saintfan

LOL.

Now THIS is a deep rabbit hole. Unfortunately it is not so easily explained by pointing the finger at one or the other of our up and out standing political parties.

I'd like to suggest to everyone that there is no shortage of oil. Read it again. There is NO SHORTAGE of oil. There is less now than there was 100 years ago of course, but supply has adequately paced demand and will continue to do so. There is plenty of untapped oil in the world when the liberals decide they need it.

And no, drilling more North American Oil isn't going to lower the price of a gallon of gas enough to make a difference. Who Dat Cat can relax. LOL

When you ask an 'industry expert', he or she will counter will all sorts of complications. And it is accurate to say there are more than a handful of variables that determine both the price of a barrel of oil and the price for a gallon of gasoline.

Here's the rub. Oil is a globally-traded commodity. It doesn't matter that the United States in fact EXPORTS a LOT of oil. It doesn't matter, in fact, that the United States IMPORTS MOST of it's oil from Canada. Oh yes. That is true. We get MOST of our oil from Canada. Our Next biggest? Mexico. Thaaaaats, rite.

Long range tankers have NO WHERE do drop oil in the United States with the lone exception of Louisiana. Yep. That's it. Smaller vessels bring it in from all over the world...but far less from the middle east than one might have been led to believe.

But that's really neither here nor there. The fact is the commodity is a global one and so, when Opec decides to have a tantrum everyone suffers, although not as much as Opec might wish. In fact Opec has FAR less control over the price of a gallon of gas than most believe. The power lies far from Iraq.

Did you know that when an oil company refines its gasoline, that the margin for profit for the oil company is, give or take, 80 cents a gallon? Bet most of you didn't know that. The media is stupid, or at least ignorant. It is expensive to locate and drill and transport and refine the stuff. Oil companies make a LOT of money. They spend a lot too...

Did you know that between federal and state taxes you're paying anywhere from 20 to 50 cents a gallon - maybe more, at the pump? Did you know it costs more to refine "summer" gas than fall and winter gas? Did you even know there was such a thing? "Summer" gas is refined to burn cleaner. Cleaner burning gas costs more to create. This is one of the reasons gas in California is more expensive than, say, Arkansas. Emission control out here is, well, out of control, but that's only semi-related.

So, we are all familiar with the real estate bubble. Something very similar happens with commodities. It's all a bet really. Speculators have created a gas 'bubble'. In fact many speculators involved in real estate a few years ago moved to the oil industry. You betcha Betsy...

Now you can blame the weak dollar, or Saudi Arabia who may very well want to cut its production as a means to make more money so it can squash a potential uprising or reward its people to prevent one all together. Yes, demand is higher in the summer and so prices typically (although not always because of a thousand other factors) rise accordingly.

There is also the issue of refineries. They are located in places where it is easy to get the oil to them, and of course these places are prone to mother nature's wrath from time to time, and when any one of them has to shut down because of a failure or a needed fix or upgrade then, well, that doesn't help. Being physically close to one is also beneficial if only in small amounts. This too is part of California's problem, and Hawaii's, and Alaska's, and so on.

But adding more refineries won't fix Wall Street, and Wall Street boys and girls is why you are currently paying 4 bucks a gallon and I'm in California paying 4.35 for freaking mid-grade.

Oh and that oil we get from Canada? It is uber-expensive to refine. Texas Intermediate, Dubai Crude, Brent Crude...all different. TI is the benchmark, but refining one is different than refining another. This all matters.

At the end of the day you can rightfully point your finger to any number of factors that in some way or other contribute to the increase or decrease in a gallon of gas. Remember though that speculators - the smarts ones - make money going up and going down. While many of the other factors that determine gas prices are in essence 'fixed', and by fixed I mean there are justifiable reasons for them, it is the Wall Street speculators who make the most difference. The fuel that pushes economies all over the world is subject to the many times knee-jerk reaction of Wall Street.

Should it be regulated? Absolutely. Is there a politician alive today with a pair big enough to do anything about it? Nope. Sorry.

C'mon Man...