Or at least get consistent among the states with the regs. One of the problems we've seen with supply shortages has been the various types of gasoline that various states require with their environmental regulations. That can increase the costs and lead, sometimes, to supply problems. Heck, just doing away with the three different grades of gasoline would ease some supply problems and likely decrease costs. The thing, though, that does make one wonder regarding the rise in fuel prices is that they tend to coincide with record profits for the large oil companies. If the higher prices at the pump were merely passed-along costs, you wouldn't expect to see spikes in profits at the oil companies. That tends to imply that at least part of the higher price ends up as profit on those companies' income statements.
That's somewhat true. When the price of crude oil is high, petroleum companies make huge profits in their exploration and production units (the ones actually drilling for the oil), not so much in their refining business, since the refining business is then dealing with higher feedstock costs. And since the price of gasoline is tied to crude oil, the companies will make the most $$ when crude prices are high and as a consequence, the price of gasoline is high.
There was a report on ABC News at 5:30 regarding the rising gas prices. They attributed the rise to the Bush administration continuing to stock up the strategic oil reserves. Some expert then came on and basically said Bush was doing the complete opposite of what has been traditionally done when gas prices go up. He's continuing to stockpile instead of releasing the reserves to lower prices. I'm sure that report is on the net somewhere... or not. Bush in action, wooohooo.
I don't know how that became a tradition, especially since it's never been done simply because crude prices have gone up. As a matter of fact, the only "true" drawdown of strategic reserves was during the first Gulf War. Since then, there have been six exchanges of crude oil from the Reserve (once in exchange for home heating oil to create a Home Heating Oil Reserve, once to trade a lower-quality oil the Reserve had for better quality oil reserves. Once in response to Hurricane Lili when that disrupted commercial oil shipments in the Gulf, etc.), and most of those were nominal amounts that wouldn't affect the price of gas at the pumps to any imaginable degree (less than 1 million barrels - sometimes less than 250K barrels). As a matter of fact, one of the exchanges that was to be repaid (with oil) in 2002 and 2003 was delayed by the Bush Administration in late 2002 so as not to hike already rising prices. And twice, oil has been sold from the Reserve in non-emergency situations, once to pay for clean-up at Weeks Island where some Reserves had been stored (poorly, apparently) and once to help lower the deficit for 1996/97. The wording of the law itself notes that the President has to consider the situation an emergency before he can enter in to a reserve drawdown. And, it has only happened once in the history of the Reserve. As it is, the Reserve stopped buying oil on the open market in 1994 as a small part of the deficit reduction plan. In February, 1999, President Clinton announced a plan to receive in-kind payments of oil as payment for the royalties for oil drilled on Federal Leases. So instead of buying oil on the open market, the Government takes oil from these companies in lieu of payment of royalties owed. The Bush Administration has continued this plan,and the Bush Administration has, on numerous occasions, delayed the payment of these royalties-in-kind so as not to take more oil of the market and raise prices/lower available supply. As a matter of fact, the shipment of oil to the Reserve was delayed in December 2002 to March of 2003. One press release from the DOE says that oil was again delayed and won't arrive until "later this year and early next year", but that release is from February.
Serious question here: How many people have gone to the lowest octane rating of 87 because the prices for rating 93 is too high for you to stomach? I have recently and I can't help but feel that my car is not performing like it could (I drive a Maxima and usually put in the premium unleaded fuel, the 93). Is that just a myth or is it true that not using premium unleaded fuel could hurt your car's performance when it comes to horsepower and gas mileage?
There are octane boost things you can but in bottle form and put in your tank every so often that supposedly give you the same results at a lower price. But, truthfully, my understanding is that there are very few cars that actually require premium gasoline. That it is for higher compression engines that produce more heat and, therefore, need a gasoline that burns more efficiently at a higher temperature. I've heard that higher octane gas can actually cause harm to an engine that doesn't burn as hot since it doesn't burn completely and leaves excess carbon deposits. But that's just what I've heard. And according to the QuickTrip Convenience Store chain, premium fuel does not result in more power, better performance or higher gas mileage, so I would say that what you said is apparently a myth. If your manual doesn't say to use it, I wouldn't worry about using it.
