Say Goodbye to $2 Gas

THE ORANGE COUNTY REGISTER ^ | April 26, 2006 | ANDREW GALVIN

[kellynla]

Get used to it.

Gasoline at $2 a gallon has probably gone the way of 5-cent coffee and 15-cent cheeseburgers.

The grim facts are these: Demand for oil is rising around the globe, especially in Asia. Supplies are generally static. Unless something happens to put a damper on demand, simple economics dictate that prices have nowhere to go but up.

In the short term, however, we may get a break. Gasoline prices, now averaging more than $3 a gallon in Orange County, are expected to fall below that level around Memorial Day as refineries ramp up production after completing maintenance work, analysts say.

Here's a look at what's driving this week's higher prices at the pump:

[kellynla]

[stuartcr]

Got that right, even if they dropped all taxes.

[thackney]

That looks just a little low on the gasoline tax.

http://api-ec.api.org/filelibrary/Gasoline-taxes.pdf

[thackney]

According to this:

http://www.gaspricewatch.com/usgastaxes.asp

California also includes a 6% sales tax on the gas. So todays inflated prices include even more tax than my previous post.

[polymuser]

IMHO, Democrats need to sieze the moment and finally launch Gore's plan -- impose a very high fuel tax to curb consumption and fund alternate energy development. Time for them to walk their talk.

[thackney]

A Primer on Gasoline Prices
Energy Information Administration
http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html

WHY ARE CALIFORNIA GASOLINE PRICES HIGHER AND MORE VARIABLE THAN OTHERS?

The State of California operates its own reformulated gasoline program with more stringent requirements than Federally-mandated clean gasolines. In addition to the higher cost of cleaner fuel, there is a combined State and local sales and use tax of 7.25 percent on top of an 18.4 cent-per-gallon Federal excise tax and an 18.0 cent-per-gallon State excise tax. Refinery margins have also been higher due in large part to price volatility in the region.

California prices are more variable than others because there are relatively few supply sources of its unique blend of gasoline outside the State. California refineries need to be running near their fullest capabilities in order to meet the State’s fuel demands. If more than one of its refineries experiences operating difficulties at the same time, California’s gasoline supply may become very tight and the prices soar. Supplies could be obtained from some Gulf Coast and foreign refineries; however, California’s substantial distance from those refineries is such that any unusual increase in demand or reduction in supply results in a large price response in the market before relief supplies can be delivered. The farther away the necessary relief supplies are, the higher and longer the price spike will be.

California was one of the first States to ban the gasoline additive methyl tertiary butyl ether (MTBE) after it was detected in ground water. Ethanol, a non-petroleum product usually made from corn, is being used in place of MTBE. Gasoline without MTBE is more expensive to produce and requires refineries to change the way they produce and distribute gasoline. Some supply dislocations and price surges occurred in the summer of 2003 as the State moved away from MTBE. Similar problems have also occurred in past fuel transitions.

[VOATNOW1]

Yes, the emerging Chinese and Indian markets are increasing the demand for oil. This is part of why I would like to see more on and off shore oil and gas exploration and drilling in the U.S.
I would also like to add that the pie charts shown fail to separate refinery cost and profit. Cost and profit are economic polar opposites. Federal and state taxes represent the largest profit in gasoline sales in this country IIRC.

[Koblenz]

California has some of the nuttiest rules and regulations. Here they have their own gas, but hardly any room for error in the supply chain. They did that crazy electricity thing a few years ago (called "deregulation" but really just a crazy set of rules). They seem to do everything exactly wrong. I don't get it.

[thackney]

I would also like to add that the pie charts shown fail to separate refinery cost and profit.

I would also like to see the taxes in the refinery and the crude production broken out.

[P-40]

Deport the illegals. The demand for fuel will be lessened by doing so. Prices will fall. Problem solved. Next!

[VOATNOW1]

Good point! We could have that pie chart looking like a spoked wheel in no time.

[HEY4QDEMS]

Demand for oil is rising around the globe, especially in Asia.

This is a valid point, China and India have been economically expanding at a brisk pace for nearly a decade as has their demand for oil.

China's demands have doubled every year for the last six years and shows no signs of slowing down.

Considering that those two country's population is collectively seven times that of the US and they produce very little oil domestically, the demand in that region will soon be way more than the US demand and thus they shall control the price.

We need to develop cost effective alternatives to oil, else we will have to deal with the expense.

That being said, I do agree that we are being grossly ripped off by oil companies as well as the government when we visit the pump.

[Democratshavenobrains]

If hurricanes aren't too bad this year, anyone think the price will go down?

[VOA]

To the forum:
Anybody here know anything about laws (Fed or state) that forbid gas stations
from "breaking down" the cost of gasoline on the sales tab?

I was listening to Glen Beck shows and he had a gas station owner
in Ohio say something LIKE he was forbidden by law from stating on his
sales receipts to the customer how much HE had paid for the fuel.

I was just wondering how prevalent ordinances against itemizing the cost
of a gasoline purchase are (or if this is something of an urban legend).
I do think itemizing the components for a gasoline sale could be
instructive (and maddening) if people saw things like the assessed tax
printed out on the receipt.

[mlc9852]

It's gone down about ten cents a gallon this week where I live. It's always about supply and demand.

[MHGinTN]

As the cost gets high enough (and we're there at $70/barrel for oil), the trillion plus barrels of crude in sand and shale in the Western U.S. will be tapped and WE will begin to be the world's suppliers. If that eventuality is combined with our tremendous technological abilities to innovate and generate, America will continue to be the world's leader. Of course, the democrat party will try their damnedest to prevent that since their professed goal is to remove US from the sole super power. Come to think of it, they've been working at that goal vigorously even with Bush and Pubbies controlling Executive and legislative branches.

[Huck]

Here's my question about the taxes. If the market is willing to pay the price at the pump that includes the tax, if we eliminated the tax, wouldn't the price remain the same anyway? Exxon would keep more profits, the gubmint would have less revenue. I don't see that as a good deal necessarily.