| Topic: |
Politics > Politics-USA |
| User: |
"Captain Compassion" |
| Date: |
28 May 2007 12:40:26 PM |
| Object: |
Foolish Fuel Follies |
Foolish Fuel Follies
Why anti-gouging laws and windfall profits taxes won't lower gas
prices
Ronald Bailey | May 25, 2007
http://www.reason.com/news/show/120388.html
Gasoline prices rose to historic highs this week and Americans are
feeling all of that pain at the pump. Trilby Lundberg, the head of the
California-based fuel market research firm, the Lundberg Survey,
calculates that the national average price per gallon of regular
gasoline is now $3.18. In inflation adjusted dollars this price breaks
the all-time high record price of March 1981 by three cents. In 1981,
regular gasoline sold for $1.35 per gallon which would be $3.15 in
today's dollars. So what's going on?
The natural villain for high prices is, of course, Big Oil. And
Congress is rushing yank the industry's greasy hands from our pockets.
Chairman of Congress' Joint Economic Committee, Sen. Charles Schumer
(D-N.Y.) held a hearing this week on whether or not the Big Oil
companies should be broken up. Also on Wednesday, the House of
Representatives passed the Federal Price Gouging Prevention Act which
makes it "unlawful for any person to sell, at wholesale or at retail
in an area and during a period of an energy emergency, gasoline or any
other petroleum distillate ... at a price that is unconscionably
excessive; and indicates the seller is taking unfair advantage of the
circumstances related to an energy emergency to increase prices
unreasonably." The act does allow that it would not be gouging if the
price "was substantially attributable to local, regional, national, or
international market conditions." And according to Lundberg that's
exactly what has been happening in the past two months.
"Record breaking prices are the result of a record breaking number of
refinery shutdowns and extended delays in returning to production from
scheduled maintenance," says Lundberg. She points out that since March
there have been over 30 events in which refineries have been shutdown
or experienced maintenance delays. For example, three refineries were
shut down when their power supplies were shorted out by a snake, a
raccoon and an opposum. "We estimate the total effect of U.S. capacity
use reductions to be at least 42 million barrels of gasoline," says
Lundberg. "The lost barrels amount to approximately 7.4 percent of
total 2007 U.S. gasoline production through May 11." So while supplies
were falling, the demand for gasoline unexpectedly increased by 1.9
percent over last year. Falling supplies and rising demand equal
higher prices.
Another factor affecting supplies is the increased complexity of
refining modern gasoline.
"Today's gasoline is not your father's gasoline," says Mark Routt, a
senior consultant with Energy Security Analysis Inc. For example, in
1981 half of all regular gasoline was still leaded. Since 2004,
refiners have been required to produce ultra-low sulfur gasoline and
in 2006, they were obliged by Congress to blend ethanol into their
fuels. These ingredients are more expensive and producing them makes
the refining process more finicky and prone to breakdown.
Nevertheless, as Lundberg notes that as a result of high gasoline
prices, refiners' margins are now "golden." On the other hand, she
points out that the margins are only "golden" for those refineries
that are actually producing gasoline. They don't make any money if
they don't make any gasoline.
Earlier this week, Democratic presidential hopeful Sen. Hillary
Clinton (D-N.Y.) called for a two-year tax on oil company profits.
"What do you think oil companies are doing with their profits?," asks
Routt. "They're doing what they should be doing—they're investing it
to produce more fuel." Recent high gasoline prices may be finally
persuading oil companies and other refiners to invest in and build the
first new refineries in the U.S. since the 1970s. For example, Shell
Oil will be spending $3 billion to double the capacity of its refinery
in Port Arthur, Tex.
With regard to Congress' anti-gouging legislation, officials in the
Office of Management and Budget (OMB) say that they would urge
President Bush to veto it if it passes in the Senate. "I heartily and
urgently agree that it should be vetoed," says Lundberg. "The idea of
gouging is dangerously subjective." She fears that the legislation
could essentially create a price cap on gasoline prices that would
produce actual shortages. Routt laughs, "Why doesn't Congress set the
price of green beans at the Winn Dixie and Piggly Wiggly while they're
at?" OMB is right when the agency pointed out, "Gasoline price
controls are an old—and failed—policy choice that will exacerbate
shortages and increase fuel hoarding after natural disasters, denying
fuel to people when they most need it." If you think that high prices
are bad, just wait until you can't fill up at any price.