Did you just boost that from somewhere without sourcing or are you following our energy policy history that carefully? Anyways, the person in the piece stated that this administration was continuing to add to the strategic oil reserves and that was contributing to the high price of gas, releasing from the reserves would quite obviously lower gas prices. I recall quite well in Bush Sr.'s administration that he tapped the reserves in conjunction with Gulf War I and the price of oil/gas dropped significantly. You seem to want to jump on my use of the word tradition (which quite possibly didn't even appear in the piece but was my quick and hurried posting on a friday evening) to try to insinuate that what I said was simply untrue when it isn't. Considering how closely current economic times seem to mirror those in 1991 and how Bush is all about "stimulating" the economy it's a little puzzling that he'd continue to stockpile reserves as the price of gas rises to such levels. I would post the article here but it was on tv and I can't find a print version but here's the link if you want to watch the show. http://abcnews.go.com/Sections/WNT/
I thought the reference to the DOE press release made it obvious. Didn't realize it had to be spelled out, as well. I looked up the facts and wrote about them. Looking at the DOE's Strategic Reserve website would've netted you the same information. I figured you would've already looked at it to see if ABC's facts were correct. First off, in your first post, you said the story attributed the rise in prices to the Administration's adding to the strategic reserve. Now you qualify that with the "contributing to". To me, that makes a difference. If they have stopped delaying the royalty-in-kind payments and are taking oil out of the market to put in the Reserve again, then yeah, that's going to contribute, that's potentially 100,000 barrels per day (about what they were putting in the Reserve when they were receiving shipments, according to the DOE) that isn't going to the market. The DOE seems to dispute that the Administration is continuing to add to to the reserve, and notes that oil owed to the Reserve was delayed so as not to put an unnecessary strain on supply. (EDIT: That was based on a press release from February that said the delayed shipments would come later this year and early next year. I simply assumed that "later this year" would mean "late this year". As it turns out, that's apparently not the case and said shipments have, once again, resumed). As for releasing oil, I can't imagine that even a release as large as the one in 1991 would have a significant effect on prices. World oil production is what? 75 million barrels a day? Is another 17 million barrels let loose over several days going to significantly lower prices? That's not even a day's worth of U.S. oil consumption. Really? I recall paying significantly higher prices through the duration of the war. The highest I had ever paid for gasoline up to that point, as a matter of fact. One could argue that the prices would've been higher without the release, but I don't recall prices dropping from their previous levels at all (and they certainly didn't at my gas stations). Well, once does not a tradition make, so yeah, I'm going to note that it's hardly a tradition to release gasoline from the Reserve, and once, in anticipation of interruptions due to a war in the Middle East is not necessarily the same as what's happening now with prices. And releases have never happened just because the price was high. Plus, I still blame the oil companies, and it's not exactly like GWB can claim some sort of moral high ground in terms of consumerism vs. big business.
By the way, I found the spot on the DOE page that mentions the shipments that were delayed from late last year. As it turns out, they are apparently now taking shipments for the Reserve to the tune of the following per month (the page says it was updated on 8/25/03): August: 5.842 million barrels Sept: 6.348 million barrels Oct: 6.107 million barrels Nov: 3.891 million barrels Dec: 5.399 million barrels Jan: 4.241 million barrels Feb: 3.756 million barrels Mar: 2.291 million barrels Apr: 6.814 million barrels This would include Royalty-in-kind payments, as well as replacement shipments for oil released from the Reserve in some of those 6 instances I mentioned earlier. These totals would indicate even a larger amount of oil being delivered than the 100,000 per day that the DOE talked about in February. So, they are apparently taking oil out of the market, and that would be contributing to the price being higher. I don't know how much higher it's making it (like I said, the U.S. consumes 18 million barrels of oil per day, so this would be what? about 1% of that?) But since these shipments have been delayed due to supply issues in the past, I don't know why they couldn't be delayed again until the supply issues (or the higher demand caused by the holiday season) have eased. But then again, you might have a story on ABC talking about how the big oil companies are getting away without paying their royalties to the U.S. Government. http://www.spr.doe.gov/reports/dir.htm
What you said was simply untrue (and, as it turns out, I was wrong on the assumption that the shipments to the reserve had not yet resumed again after being delayed last year). You said: Now you're saying they said that has contributed, which is far less objectionable. But to lay it all on the feet of the administration is going overboard, which is what the sentence quoted here implies that they did. I'll give you contributed. I won't give you that the rise is attributable to the accepting royalty shipments again. You said: Reserves have never been released because gas prices were going up. They were released because of supply disruptions and anticipated disruptions caused by the Gulf War. And even that only happened once. It has never been done simply to lower prices. That may be a net effect due to supply and demand, but that's never been the stated aim even in the times where oil was released in exchange. Take out the word "traditionally", and it's still not the case. Now you could say that the fact that the administration is continuing to accept royalty shipments instead of delaying them again is the opposite of what this administration has done in the past when prices were going higher, but you can't say that administrations have released oil from the reserve because of higher prices, which is what you said, because that's never been done for that reason.
