This is for the moron who said I was *fucked up* for reporting the truth a couple of threads down..... Here's your *proof* mr. demanding an answer! What kind of cheese would you like to go along with your whine now???

Headline: 50 reasons gasoline isn't cheaper Source: The Christian Science Monitor, 4 May 2001

URL: http://www.csmonitor.com/durable/2001/05/04/fp1s3-csm.shtml

The Marathon Oil Co. refinery in Detroit is only about 200 miles from Chicago. That's not an uncommon distance to transport gasoline, but it might as well be on the other side of the continent as far as residents of the Windy City are concerned.

The reason: The gasoline Chicagoans use is a different blend, formulated to match the city's environmental needs.

This Balkanization of the gasoline market - there are literally 50 different blends used in the country - is a major reason prices might approach $2.00 per gallon in some areas this summer. In fact, now that the summer driving season is near, boosting demand in an era of tight supplies, the nation's refiners face daunting challenges - and criticism from all sides. They find themselves blamed for shortages, and for air pollution.

They are accused of price-gouging, while they themselves claim they can't make enough money to build new plants. Meanwhile, summer is also smog season, and as metro areas struggle to meet clean-air laws, refiners must find ways to get 50 gas blends through a maze of pipelines to the right storage tanks without making a mistake that might cause motorists to see red.

"They are in a difficult position, it's tough to make everyone happy," says Mark Zandi, chief economist for Economics.com, a web site.

It's a situation that has not escaped the White House, which will be releasing its energy policy in only a few weeks. This week, Vice President Dick Cheney said the nation has to increase its refining capacity to prevent gasoline prices from spiking. "As matters stand, it's been about 20 years since a large refinery was built in the United States," said Mr. Cheney.

To encourage new refinery capacity, the industry wants the White House to ease up on environmental rules that govern the changes that have to be made in existing facilities. The Environmental Protection Agency (EPA) requires strict standards for the refineries. "The most severe standards should only be required when needed," says Bob Slaughter, a lawyer at the National Petrochemical and Refiners Association (NPRA) in Washington.

For example, the EPA rules require burners that use little nitrogen oxide (a pollutant). But the burners are expensive, and the industry says not all refineries need them. "You have some places like in Yorktown, Va., or Billings, Mont., where it does not always make sense," says Mr. Slaughter.

The environmental community opposes these types of changes. "It's a basic concept of the Clean Air Act, going back as far as 1970, that if you build any new facilities, you must put on the most stringent air pollution technology available," says Blake Early, an environmental consultant to the American Lung Association in Washington. "These companies should not be allowed to get away with this."

Mr. Early says this is not the time to ease up on the rules, since the Lung Association's most recent report found 9 million more Americans living in areas with unhealthy smog levels today, compared with the prior year's report. "It's not like we licked the problem, and it won't hurt if we weaken the requirements."

In fact, on Wednesday, an environmental consortium released a study of ExxonMobil's gigantic Baytown, Texas, refinery. The group alleges scores of environmental problems, ranging from a failure to report emissions to possible violations of federal law. "This is bad news for Texans who want clean air," says Peter Altman, executive director of the coalition. ExxonMobil, in a press release, said it operates the refinery in accordance with all regulatory requirements. It said the report has misrepresentations and uses "hysterical" language.

Because of strict environmental laws, it's extremely expensive to build a new refinery. Jerry Thompson, a senior vice president at Tulsa-based Citgo, one of the nation's largest refiners, estimates a state-of-the-art refinery processing 300,000 barrels per day would cost about $3 billion. Instead of building new facilities, the industry is adding about 1.5 percent to the capacity of its existing ones each year. This is about in line with demand, but leaves no cushion.

As long as there are no refinery outages or pipeline problems, Mr. Thompson, also the chairman of the NPRA, predicts the industry will be able to supply most of America. But he warns there could be regional problems in California and the Great Lakes regions, areas with specific gasoline requirements to cut smog.

To try to minimize these problems, the refiners would prefer to see only three blends in the entire country. "The real pinch point is distribution and tankage," Thompson says. For example, until this year, the city of Tulsa had its own blend of gasoline for the summer. Now, it's been modified so it's the same blend used in Dallas. "It will be a little bit easier for the industry to supply that," Thompson says.

