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.