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Pain in the Gas
Author: BobR    Date: 02/29/2012 13:51:20

We've all watched with helplessness as the prices at the gas pump keep creeping up. It seems unfathomable that 5 years ago, the price had just gone over $2.00/gal. Why are gas prices so high? Will they ever go back down again? Is there anything that a politician can do about it?

To hear the Republican presidential candidates tell it (particularly Newt Gingrich), they have the magic bullet for high gas prices, and if you just elect them, they will deliver $2.50/gal gas:
Newt Gingrich, struggling to regain momentum in the Republican presidential primary, is leading the way, promising to get prices down to $2.50 per gallon.

"I've developed a program for American energy so no future president will ever bow to a Saudi king again and so every American can look forward to $2.50 a gallon gasoline," Gingrich said during his self-introduction at Wednesday's CNN debate
.
What are the details of that program? They're pretty vague, but generally involve removing all restrictions on drilling in environmentally sensitive areas. These include areas in the west that contain shale oil. This is a similar grade of oil as what is coming from the tar sands in Canada.

So does supply and demand really determine gas prices? Yes and no. For crude oil, it is the perception of supply and demand. Crude oil is a commodity, and is traded like any other stock. If there is a potential threat to supply, traders will buy shares, driving the price up. If traders think the shares are over-priced, they'll start dumping them, driving the price down. It seems the most a president can do is prevent threats to supply, by oh... I don't know... NOT threatening war with Iran?

Even then, the profit motive for commodities traders trumps geopolitical concerns. Let's not forget the trader that purposely drove the price per barrel over $100 for the first time, simply for the bragging rights to say he did. That sort of irresponsible ego-driven action has real effects on us all.

But wouldn't removing the Middle East from the equation help? It might if all oil was created equal. Unfortunately, it is not. Oil comes in different grades, and the equipment required and costs involved in refining it differ. Most oil refineries here in the US are configured to refine "light sweet crude". The oil coming from the tar sands is not. It requires more specialized equipment and time to refine, which drives the price of the finished products (ie: gasoline) up.

But let's get back to supply and demand. Most new cars these days are getting much better gas mileage than their ancestors. This has driven the demand for gasoline down. One would think that would drive the price down as well. Not unlike the OPEC countries in the 70s, the oil companies have handled that by reducing production to meet the reduced demand, and thus keep prices from dropping. They are also closing refineries, including several that produce most of the gas used by the northeast part of the U.S.:
In recent years we lost refineries in Westville, NJ, and Yorktown, Va. A large refinery in southeastern Pennsylvania was shut down in December as was one in New Jersey. A third large Philadelphia refinery is up for sale and will be closed in July if no buyer can be found.

Last week we learned that what once was one of the largest refineries in the world (500,000 barrels a day [b/d]), located in the US Virgin Islands and which has been shipping about 200,000 b/d to the U.S.'s east coast will close next month. If you add up the rated capacities of refineries being closed you are looking at something approaching 1.5 million b/d, but as these refineries were not running at capacity or sending their entire product to the northeastern U.S., we are losing more on the order of 800,000 b/d of daily production. If this is not enough several European refineries, another source for gasoline in the U.S., have recently closed down or are up for sale.

Leaving out the 200,000 b/d of oil products that has been coming from the Virgin Islands, the three big Philadelphia area refineries were producing about 40 percent of the gasoline and 60 percent of the diesel being consumed in the northeast. Making up for a loss of this size is likely to take some doing. The EIA is already warning of higher prices in the area and the possibility of spot shortages as the logistics of keeping the northeast supplied with liquid fuels is becoming far more complicated.

Some of the loss in refining capacity can be made up by increasing production at the remaining refineries in the northeast, increasing the amount of ethanol in gasoline, or trying to push more oil through the pipelines from the Gulf Coast refineries. These pipelines, however, are already moving about 2.5 million b/d which is close to max capacity.