So what's going to happen to prices this summer? Lundberg and Routt
both admit that they were wrong when they predicted that gasoline
prices were about to peak back in March. However new trend may help
lower prices. Routt notes that high prices have recently reduced the
growth in the demand for gasoline. And Lundberg points out high prices
have begun to bring more offshore gallons that will help rebalance
supply. Lundberg says that her most recent survey of retail gasoline
stations found that prices have actually fallen in some markets in
California and other western states. Lundberg believes that we may now
be near the peak and that prices could begin to fall after Memorial
Day. However, if crude oil prices rise, and refineries continue to
experience shutdowns, all bets are off. Whatever happens to the price
of gasoline this summer, Lundberg's bottom line is "the worst thing
that U.S. authorities could do is to 'fix' the gasoline market."
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
daranc@NOSPAMcharter.net
.
|
|
| User: "" |
|
| Title: Re: Foolish Fuel Follies |
28 May 2007 04:02:02 PM |
|
|
On May 28, 10:40 am, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
Foolish Fuel Follies
Why anti-gouging laws and windfall profits taxes won't lower gas
prices
Ronald Bailey | May 25, 2007http://www.reason.com/news/show/120388.html
Gasoline prices rose to historic highs this week and Americans are
feeling all of that pain at the pump. Trilby Lundberg, the head of the
California-based fuel market research firm, the Lundberg Survey,
calculates that the national average price per gallon of regular
gasoline is now $3.18. In inflation adjusted dollars this price breaks
the all-time high record price of March 1981 by three cents. In 1981,
regular gasoline sold for $1.35 per gallon which would be $3.15 in
today's dollars. So what's going on?
The natural villain for high prices is, of course, Big Oil. And
Congress is rushing yank the industry's greasy hands from our pockets.
Chairman of Congress' Joint Economic Committee, Sen. Charles Schumer
(D-N.Y.) held a hearing this week on whether or not the Big Oil
companies should be broken up. Also on Wednesday, the House of
Representatives passed the Federal Price Gouging Prevention Act which
makes it "unlawful for any person to sell, at wholesale or at retail
in an area and during a period of an energy emergency, gasoline or any
other petroleum distillate ... at a price that is unconscionably
excessive; and indicates the seller is taking unfair advantage of the
circumstances related to an energy emergency to increase prices
unreasonably." The act does allow that it would not be gouging if the
price "was substantially attributable to local, regional, national, or
international market conditions." And according to Lundberg that's
exactly what has been happening in the past two months.
"Record breaking prices are the result of a record breaking number of
refinery shutdowns and extended delays in returning to production from
scheduled maintenance," says Lundberg.
......
She points out that since March
there have been over 30 events in which refineries have been shutdown
or experienced maintenance delays. For example, three refineries were
shut down when their power supplies were shorted out by a snake, a
raccoon and an opposum. "We estimate the total effect of U.S. capacity
use reductions to be at least 42 million barrels of gasoline," says
Lundberg. "The lost barrels amount to approximately 7.4 percent of
total 2007 U.S. gasoline production through May 11.
Sounds like a good argument for higher quality standards in the
refining process. Can you imagine stock-holders standing still for
7.4% reduction in productivity due to preventable error in other
industries? But then, those industries face a lot more competition in
relation to market demand. It sounds like a pretty bad example of
free-market capitalism at work to me, as the market essentially allows
half-assed quality control to go without consequence.
" So while supplies
were falling, the demand for gasoline unexpectedly increased by 1.9
percent over last year. Falling supplies and rising demand equal
higher prices.
Another factor affecting supplies is the increased complexity of
refining modern gasoline.
"Today's gasoline is not your father's gasoline," says Mark Routt, a
senior consultant with Energy Security Analysis Inc. For example, in
1981 half of all regular gasoline was still leaded. Since 2004,
refiners have been required to produce ultra-low sulfur gasoline and
in 2006, they were obliged by Congress to blend ethanol into their
fuels. These ingredients are more expensive and producing them makes
the refining process more finicky and prone to breakdown.
Nevertheless, as Lundberg notes that as a result of high gasoline
prices, refiners' margins are now "golden." On the other hand, she
points out that the margins are only "golden" for those refineries
that are actually producing gasoline. They don't make any money if
they don't make any gasoline.
Earlier this week, Democratic presidential hopeful Sen. Hillary
Clinton (D-N.Y.) called for a two-year tax on oil company profits.
"What do you think oil companies are doing with their profits?," asks
Routt. "They're doing what they should be doing-they're investing it
to produce more fuel." Recent high gasoline prices may be finally
persuading oil companies and other refiners to invest in and build the
first new refineries in the U.S. since the 1970s. For example, Shell
Oil will be spending $3 billion to double the capacity of its refinery
in Port Arthur, Tex.
