The official Summer Season is only 30 days away, but the Summer Driving Season is already here.
But looking at the gas prices, you'd think it was August!
April 6, the Department of Energy released its report
concerning what it believed gasoline prices would be this summer.
"Retail gasoline prices are expected to average $1.49 per gallon, slightly lower than last summer's average
of $1.53 per gallon, but still above the previous (current-dollar) record
summer average of $1.35 per gallon", the report states.
Obviously, the DoE got it wrong.
As of 04/23 the US average was $1.619.
On 04/02 the Average was $1.442. A difference of 17.7 cents! Compare this to
the average on Memorial Day weekend, 1998. Any guesses? $1.108!
Oh, but we were much simpler then. 04/26/99 - $1.166!
So, who is getting our summer money? Apu the 7-11 owner? The government? Distributors? Refineries? The Arabs?
The DoE has put together this primer
on gas prices, in an attempt to explain whose pockets we're lining.
According to our friends at the DoE, in February 43%
of the cost of gasoline is the cost of crude oil. The rest is made up of
taxes, Distribution, and Refining costs.
Crude oil is $27.58 per barrel.
If 43% of x = 27.58 then x =
If there are 50 gallons in 1
barrel, then according to this, gasoline should be around $1.28 per gallon!
Obviously Apu isn't making
$0.339 per gallon... or OPEC is only making 34%.
The price difference, explains
the industry, is a simple case of supply and demand. There was a sudden
increase in demand that was not matched with an increase in supply. I wonder
how something can be sudden when it happens every summer?
Oh wait! It's those bastards in
OPEC. They keep screwing with the crude oil prices. This crude oil
forecast, however, paints a stable, and affordable future.
For the week ending 04/13, the
DoE says the US produced 8,477,000 barrels of finished gasoline per day.
Summer of 2000 saw a demand of
8,539,000 barrels per day, and the DoE expects a modest increase of 0.6% or
8,593,000 barrels per day. This, of course, leaves us with a deficit of 53,000
barrels per day (1.01 %).
Add in 217,000 barrels imported
per day, and you've got a surplus of 164,000 barrels going into the reserve
Who do we import our "foreign"
gasoline from? ALL our imported gas comes from our allies - Canada, Venezuela
(an OPEC Founding Member), and Western Europe.
Gasoline stocks or inventories
are presently at 192.8 million barrels. That is enough fuel for 9.966 years
if production keeps going, or 22.43 days, if all gasoline production stops.
Keep in mind, these are Industry stocks, and doesn't include government
The DoE calls this `low
inventory compared to normal'.
Where's the decrease in supply?
The 80,000 barrels that used to come out of the aging Blue Island, Illinois
Things get a bit complicated,
thanks to government regulation. In 1995, the Clinton Administration passed
regulations requiring additives to be mixed with the gasoline to reduce
pollution and smog. In 2000, we ran out of additives. Refineries goofed. "There was such a small margin between
production and demand; there wasn't much room for error." - Except for those
192.8 million barrels. Not to worry, says the DoE. They're learning.
Keep in mind that Exxon-Mobil
is this year's Fortune 500 champ.
Petroleum Refining, Pipelines,
and Drilling all were in the Top 10 of Fortune's Growth
in Profits (5 Years) list.
Even more damning is the Growth
in Profits (1 Year) List.
Crude Oil Production - 473.8%
Refining - 148.0%
- 73.2% - 1,2 and 3 respectively
473.8%!!! In one year!
Exxon-Mobil made $210,392 million
dollars last year. Not bad for someone still "learning."
By the way, Big Oil donated $2,857,848
to the Bush campaign, as opposed to $301,075
to Al Gore. The future keeps looking brighter and brighter.
So, what's the solution? Are we
being fleeced? Yes. Is it Apu the Gas Station Owner? No. Is it
the evil Arabs? Not this time.
So what do we do about it?
Drive-off and hurt Apu? Go to war and kill all the Arabs? Write your bought-off
The oil industry has it made.
They have an in-elastic product, politicians in their pockets, a foreign
`bad-guy', and are totally inaccessible from the Teeming Millions. I'm going to
keep driving my car and blame Apu and the Arab sheiks for my $25 fill-up.