So I wonder how THIS fits into Newt's plan. Is he going to nationalize the refineries to force them to stay open? The laws of supply and demand only work for the consumer when there are alternative sources. Otherwise, the oil companies can turn down the spigot, and make the same profit either way. "Drill here, drill now" only works if there is a place to refine the oil, and the companies are willing to refine it.

This is the free market at work. I think I'd like to see more regulation, not less.

69 comments (Latest Comment: 03/01/2012 02:54:11 by TriSec)
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Comment by wickedpam on 02/29/2012 14:20:36
Morning

Great blog - you know every morning you guys write great blogs that are very informative on lots of different subjects - I think thats what makes our internet home so well-round.

That and the awesome blog clubhouse with pool, a never ending supply of coffee and donuts, and extensive geek library

Comment by Raine on 02/29/2012 14:32:22
Good morning!

Comment by wickedpam on 02/29/2012 14:41:43
I sadly have to admit I have seen Kiss Meets the Phantom of the Park - I seem to remember it was on some Creature Double Feature on Saturday afternoon

Comment by Mondobubba on 02/29/2012 14:42:52
Quote by wickedpam:
Morning

Great blog - you know every morning you guys write great blogs that are very informative on lots of different subjects - I think thats what makes our internet home so well-round.

That and the awesome blog clubhouse with pool, a never ending supply of coffee and donuts, and extensive geek library



Hey don't forget the bank of custom made faiting couches.

Comment by BobR on 02/29/2012 14:43:55
Quote by wickedpam:
I sadly have to admit I have seen Kiss Meets the Phantom of the Park - I seem to remember it was on some Creature Double Feature on Saturday afternoon

I was a huge KISS fan - of course I saw it. I was disappointed.

Comment by wickedpam on 02/29/2012 14:44:12
Quote by Mondobubba:
Quote by wickedpam:
Morning

Great blog - you know every morning you guys write great blogs that are very informative on lots of different subjects - I think thats what makes our internet home so well-round.

That and the awesome blog clubhouse with pool, a never ending supply of coffee and donuts, and extensive geek library



Hey don't forget the bank of custom made faiting couches.



how could I forget!

One of these days I'm going to have to put together a Sims rendering

Comment by Raine on 02/29/2012 15:02:24
This is a great blog. Newt isn;t the only making unrealistic claims about Oil etc., in this country.

We have this guy -- you may remember him as Macaque -- AKA George Allen. He's running for senator in Virginia again. Our Local Patch (which I just LOVE) wrote an article featuring him last week. Some of it caught my eye.

Allen Touches on Alexandria's Waterfront Plan

... When asked about the city’s controversial waterfront plan, Allen said he has had conversations about it with Alexandria City Council members Frank Fannon and Alicia Hughes. ....

Fannon has said one of the reasons he voted against the plan was because it endorsed the seizure of private property through eminent domain.

In his one term as a U.S. senator, Allen cosponsored legislation that limited the government's power to wield eminent domain.

“I don’t think you ought to be taking people’s private property unless it is truly for a public purpose,” Allen told Patch on Monday. “You don’t take it to give it to some other entity. We own our property not as serfs and vassals for a government. So to the extent, some of this dispute is in that light.”
Seems fair, right? Alexandria is currently going thru a rather big battle on how to develop part of the waterfront -- it includes building hotels etc. After that, Allen went on to say this, and this is REALLY important:
I think we should be allowed to produce natural gas and oil off our coast of Virginia and I’m for the Keystone Pipeline,” the former governor said. “While I’d prefer American oil, I’d rather be getting it from Canada as opposed to Saudi Arabia or Venezuela. With that increase in supply, that would help out with the price of gasoline.”



I had to respond.
With regards to Keystone and oil: George Allen either doesn't know about oil being a commodity, or he is happy to keep up the illusion that we can choose where our oil comes from.