Atlanta and 43 counties around it also have a unique fuel. Thompson says they came up with this new blend to avoid having to use reformulated gas, the other main way to meet federal air-quality standards.

The demands on the refining industry are only expected to increase. It must produce low-sulfur gasoline by 2004, and low-sulfur diesel by 2006. Thompson doubts the industry can make the $8 billion to $11 billion in needed diesel investments in time.

(note: the story has already been archived, so the link might not work, but a quick check of the archive files will show the article there)

-- Rob McCarthy (celtic64@mindspring.com), May 08, 2001

Answers

Here are more:

51) Oil company profits are way up; look at Chevron, etc. quarterly results. In particular, look at the corporate quarterly results for the oil (as opposed to chemical, etc.) business. For example, last week Shell reported its petro business profits up 60%. High profits are not easily given back.

52) There is a major refinery fire a few times a week for the last several years. You never hear about loss of life, or material damages for these. Instead, you see pictures of black smoke, and then the announcement that now prices will be going up (see #51).

53) During the 'gas crisis' of the early 70s, the oil companies begged for an Alaska pipeline. Said we would then be part of a sea of petroleum, and that would solve everything. Today, what happened to the Alaska pipeline promise? The majority of that Alaska petro goes to Asia, not to North America.

-- ThatsClose (OhYeah@I.Belive), May 08, 2001.

Gas is actually cheaper, relative to other prices, than any other commodity. It's just that people have been lulled into believing that it should always be 1.29/gallon. Milk sure ain't the same price as it was ten years ago, but the genius claiming that oil companies are making unreasonable profits has no clue and no sanity. Oil companies were hammered just a few years ago, and refineries continue to make little or no profits.

We are in big time trouble as oil products are going to rise at least at the rate of inflation from here on out, and probably at a faster rate. Demand continues to rise, but supply has not kept up. Logic follows. Natural depletion will only make it worse.

-- libs are idiots (moreinterpretation@ugly.com), May 08, 2001.

a $5.00 six pack of 12 oz. bottles of beer works out to $8.89 a gallon. Why is everybody griping about gas? A friend bought an 8 oz. health drink for $2.00-that works out to $32 a gallon. I pay $4.00 for 16 ounces of shampoo-also $32 a gallon. Let's get real here.

-- Enlightenment (gone@away.now), May 08, 2001.

I have to agree with the post above, at least a little. There are lots of reasons gas is going up, but basically it’s still a cheap commodity. Inflation and labor costs are probably the prime reasons - I was buying $1.29 gas when I was buying trucks for $12,000. (I just priced a new Ford F250 at slightly over 30 grand!)

But the thing that worries me is the easy absurdity of “blaming” the environmental regulations for increased prices. First, we passed environmental laws because we needed them, and the populace, for the most part, wanted them. Second, most regulations have been in force for years, if not decades, and most have given leeway for the industry to prepare, with measures like interim standards, or graduated effluent limitations.

I’m a professional environmentalist. At one time I was in charge of all water programs in 12 counties of the Texas Golden Triangle (big time oil county) for the state regulatory agency. I founded a consulting agency in the 80’s which completed over 300 remediation sites in nine states. Now I own a little company which provides testing and compliance services for retail petroleum facilities. I’ve seen this business from many angles over the years, and I know firsthand how foolish some regulations are and how obscenely stupid some regulators can be. But I guess the bottom line was best said by a refinery worker who put me onto a major violation one day. When I asked him why he was “ratting” on his own company, he replied, “I’ve got kids, too, ya know.”

I think the prices will continue to rise, however much new oil we develop. Maybe this will be the catalyst that finally pushes us to evolve as a society beyond our absolute dependence on petroleum. Maybe people will start buying hybrid vehicles, maybe research will progress on alternative power, maybe Americans like me will start to travel a little more by public transportation. Maybe.

(but then I'm an idiot tree hugger)

------------------------------

-- Lon Frank (lgal@exp.net), May 08, 2001.

