Gas Prices: Who’s to Blame? – Roger Ingalls
Often, filling stations take the heat for high gas prices but, in reality, your local pit stop doesn’t make much money from the fuel they sell. They make pennies per gallon. Most of their revenue comes from junk food sold out of the attached convenient store. Yes, stations do raise prices minutes after crude oil goes up and then lower the price weeks after oil decreases so they do take a little advantage but that has always been the case. Gas stations are not to blame for the current high price of fuel.
Are oil producing companies or middle-east countries to blame for high gas prices? For the most part, they run their output and let the market dictate the prices. They may vary production levels a little but it hasn’t been a market-driver since the 1970s. Oil suppliers are not to blame.
How about oil refineries, are they the evil ones? Back in 2008, oil peaked at $147 a barrel and gas prices rose to about $4.30 a gallon. Now, in early 2012, gas prices are again hitting the $4.30 range but oil is trading at approximately $105 a barrel. Something seems fishy. Oil is 30% less now than in 2008 but current gas prices are the same. Also, we now use 17% less gas than we did in 2008; it doesn’t add up. Demand is down, crude oil prices are lower but fuel prices are higher!
US oil refineries are to blame for the current increase in gas prices. They created an artificial shortage by reducing their refining capacity to 85% of what it was in 2008. The refineries say they had to close down some refineries because the crude oil quality has made some of their production capacity obsolete. It is unbelievable that companies making record billions in profits cannot keep up with the required technology in their own industry. I believe this excuse is a flat-out market manipulating lie. These big companies are not that stupid; they know what kind of oil they’re getting years in advance.
When gas hits $8 per gallon in a year or two, you can blame deregulating legislation that now allows reckless speculation (futures trading of oil) and the elimination of alternative energy programs by Ronald Reagan in the 1980s. However, the current high price of gas falls squarely on shoulders of US oil refineries.