Source for chart: http://www.energy.ca.gov/gasoline/margins/index.html
Posted on 05/10/2008 6:35:13 AM PDT by kellynla
With the nation’s economic anxieties growing in direct proportion to oil prices, let’s not forget this fact: that the Left’s decades-long refusal to address domestic energy supply will cost Americans more than the soaring gas prices they are already paying.
Who is to blame for increasing gas prices? Listening to the rhetoric on the Left, it’s the fault of George Bush, or, better yet, Dick Cheney, who must be making some money on the side. (Is it part of a Halliburton plot?) Moving rightward, a surprising number of conservatives seem to be buying into the notion that soaring oil prices are a conspiracy hatched in the boardrooms of corporate America.
Unfortunately for the conspiracy theorists, the exotic theories do not hold up. Instead, rising prices are the result of that most fundamental of economic principles: supply and demand. Demand for oil is booming around the world as developing nations grow economically and develop their own middle-classes.
Consider the world’s two most populous nations, China and India, which together contain over one third of the world’s population and seven times that of the world’s third largest country, the United States. Both China and India are experiencing annual economic growth rates approaching 10 percent. As these folks earn more, they want what we want – cars, air conditioning, TVs, better food, etc.
We cannot freeze economic conditions around the world. As demand for oil increases, supplies get tighter and costs go up. That’s Economics 101. A recent Canadian study predicted that oil prices could double by 2012 due to the growing supply and demand imbalance. The report also states, “An expected drop in demand in the United States due to higher prices and a weak economy will be more than offset by demand growth in developing nations.”
Then there’s the supply side of the equation. This week’s spike in prices had little to do with any of the popular explanations. Recently, Islamic radicals in Nigeria attacked and blew-up multiple oil pipelines run by Shell Oil. At the same time, employees of Exxon in Nigeria were striking for more pay. Nigeria is Africa’s most prolific oil producer and an important source of world oil supplies.
But that isn’t all. Rumors were rampant last weekend that the Defense Department is drawing up plans to hit terrorist camps in Iran, where radicals are being trained and sent to Iraq to kill American soldiers. We have tolerated this for months, and patience is wearing thin. Any hostilities in Iran raise the possibility of an interruption in oil supplies from that country. A Strike on Iran could cause that nation’s unstable leader to blockade the Strait of Hormuz, through which 30 percent of the world’s oil passes.
So, if you’re a foreign government that needs oil for your military, or an airline company or anyone else who relies on oil, this week brought anxiety about whether your supply will be disrupted. To “hedge,” you go into the market place and buy contracts guaranteeing you delivery of oil at a future date. But because many people had the same need this week, prices were driven up (supply and demand).
Supply-side action can be taken. President Bush remarked in a speech this week that, “Members of Congress have been vocal about foreign governments increasing their oil production; yet Congress has been just as vocal in opposition to efforts to expand our production here at home.”
Bush went on to explain:
“They repeatedly blocked environmentally safe exploration in ANWR. The Department of Energy estimates that ANWR could allow America to produce about a million additional barrels of oil every day, which translates to about 27 millions of gallons of gasoline and diesel every day. That would be about a 20-percent increase of oil -- crude oil production over U.S. levels, and it would likely mean lower gas prices. And yet such efforts to explore in ANWR have been consistently blocked.”
As the president also noted, it’s been more than 30 years since America built its last new oil refinery during which time Congress has repeatedly blocked efforts to expand capacity and build more refineries.
But liberal politicians believe the solution lies in punishing the producers of the very products we need most. Barack Obama has suggested imposing a “windfall profits” tax on the oil companies. We tried high taxes and price controls back in the 1970s, and that scheme led to decreased domestic oil production and increased oil imports from OPEC nations, shortages and long lines at the pumps.
