Day by Day

Wednesday, March 09, 2005

Paying for Leftist legislation

By now, you should all know that anytime a Leftist gets a piece of legislation passed, you're going to take the hit right on the wallet (or a nearby area, if you know what I mean).

I saw an article in the paper today about how truckers are complaining about the high price of disel fuel. And that got me to thinking, and from that to getting kinda pissed. Here's the information you can use when some leftist asshat starts whining about the "greedy oil barons".

#1) Oil is a commodity. That means that it's bought and sold pretty much at auction. If people are willing to pay $50 a barrel for crude oil, then that's what they're going to pay. If demand goes up and people are willing to pay $100 a barrel for crude, then that's what they'll pay. Ask anyone who trades commodities. It's nothing but a huge, nationwide or even international auction, and price is set by demand.

#2) There hasn't been any new oil refineries built in this country for two decades. Not a one. Meanwhile, demand for gas and oil has gone up. Do the math.

#3) Thanks to idiotic rules and laws that crop up every year, these refineries have to produce a multitude of blends of oil products. The same refineries that produce gasoline also produce kerosene, disel, and heating oil. Since we have the same number of refineries that we've had since 1980, and we're forcing them to do more, they're already operating at top gear. They're close to the breaking point, if not already there.

These are the basic facts. Those with more knowledge in these matters can expound upon them if they wish, but those three pieces of information are all you really need to know. With these three facts in mind, let's use some logic.

We cannot increase our production of any fuel without cutting production of a different fuel. Right now refineries are still pumping out heating oil for the East Coast, while demand for gas and disel is increasing on the West Coast. Refineries cannot produce different kinds of fuel at the same time, which means that one demand is going to be unfullfilled. Without building more refineries this condition will not change, which means that demand will drive the price of oil products up even higher. I expect gas prices to hit $3 a gallon in the next few years, because people still use gas without allowing any new refineries to be built in their area. The gas has got to come from somewhere, folks.

Adding to the problem is the fact that due to legislation in different urban areas, refineries now have to produce hundreds of different blends of gas. The gas that is sold in Seattle is not the same blend as the one that's sold in Spokane, which is different than the one sold in Renton, ect., ect., ect. Since refineries are already operating at top gear, this means that refineries have to stop production in order to refit the operations to produce a different blend. Stopping production = drop in supply. Adam Smith will not be denied. Low supply + high demand = pay through the nose at the gas pump.

What does all of this adding up to? Don't expect gas prices to drop anytime soon. I stated a while ago that gas prices were going to stay high, and I'm sticking with that. In fact, I think they'll continue rising in the next few years until someone builds more refineries, because demand isn't going down while supply remains, in effect, static.

Now pardon me, I need to go beat a few hippies. See y'all later.

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