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Sunday, March 04, 2007

Poor Direction For Cheap Fuel

The March 3rd Janesville Gazette editorial titled ”Focus on fuel economy is critical here,” was an exercise of the usual talking points blaming either tough emission standards or labor unions (liberal policy) for the poor mileage American vehicles squeeze out of a gallon of gas. But they failed to explain the very reasons why Americans should want better fuel economy in the first place. In fact the only reason we are having this discussion is not because we are dependent on foreign oil, it’s just because gasoline prices are both unstable and high.

We seem to be under the impression that better average national fuel economy means traveling costs per mile will drop when indeed nothing could be more deceptively false. It also seems to hold that if American vehicles suddenly doubled their average mileage per gallon from 20 to 40 overnight, thus cutting consumption in half, the price of a gallon of gas should plummet because of the huge, huge gasoline glut. True supply and demand results. But we know that’s not how things work with Big Oil and chances are more than likely that the price of a gallon of gas would double, refineries would close from severe under-capacity and we would be exactly where we are today – production on a tightrope and a near doubling of their all infamous 9% profit margin to 15%. Sure, this would help cut greenhouse emissions but Americans want better gas mileage NOT to save gas or cut emissions, they want it to save money. They won’t save money with the current greedy Big Oil corporate policies.

When the Republican base or Bush enablers discuss our current situation with high gasoline prices they first bring up the principle of supply and demand. Low oil supply and high global demand equals high prices. Simple law of economics they say. Except that there is NO shortage of crude oil, the crude oil arrives here, the (high) price is paid – no shortage. If they are corrected in their choice of words that we have what appears to be deliberate manipulation of gasoline production, they immediately cry foul and reply it is because Democrats, liberals and environmentalists have banned new refineries or made them cost prohibitive. Too expensive to build with all those environmental protections they say. But if they can’t build a single new refinery while they are reaping the largest profits known to mankind, it’s obvious they never intend to build one at all – ever. In fact, Big Oil is elated that they have someone to blame other than themselves for the lack of refineries. When in truth, environmentalists have demanded stricter smokestack emissions and other refinery standards simply to protect human health and the general environment. Bush wants these refinery standards dropped in the name of lower costs to the oil companies, not lower gasoline prices, which means even greater profits and of course, filthier air.

This is the wrong direction to take and it is actually hurting the economy and job creation. Here’s why. When liberals convinced Congress to enact strict pollution standards on automobiles in the 70’s, the car companies vehemently opposed the change and said it would be too expensive. In 1975, anti-environmentalists and liberal bashers warned that a new car with a catalytic converter would hit your pocketbook an additional $400. But what happened back then? Whole new industries were developed to design and manufacture EGR valves, pollution pumps and expensive platinum catalytic converters. People paid the price to get cleaner air even if it meant worse gas mileage. But, thousands of people were put to work. Contrary to mainstream beliefs, environmentalist policies created jobs. We gained all around with cleaner air and jobs that never existed before.

Similarly, today’s argument seems to be centered on making vehicles more fuel efficient and again, corporatists and anti-liberals use the same old talking points from over 30 years ago.
JG Editorial Excerpt:
The goal would also hit your pocketbook. Use of expensive technology would cost you $1,300 more for a car and almost $2,000 more for a truck.
The GOP and their supporters are holding up the same progress to build energy star cars and new clean refineries with chimney scrubbers, catalysts and particulate recycling, primarily because their base wants it this way. The oil companies know whether they build new refineries or high mileage cars, the results will be the same. Production on a tightrope will end and they will have to earn money the old fashioned way, not by price gouging under the guise of tight supplies and fear. Need I say more? America needs new leadership with fresh ideas….. if not, it’s like they say, you may as well get used to it.


Whybealeftie said...

The shortage isn't oil it's gasoline. We have to refine oil into gasoline. We haven't the refining capicaity we once had. It takes a company on the average of 12 years to get a refinery up and running with all the regulations they would have to go through just to get the refinery off the ground. I don't know of to many people or companies willing to go without an income for 12 years.

Jimdaddy said...

The reason prices are up is because the refineries aren't operating at 100% capacity which is normal for this time of year. Whybealeftie is right there hasn't been a refinery built since 1976. Also, refineries don't just refine oil for gasoline they also make jet fuel and other types of fuels that are needed.

Lou Kaye said...

Go without an income for twelve years? Lets say a refinery costs $10 billion of which half is for labor. You could employ 2,000 workers for 50 grand/year for 50 YEARS with 5 billion dollars!! Quit making excuses for getting gouged at the pump.

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