So I’m watching the O’Reily Factor from LA on Wednesday February 22nd, and Bill is talking to this oil industry guy; asking him about the available inventory of gasoline, diesel and jet fuel and the guy admits that there is no shortage of product. Quite the contrary, they are exporting product.
Bill is trying to pin down the guy about price at the pump and whether the oil companies are manipulating the price.
It turns out that available oil in the pipeline (so to speak) is more than adequate to handle our domestic needs but the market price of oil doesn’t directly dictate the value of refined products. Fluctuations in the market price for oil have a general impact on gasoline price but world demand for refined products like jet fuel, diesel and gasoline allow additional profits to be generated by refiners jacking up the price and selling it to the highest bidder; some of whom are foreign.
So, the oil we refine in this country does not just supply the American market. Both the foreign sourced oil and the Native American oil comes to the American refiners and they refine it here and send it back over seas. I wasn’t aware of that. I guess I assumed that we consumed the entire output of refined product here.
Every time there is a seasonal change-over they blame refinery capacity for the price increase and a supposed shortage of product to meet domestic demand.
I don’t know about you all, but that’s disappointing to me. I think most of us thought there wasn’t enough refining capacity here to handle our domestic needs and so shortages and higher prices had to be the result.
I know that we live in a global economy so I understand how the market works but if we’re trying to reduce our dependence on foreign oil to keep prices down at the pump the global market will still increase the price for oil and so the price of gasoline, jet fuel and diesel but shifting the recipient of the windfall to American price gougers rather than Venezuelans, Saudis or Iraqis. That is not comforting to me in the least.
Increasing oil production in this country will not reduce the price of gasoline at the pump if China offers to pay refiners here more than Americans will.
I guess we need a disincentive to export American oil or at least refined petroleum products so that Americans can benefit from having a plentiful supply of oil in the ground rather than any oil company willing to drill and pump it out. Maybe it might come in the form of a tariff for refined products; or oil pumped from public land. That part may require further discussion and analysis.
Bill O’Reily certainly gave me a lot to think about. I wonder if anyone else was paying attention that can actually do something about it.
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Posted on February 24, 2012 at 11:44 am in Environmental, Federal Government, Partisan Politics, Political commentary | RSS feed
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Does Gas Really Have to Sell for $5 a gallon
by Steve DanaSo I’m watching the O’Reily Factor from LA on Wednesday February 22nd, and Bill is talking to this oil industry guy; asking him about the available inventory of gasoline, diesel and jet fuel and the guy admits that there is no shortage of product. Quite the contrary, they are exporting product.
Bill is trying to pin down the guy about price at the pump and whether the oil companies are manipulating the price.
It turns out that available oil in the pipeline (so to speak) is more than adequate to handle our domestic needs but the market price of oil doesn’t directly dictate the value of refined products. Fluctuations in the market price for oil have a general impact on gasoline price but world demand for refined products like jet fuel, diesel and gasoline allow additional profits to be generated by refiners jacking up the price and selling it to the highest bidder; some of whom are foreign.
So, the oil we refine in this country does not just supply the American market. Both the foreign sourced oil and the Native American oil comes to the American refiners and they refine it here and send it back over seas. I wasn’t aware of that. I guess I assumed that we consumed the entire output of refined product here.
Every time there is a seasonal change-over they blame refinery capacity for the price increase and a supposed shortage of product to meet domestic demand.
I don’t know about you all, but that’s disappointing to me. I think most of us thought there wasn’t enough refining capacity here to handle our domestic needs and so shortages and higher prices had to be the result.
I know that we live in a global economy so I understand how the market works but if we’re trying to reduce our dependence on foreign oil to keep prices down at the pump the global market will still increase the price for oil and so the price of gasoline, jet fuel and diesel but shifting the recipient of the windfall to American price gougers rather than Venezuelans, Saudis or Iraqis. That is not comforting to me in the least.
Increasing oil production in this country will not reduce the price of gasoline at the pump if China offers to pay refiners here more than Americans will.
I guess we need a disincentive to export American oil or at least refined petroleum products so that Americans can benefit from having a plentiful supply of oil in the ground rather than any oil company willing to drill and pump it out. Maybe it might come in the form of a tariff for refined products; or oil pumped from public land. That part may require further discussion and analysis.
Bill O’Reily certainly gave me a lot to think about. I wonder if anyone else was paying attention that can actually do something about it.
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Posted on February 24, 2012 at 11:44 am in Environmental, Federal Government, Partisan Politics, Political commentary | RSS feed | Respond | Trackback URL
2 Comments to “Does Gas Really Have to Sell for $5 a gallon”
February 25, 2012 at 11:43 am
So the global solution is an EXPORT tariff so American oil producers / refiners won’t sell overseas? Next question — do our US refineries use international crude, or only our own raw stock? I thought some of our crude was sour (sulfur) so we aren’t allowed to refine it due to environmental regs. Just some random thoughts
February 25, 2012 at 12:51 pm
I’m not sure if there is a global solution to a local problem but if any politician has a hope or a plan to reduce petroleum prices for American consumers there has to be some disconnect between global markets and local supplies. If China will always offer a buck or two per gallon more for gas than we are willing to pay, who will probably get it? My piece was intended to draw attention to the fact that even if we have an adequate supply of oil, the price for refined products is also established by bidding and foreign markets are consuming refinery capacity in America keeping the market price for gas, diesel and jet fuel high. The news stories reference change overs at the refineries from winter blend products to summer blends. the suggestion being that all the refineries make the change at the same time like the produce markets when the California tomatoes dry up and the Arizona tomatoes ripen. If there are 170 plus refineries working in America today they should be able to transition without disrupting the market like they do. If we analyze the difference between the cost of a barrel of oil and the market price for the same barrel we can see who is gouging who. If profiteering is illegal following a hurricane, earthquake or tornado couldn’t we make a case for it here? I realize the cost of to bring a barrel of oil in Saudi Arabia to the market is different than a barrel pumped from the North Slope or fracked from shale or pumped from the Deep Water Horizon and that has to be taken into consideration. I don’t have the answer, I don’t even have the right questions yet but I’m trying to understand the issues so I can. I’m hoping that other folks are wondering the same things.
Steve Dana Century 21 – North Homes Realty – Snohomish Call me if you know anyone who might need help buying or selling a home! Referrals gladly accepted. 425-327-5948 http://stevedana.century21nhr.com