With regard to Congress' anti-gouging legislation, officials in the
Office of Management and Budget (OMB) say that they would urge
President Bush to veto it if it passes in the Senate. "I heartily and
urgently agree that it should be vetoed," says Lundberg. "The idea of
gouging is dangerously subjective." She fears that the legislation
could essentially create a price cap on gasoline prices that would
produce actual shortages. Routt laughs, "Why doesn't Congress set the
price of green beans at the Winn Dixie and Piggly Wiggly while they're
at?" OMB is right when the agency pointed out, "Gasoline price
controls are an old-and failed-policy choice that will exacerbate
shortages and increase fuel hoarding after natural disasters, denying
fuel to people when they most need it." If you think that high prices
are bad, just wait until you can't fill up at any price.
So what's going to happen to prices this summer? Lundberg and Routt
both admit that they were wrong when they predicted that gasoline
prices were about to peak back in March. However new trend may help
lower prices. Routt notes that high prices have recently reduced the
growth in the demand for gasoline. And Lundberg points out high prices
have begun to bring more offshore gallons that will help rebalance
supply. Lundberg says that her most recent survey of retail gasoline
stations found that prices have actually fallen in some markets in
California and other western states. Lundberg believes that we may now
be near the peak and that prices could begin to fall after Memorial
Day. However, if crude oil prices rise, and refineries continue to
experience shutdowns, all bets are off. Whatever happens to the price
of gasoline this summer, Lundberg's bottom line is "the worst thing
that U.S. authorities could do is to 'fix' the gasoline market."
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net
.
|
|
|
| User: "Captain Compassion" |
|
| Title: Re: Foolish Fuel Follies |
28 May 2007 06:36:36 PM |
|
|
On 28 May 2007 14:02:02 -0700, wrote:
On May 28, 10:40 am, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
Foolish Fuel Follies
Why anti-gouging laws and windfall profits taxes won't lower gas
prices
Ronald Bailey | May 25, 2007http://www.reason.com/news/show/120388.html
Gasoline prices rose to historic highs this week and Americans are
feeling all of that pain at the pump. Trilby Lundberg, the head of the
California-based fuel market research firm, the Lundberg Survey,
calculates that the national average price per gallon of regular
gasoline is now $3.18. In inflation adjusted dollars this price breaks
the all-time high record price of March 1981 by three cents. In 1981,
regular gasoline sold for $1.35 per gallon which would be $3.15 in
today's dollars. So what's going on?
The natural villain for high prices is, of course, Big Oil. And
Congress is rushing yank the industry's greasy hands from our pockets.
Chairman of Congress' Joint Economic Committee, Sen. Charles Schumer
(D-N.Y.) held a hearing this week on whether or not the Big Oil
companies should be broken up. Also on Wednesday, the House of
Representatives passed the Federal Price Gouging Prevention Act which
makes it "unlawful for any person to sell, at wholesale or at retail
in an area and during a period of an energy emergency, gasoline or any
other petroleum distillate ... at a price that is unconscionably
excessive; and indicates the seller is taking unfair advantage of the
circumstances related to an energy emergency to increase prices
unreasonably." The act does allow that it would not be gouging if the
price "was substantially attributable to local, regional, national, or
international market conditions." And according to Lundberg that's
exactly what has been happening in the past two months.
"Record breaking prices are the result of a record breaking number of
refinery shutdowns and extended delays in returning to production from
scheduled maintenance," says Lundberg.
.....
She points out that since March
there have been over 30 events in which refineries have been shutdown
or experienced maintenance delays. For example, three refineries were
shut down when their power supplies were shorted out by a snake, a
raccoon and an opposum. "We estimate the total effect of U.S. capacity
use reductions to be at least 42 million barrels of gasoline," says
Lundberg. "The lost barrels amount to approximately 7.4 percent of
total 2007 U.S. gasoline production through May 11.
Sounds like a good argument for higher quality standards in the
refining process. Can you imagine stock-holders standing still for
7.4% reduction in productivity due to preventable error in other
industries? But then, those industries face a lot more competition in
relation to market demand. It sounds like a pretty bad example of
free-market capitalism at work to me, as the market essentially allows
half-assed quality control to go without consequence.
Next time I go to a share holder's meeting heads will roll.
" So while supplies
were falling, the demand for gasoline unexpectedly increased by 1.9
percent over last year. Falling supplies and rising demand equal
higher prices.
Another factor affecting supplies is the increased complexity of
refining modern gasoline.
"Today's gasoline is not your father's gasoline," says Mark Routt, a
senior consultant with Energy Security Analysis Inc. For example, in
1981 half of all regular gasoline was still leaded. Since 2004,
refiners have been required to produce ultra-low sulfur gasoline and
in 2006, they were obliged by Congress to blend ethanol into their
fuels. These ingredients are more expensive and producing them makes
the refining process more finicky and prone to breakdown.