What’s the real solution? Recently, U.N. Secretary General Ban Ki-Moon responded to the global food crisis by warning that the world “must urgently increase food production to ease skyrocketing prices…” That solution would be more aptly applied to our growing energy challenges. We must increase production of oil and natural gas in order to meet the increasing demand worldwide
In order to do that, Senate conservatives have introduced a common-sense, free market-oriented plan – the American Energy Production Act of 2008. The bill would allow for more domestic oil and natural gas exploration, more use of coal and liquefied coal and it would tap into America’s vast oil shale fields. The result of such a plan, if enacted, would be more oil and natural gas on the market, easing supply constraints and lowering prices. It would also create tens of thousands of new jobs in America and go a long way toward reducing our dependence on energy from unstable and hostile foreign regimes, many of which are actively seeking our destruction.
The plan makes sense, which is probably why congressional liberals have already come out against it.
Please call & email your representatives & senators.
S.2958 needs to be passed and it needs to be passed NOW!
ping
It is all the fault of the Rats and their eviromentalist Marxist buddy’s who want to take us back to the dark ages.
I’m going to read this later. It’s just too depressing to contemplate on a Saturday morning. I fully expect to find a lot of common-sense, well-thought-out solutions to our energy problems in this bill, a bill which I fully expect to fail. Which is why it’s depressing. But I will read it later.
And by the way, why don’t we just FEED the friggin’ polar bears if we care so much about them?
The whole reason we created the Dept of Energy in 1978 was to purse these green dogmas. Well it 30 years and trillions of dollars in Govt spending later. Where are we from following the Democrat Party's siren song on Energy Policy? The reason we are wholly dependent on the variances of the International Oil Market, instead of being one of the nations profiting by them, is because, for “environmental” reasons, we have spent the last 30 years as a matter of Govt policy, doing everything to restrict domestic energy production to in order to push silly “conservation” schemes
To blame the speculators for speculating in an Oil market made so ultra profitable for them by stupid US Govt polices is to blame the cart for being pulled by the horse.
WE, the people of the USA via the agency of those idiots we elect and re-elect year after year after year, are to blame not speculators, not the market, not the Fed Reserve and dollar policy. US for not developing our own resources and instead allowing the usual suspects to sing the siren song that we could have all the “Eco green” Govt polices we felt like but would never have to pay any economic prices for those stupidities.
The bill should be amended to expedite the permitting process for nuclear power plants.
It makes no sense to burn fossil fuels to generate electricity when we have ample domestic supplies of uranium. That’s the key to energy self-sufficiency.
Putting a stop to the oil market manipulations might be helpful too.
and now we’re going to do the oil shale boondoggle all over again? Anything but solutions, that’s Washington for you. There is no evidence that any Republicans have shown any more leadership than the Democrats, except on ANWR. The Cheney task force was a joke reinforcing the truth that oligopolies will always avoid disruptive technology, as Jason Vines has pointed out on his blog. Once again we hear all the nonsense about a “Manhattan project” to put windmills in your car.
Remember, McShamesty is one of those that would not let the bill pass to drill in ANWR.
“it’s been more than 30 years since America built its last new oil refinery during which time Congress has repeatedly blocked efforts to expand capacity and build more refineries”
Finally, someone is actually beginning to tell the truth about the energy situation in America. Unfortunately, the MSM and the Democrats will say that it is entirely the fault of the greedy oil companies and many people will be stupid enough to believe it.
And I know just what to feed them with!
I certainly do remember. Why in world did we ever get stuck with McLame as a candidate for prez?
Source for chart: http://www.energy.ca.gov/gasoline/margins/index.html
“What percentage of oil futures purchased by party X take delivery of said oil?”
It does not matter at all whether someone takes delivery or not. Oil is a commodity. The reason you buy futures is to hedge the price you need to pay.
Drill for oil everywhere it is domestically found.
Raise the tax on a barrel of imported oil or gas to $50.00
Build Nuke plants and coal plants and coal gasification plants
Let companies write off 100% of the cost of coveting their facilities to alternative energies.
Purchase price of a hybrid or alternative fuel vehicle 100% tax deductible.
Using the purchasing power of the Fed Govt to help develop the alternative fuel vehicle technology by mandating x% of Govt vehicles purchase each be powered by alternative energy sources. Increase the % of vehicles purchased by 2% each and every year.