I think the prices will continue to rise, however much new oil we develop. Maybe this will be the catalyst that finally pushes us to evolve as a society beyond our absolute dependence on petroleum. Maybe people will start buying hybrid vehicles, maybe research will progress on alternative power, maybe Americans like me will start to travel a little more by public transportation. Maybe. (but then I'm an idiot tree hugger) ------------------------------ -- Lon Frank (lgal@exp.net), May 08, 2001 If you had to choose between a million year old beach or a 100 year old tree, which would you choose? What if you had to choose between clean water or clean air, what would it be? The opening commercial for EarthShare.org

I don't consider myself a tree hugger, or even overly friendly to most environmental issues. But, let's get real here. I am NOT ever gonna wish that the EPA was disbanded, that they roll back the requirements for gas blends just for the sake of cheap gas. Clean air will always come first to me. I listin to the local news and wince as they interview people filling the tanks of their SUV's. Everyone, including Bush seems to think that driving gas guzzler vehicles and having cheap gas is a constitutional right! Those people choose to drive those vehicles that get less than 15 miles per gallon. A summer of $3.00/gallon gas should solve this, I hope. I understand the ripple effects on the economy, but I am not willing to sacrifice the environment either.

-- Rob McCarthy (celtic64@mindspring.com), May 08, 2001.

I agree that regs cannot be willy-nilly thrown out in order to have gas at a price that someone with 3 or 4 suv's would like. But neither should the government get into the business of price-fixing the suppliers, as California would like. If gas is expensive, so be it, and people will start to convert to smaller cars again, and mass transit.

-- libs are idiots (moreinterpretation@ugly.com), May 08, 2001.

Price caps would be disasterous to the whole of the economy! Sadly, the california state congress is in the process of imposing their own version on the power companies that do business with them. Guess what? If california thinks they have troubles now, just wait until these power companies refuse to do business with them... Why is it that we think corporations are not allowed to make a profit? I had my own painting business in the 90's and believe me, I was in it to make money! Do any of us go to work for free, just for the hell of it? NO, we expect to make money too. These problems have been years in the making. And with everyone having a severe case of NIMBY (not in my backyard!), don't expect any serious relief soon. And what are we gonna do when the bell curve of supply is on the downside? Did we really all think oil would last forever?

-- Rob McCarthy (celtic64@mindspring.com), May 08, 2001.

One thing everyone forgets is that you don't have to have 2 gallons of shampoo at $32 per to get to a job that pays $10 per hour. Most of us in the rural areas need the gas but can do without the beer and "health drink" and your $4 shampoo lasts for 2 months so a gallon would last for over a year. I drive 18 miles one way to a job in a car that gets 21mpg. I can afford to put $10 to $20 of gas in my car a week but I can't afford a $200 car payment to only have to have $5 to $10 of gas in a week.

-- Just Passin Through (Nobody@nowhere.com), May 08, 2001.

Several things here. If we were all using the same blend of gas or cut down on the number of blends then it would get cheaper all around. If people start converting to smaller cars from SUVs the death rate on highway accidents will go up and the vehicles will wind up in the hands of those less able to pay for the gas that they run on. A lot of the less fortunate will be and or are stuck with older less efficient cars now and dispite the opinions of tree huggers everywhere they need to get to work and the grocery store as much as anyone. And not everyone lives in a city where mass transit works. Out in the rural areas mass transit isn't practical or efficient because they all rely on large fuel sucking buses. Price caps are an answer, as long as the law is stable and the companys can plan into the future. Electric generating companys can amortize the cost of new construction 50 years into the future if they have a stable market to sell to. Under deregulation they have no locked market and must recover their investment in a much shorter period of time or risk loosing money. this results in higher prices. Price caps and controls have been used for decades in almost all public utilities otherwise they wouldn't always have to have been going to the public utilities commissions to get permission to raise rates. California is a screwy situation because its only partialy deregulated. The sellers still have to ask permission to raise rates but the generators don't and the sellers where required to divest themselfs of the generating capacity. That ought to keep you busy for a while.

-- Just Passin Through (Nobody@Nowhere.com), May 08, 2001.

I for one would much rather drink a gallon of milk than a gallon of gasoline.

-- ditto-monkeys (bore@me.stiff), May 08, 2001.