gas prices – Page 2

Dispatches: It’s a gas, gas, gas

Dispatches — on John McCain’s oil-drilling plan — went up yesterday.

Here is a letter I received today in response — which will run in next week’s paper:

Its a gas (according to the Luddites),
Nice “Dispatches”,
Of course we all are all suffering from high energy prices. While you, and fellow liberals Obama, Kennedy , Nader, etc.. bash John McCain’s sensible solution of off-shore drilling, you neglect to mention the “dirty little secret” that can solve our
energy problems.
You mention wind, solar, biofuels. These are a drop in the bucket. What about safe, efficient , NUCLEAR POWER? The Luddite knee-jerk aversion to a proven, clean, safe alternative energy source could well be our countries undoing.The French, Russians, and now the Chinese have found the answer. It is only our week-kneed liberal politicians that are holding us back for the most efficient, safe, answer to our energy problem.
That you can write a 3 column article decrying our energy policy, and not even mentioning the Nuclear alternative reveals your misguided, left wing , tree-hugging
bias
Ken White
Monmouth Junction

I won’t comment.

Bush’s gas games

http://www.cbs.com/thunder/swf/rcpHolderCbs-prod.swf

The president once again entered the fray yesterday, offering an ineffectual but wholly political response to the gas-price crisis, ending a nearly two-decade ban on off-shore oil and natural gas exploration.

The president, who just last month joined with the leaders of other industrialized nations in pledging to curb greenhouse gases, said the move would expand domestic oil production and help drive down prices.

The problem, the president says, is that the Democrats in Congress have stymied every effort he has made.

Those efforts, of course, have focused solely on drilling in environmentally sensitive areas combined with the most modest of nods toward energy conservation or alternative fuels.

Which brings us to yesterday’s announcement, which when assessed honestly can only be viewed as the president using his office to alter political conditions as the presidential election — an election that will choose his successor — moves through the summer. It is no accident that the president’s proposal matches John McCain’s call for a lifting of the moratorium — a policy position at odds with previous McCain positions.

Anyone who doubts this needs to read this quotation from the president:

To reduce pressure on prices we must continue to implement good conservation policies, and we need to increase the supply of oil, especially here at home. For years, my administration has been calling on Congress to expand domestic oil production. Unfortunately, Democrats on Capitol Hill have rejected virtually every proposal — and now Americans are paying at the pump. When members of Congress were home over the Fourth of July recess, they heard a clear message from their constituents: We need to take action now to expand domestic oil production.

One of the most important steps we can take to expand American oil production is to increase access to offshore exploration on the Outer Continental Shelf, or what’s called the OCS. But Congress has restricted access to key parts of the OCS since the early 1980s. Experts believe that these restricted areas of the OCS could eventually produce nearly 10 years’ worth of America’s current annual oil production. And advances in technology have made it possible to conduct oil exploration in the OCS that is out of sight, protects coral reefs and habitats, and protects against oil spills.

He was much more brief and direct, later in his brief announcement:

With this action, the executive branch’s restrictions on this exploration have been cleared away. This means that the only thing standing between the American people and these vast oil resources is action from the U.S. Congress.

The reality, of course, is that off-shore oil exploration offers no guarantees. And even if it was a given that it would produce the volume of oil the administration and McCain believe — which wouldn’t happen for at least a decade — there are no guarantees that it would have the desired effect on prices.

Consider this (received via e-mail) from U.S. Robert Menendez, D-N.J.:

Republicans claim the Bush/McCain coastline oil drilling plan will reduce gas prices. It will not:

811,000 barrels per day is how much Americans have reduced its consumption of oil because of high gas prices — despite this, gas prices are still at record levels.[1]

500,000 barrels per day is how much Saudi Arabia has upped production in recent weeks – despite this, gas prices are still at record levels.[2]

200,000 barrels per day, according to President Bush’s Energy Information Agency, is how much oil the Republican plan to drill along the West, East, and Gulf Coasts will result in once full production is reached in 2030.[3]

If a more than 800,000 barrel per day reduction in demand coupled with a 500,000 barrel per day production increase does not reduce gas prices today, then how would adding 200,000 barrels per day to the market in 2030 reduce gas prices now or ever?