Nevertheless, as Lundberg notes that as a result of high gasoline
prices, refiners' margins are now "golden." On the other hand, she
points out that the margins are only "golden" for those refineries
that are actually producing gasoline. They don't make any money if
they don't make any gasoline.
Earlier this week, Democratic presidential hopeful Sen. Hillary
Clinton (D-N.Y.) called for a two-year tax on oil company profits.
"What do you think oil companies are doing with their profits?," asks
Routt. "They're doing what they should be doing-they're investing it
to produce more fuel." Recent high gasoline prices may be finally
persuading oil companies and other refiners to invest in and build the
first new refineries in the U.S. since the 1970s. For example, Shell
Oil will be spending $3 billion to double the capacity of its refinery
in Port Arthur, Tex.
With regard to Congress' anti-gouging legislation, officials in the
Office of Management and Budget (OMB) say that they would urge
President Bush to veto it if it passes in the Senate. "I heartily and
urgently agree that it should be vetoed," says Lundberg. "The idea of
gouging is dangerously subjective." She fears that the legislation
could essentially create a price cap on gasoline prices that would
produce actual shortages. Routt laughs, "Why doesn't Congress set the
price of green beans at the Winn Dixie and Piggly Wiggly while they're
at?" OMB is right when the agency pointed out, "Gasoline price
controls are an old-and failed-policy choice that will exacerbate
shortages and increase fuel hoarding after natural disasters, denying
fuel to people when they most need it." If you think that high prices
are bad, just wait until you can't fill up at any price.
So what's going to happen to prices this summer? Lundberg and Routt
both admit that they were wrong when they predicted that gasoline
prices were about to peak back in March. However new trend may help
lower prices. Routt notes that high prices have recently reduced the
growth in the demand for gasoline. And Lundberg points out high prices
have begun to bring more offshore gallons that will help rebalance
supply. Lundberg says that her most recent survey of retail gasoline
stations found that prices have actually fallen in some markets in
California and other western states. Lundberg believes that we may now
be near the peak and that prices could begin to fall after Memorial
Day. However, if crude oil prices rise, and refineries continue to
experience shutdowns, all bets are off. Whatever happens to the price
of gasoline this summer, Lundberg's bottom line is "the worst thing
that U.S. authorities could do is to 'fix' the gasoline market."
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
daranc@NOSPAMcharter.net
.
|
|
|
| User: "" |
|
| Title: Re: Foolish Fuel Follies |
28 May 2007 08:16:37 PM |
|
|
On May 28, 4:36 pm, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
On 28 May 2007 14:02:02 -0700, wrote:
On May 28, 10:40 am, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
Foolish Fuel Follies
Why anti-gouging laws and windfall profits taxes won't lower gas
prices
Ronald Bailey | May 25, 2007http://www.reason.com/news/show/120388.html
Gasoline prices rose to historic highs this week and Americans are
feeling all of that pain at the pump. Trilby Lundberg, the head of the
California-based fuel market research firm, the Lundberg Survey,
calculates that the national average price per gallon of regular
gasoline is now $3.18. In inflation adjusted dollars this price breaks
the all-time high record price of March 1981 by three cents. In 1981,
regular gasoline sold for $1.35 per gallon which would be $3.15 in
today's dollars. So what's going on?
The natural villain for high prices is, of course, Big Oil. And
Congress is rushing yank the industry's greasy hands from our pockets.
Chairman of Congress' Joint Economic Committee, Sen. Charles Schumer
(D-N.Y.) held a hearing this week on whether or not the Big Oil
companies should be broken up. Also on Wednesday, the House of
Representatives passed the Federal Price Gouging Prevention Act which
makes it "unlawful for any person to sell, at wholesale or at retail
in an area and during a period of an energy emergency, gasoline or any
other petroleum distillate ... at a price that is unconscionably
excessive; and indicates the seller is taking unfair advantage of the
circumstances related to an energy emergency to increase prices
unreasonably." The act does allow that it would not be gouging if the
price "was substantially attributable to local, regional, national, or
international market conditions." And according to Lundberg that's
exactly what has been happening in the past two months.
"Record breaking prices are the result of a record breaking number of
refinery shutdowns and extended delays in returning to production from
scheduled maintenance," says Lundberg.
.....
She points out that since March
there have been over 30 events in which refineries have been shutdown
or experienced maintenance delays. For example, three refineries were
shut down when their power supplies were shorted out by a snake, a
raccoon and an opposum. "We estimate the total effect of U.S. capacity
use reductions to be at least 42 million barrels of gasoline," says
Lundberg. "The lost barrels amount to approximately 7.4 percent of
total 2007 U.S. gasoline production through May 11.
