Fuel Prices

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Fuel Prices: Myths and Reality Surrounding the Price of Gas. Part


"Price of Gas Myth Number 2": Fuel price increases are "sustainable"
Fear creates all kinds of illusions. That is precisely what has happened in the case of our "fuel price ? price of gas" self-inflicted (media) torment. In June, 2005, the highly respected Cambridge Energy Associates, Inc. predicted the supply of oil would catch up in the near future with demand. That would necessarily mean a decrease in fuel prices. The price of gas should reflect that astounding fact.
Not too long ago, even Chevron Chief, David O?Reilly, historically a bit of a pessimist, pointed out that high gas prices were unsustainable. His August 2005 statement:
"I don?t think $70, $60 or $50 is sustainable. At these prices, demand growth moderates and there is new capacity coming on."

"Price of Gas Myth Number 3": Our government is doing all it can to foster "real solutions" to our fuel price problems.
Let?s face it. We are not just awash in supplies of oil. We are awash in an oversupply of bureaucracy, (especially) Congressional interference, and political posturing.
Since 1981, the U.S. has seen a sharp decline in the number of operating refineries. According to the Energy Information Agency, "Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million barrels per day in operable capacity (from 18.6 million barrels per day to 15.7 million barrels per day)."
By 2003, refinery closures decreased further to 149. No doubt, expansion in some refinery capacity has given back about 2 million barrels per day. But, that doesn?t begin to compensate the massive losses. Fuel prices are definitely reflecting the loss of refinery capacity in the U.S. Your price of gas at the pump is a Congressional, regulatory-induced problem, not a supply problem.
There hasn?t been a new refinery built in the United States for over 30 years. In short, the price of gas is dependent upon, and we are vulnerable to, foreign oil production.