With regards to Keystone and Allen's stance on Eminent Domain: Trans-Canda has ALREADY used Eminent Domain to acquire property in Texas. There are people there who can't afford to fight Trans-Canada in court and are forced to give up their property.

One cannot honestly be for the pipeline -- owned by a corporation actively engaging in acquiring property thru the very process he claims to be against -- while saying he supports the Trans-Canada in hopes of getting Canadian oil.

Allen is contradicting himself. Seems like a lot of posturing from George Allen.



Comment by Raine on 02/29/2012 15:08:28
These seems like pretty big news.
North Korea has agreed to a moratorium on its nuclear tests, long-range missile launches, and uranium enrichment program, the State Department announced Wednesday.

The Department announced that North Korea would cease nuclear tests at its main nuclear facility in Yongbyon.


Comment by wickedpam on 02/29/2012 15:10:32
I think some poll came out this week that has Allen leading Kaine - not happy.

Comment by Raine on 02/29/2012 15:31:57
Quote by wickedpam:
I think some poll came out this week that has Allen leading Kaine - not happy.
Neither candidate seems very strong at this point. I'm concerned to be honest about Kaine -- he really needs to be stronger with his campaign. Maybe things will change after the GOP chooses its candidate.

Allen really irritated me with his eminent domain/keystone comments. He's lying about oil and it seems like no one is calling him out on it.


Comment by Raine on 02/29/2012 15:34:27
Breaking NEWS!

Snooki is reported to be pregnant.

Comment by Scoopster on 02/29/2012 15:35:04
Morning all..

Comment by wickedpam on 02/29/2012 15:38:21
Quote by Raine:
Quote by wickedpam:
I think some poll came out this week that has Allen leading Kaine - not happy.
Neither candidate seems very strong at this point. I'm concerned to be honest about Kaine -- he really needs to be stronger with his campaign. Maybe things will change after the GOP chooses its candidate.

Allen really irritated me with his eminent domain/keystone comments. He's lying about oil and it seems like no one is calling him out on it.



Kaine does need to get stronger, I hope it changes soon too. Allen lies about everything.

Comment by velveeta jones on 02/29/2012 15:40:46
Morning!
Great blog. Soooo, Newt wants to lower my gas prices? Hahahaha. I'd consider voting for him if he could get them down to $0.35



Comment by BobR on 02/29/2012 15:45:12
Quote by Raine:
Breaking NEWS!

Snooki is reported to be pregnant.



Comment by Raine on 02/29/2012 15:47:02
Quote by BobR:
Quote by Raine:
Breaking NEWS!

Snooki is reported to be pregnant.

I think this is important. My new mantra:


2 words why EVERYONE needs access to contraception: Snooki Pregnant.


This should forever end any debate about birth control.

Comment by Mondobubba on 02/29/2012 16:01:18
Quote by Raine:
Quote by wickedpam:
I think some poll came out this week that has Allen leading Kaine - not happy.
Neither candidate seems very strong at this point. I'm concerned to be honest about Kaine -- he really needs to be stronger with his campaign. Maybe things will change after the GOP chooses its candidate.

Allen really irritated me with his eminent domain/keystone comments. He's lying about oil and it seems like no one is calling him out on it.



Alien (yes misspelled) has long lied to the citizens of Virginia. He lied about getting rid of personal property taxes when he ran for governor. Very few called him out on that be mandated by the state constitution, but it got him elected as governor.

Comment by velveeta jones on 02/29/2012 16:07:58
This might explain The Santorum Surge.

Comment by Raine on 02/29/2012 16:14:49
Quote by velveeta jones:
This might explain The Santorum Surge.


So we are all supposed to be liberal edukateded snobs?!?!? I hate these elitists!

(this is actually really interesting. I think it indeed does say a lot about our nation in general.)


Comment by Scoopster on 02/29/2012 16:17:17
Comment by Mondobubba on 02/29/2012 16:18:27
Quote by velveeta jones:
This might explain The Santorum Surge.



PHRASING!