Sounds like a good argument for higher quality standards in the
refining process. Can you imagine stock-holders standing still for
7.4% reduction in productivity due to preventable error in other
industries? But then, those industries face a lot more competition in
relation to market demand. It sounds like a pretty bad example of
free-market capitalism at work to me, as the market essentially allows
half-assed quality control to go without consequence.
....
Next time I go to a share holder's meeting heads will roll.
LOL, but I'm sure you understand what I mean. It's the very un-free-
market nature of the oil industry dynamic that makes it so vulnerable
to the "Get-Big-Oil" mentality, which results in further intrusive
regulation that ultimately ends up being passed on to the consumer.
It is only the fact that customers can be socked with the full price
burden of bad quality management without risk of their departure to
the competition that allows this practice to continue.
This is a sloppy approach that could produce the same long term
results for big oil as it did for big auto in Detroit.
Suddenly those hybrids aren't looking too frivelous a purchase to a
lot of people who could care less about the environment.
Add more regulation to the mix, due the an easily-manipulated price-
angry public, and I would say it should be quite a concern to the long
term investor.
" So while supplies
were falling, the demand for gasoline unexpectedly increased by 1.9
percent over last year. Falling supplies and rising demand equal
higher prices.
Another factor affecting supplies is the increased complexity of
refining modern gasoline.
"Today's gasoline is not your father's gasoline," says Mark Routt, a
senior consultant with Energy Security Analysis Inc. For example, in
1981 half of all regular gasoline was still leaded. Since 2004,
refiners have been required to produce ultra-low sulfur gasoline and
in 2006, they were obliged by Congress to blend ethanol into their
fuels. These ingredients are more expensive and producing them makes
the refining process more finicky and prone to breakdown.
Nevertheless, as Lundberg notes that as a result of high gasoline
prices, refiners' margins are now "golden." On the other hand, she
points out that the margins are only "golden" for those refineries
that are actually producing gasoline. They don't make any money if
they don't make any gasoline.
Earlier this week, Democratic presidential hopeful Sen. Hillary
Clinton (D-N.Y.) called for a two-year tax on oil company profits.
"What do you think oil companies are doing with their profits?," asks
Routt. "They're doing what they should be doing-they're investing it
to produce more fuel." Recent high gasoline prices may be finally
persuading oil companies and other refiners to invest in and build the
first new refineries in the U.S. since the 1970s. For example, Shell
Oil will be spending $3 billion to double the capacity of its refinery
in Port Arthur, Tex.
With regard to Congress' anti-gouging legislation, officials in the
Office of Management and Budget (OMB) say that they would urge
President Bush to veto it if it passes in the Senate. "I heartily and
urgently agree that it should be vetoed," says Lundberg. "The idea of
gouging is dangerously subjective." She fears that the legislation
could essentially create a price cap on gasoline prices that would
produce actual shortages. Routt laughs, "Why doesn't Congress set the
price of green beans at the Winn Dixie and Piggly Wiggly while they're
at?" OMB is right when the agency pointed out, "Gasoline price
controls are an old-and failed-policy choice that will exacerbate
shortages and increase fuel hoarding after natural disasters, denying
fuel to people when they most need it." If you think that high prices
are bad, just wait until you can't fill up at any price.
So what's going to happen to prices this summer? Lundberg and Routt
both admit that they were wrong when they predicted that gasoline
prices were about to peak back in March. However new trend may help
lower prices. Routt notes that high prices have recently reduced the
growth in the demand for gasoline. And Lundberg points out high prices
have begun to bring more offshore gallons that will help rebalance
supply. Lundberg says that her most recent survey of retail gasoline
stations found that prices have actually fallen in some markets in
California and other western states. Lundberg believes that we may now
be near the peak and that prices could begin to fall after Memorial
Day. However, if crude oil prices rise, and refineries continue to
experience shutdowns, all bets are off. Whatever happens to the price
of gasoline this summer, Lundberg's bottom line is "the worst thing
that U.S. authorities could do is to 'fix' the gasoline market."
