From: MV (MV@dc9.tzo.com)
Date: Thu Aug 25 2005 - 06:39:08 PDT
Not exactly. There are many different blends of gas required for
different regions of the country now. I know that Indiana for instance
requires a certain percentage of Ethanol in the gas. The EPA also has
different requirements for differing areas of the country. In the
midwest Chicago, Northern Indiana, Western Ohio there are only a couple
of refineries setup to run the gas blend required in this area. So even
if a refinery in Pittsburg has excessive capacity, they cannot just
decide to run Chicago blend gas, it just doesn't work. And if the
refineries are running near 100% anyway, where is the excess capacity to
allow a switchover from one blend to another?
A couple of summers ago the price for fuel in the Fort Wayne area spiked
about 30 cents per gallon for about a week. The local newspaper did
some investigative reporting (so they said) to find out what was
happening. It turned out that one refinery had an equipment malfunction
and had to shutdown for a couple of days, other refineries in the region
(multistate) were not setup to run our blend, so a shortage developed
and the price spiked. I believe some stations even ran out of gas.
So the flexibility and market driven conditions are simply not there any
longer. At the same time, BP has a very large refinery in mothballs in
Lima, OH (just southwest). Why haven't they opened it? I don't know.
that refinery is sitting next to a very large pipeline that runs down to
the gulf coast.
Dave
Joe Garrett wrote:
> The only problem with this analysis is that higher prices drive MORE
> production. If I can get $3 a gallon for gasoline, I am going to produce as
> much as I possibly can, because the more I sell, the more money I make.
>
> The incentive to reduce production is LOW prices. If I can't make any money
> selling gas at $1.50 a gallon, why bother to build more refineries?
>
> With many oil refiners (oligopoly), it is impossible for one refiner to
> drive prices up by withholding production. As soon as one company stops
> producing gasoline, another one will rush in to capture the market share and
> the associated profits.
>
> The problem we are experiencing is a combination of market forces and
> politics. It is clear to me that OPEC is up to it's old tricks. We are
> caught between Saudi Arabia, Iran, and Venezuela. What isn't clear is why
> this hasn't caused more of a backlash among consumers.
>
> Joe Garrett
>
>
> -----Original Message-----
> From: Military Vehicles Mailing List [mailto:mil-veh@mil-veh.org] On Behalf
> Of MV
> Sent: Wednesday, August 24, 2005 4:24 PM
> To: Military Vehicles Mailing List
> Subject: Re: [MV] (OT?) UK - US tax
>
>
> Good point Randy.
>
> I'd like to also point out that the actual cost to remove oil from the
> ground has actually gone down over the years. The cost to transport the
> oil from the Middle east to the USA is actually pretty minor. Single
> digit cents per gallon.
>
> The price of fuel has more than doubled in the last few years, and with
> the production costs staying pretty much the same, this means that some
> groups have more than doubled their profits on the same exact product.
> Actually it is probably more like tripled their profit margins.
>
> If the rules of supply and demand are actually involved here (I question
> that) then why should the oil companies try and produce more oil and
> build refineries. It seems to me that their best course of action would
> be to cut back on production and let the price of oil rise even further.
> If the people of the USA don't get upset with $3.00/gallon and more
> on the west coast, then obviously we haven't hit the critical pain point
> yet. Perhaps it is around $4.50/gallon?? Maybe $5.50??
>
> The big oil companies are making record profits. That is, that they are
> making record profits after doing everything they can to hide their
> record profits. There is a lot that can be done to hide profits by
> investing in other companies and acquiring assets.
>
> When BP moved in to the US about 15 years ago, the first thing they did
> was to shut down refineries. There is a huge refinery in Lima, OH that
> was mothballed. I have never heard of them taking any interest in
> reopening it. If they did I think they would create a surplus in the
> market that would tend to drive the price down. For them it is better
> to leave it shutdown and let the prices rise. Their is extra refinery
> capacity in this country, they just don't want to utilize it.
>
> BTW, Milk at Sam's club was $2.28/gallon the other day. That milk was
> sucked out of a cow 3-4 gallons per cow, refrigerated, transported,
> separated in sterile conditions, homogenized, pasteurized, bottled,
> transported in refrigerated trucks, delivered to the store with an
> expiration date, and sold to me in a quantity of 2 gallons for $2.28 per
> gallon.
>
> None of these price levels make any sense at all.
>
> These fuel prices are total BS. And if the citizens of the US don't get
> upset about the prices, then they only deserve to pay more.
>
> And why any country would apply a 100%+ tax to motor fuel is beyond me.
> The only reason I can think of to apply taxes like that is social
> engineering. They simply want to minimize the use of cars and trucks
> for some bigger purpose. Nothing else makes much sense.
>
> Dave
>
>
>
>
>
>
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