What's Driving Up Gas Prices This Time

THE WALL STREET JOURNAL ^ | February 22, 2004 | ANDREW BLACKMAN and BHUSHAN BAHREE

[sarcasm]

A recent surge in the cost of gasoline contributed to the jump in consumer prices reported Friday. And the rules of the gasoline industry are in flux, which could mean still higher prices at the pump this year.

While the traditional rules of supply and demand still largely drive gasoline prices, new factors such as environmental rules and a weaker dollar now have been thrown into the mix.

[NotJustAnotherPrettyFace]

"Sky high" is also relative to where one lives in this country. The fact is that the various kinds of reformulated gas PLUS the taxes levied account for the variances in price even from county to county around here (Chicago area). PLUS if I drive over the state border and buy gas in Indiana, I'm typically paying $.50 a gallon less mainly because of lesser taxes on the gallon.

[AEMILIUS PAULUS]

In Los Angeles $2.05.9/gallon.

[SAJ]

Good idea. Try convincing local and state politicos of its merit, though -- not to mention the watermelon crowd.

Last I counted (2002), there were 42 various blends required, by law and/or rule, around the country, some of which (see S. WI, for example) don't have any sort of economic OR environmental rationale.

One of the truly great idiocies is the requirement that STL, MO have a different blend than E. STL, IL, notwithstanding that they are separated by just 1.2 miles of river. Another is that, by crossing certain county lines in IL, the (presumably IL) motorist can effectively conduct a price arbitrage between two different blends. To be sure, the IL state enviroturkeys do try to game the prices of the competing blends to ''equality'', but, as with all price manipulation, they are unsuccessful to a degree that they find highly annoying.

If you keep CA out of the mix, you **might** be able to cut the number of required blends around the rest of the states to perhaps 12 or 13...and that estimate's stretching political reality a bit, too.

[Prodigal Son]

UK and US **petrol** costs are within 1.5 cents of each other as I write this, basis Rotterdam and allowing for estimated shipping differentials. The difference in the price at the pump is almost entirely due to the confiscatory tax on petrol that the UK levy.

The price at the pump is what you pay though, yes? That's the bottom line. I think everybody is well aware that petrol is petrol- it's fungible. It's not like the Brits are buying a special brand that just costs 3 times as much. It's obvious the difference in price is all tax related. But still, what the consumer pays at the pump is the important part. And Americans with their 'sky high pump prices' still pay considerably less than we do here.

[Prodigal Son]

What are light truck sales doing there?

You really don't see pick-up trucks here (or anywhere in Europe for that matter). You see quite a few SUVs (to include the traditional Landrover) but I have no way of comparing that to what Americans own because when I lived in the States SUVs weren't really 'the thing' yet.

Mostly the people you'll see in Britain with a pick-up truck are those folks that use them in their lifestyle- farmers, those that raise sheep etc.

[N. Theknow]

Specialized fuels are required by environmental rules in particular states or cities. California, for example, has banned the chemical MTBE and switched to ethanol-based fuels. New York and Connecticut are now doing the same. Mr. Sundstrom says there are at least 14 different blends of gasoline being used in different regions, and it is illegal to sell a noncompliant blend in some areas. This restricts the gasoline industry's ability to distribute nationally.

Isn't the all-knowing, great and magnificent Algore responsible for this nonsense which is derived from the pseudo-scientific drivel espoused in his book?

[toddst]

Besides more refineries, we need to cut down on different blends. Go with just two: urban and rural.

This is what we need. More refining capacity and less regional fuel requirement silliness would bring down prices significantly.

[SAJ]

The point is that, postulating only that you believe that you have a representative parliamentary gov't (and I grant you those disagreeing can make a strong case), you've only yourselves to blame **for** the price differential at the pump given that this differential is taxation.

I'd pay hard cash to see a tax revolt in the UK, especially one featuring a person or a group of people telling CoE Brown to bog off -- the hard way.

[Prodigal Son]

I'm an American citizen. Live in the UK.

My comment was purely that US gas prices- no matter how high they seem to you- are not actually not that high.

I don't care to get into debating why the Brits don't demand lower taxes. I don't care about that.

Gas prices are not sky high in the States. That's all.

[SAJ]

Agreed as to not being ''skyhigh''. Actually, depending on where you set the base date, US gasoline prices are at or a bit under 30 years ago, adjusted for inflation.

[dennisw]

Gasoline prices are high. $1.60 for regular is the new floor. Reason is, the US dollar is weak due to unending trade deficits. High gasoline prices are your early heads up on the danger of huge trade deficits

[upcountryhorseman]

I beg to differ. Blame OPEC for cutting production and blame
the enviro's for not allowing more refineries to be built. I
understand that several refineries are down for repair. You
are probably going to see $3.00/gal. unleaded in California
by summer.

[mewzilla]

You left out drivers. You know, the demand side :)

[jpl]

The good people of Great Britain really should give free market capitalism a try sometime. It's done wonders for us here in the USA!

[familyofman]

Increased gas prices are good for the US economy, in the long run. Just like outsourcing and job losses.

[skip2myloo]

Well, gee - I thought that's what I said.

OPEC is an unregualted monoplistic cartel, they are greedy -- what are you disagreeing with ??

I'm confused.

I think you'll see $3/gal in CA NEXT WEEK, the way things are going.

[citizen]

Yep, we got it cheap over here.

Historically speaking, it's as cheap as when I'd fill up in '68 for 25-30 cents a gallon for full-service.

It was even less during a gas war between competing stations.

[kaktuskid]

OPEC is an unregualted monoplistic cartel

Whose members have US operations (Venenzuela with CITGO) that can be easily hauled into court..cartels are ILLEGAL in the US!

[skip2myloo]

Right -- let me know what kind of settlement you reach.

[RightWhale]

Drill ANWR NOW

Go ahead. Won't help. Won't even help Alaska's budget problem.