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net- Hide quoted text -
- Show quoted text -- Hide quoted text -
- Show quoted text -
.
|
|
|
| User: "Captain Compassion" |
|
| Title: Re: Foolish Fuel Follies |
28 May 2007 10:10:18 PM |
|
|
On 28 May 2007 18:16:37 -0700, wrote:
On May 28, 4:36 pm, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
On 28 May 2007 14:02:02 -0700, wrote:
On May 28, 10:40 am, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
Foolish Fuel Follies
Why anti-gouging laws and windfall profits taxes won't lower gas
prices
Ronald Bailey | May 25, 2007http://www.reason.com/news/show/120388.html
Gasoline prices rose to historic highs this week and Americans are
feeling all of that pain at the pump. Trilby Lundberg, the head of the
California-based fuel market research firm, the Lundberg Survey,
calculates that the national average price per gallon of regular
gasoline is now $3.18. In inflation adjusted dollars this price breaks
the all-time high record price of March 1981 by three cents. In 1981,
regular gasoline sold for $1.35 per gallon which would be $3.15 in
today's dollars. So what's going on?
The natural villain for high prices is, of course, Big Oil. And
Congress is rushing yank the industry's greasy hands from our pockets.
Chairman of Congress' Joint Economic Committee, Sen. Charles Schumer
(D-N.Y.) held a hearing this week on whether or not the Big Oil
companies should be broken up. Also on Wednesday, the House of
Representatives passed the Federal Price Gouging Prevention Act which
makes it "unlawful for any person to sell, at wholesale or at retail
in an area and during a period of an energy emergency, gasoline or any
other petroleum distillate ... at a price that is unconscionably
excessive; and indicates the seller is taking unfair advantage of the
circumstances related to an energy emergency to increase prices
unreasonably." The act does allow that it would not be gouging if the
price "was substantially attributable to local, regional, national, or
international market conditions." And according to Lundberg that's
exactly what has been happening in the past two months.
"Record breaking prices are the result of a record breaking number of
refinery shutdowns and extended delays in returning to production from
scheduled maintenance," says Lundberg.
.....
She points out that since March
there have been over 30 events in which refineries have been shutdown
or experienced maintenance delays. For example, three refineries were
shut down when their power supplies were shorted out by a snake, a
raccoon and an opposum. "We estimate the total effect of U.S. capacity
use reductions to be at least 42 million barrels of gasoline," says
Lundberg. "The lost barrels amount to approximately 7.4 percent of
total 2007 U.S. gasoline production through May 11.
Sounds like a good argument for higher quality standards in the
refining process. Can you imagine stock-holders standing still for
7.4% reduction in productivity due to preventable error in other
industries? But then, those industries face a lot more competition in
relation to market demand. It sounds like a pretty bad example of
free-market capitalism at work to me, as the market essentially allows
half-assed quality control to go without consequence.
...
Next time I go to a share holder's meeting heads will roll.
LOL, but I'm sure you understand what I mean. It's the very un-free-
market nature of the oil industry dynamic that makes it so vulnerable
to the "Get-Big-Oil" mentality, which results in further intrusive
regulation that ultimately ends up being passed on to the consumer.
It is only the fact that customers can be socked with the full price
burden of bad quality management without risk of their departure to
the competition that allows this practice to continue.
This is a sloppy approach that could produce the same long term
results for big oil as it did for big auto in Detroit.
Suddenly those hybrids aren't looking too frivelous a purchase to a
lot of people who could care less about the environment.
Add more regulation to the mix, due the an easily-manipulated price-
angry public, and I would say it should be quite a concern to the long
term investor.
There is always organizational waste the bigger the organization the
more the waste. Investors always look at the bottom line. In the case
of the oil companies the bottom line is good.
I suspect that the oil companies are more efficient than the
government.
" So while supplies
were falling, the demand for gasoline unexpectedly increased by 1.9
percent over last year. Falling supplies and rising demand equal
higher prices.
Another factor affecting supplies is the increased complexity of
refining modern gasoline.
"Today's gasoline is not your father's gasoline," says Mark Routt, a
senior consultant with Energy Security Analysis Inc. For example, in
1981 half of all regular gasoline was still leaded. Since 2004,
refiners have been required to produce ultra-low sulfur gasoline and
in 2006, they were obliged by Congress to blend ethanol into their
fuels. These ingredients are more expensive and producing them makes
the refining process more finicky and prone to breakdown.
Nevertheless, as Lundberg notes that as a result of high gasoline
prices, refiners' margins are now "golden." On the other hand, she
points out that the margins are only "golden" for those refineries
that are actually producing gasoline. They don't make any money if
they don't make any gasoline.
Earlier this week, Democratic presidential hopeful Sen. Hillary
Clinton (D-N.Y.) called for a two-year tax on oil company profits.
"What do you think oil companies are doing with their profits?," asks
Routt. "They're doing what they should be doing-they're investing it
to produce more fuel." Recent high gasoline prices may be finally
persuading oil companies and other refiners to invest in and build the
first new refineries in the U.S. since the 1970s. For example, Shell
Oil will be spending $3 billion to double the capacity of its refinery
in Port Arthur, Tex.