Comment by Scoopster on 02/29/2012 16:32:30
Rep. David Dreier (R-CA) is retiring.. dayum keep 'em coming!

Comment by Raine on 02/29/2012 16:42:56

This was expected. What I find amazing -- STILL -- is that many women who get abortions are given abdominal ultra-sounds.This is why I still don't get WHY this was passed at all -- Take a look at this, from a a Woman's Services provider:
As part of our services, all necessary laboratory testing, physical examination and ultrasound will be performed to evaluate your condition and the gestational age of your pregnancy. As our patient, you will receive individual options counseling, detailed information on the procedures available to you, and time to discuss your feelings. During each step of your appointment, you will be supported by our experienced, compassionate, friendly staff. For more information, please visit our Frequently Asked Questions page or call the office most convenient to you.


Now, from the link you provided:
Virginia Republicans toned down the bill so that it only requires external ultrasounds. But any doctor who fails to perform the procedure could be prosecuted under the new law. The bill also requires that a copy of the ultrasound image be kept on the woman’s medical records.
How can this be enforced? I'm not extremely familiar with HIPPA laws, but I don;t really see how this can legally be done.



Comment by wickedpam on 02/29/2012 16:48:45
Quote by Raine:

This was expected. What I find amazing -- STILL -- is that many women who get abortions are given abdominal ultra-sounds.This is why I still don't get WHY this was passed at all -- Take a look at this, from a a Woman's Services provider:
As part of our services, all necessary laboratory testing, physical examination and ultrasound will be performed to evaluate your condition and the gestational age of your pregnancy. As our patient, you will receive individual options counseling, detailed information on the procedures available to you, and time to discuss your feelings. During each step of your appointment, you will be supported by our experienced, compassionate, friendly staff. For more information, please visit our Frequently Asked Questions page or call the office most convenient to you.


Now, from the link you provided:
Virginia Republicans toned down the bill so that it only requires external ultrasounds. But any doctor who fails to perform the procedure could be prosecuted under the new law. The bill also requires that a copy of the ultrasound image be kept on the woman’s medical records.
How can this be enforced? I'm not extremely familiar with HIPPA laws, but I don;t really see how this can legally be done.



they can't - I think they just wanted to prove they could be hateful to women

Comment by Raine on 02/29/2012 16:50:13
More sick Irony from the Virginia governor:

Va. gov. supports abortion ultrasounds, denounces TSA scans

Comment by wickedpam on 02/29/2012 16:52:46
Quote by Raine:
More sick Irony from the Virginia governor:

Va. gov. supports abortion ultrasounds, denounces TSA scans



he's inconsistent - he'll be a perfect running mate for Mittens

Comment by Raine on 02/29/2012 16:58:39
Quote by wickedpam:they can't - I think they just wanted to prove they could be hateful to women
Exactly.

lost in all of this -- is the fact that most women GET abdominal ultrasounds prior to abortion. It's actually important. Doctors do this so they now how to proceed with the procedure.

Let me describe a possible scenario: A woman comes in thinking she is 5-6 weeks pregnant and wants to have an abortion. Let's say she isn't aware that she is actually 2 -2.5 months along. Most doctors check to make sure the woman is correct -- not all abortion procedures are the same. Doctors need to know the best approach to proceed with.

It's awful to think about, but it is true.

If I understand correctly women are not forced to look at the ultrasound -- not that this makes this law any better, mind you.



Comment by Raine on 02/29/2012 17:45:50
I guess abortion kills.....













the blog.

Comment by wickedpam on 02/29/2012 17:47:34
Quote by Raine:
I guess abortion kills.....













the blog.



XD - no just in right now

Comment by livingonli on 02/29/2012 17:49:28
Good day everyone. I am still wondering what is with Virginia and the uber-right wing crazy in the GOP there.

