The very high price of gas

When my father told me that he was going to vote for George Bush, I told him that he had better be prepared to pay $5.00 per gallon for gasoline.  He did not say anything but I could see that my words had made an impact on him.

The Bush Cheney ticket was a no-brainer as far as where the emphasis was going to be placed if they were elected.  Two men who made their fortunes (and Cheney made a very big fortune) in oil and gas are presently at the apex of the most powerful nation in the world.  And now in just four months there is a monumental problem in California with rolling black outs and the price of gasoline is going up up and away.  

Is it a coincidence or did the oil companies somehow see a Bush Cheney green light to make a lot of money without a lot of scrutiny?  With the President and Vice-President running interference, who needs to worry about making a few extra bucks on the price of gasoline.

And what is the solution?  Well Bush Cheney advocate raping the environment and drilling more wells.  Drill off the shore of California.  Drill in the Artic.  Drill in the National Forests.  Drill.  Drill.  Drill. The more we Drill the cheaper will be the price of energy.  Right?  The more wells, the more oil, the more gas, the more pollution, the cheaper the price of gas.  Right?

And Dick Cheney says price caps will not work.  And President Bush says it will take ten years to get out of the hole.  I guess in the meantime we just have to deal with $2.00 per gallon gasoline and hope that we are not all going to be riding bicycles in the near future.  

I guess that the dot.com fortunes of the Clinton era are going to be replaced with the dot.oil fortunes of the Bush Cheney era.  But I think one has only four years to make money on dot.oil.

John WorldPeace
May 24, 2001

Gas Prices Expected to Increase

By BRAD FOSS
.c The Associated Press

May 24, 2001

Fears of a supply crunch ahead of the Memorial Day weekend sent wholesale gasoline prices to record heights this week, increasing the likelihood of $2 a gallon for regular unleaded in many parts of the country. 

What's got buyers scared so close to the start of the busiest driving season is a scarcity of the cleaner-burning fuel needed to meet summer air quality requirements. 

The most recent inventory data showed dwindling supplies of the reformulated gasoline, or RFG, especially on the East Coast. That sent wholesale prices to a record high of $1.175 per gallon during trading Thursday on the New York Mercantile Exchange. 

While prices settled at $1.12 by the end of the day, analysts said they would remain volatile into the summer and probably move upward. 

``A supply shock anywhere, is a price shock everywhere,'' said Larry Goldstein, president of the Petroleum Industry Research Foundation. 

Tight supplies are keeping prices erratic. Gasoline inventories in the United States are 26 percent lower than they were two decades ago and no new refineries have been built since 1976. With refiners struggling to keep up with demand, machinery is being worked extra hard and factories have had to shut down for repairs, leading to further price spikes. 

``It's a vicious cycle,'' said Mike Fitzpatrick, an analyst at Fimat USA. ``The only way to turn it around is to build more refineries.'' 

The average retail price has risen more than 20 cents in just six weeks to $1.69. 

With gas prices up 10 percent from this time last year, motorists are cutting back on their driving and looking for good deals when they need to re-fuel. 

``People are price shopping,'' said Lanae Muldrow, manager of a Chevron station in Phoenix. ``If you drive a SUV, you could spend $50 filling it up for the long drives. 

``I could see us going up in price for unleaded around here - close to $2, maybe $1.90.'' 

Debra Warren of Jacksonville, Fla., has modified her driving habits and begun to consider alternate modes of transportation. 

``If it keeps going up, I may have to get a bicycle,'' said Warren, 35, an Aetna Insurance Co. employee who has saved a few bucks lately by ``having more clients coming to me, instead of going to them.'' 

Before Thursday, many analysts believed prices had leveled off. Now they're not so sure. 

``If you have another refinery problem somewhere that creates a major disruption of supply, there's no telling where (prices are) going to go,'' said Tom Bentz, analyst at BNP Paribas in New York. 

Another problem, Bentz said, is that RFG imported from Europe, the Caribbean and elsewhere often does not meet U.S. standards. 

Total inventories of reformulated gasoline declined 1.4 million barrels to 39.9 million barrels in the week ended May 18, according to the Energy Department's Energy Information Administration. At this time last year, there were roughly 42 million barrels on hand. 

``There is still no sign of any relief on the way,'' said Peter Beutel, president of Cameron Hanover Inc., which publishes a daily newsletter on energy markets. ``It now looks like $2-a-gallon retail gasoline prices will become a reality everywhere in the country.'' 

Traders also expressed concern over how national energy policy might be affected by Sen. Jim Jeffords' decision on Thursday to leave the Republican Party. That leaves Sen. Jeff Bingaman, a Democrat from New Mexico, to take control of the Senate Energy and Natural Resources Committee. 

The high price of natural gas also plays a role in today's high price of gasoline. MTBE, an additive used to make some reformulated gasoline, is made from methanol, a derivative of natural gas.