With regard to Congress' anti-gouging legislation, officials in the
Office of Management and Budget (OMB) say that they would urge
President Bush to veto it if it passes in the Senate. "I heartily and
urgently agree that it should be vetoed," says Lundberg. "The idea of
gouging is dangerously subjective." She fears that the legislation
could essentially create a price cap on gasoline prices that would
produce actual shortages. Routt laughs, "Why doesn't Congress set the
price of green beans at the Winn Dixie and Piggly Wiggly while they're
at?" OMB is right when the agency pointed out, "Gasoline price
controls are an old-and failed-policy choice that will exacerbate
shortages and increase fuel hoarding after natural disasters, denying
fuel to people when they most need it." If you think that high prices
are bad, just wait until you can't fill up at any price.
So what's going to happen to prices this summer? Lundberg and Routt
both admit that they were wrong when they predicted that gasoline
prices were about to peak back in March. However new trend may help
lower prices. Routt notes that high prices have recently reduced the
growth in the demand for gasoline. And Lundberg points out high prices
have begun to bring more offshore gallons that will help rebalance
supply. Lundberg says that her most recent survey of retail gasoline
stations found that prices have actually fallen in some markets in
California and other western states. Lundberg believes that we may now
be near the peak and that prices could begin to fall after Memorial
Day. However, if crude oil prices rise, and refineries continue to
experience shutdowns, all bets are off. Whatever happens to the price
of gasoline this summer, Lundberg's bottom line is "the worst thing
that U.S. authorities could do is to 'fix' the gasoline market."
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net- Hide quoted text -
- Show quoted text -- Hide quoted text -
- Show quoted text -
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
daranc@NOSPAMcharter.net
.
|
|
|
| User: "" |
|
| Title: Re: Foolish Fuel Follies |
29 May 2007 12:11:01 AM |
|
|
On May 28, 8:10 pm, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
On 28 May 2007 18:16:37 -0700, wrote:
On May 28, 4:36 pm, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
On 28 May 2007 14:02:02 -0700, wrote:
On May 28, 10:40 am, Captain Compassion <dar...@NOSPAMcharter.net>
wrote:
Foolish Fuel Follies
Why anti-gouging laws and windfall profits taxes won't lower gas
prices
Ronald Bailey | May 25, 2007http://www.reason.com/news/show/120388.=
html
Gasoline prices rose to historic highs this week and Americans are
feeling all of that pain at the pump. Trilby Lundberg, the head of =
the
California-based fuel market research firm, the Lundberg Survey,
calculates that the national average price per gallon of regular
gasoline is now $3.18. In inflation adjusted dollars this price bre=
aks
the all-time high record price of March 1981 by three cents. In 198=
1,
regular gasoline sold for $1.35 per gallon which would be $3.15 in
today's dollars. So what's going on?
The natural villain for high prices is, of course, Big Oil. And
Congress is rushing yank the industry's greasy hands from our pocke=
ts.
Chairman of Congress' Joint Economic Committee, Sen. Charles Schumer
(D-N.Y.) held a hearing this week on whether or not the Big Oil
companies should be broken up. Also on Wednesday, the House of
Representatives passed the Federal Price Gouging Prevention Act whi=
ch
makes it "unlawful for any person to sell, at wholesale or at retail
in an area and during a period of an energy emergency, gasoline or =
any
other petroleum distillate ... at a price that is unconscionably
excessive; and indicates the seller is taking unfair advantage of t=
he
circumstances related to an energy emergency to increase prices
unreasonably." The act does allow that it would not be gouging if t=
he
price "was substantially attributable to local, regional, national,=
or
international market conditions." And according to Lundberg that's
exactly what has been happening in the past two months.
"Record breaking prices are the result of a record breaking number =
of
refinery shutdowns and extended delays in returning to production f=
rom
scheduled maintenance," says Lundberg.
.....
She points out that since March
there have been over 30 events in which refineries have been shutdo=
wn
or experienced maintenance delays. For example, three refineries we=
re
shut down when their power supplies were shorted out by a snake, a
raccoon and an opposum. "We estimate the total effect of U.S. capac=
ity
use reductions to be at least 42 million barrels of gasoline," says
Lundberg. "The lost barrels amount to approximately 7.4 percent of
total 2007 U.S. gasoline production through May 11.
Sounds like a good argument for higher quality standards in the
refining process. Can you imagine stock-holders standing still for
7.4% reduction in productivity due to preventable error in other
industries? But then, those industries face a lot more competition in
relation to market demand. It sounds like a pretty bad example of
free-market capitalism at work to me, as the market essentially allows
half-assed quality control to go without consequence.