mrpaige, Thanks for the response to my question. I looked back at my manual and it says "premium unleaded fuel is recommended." The engine in my car is a 3.0 L V-6. So, I don't know if that really makes that much of a difference, but I probably should have said earlier what engine was in the vehicle.
The cause of this problem is liberalism, plain and simple. The environmental movement is nothing more than a liberal hoax. These liberals will not allow the construction of new refineries because of "environmental" reasons. The effect is less new technologies are used in the refining of petrolium which could lessen the effects of the environment. More pipelines are needed, but they aren't allowed because of "environmental reasons." The effect is we're using pipelines that are worn out. When they burst, it is catastrophic for the local environment. Finally, the restriction on drilling is really a joke. I work in the industry here in Southeast Texas and Southwest Louisiana. I can confidently report that production CAN be done in a manner that does NO harm to the environment.
Originally posted by mrpaige First off, in your first post, you said the story attributed the rise in prices to the Administration's adding to the strategic reserve. Now you qualify that with the "contributing to". To me, that makes a difference. Considering it's summer time and gas prices traditionally go up during the summer, considering we're in a dual war/occupation situation in an oil rich area of the world which also has caused gas prices to go up, it seemed more appropriate to say contributing before someone pulled the nuh uh it's summer and we're at war card. Really? I recall paying significantly higher prices through the duration of the war. The highest I had ever paid for gasoline up to that point, as a matter of fact. One could argue that the prices would've been higher without the release, but I don't recall prices dropping from their previous levels at all (and they certainly didn't at my gas stations). Well, once does not a tradition make, so yeah, I'm going to note that it's hardly a tradition to release gasoline from the Reserve, and once, in anticipation of interruptions due to a war in the Middle East is not necessarily the same as what's happening now with prices. And releases have never happened just because the price was high. Plus, I still blame the oil companies, and it's not exactly like GWB can claim some sort of moral high ground in terms of consumerism vs. big business. In 1991, former President Bush announced the release of oil from the Strategic Petroleum Reserve on the same day the United States attacked Iraq. “I believe if and when military action in Iraq starts, the Strategic Petroleum Reserve oil will be released,” said John Lichtblau, an economist at the Petroleum Industry Research Foundation Inc. in New York. But the sudden release of supplies from the reserve at the start of the Persian Gulf War caused oil prices to fall more than $10 a barrel, especially as it became clear that oil supplies wouldn’t be disrupted outside of Kuwait and Iraq. The administration sold less oil from the reserve than originally planned because the price dropped so quickly and unexpectedly, said David Goldwyn, an Energy Department official in the Clinton administration. That oil shock helped deepen the recession at the time, he said. http://www.theadvertiser.com/business/html/B65C4395-DE55-4448-92C4-B615521F7231.shtml $10 less a barrell and you were still paying the same price? I guess you should comparison shop better. You say there are no releases when prices are high but that's precisely why there was a release in 1991. The US probably wasn't the only country at the time that released from it's reserves as well, that's what happens when you actually have a broad based coalition going to war instead of saying you have one and it not really being so. Potential supply disruptions, wars, and such cause prices to go up, even the rumor of war causes the prices to go up. You're playing semantics with why that release took place. Continuing to add to the reserve whether by delayed shipment or not causes prices to increase. I wasn't laying all the blame at the foot of George Bush (the price of gas would be higher than usual anyway for the reasons I stated above) but simply presented a report that I saw which I considered to be yet another example of his now growing record of incompetence.
Simple supply and demand: More people buying gas (demand) outstrips supply, therefore, price rises. When people go back home after the holiday weekend, the prices always go down as the supply goes up and demand goes down. I'm glad my truck has a diesel motor.
Gas prices are high because morons choose to drive SUVs, sports cars, and other high-luxury, low efficiency motor vehicles.
