Easy way for gvt to fix high gas prices

Discussion in 'Economics' started by silk, May 30, 2007.

  1. silk


    All we have to do is to ensure that gasoline imports are an extra 100,000BPD higher March-MAY. This would put an end to gasoline speculation that is responsible for about $20 barrell worth of crack spread or about 50 cents worth.

    If the DOE saw to it that the global energy industry sent us a tad extra gasoline for the summer build months of March-May all fear of inadequate supplies would go away and speculators would trade gasoline crack at $12 instead of the current $30+. There is no way americans should have to pay a $30+ refining margin because of HYPE regarding inadequate supply. This margin was only $10-12 two years ago.

    If imports were an extra 100,000 BPD higher, we would be at over 200MM barrels in gas inventories and the hype would be over. And that is even during a year when everything went wrong as far as refineries blowing up ect. In normal year this extra build would leave us with a glut of gasoline. They could do 200,000 barrel per day and then gasoline price would really be decimated.

    Gvt can actually make money off of arranging for higher imports because gasoline refining margin is less in Europe.

    Even if they had to take a slight loss on gasoline purchases, pump prices would fall so much in America because of reduced fear and hype of inadequate supplies they could increase gas tax a few cents to pay for gasoline purchases and gas at pump would still be 20 cents lower+.

    Bottom line is that there is no gasoline shortage. If we are going to allow gasoline to be set by market forces, then GVT needs to step in to see to it that distribution bottlenecks are done away with. Big oil has no incentive to flood its american cash cow market with extra imports. Just the oppositve. They have incentive to keep imports low. GVT can change this i think.

    There is no reason why gasoline refining margin should be 20-40 cents higher in America then in Europe, if all gvt has to do is arrange for a few more imports to CALM the speculators.
  2. Silk;
    I like your bottom line, cheaper gas;
    its being lowered lately anyway ,memorial day thru now, private sector solution.

    Or gov could cut gas taxes, since they make more profit per gallon in taxes than oil companies

    And as investors.com
    wrote recently, consumers, not oil companies, hold the key to lower transportation costs.
  3. Good post Silk.
  4. Laissez Faire.
  5. Why not just sponsor the building of another refinery? They haven't built a US refinery in something like 30 years. Pick a rundown section of USA, near a port, that needs jobs, and put the stupid thing up. We have constant shortage everytime somebody sneezes, etc.
  6. Refineries take a long time to put up, even if moved from another location. They have a lot of environmental issues. Try putting one up and you will get so much NIMBY backlash. Also, consider state, municipality and township, all of which have to be dealt with.

    You guys are looking at a fraction of the picture, hence sound almost naive. There is a shortage of operating refineries, they are way too expensive to put up because the pay-off is in the decades. When you consider all the oil and energy issues, it's very hard to find someone who will put up a brand new one in a first world country. Some refineries were simply shut down because of all the hassle when dealing with regulations, which translate into costs.
    What has been effective is moving these old refineries to African nations like Guana. But with that you get all the fun the political risk. And no big oil company wants to get their hands dirty with that. They will do it through subsidiaries & shell companies however.

    Want the price of gasoline to stop rising, at least not in line with inflation? Simple. Stop buying so much gas. As long as the people continue to buy it at these prices, why would anyone drop them? The people can bitch and moan, but somehow gas guzzling cars are still being sold in decent numbers.
    It's like me complaining about LCDs and plasma screens being too expensive and asking the govt to do smth about it. Well too bad, cause there are people buying at the current prices.
  7. What a joke. I can't wait for gas to be $5.00 a gallon to watch you bitch again on this board. Quit being cheap!!!!!!

    :D :D :D :D :D :D :D :D
  8. I think a better question is how will they react at $10/gal.

    I think that happens within 2 yrs. Asia has the dollars and will bid up the resources to get whatever they want. All we are doing is printing more dollars to bid with. At some point, somebody will smell the coffee and change the rules, maybe not overnight, but over time.

    Watch Al Gore's Bloomberg interview. His carbon tax to replace payroll taxes is really a fossil fuels tax. As far as I'm concerned, its a good idea because it will force people to reduce consumption, at the same time as making America more competitive, and that, long term, is our only hope, because we don't have the resources, and can't keep printing dollars to pay for them forever without severe repercussions.
  9. Well thank you for letting us know how naive we are, and illuminating, however telling us many facts we are quite aware of. Nobody said it would be easy. No one built nuclear reactors for decades, but now it is slowly coming to life. LNG is controversial, but it is only a matter of time until it starts occurring.

    And you provide such a brilliant solution instead:

    "Want the price of gasoline to stop rising... Simple. Stop buying so much gas."
  10. TM1


    The govt can't even keep the SPR stocked to the proper levels, and you think they can "order" more gasoline in the off months? So now we want the U.S. government in the business of buying storing and selling gas? Or are you suggesting that private corporations be forced to buy and import gasoline that they don't need or want, and have to store it? Not to mention the increased dependency on imports, aren't we trying to accomplish the opposite? Besides all of that, refineries switch their bias to heating oil production in the cooler months.

    Reduced consumption is the answer, when every other vehicle isn't a 3500lb+ suv doing 15 mph over the speed limit, I might have some sympathy. But I doubt it as I can't stand people that either don't understand supply and demand or worse yet they do understand it, but would willingly usurp capitalism and free markets.

    Indeed there is no actual shortage, however that is precisely because prices increase with demand which in turn lowers demand, if the cost did not increase there would be no incentive to reduce consumption leading to a realized shortage.

    The price of milk has gone up too, in fact it's more expensive than gas in my neighborhood, perhaps we can apply the same strategy? In fact all consumable goods have increased over the years, yet gasoline should still be what...$2, $1.50? Gasoline and oil are not allowed to keep pace with inflation?

    Price controls have no place in the U.S marketplace. Iran has cheap gas via price controls, about 40 cents a gallon iirc, perhaps you would find that country more suited to your ideals.
    #10     Jun 4, 2007