Top to bottom review and rationalization of EPA and Department on Energy to rationalize, standardize, steam line and fast track all Govt regulatory activities overseeing any form of energy production
Mandate a single national standard for gasoline production to fully replace the current patch work of 93 different federal and state standards
etc etc etc etc etc etc ad nausea
Freepers can do it in 30 minutes, DC political has taken 30 years, trillions of dollars and still cannot get it head out of it's butt which indicates to me the politicans are just happy leaving the mess the way it is.
This does not include all the other taxes imposed on petroleum production and the tax at the gas pump...
And I think if the feds would split the royalty with the coastal states on offshore drilling then we might get the majority of folks in the coastal states to allow drilling...money talks. LOL
bump
Dingy Harry Reid will never let it come to the floor for a vote!
Due to the high prices of fossil fuels someone is finally getting off their collective, well you know what I mean.
Some 17 companies and consortia are pursuing licenses for more than 30 nuclear power plants. The U.S. Nuclear Regulatory Commission has begun reviewing the first wave of applications.
This link provides a downloadable file which shows the status on these proposed plants.
http://www.nei.org/resourcesandstats/documentlibrary/newplants/graphicsandcharts/newnuclearplantstatus/
This is a dowloadable file and can only be views if you have excell.
ping for future reference
We could put an end to these exotic blends, free up refining capacity and the effect would be immediate lowering of prices, at least as much as suspending the gas tax with little economic impact. But hey, I’m just a dumb, greedy, delusional Republican.
Polar bears don’t eat RATS.
It makes sense though. They're just responding to a market targeted by Democrats. It's a sure thing while Democrats weild power.
Our government at all levels STEALS most of the money generated by the oil and gas industry one way or another. I'd love for someone to figure out exactly how much of every oil dollar generated ends up in the GREEDY hands the government. My bet would be over 60 cents. Easily.
Recent EIA information shows that US refineries are running at a lower percentage of capacity this year than last. US imports of finished products are essentially unchanged relative to last year. US demand for products is about equal to last year. US inventories of crude oil plus gasoline are above last year. In other words, there is plenty of crude oil and the refining capacity to turn it into gasoline, of which there is already a sufficient inventory.
Here is the link: http://tonto.eia.doe.gov/oog/info/twip/twip.asp
World wide crude oil prices are apparently being driven up by two factors; 1.) demand in the rest of the world compared to perceived overall world wide supply, and 2.) depreciation in the US dollar, in which oil is traded, relative to the majority of other currencies in the world.
It appears that the value of the US dollar may be the most important current factor. As the US Fed reacts to the sub-prime credit crisis by lowering US interest rates and injecting more money into the US system, that devalues the US dollar. Almost by definition, the cost of crude oil, gold, and any other commodity priced in dollars, but consumed by countries whose currency is not the US dollar, will have to rise.
Simply put, the Fed's action devalue the US dollar, which makes US exports more competitive with the rest of the world. It also makes imports into the US more expensive. Oil is largely an import.
“the Left’s decades-long refusal to address domestic energy supply “
Umm - didnt we own the house, senate, and Pres for a couple years there?
Senators of the 110th Congress http://www.senate.gov/general/contact_information/senators_cfm.cfm
If we attribute cost solely to supply and demand, then demand for crude is down slightly, while we're supposed to believe that demand for refined fuel is up more than 50 percent??? Oddly, a corresponding demand isn't reflected at the pump, where the cost is up "only" 4.3 percent.
It would appear that the refineries are taking huge profits, or their processing costs have mysteriously risen in the last month.
“Umm - didnt we own the house, senate, and Pres for a couple years there?”
actually, the GOP had the WH and the majority of both houses of congress for 4 years!
But that was then and this is now!
WE NEED EVERYONE TO CONTACT THEIR SENATORS.
I just emailed my two ‘Rat senators from CA.
This one gets it!
All the while the Democrats (In their Socialist brilliance) have drafted another amazing piece of legislation that is designed to punish American Oil Companies for trying to do something about this problem. (Like they did to punish Tobacco.)
