Bush Eases Environmental Rules on Gasoline
As much as I appreciate the effort, and the big splash it made in the news. Exactly how many cents per gallon is this going to reduce gas prices?
Bush Eases Environmental Rules on Gasoline
I believe the wholesale market for gasoline is running around 2.20 per gallon. Assuming 70% efficiency the crude we buy to refine into gasoline would cost around 1.95 per gallon. I’m not sure where I’m wrong here, but I must be missing something.
April 26th, 2006
According to the article, we might see as much as $.04/gallon reduction, though it is unlikely to be before end of summer.
President Bush is late to the party and despite having been exposed as heavily favoring the industry from which his family has so richly profited, he fears turning on it save for token measures, such as the $2,000,000,000 tax he wishes to extract from the industry. That amount is trivial in the scheme of things but it is more money than most individuals can conceive of when they hear it. It would appear that the bulk of Congress is also at a loss to explain their hands in the cookie jar, and they are reluctant do something that will truly help rein in fuel prices, or at least give them stability other than the stable increases in price we’ve observed. I think we are being gouged by the companies and both state & federal governments are letting it happen. Whether there is anything we can do is a matter for another time. The suggestion from a Democrat in the article, whose name eludes me, suggested suspending the federal fuel tax. Robbing Peter to pay Paul strikes me as a waste of effort and it will certainly reduce cash flow in the US Treasury. That doesn’t seem a good idea to me, especially given the federal balance sheet at present. You’d think a Democrat would at least check the direction of the wind before making financially reckless suggestions while the citizenry are worked out over the past several years of federal recklessness mostly on the part of Republicans. Perhaps the Democrat did check and I’m further out of touch than I suspect. More likely is that he reasoned the voters would appreciate immediate relief and most won’t consider the cost down the road. If so, he is probably correct.
April 27th, 2006
Here is a good breakdown of why gasoline prices are almost purely supply and demand. I’m still having difficulty applying my own reasonableness to the math in the article. I understand the prices have increased 20% since the breakdown, but it still seems a little low on the crude oil percentage. We only get 19 to 20 gallons of gasoline out of every barrel of oil and a barrel of oil is going for over $70 (they must sell the non-gasoline components for a good price).
Additionally taxes vary quite a bit from state to state but are usually metered at the per gallon level so they make up a lower percentage of total price as the price of gas increases.
April 28th, 2006
Thanks for the link. I found it very helpful. However, my accusation of gouging is based on my observations the past three years or so, noting the price difference between gasoline in Alabama, which has a high fuel tax, and Georgia, which has the 2nd lowest fuel tax in the country. Only in Alaska is the tax lower. Used to be that gasoline ranged between $.10-20/gallon between the two states. I’ve had a handful of occasions where I’ve paid more in Georgia during this time frame than in Alabama, and many more where the price has been the same. This gouging, if that is what it is, likely doesn’t originate with the oil producers, but it is frustrating all the same.
Should Congress have continued tax breaks for the oil companies when it was known that the companies were making much higher than expected profits? As an owner of oil company stock, I’ve been literally appreciating it, but as a consumer, it is painful. It wasn’t that long ago that I could fill the tank of my car for $20-25 and now it costs $50-60. I don’t complain too much about it since my operating cost remains very low. This is due to the car being paid for and sufficiently reliable that I rarely pay for any repairs. I did recently get severely dinged for new tires since their price has gone up just like that of gasoline.