Even that is a “best-case” scenario for the Bush/McCain coastline drilling plan. In reality, it will likely not result even in 200,000 barrels per day in production. More likely, it would result in production of less than 50,000 barrels per day:

The plan requires consent by the Governor of the state in whose waters drilling will commence. It is doubtful that California, Oregon, or Washington will ever allow approval new drilling along the West Coast.

The Bush/McCain drilling plan will not open up the Eastern Gulf of Mexico to drilling (even though this area has considerable oil resources and is the only offshore location with the infrastructure in place to begin oil production within a decade).

The remaining 20% of OCS oil on the Atlantic Coast amounts to less than 50,000 barrels per day in 2030 – this is less oil than the United States consumes in 4 minutes or the world consumes in one minute – a truly miniscule amount.

I understand that this argument comes from a Democrat, but I think it offers a line of reasoning that has to be acknowledged. Why sacrifice the coastline and the Arctic refuge in an effort to maintain the status quo, or to return to last year’s status quo — one we knew was untenable in the first place?

Barack Obama, the Democratic presidential nominee, is correct in his response:

“If offshore drilling would provide short-term relief at the pump or a long-term strategy for energy independence, it would be worthy of our consideration, regardless of the risks,” the Obama campaign’s spokesman, Bill Burton, said in a statement. “But most experts, even within the Bush administration, concede it would do neither. It would merely prolong the failed energy policies we have seen from Washington for 30 years.”

The New York Times adds this, in today’s editorial:

Offshore drilling will not bring short-term relief from $4-a-gallon gasoline, nor can it play much more than a marginal role in any long-term strategy for energy independence. The oil companies already have access to substantial unexplored resources.

The reality, as well, is that we have done little to move away from oil as a primary energy source, thanks to the heavy lobbying by the oil industry.

That has to change. Opening the coast to drilling won’t help.

It is time to kick the oil companies and speculators out of the driver’s seat on energy policy. They’ve been behind the wheel too long and are ready to drive us all off a cliff.

Taking advantage of drivers and gasoline retailers

Why gas stations can get away with this is beyond me:

The price of gas on a given day can be difficult to gauge, especially given that prices often fluctuate wildly from station to station, even when they are less than a mile a part.

The phenomena is due to an oil refinery practice called zone pricing — when oil companies charge retail suppliers gasoline based on geographic zones created by the refiners, said Sal Risalvato, executive director of the New Jersey Gasoline-C-Store-Automotive Association.

Essentially, according to retailers, the wholesalers gauge the affluence of an area — or its proximity to, say, the NJ Turnpike — and adjust their prices to maximize profit. So prices in Princeton tend to be higher than prices in South Brunswick, though prices along Route 1 are often higher than on Route 130.

The approach might seem an acceptible outgrowth of the market — capitalism at work — but the reality is that the fuel companies are taking advantage of the retail stations knowing that the public doesn’t distinguish between the station owner who fills their tank and takes their cash and the larger oil companies who make the big profits.

Hence, the legislation being proposed by Assemblyman Jon Bramnick, R-Westfield.

(He) has proposed a bill co-sponsored by members of both parties that would change the law to prevent zone pricing. The legislation was proposed in January, and is currently in committee.

“If it is sold at $3.75 a gallon to a station, then it should be sold throughout the whole state at that price,” Mr. Bramnick said. “That’s the only thing that makes sense.”

Mr. Bramnick said the law allows for zones because of the differences in shipping costs from refineries to stations, but he wants to eliminate the oil companies’ ability to use zone pricing because they are not using it for that purpose.

Risalvato, of the gas station association, sums it up nicely.

“Does Burger King charge one restaurant one price for Whopper patties, and then charge another Burger King two blocks down the road a different price? I don’t think so. Stations are at the whims of the oil companies,” Mr. Risalvato said. “It is understandable to charge a retailer who is farther from the refinery more because of the cost to deliver the fuel, but they can’t say what they are doing is because of transportation.”