But Like Tobacco, they will simply move off shore and leave America. Tobacco is still selling in foreign countries like China and India at increasing volumes now that their economies are gaining from free enterprise.
While our own government, with the help of those spineless Republicans, are doing the opposite.
Get ready for double digit unemployment, inflation, etc. All the government induced projects in the World will not stop it. It is headed rapidly for the same situation we had when Jimmy Carter tried to ruin the Capitalist World but failed.
I think that's a good idea -- particularly for expansions to existing sites -- but I believe that there are some very long lead times for some manufacturing activities also. From looking at the EIA's site the other day, it appeared to me that some companies have already ordered equipment that apparently will take years before it comes.
I read a very interesting article back in March about the wait times at the Japan Steel factory that builds reactor containment vessels. It was on paper, but I found a related Bloomberg story Samurai-Sword Maker's Reactor Monopoly May Cool Nuclear Revival.
(For what is worth, according to the Bloomberg story, this is the same factory that made the 18 inch guns for the Yamato class battleships.)
Well, that’s encouraging that some are in the permitting process, but I want to see some in the construction process.
And if the permits are approved, I’m sure we can expect a round of litigation to block any construction.
The value of the dollar has some effect but it in no way is the cause of these prices.
The price of crude has almost doubled in the past year. For the value of the dollar to have caused it a dollar would be worth zero!
oops...50 cents, not zero.
Cause it the usual attempt by the Noise media to lie using statistics to hide their lie. The cost is not down on crude and the "Refinery cost and profits" is an attempt to deliberately hide the cost of crude and operations($3+) which the refinery has to pays out with the $.30 profit it makes from those sales. God forbid we actually turn over 30 years of reckless Leftist demagoguery about "Big oil" by having a actual discussion of the real facts. So the "Enviromentalists" manufacture statistics like these to hide the real issues that might require them to question their dearly held dogmas.
Excellent! Someone I know needs to see this... Sick of the way the MidEast has us by the short and curlies and how much our goobermint adds to the problem in every way possible.
Are the numbers in that chart lies?
Yep. Love the Democrats latest demagoguery about ANWR "Well it would be 10 years before we saw any results" Yes 10 years due to the absurd regulatory process the Feds have set up coupled with the deliberate policy of judicial terrorism pursued by groups like "The Sierra Club" and other trust fund baby wacko job groups who routinely use the Courts to prevent the will of the people being executed. Congress could create a legislative solution, a fast track program like they use on trade deals, but they will not since the Democrat Party is a wholly own subsidiary of the Eco nut lobby groups
The fallacy of the "declining dollar" argument is that rising oil prices are largely responsible for the dollar's decline! We're hemorrhaging dollars overseas because of extortionary costs for crude, and the pro-oil propagandists are trying to convince us the cart is pulling the horse.
High oil costs are weakening the dollar; the weak dollar is not driving higher oil costs.
“...why don’t we just FEED the friggin’ polar bears if we care so much about them?”
Yes, I think enviro-whacko, self-sacrifice would be a good start.
Strange as it seems, refineries have no way to determine the cost of a gallon of gasoline. They can determine the cost of all of their products, the revenue from all of their products, and the resulting profit or loss.
Think of refineries like a butcher shop. The butcher shop knows how much it costs to buy a cow, how much it costs to butcher it, wrap the cuts of beef, and market them. It also knows how much it costs in taxes on each cut of beef. However, the butcher shop has no consistently logical way to allocate the majority of it's costs to a specific cut of beef. Therefore, the butcher shop really does not know the cost of that sirloin steak you bought. It just knows all of the costs for doing everything, and the sum total of all of the revenue.
Refineries are the same, but on a much larger scale. Therefore, the refining cost and margin for any specific product, like gasoline, are always calculated by difference.
OilByCurrency.pdf Currency fluctuations are a significant part of the cost of Oil.
As do I, unfortunately the process is still very lengthly.
Design Certification, Early Site Approval, construction permit and operating license, environmental impact study, blah, blah, blah.
Here is an interesting article on the impact of US currency value on the price of oil:
http://www.agiweb.org/workforce/Currents-007-OilByCurrency.pdf
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.