Thursday, May 14, 2009

Why Are Gas Prices Going Up AGAIN, V.2

Once again, oil prices are falling, yet gas prices are going up.

What gives?

One more time with feeling, people: drilling here, drilling now has not in the past and will not now affect what you pay at the pump.

I have written about this a lot, most recently back in February, when refiners cut back on production in response to decreased demand, which lowered gas prices so much the refiners felt it in their own pockets.

Back then USA Today reported:
Beset by weak consumer demand and losses on gasoline sales, oil refiners have scaled back production since late December. The average utilization rate at U.S. refineries was 81.5% as of Feb. 6, the lowest in 17 years, not including hurricane-related slowdowns, according to the Energy Information Administration. As recently as early December, refineries were running at 87.4% of capacity.

Here, via the AAA Fuel Gauge Report, is what gas and crude oil prices were doing in December:

Note when gas prices hit rock bottom: yep, that would be December.

I don’t know what the profit margin is on a refinery, but clearly the refiners have become accustomed to a certain level of dough rolling in. Thus they responded by cutting back on refining the crude, at a time when crude oil was relatively cheap (compared to recent history, at least).

None of this has anything to do with drilling for oil off the coast of the United States or in an Alaskan wildlife refuge. The oil companies already have more domestic leases than they know what to do with, because with oil priced below $60 per barrel, it’s not profitable to pull that stuff out of the ground. There’s a reason this stuff hasn’t been tapped before, and it has nothing to do with tree-hugging environmentalists.

Rising gas prices do, however, provide the perfect opportunity for people in Washington to score political points and try to sway low-information voters who think gasoline is a commodity like corn or pork bellies. And yes, I do mean the usual suspects:

Republicans believe that rising gas prices are their trump card against a Democratic-sponsored climate change bill.

The GOP is struggling to regain footing after two successive electoral blowouts, but party leaders are relishing an opportunity to debate what they call a “national energy tax.”

The Democrats’ plan of moving a cap-and-trade bill this summer plays into GOP hands because as the cost of gasoline spikes, so does the public’s awareness of energy prices, Republican leadership aides say.

Rep. Adam Putnam (R-Fla.), the former House GOP conference chairman, said that the cost of gas is not likely to hit last summer’s national high of $4 a gallon, but he noted that oil prices have been creeping up recently.

Putnam said most Americans want to increase oil production, not restrict consumption, adding, “At some point, gas prices become a very potent political weapon again.”

I don’t know about that. I think all of this yanking consumers around by the gas nozzle fosters anger and ill will toward oil companies. It makes me want to send a big “fuck you” to Exxon and Chevron and find another way of getting around town.

And yes, I did buy a used bicycle a couple weeks ago.

Here's a handy reference tool to keep bookmarked for the coming debate. Next time you hear a politician tell us we need to "drill here, drill now," follow the oil money.