Comment by Raine on 02/29/2012 17:53:20
Quote by livingonli:
Good day everyone. I am still wondering what is with Virginia and the uber-right wing crazy in the GOP there.
Oh Liv,by now you should know it a national epidemic. It's just Virginias turn right now.


Comment by livingonli on 02/29/2012 18:12:46
Can someone smack Rory upside his head? He just doesn't understand or doesn't want to understand what speculation does.

Comment by Raine on 02/29/2012 18:13:34
Quote by livingonli:
Can someone smack Rory upside his head? He just doesn't understand or doesn't want to understand what speculation does.
He makes my brain hurt.


Comment by Scoopster on 02/29/2012 18:15:52
Comment by Raine on 02/29/2012 18:16:46
I was just coming over to post this.

Damn.


Comment by wickedpam on 02/29/2012 18:23:40
Quote by Raine:
I was just coming over to post this.

Damn.



wow, he was the one of the origianl "boy band"ers - their music still makes me smile

Comment by Raine on 02/29/2012 18:23:46
It makes me sad to live in world without Davy Jones and an extra Snooki.

Comment by BobR on 02/29/2012 18:30:57
Quote by Raine:
It makes me sad to live in world without Davy Jones and an extra Snooki.

It does make one consider the arc of Idiocracy...

Comment by Mondobubba on 02/29/2012 18:40:02
Quote by Raine:
It makes me sad to live in world without Davy Jones and an extra Snooki.



How do we know it isn't Davy Jones' love child?? Just sayin... :penalty box:

Comment by Raine on 02/29/2012 18:43:33
Quote by Mondobubba:
Quote by Raine:
It makes me sad to live in world without Davy Jones and an extra Snooki.



How do we know it isn't Davy Jones' love child?? Just sayin... :penalty box:
oh dear.


Comment by Mondobubba on 02/29/2012 18:50:44
On a serious Davy Jones note, Bobber and I might be the only two folks who could have actually seen "The Monkees" in their original time slot on the teevee mosheen. :adjusts cardigan:

Comment by Mondobubba on 02/29/2012 19:22:02
Quote by Raine:
Quote by Mondobubba:
Quote by Raine:
It makes me sad to live in world without Davy Jones and an extra Snooki.



How do we know it isn't Davy Jones' love child?? Just sayin... :penalty box:
oh dear.



Five minute major?

Comment by Mondobubba on 02/29/2012 19:38:20
Snooki-Davy Jones love child killed the blog???

Comment by Raine on 02/29/2012 20:10:43
Quote by Mondobubba:
Snooki-Davy Jones love child killed the blog???
Heh.

Naw I was at the liberry.


Comment by BobR on 02/29/2012 20:20:05
Quote by Mondobubba:
On a serious Davy Jones note, Bobber and I might be the only two folks who could have actually seen "The Monkees" in their original time slot on the teevee mosheen. :adjusts cardigan:

I used to wear an onion belt while watching them

Comment by Mondobubba on 02/29/2012 20:27:01
Quote by Raine:
Quote by Mondobubba:
Snooki-Davy Jones love child killed the blog???
Heh.

Naw I was at the liberry.



Oh the lye-berry. :ting!: One of my favorite places.

I am the first to admit that a Davy-Snooki love child is enough to kill a blog. :shudder: :fainting couch: Mandi! A Fainter stat, please. Make it double!

Comment by Mondobubba on 02/29/2012 20:27:50
Speaking of the afore mentioned Fainter, we need to come up with an actual recipe for that.

Comment by Raine on 02/29/2012 20:45:59
Quote by Mondobubba:
Speaking of the afore mentioned Fainter, we need to come up with an actual recipe for that.
What do you suggest?


Comment by Scoopster on 02/29/2012 21:01:11
Seriously??!?!!?!?!?

I can't tell if this article is serious or not!

Comment by wickedpam on 02/29/2012 21:13:17
Quote by Scoopster:
Seriously??!?!!?!?!?

I can't tell if this article is serious or not!



spoiled brats.