; the price of gasoline will fall as soon as the supply exceeds demand. We have seen government try to dictate supply and even take a shot at fixing prices; dosnt work, never will, and if we had leaders that understood economics, they would stop trying to regulate everything and just let the market place work.