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Pain in the Gas, Redux
Author: BobR    Date: 04/06/2012 12:36:06

A month ago, I wrote a couple of blogs (Pain in the Gas and Pain in the Gas, Pt 2) about what is driving the price of gas so high, and why there is little that the president can do about it. I reminded that crude oil is a commodity, and the price is set by traders, just like on the stock exchange, where perception and "investment strategy" is more important than actual shortages or surplus. I pointed out that oil companies are creating gasoline shortages by closing "unprofitable" refineries, yet still maintaining obscene profits.

The president reiterated yesterday that there are "no silver bullets" for lowering gas prices, despite what Newt Gingrich says.

But what if it WAS possible to make more gasoline available, thus rebalancing the supply/demand equation? What if Newt's "$2.50/gal" pipe dream could actually be possible? There just might be a way:

Have the federal government buy the shuttered refineries, and re-open them as federal government operations.

I think it's a great strategy: The government does not need to make a profit; it simply needs to break even. This would allow it to sell the gas to service stations at cost, and the savings would be passed on to the consumer. Of course, there would need to be some sort of contractual obligation that the gas stations can only pad on XX% for markup, or else they'd just set the price to match the current market and make 100% profit on every gallon.

Naturally, the Republicans would scream "socialism" and "unfair advantage". They would be undercut by their own dogma, of course. In actuallity, the government gasoline would be competing in the "free market" - consumers could make their own choice of whether they wanted to buy gas from the government or from the oil companies. The Republicans also claim that the "inefficient" government cannot do things as cheaply as private enterprise, so by their own logic, the gas from the government should actually cost more than that from the oil companies.

The one glitch here is that it might be difficult for the government to buy oil on the open market. It's possible that the companies might refuse to sell to them. To address this (and placate the "drill here, drill now" folks), the government could actually contract dilling companies to drill oil for them to refine in these government-owned refineries.

Think about it: U.S. oil being refined and sold in the U.S. You could go to the gas pump and know with 100% certainty that not one penny of the money you spend to fill your tank would be going to "Middle East Terrorists". Of course, 100% of the pennies you spend would be going to the federal government.

That would certainly be a conundrum for these folks, wouldn't it? Do they buy cheaper gas, produced by "socialist" government refineries, knowing their money is going to the hated federal government, or do they buy more expensive "private enterprise" gas, knowing some of their money is ending up in the Middle East?

It really makes me wonder who the Tea Partiers hate more.

I don't know if this is something that the Executive Branch can do without Congress, but if they can, I suggest they do it. It would create jobs and lower gas prices. There is no downside... except to BP, et al.

32 comments (Latest Comment: 04/07/2012 00:24:44 by Raine)
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