Price of Gasoline ?


The following is an opinion piece written by Gary Ogg, retired public school administrator from Miami County, Ohio.   He is a columnist for the Piqua (Ohio) Daily Call.

Wasn’t that 40-cent price hike for a gallon of gasoline just a few days before Christmas an exciting present from Big Oil to all Americans? I found this increase perplexing since there were no hurricanes threatening the oilrigs in the Gulf of Mexico or the refineries along the Mississippi River…and nothing was on fire, sinking, or shut down for service. The Middle East was fairly quiet, relatively speaking. Libya’s Muammar Qaddafi had been gone for weeks (and taken out with the loss of not one American life). Perhaps some butterfly had flapped its wings over the Pacific Ocean necessitating a price rise.

The reason was soon revealed. Turns out that the death of North Korea’s dictator Kim Jong II (to be replaced by his son) supposedly spooked the markets. Now I may not have the best grasp on the workings of this Communist Country, but as far as I know they are not an exporter of oil. I’m pretty sure no major pipelines cross their borders. And I don’t think there are any oil shipping lanes anywhere close to their shoreline. Even if there were, I doubt the few boats of their navy would present much of a threat.

Contrast this with the news just one week later that Iran began threatening to close off the Straight of Hormuz, the world’s most important oil transit point, if Western powers attempted to impose an embargo on their petroleum products. This shipping chokepoint is on their southern coast and while their military capability may not allow a total closing, I would bet they could wreck some havoc.

The market response was one giant yawn and an actual decrease in the price of oil but not a gallon of gas.

We all know the real reason for the pre-Christmas Day hike had nothing to do with anything happening in the real world and that Korea was a convenient excuse to jack up the price just before millions of Americans were about to jump into their cars and head out for the holiday season. A big price hike would simply fatten their bottom line, which perhaps is good if you are a major stockholder not affected by $3.50 per gallon of gasoline.

This latest price hike is very strange in light of recently released information that gas guzzling America has become a major exporter of…please sit down for this…fuel.

Apparently refined fuel products became and have stayed our country’s biggest exported item each year since 2008, edging out airplanes. According to the U.S. Energy Information Administration, we have exported 655 million barrels of refined petroleum products and 121 million barrels of gasoline just in the first nine months of 2011.

The recession and slow recovery, coupled with more fuel-efficient cars, have tempered the country’s thirst for gasoline. So what’s an oil company to do with all this excess fuel backing up? Allow an actual market force of too much product to lower the price for average Americans struggling to make ends meet?

Heck no. Export it to foreign countries like Brazil and Argentina to keep the price propped up here at home.

And while we are exporting fuel and finished oil products, we continue to import 264 million barrels of refined products and 32 million barrels of gasoline.

I pulled “C’s” in my college econ classes. Perhaps had I paid closer attention, this all might make sense.

I listened to several of the Republican debates thinking that one of the candidates may explain it. After all, in the run-up to the 2008 Presidential election, the GOP adopted and has maintained since then the policies of “Drill Baby Drill” and Palin’s favorite “Energy Produced in America Stays in America”. This slogan came right after signing, as one of her last official acts before resigning as governor, a contract to sell Alaskan LNG to Asia instead of shipping it to the west coast.

But no, little has been mentioned recently by any Republican about any energy policy, let alone explaining why we are exporting gasoline.

However, Oil Industry lobbyists are now threatening “political consequences” for President Obama if he does not immediately allow the construction of the XL Keystone pipeline from Alberta, Canada to Texas. Why do we need this if we are exporting fuel?

So as your wallet already knows, gasoline is taking a 9% cut from the budget of the typical American household, a level not seen in 30 years.

I have written Senators Portman and Brown asking them to explain why we are exporting fuel instead of providing some relief at the pump. I’ve also contacted my House Rep, John Boehner, but knowing he rakes in lots of cash from the oil industry and their lobbyists, I think I already know where he stands on economic theories that benefit him.

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