Gas pricing: The reality

As we suffer from much higher gas prices at the pump, many unfounded rumors swirl around as to how the price of auto gas at the pump is established. Basically, it is simply the Law of Supply and Demand.

Crude oil, irrespective of where it comes from, is a global commodity and, as such, is traded across the global commodity market -- just like wheat, corn, or cattle futures. The global market price for crude oil is based on the amount of crude oil that is up out of the ground and in transit by sea, by 18-wheelers, in the pipelines, in storage tanks, and at the oil refineries.


Based on fairly accurate knowledge of how much crude oil is up out of the ground, the world price for crude oil is established. When the supply goes down, the price goes up. When the supply increases, the price goes down.

The radical environmentalists spread the rumor that the U.S. exports oil to other countries and, therefore, does not need to increase its domestic oil production. Actually, the U.S. is a net importer of crude oil. In short: we import far more crude oil than we are producing.

Nevertheless, we do export a small amount of “refined” oil products to other countries. Here’s why: Our oil refineries are designed to produce far more unleaded gasoline than diesel fuel. So, the reason diesel fuel is so much higher in price now than auto gas is because the supply of diesel fuel is so limited compared to the supply of unleaded auto gas. Higher diesel-fuel prices translate to higher prices for food and for all consumer goods.

While we do export a small amount of auto gas and other refined-oil products to Mexico and Canada, we do so in exchange for more diesel fuel for our trucking fleets and for other consumers of diesel fuel.

Due to the radical environmentalists, we have not built a new oil refinery in this country in 40 years. If the Obama Administration would allow them, new refineries would be designed to produce as much diesel fuel as auto gas. Unfortunately, to reconfigure our current refineries would be prohibitively expensive.

As for our abundant coal reserves, in 2008, Candidate Obama told ABC News that he plans to tax our coal-powered plants into bankruptcy and use the taxes collected to develop alternative energy sources.

Another rumor: Big Oil gets big tax breaks. According to the Congressional Budget Office, the tax preferences for all fossil-fuels amount to $2.5 billion per year, enough to run the U.S. government for about six hours. Renewable energy gets 68-percent of the tax breaks, fossil-fuels 15-percent, and nuclear energy four-percent. Twelve percent goes to energy efficiency incentives like Mr. Obama’s favorite $50.00 light bulbs, Solyndra solar that gave $370,000 in bonuses to 20 executives and went bankrupt, and the $250,000 per car subsidies for the failed Chevy Volt.

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http://www.central-view.com/past.asp?number=1614

Gary L. Bauer: Business; Promote Pain

Senate Democrats today resorted to populist demagoguery in an attempt to avoid blame for high gas prices. They hauled the heads of the big oil companies up to Capitol Hill and berated them for making profits. They did it because they know we are unhappy with the high price of gas, and they want us to blame everyone -- oil companies, Wall Street speculators, SUV owners -- except Obama, Reid, Pelosi and their anti-energy policies.


This hearing won't do a thing to lower gas prices. Nor will the Democrats' preferred solution of raising taxes on oil companies. But the hearing did serve a useful purpose: It exposed the economic ignorance and arrogance of Washington's liberal elites.

During one exchange Sen. Jay Rockefeller (D-WV) accused Chevron CEO John Watson of being "deeply, profoundly, out of touch" for not endorsing the Democrats' calls for "shared sacrifice." To his credit, Watson fired back, telling Rockefeller, "I don't think the American people want shared sacrifice. I think they want shared prosperity."

Watson is right. Americans want policies that will create jobs and grow the economy. Unfortunately, we have gotten wasteful stimulus spending, a socialized medicine scheme and policies that seem designed to cripple America's domestic energy production. We are subsidizing Brazil's oil industry while we are attacking our own domestic energy industry. The liberal war on U.S. energy translates into a war on U.S. energy jobs.

http://www.ouramericanvalues.org/

NC RENEGADE: Frank Roche Explains the Dollar Index

Frank Roche Explains the Dollar Index

May 6, 2011 at 1:51 am

The government released data on May 5th showing an unexpected increase in people filing for unemployment benefits. This caused the stock market to drop 100 points but due to the “bizarre correlation between equities and the dollar”, the US dollar strengthened. Frank Roche is running for the US House of Representatives in 2012 and explains why this happened:
watch?v=Z8nanjnXPgs&feature=player_embedded

This correlation is more verification for me personally not to buy equities. The good news is that gold is still in positive territory over the last 30 days and that oil dropped below $100 per barrel.

David DeGerolamo
NC Renegade
http://ncrenegade.com/