...
Next time I go to a share holder's meeting heads will roll.
LOL, but I'm sure you understand what I mean. It's the very un-free-
market nature of the oil industry dynamic that makes it so vulnerable
to the "Get-Big-Oil" mentality, which results in further intrusive
regulation that ultimately ends up being passed on to the consumer.
It is only the fact that customers can be socked with the full price
burden of bad quality management without risk of their departure to
the competition that allows this practice to continue.
This is a sloppy approach that could produce the same long term
results for big oil as it did for big auto in Detroit.
Suddenly those hybrids aren't looking too frivelous a purchase to a
lot of people who could care less about the environment.
Add more regulation to the mix, due the an easily-manipulated price-
angry public, and I would say it should be quite a concern to the long
term investor.
There is always organizational waste the bigger the organization the
more the waste. Investors always look at the bottom line. In the case
of the oil companies the bottom line is good.
..=2E.
I suspect that the oil companies are more efficient than the
government.
a 7.4% error rate is pretty high, even by government standards.
" So while supplies
were falling, the demand for gasoline unexpectedly increased by 1.9
percent over last year. Falling supplies and rising demand equal
higher prices.
Another factor affecting supplies is the increased complexity of
refining modern gasoline.
"Today's gasoline is not your father's gasoline," says Mark Routt, a
senior consultant with Energy Security Analysis Inc. For example, in
1981 half of all regular gasoline was still leaded. Since 2004,
refiners have been required to produce ultra-low sulfur gasoline and
in 2006, they were obliged by Congress to blend ethanol into their
fuels. These ingredients are more expensive and producing them makes
the refining process more finicky and prone to breakdown.
Nevertheless, as Lundberg notes that as a result of high gasoline
prices, refiners' margins are now "golden." On the other hand, she
points out that the margins are only "golden" for those refineries
that are actually producing gasoline. They don't make any money if
they don't make any gasoline.
Earlier this week, Democratic presidential hopeful Sen. Hillary
Clinton (D-N.Y.) called for a two-year tax on oil company profits.
"What do you think oil companies are doing with their profits?," as=
ks
Routt. "They're doing what they should be doing-they're investing it
to produce more fuel." Recent high gasoline prices may be finally
persuading oil companies and other refiners to invest in and build =
the
first new refineries in the U.S. since the 1970s. For example, Shell
Oil will be spending $3 billion to double the capacity of its refin=
ery
in Port Arthur, Tex.
With regard to Congress' anti-gouging legislation, officials in the
Office of Management and Budget (OMB) say that they would urge
President Bush to veto it if it passes in the Senate. "I heartily a=
nd
urgently agree that it should be vetoed," says Lundberg. "The idea =
of
gouging is dangerously subjective." She fears that the legislation
could essentially create a price cap on gasoline prices that would
produce actual shortages. Routt laughs, "Why doesn't Congress set t=
he
price of green beans at the Winn Dixie and Piggly Wiggly while they=
're
at?" OMB is right when the agency pointed out, "Gasoline price
controls are an old-and failed-policy choice that will exacerbate
shortages and increase fuel hoarding after natural disasters, denyi=
ng
fuel to people when they most need it." If you think that high pric=
es
are bad, just wait until you can't fill up at any price.
So what's going to happen to prices this summer? Lundberg and Routt
both admit that they were wrong when they predicted that gasoline
prices were about to peak back in March. However new trend may help
lower prices. Routt notes that high prices have recently reduced the
growth in the demand for gasoline. And Lundberg points out high pri=
ces
have begun to bring more offshore gallons that will help rebalance
supply. Lundberg says that her most recent survey of retail gasoline
stations found that prices have actually fallen in some markets in
California and other western states. Lundberg believes that we may =
now
be near the peak and that prices could begin to fall after Memorial
Day. However, if crude oil prices rise, and refineries continue to
experience shutdowns, all bets are off. Whatever happens to the pri=
ce
of gasoline this summer, Lundberg's bottom line is "the worst thing
that U.S. authorities could do is to 'fix' the gasoline market."
--
There may come a time when the CO2 police will wander the earth tel=
ling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here=
, not
on account of the place, but of my judgments which I shall carry aw=
ay
with me, for no one can deprive me of these; on the contrary, they =
alone
are my property, and cannot be taken away, and to possess them suff=
ices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, n=
ot
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alo=
ne
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
dar...@NOSPAMcharter.net- Hide quoted text -
- Show quoted text --
...
read more =BB- Hide quoted text -
- Show quoted text -- Hide quoted text -
- Show quoted text -
.
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