While it tickles my heart to see a Bush and a Clinton receive the blame for something, I believe Doug Turner still has it wrong when it comes to high gasoline prices.
Between 1991 and 2000, Democrat Clinton and Republican Bush OK’d
2,600 mergers in all segments of the American petroleum industry.
Clinton
and Bush left us with predictably sky-high pump prices and massive oil
company profits. Now, five companies control more than 55 percent of
gasoline sales, giving them massive regional clout on wholesale prices.
Have you seen the price of oil lately (gasoline is refined from oil)? It closed at almost $65/barrel today. That price is determined by millions of investors and there's next to nothing that the oil companies can do to influence it.
They're not quite the global force they were in the seventies. 70% of the world's oil supply is now controlled by the producing nations and not by the oil companies. That's why we even have to listen to the likes of Russia, the Arab countries and Venezuela. They can certainly affect oil prices and thus gasoline's by curtailing production.
Since the gasoline supply crunch in the 1970s, gasoline
consumption doubled but no refineries have been built by any of these
new “oiligarchs.”
This is probably the most irritating of the Democrats' complaints. Environmental regulations imposed in the seventies are why we don't have any new refineries, not a lack of desire to build them. They're almost impossible to get approved and no one wants one in his backyard anyway. At the moment a little ethanol plant proposed for Buffalo is being fought with lawsuits. Can you imagine the local reaction if Exxon wanted to build an oil refinery here?
But that's not to say that we're trying to operate on the same refining capacity we had in the seventies. That capacity was fine right into the nineties -- in fact there was excess capacity back then. But as gasoline usage has increased, the oil companies have spent billions upgrading those facilities and expanding their capacity.
In fact, we probably wouldn't even be having this debate over high gasoline prices if it weren't for another helpful environmental regulation, the one that specifies 20 separate regional blends of gasoline. This beauty splits up the American gasoline market to the point that excess gasoline in Buffalo, for example, can't be rerouted to St. Louis in case of a shortage there.
To make things even worse, those 20 blends are further separated into winter and summer varieties.
Summer-blend gas isn't new. It was first sold in 1995, as required by the Clean
Air Act's 1990 amendments, and the current, even cleaner, concoction was phased
in for the summer of 2000. Since then, there have been sharp spikes in fuel
prices every spring as summer blends get rolled out. This is not so much because
it's expensive to make the gas—the added cost per gallon is only 1 or 2
cents—but because refineries generally try to sell every last bit of winter fuel
before mixing in the slightly more expensive summer batch. Sometimes they draw
down the stock too far, creating shortages before the first deliveries of summer
blend enter the supply chain.
So refiners have to perform the delicate balancing act of predicting how much winter blend will be required through March while assuring at the same time that it's all gone on April 1st. During that process they also have to shut down the refinery and retool it for the summer blend. Throw in an increase in gasoline demand this year and $3.19 gas is what you get.
George H.W. Bush and Bill Clinton may both have made mistakes during their careers (both, oddly enough, having to do with lips), but causing gas prices to rise wasn't one of them. Environmental regulations have a cost. If we think gas prices are too high, then we should work to get rid of the superfluous ones. And those who believe that only high gas prices will save the earth should just shut up while they're ahead.