Gas Price Fixes that Won't
But Bush oversimplified the problem in saying, "we ought to expand our refining capacity by permitting new refineries and getting after it quickly." It's true that there is a myriad of federal, state and local regulations and permits to navigate for anyone wanting to build a refinery. But he ignores the fact that they are tough to build, expensive, and for many companies, simply not worth the trouble.
As a 2005 New York Times story about a company's attempt to build the first new refinery in the country since 1976 summarized:
NY Times: The business of turning crude oil into gasoline, jet fuel or heating oil has rarely been a lucrative proposition. It has dismal profit margins compared with its more glamorous cousin, exploration. It is highly cyclical and fairly unpredictable, because demand for gasoline swings sharply by season.
Ten years after the company first decided to try to build the refinery and seek permits, it still lacks enough investors and hasn't begun construction.
Someone did get something right. Bush is correct in noting that the average price for a gallon of gas has climbed $1.40 in the last 18 months, from $2.25 to $3.65. So while politicians' solutions may slip on faulty reasoning, the problem remains a stubborn fact.
Republished with permission from factcheck.org.
Sources
American Association of State Highway and Transportation Officials. "McCain's Gas Tax Holiday Would Devastate Highway and Transit Programs While Saving Motorists an Average of $28." 15 April 2008. Transportation.org. 30 April 2008.
American Society of Civil Engineers. "'Gas Tax Holiday' No Vacation for Economy, Consumers or the Environment." 15 April 2008. Denver Business Journal. 30 April 2008.
Americans for Transportation Mobility. "ATM Statement on Sen. John McCain's 'Gas Tax Holiday'." 15 April 2008. PRNewswire.com. 30 April 2008.
Bamberger, Robert and Pirog, Robert, "The Strategic Petroleum Reserve: Affects on Gasoline Prices of Selected Fill Policies," Congressional Research Service. 27 Sept 2004.
Bureau of Transportation Statistics. "Motor Vehicle Fuel Consumption and Travel." 2007. U.S. Department of Transportation: Bureau of Transportation Statistics. 1 May 2008.
Burman, Len. "McCain's Gas-Tax Plan is On Empty." 18 April 2008. The Tax Policy Center. 30 April 2008.
Energy Information Administration. "Basic Petroleum Statistics." July 2007. U.S. Department of Energy. 30 April 2008.
Energy Information Administration. "U.S. Refineries Operable Capacity." July 2007. U.S. Department of Energy. 30 April 2008.
Hillary Clinton. "North Carolina: Hillary Clinton's Plan to Address Soaring Prices at the Pump." 28 April 2008. HillaryClinton.com. 30 April 2008.
Murray, Mark. "The Downside to Suspending the Gas Tax." 15 April 2008. MSNBC. 30 April 2008.
Power, Stephen. "McCain's Gas-Tax Plan May Be a Clunker." 15 April 2008. Washington Wire: The Wall Street Journal. 1 May 2008.
"Press Conference by the President," White House. 29 April 2008.
Taylor, Jerry. "Attention Sen. McCain: Moderation in the Pursuit of Tax and Spending Cuts is No Virtue." 18 April 2008. Cato @ Liberty. 30 April 2008.
Taylor, Jerry and Peter Van Doren. "Don't Increase Federal Gasoline Taxes—Abolish Them." 7 August 2007. Policy Analysis. 30 April 2008.
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Member Comments
Posted By: weraloc @ 05/12/2008 9:49:23 AM
Comment: Do you know the difference between a moral and an economic argument? For Clinton and McClain it is a moral issue not an economic one. Economists do not recognize morality, so leave their arguments out of it.
Posted By: $2Gas @ 05/08/2008 10:05:54 AM
Comment: Demand $2 a Gallon Gas
Oil hit a new high of $120 a barrel on May 5, 2008.
The cost of making a barrel of synthetic fuel from coal is estimated to be around $55, including the sizeable infrastructure investments and the labor force necessary to operate the plant.
Petroleum poor Germany fueled WWII with synfuel from coal. It is proven technology.
America is the Saudi Arabia of coal with 1/3rd of the deposits on planet. We can eliminate dependence on foreign oil.
Reducing America???s trade imbalance, keeps money, technology and jobs here in America.
It is estimated that every billion in trade deficit equals 13,000 American jobs lost. $400 billion for oil last year: do the math.
And we can quit sending those billions to countrys that sponsor terrorism.
Synfuels are cleaner burning than gasoline and carbon sequestration can remove the CO2 hot house gases.
Visit http://governor.mt.gov/hottopics/faqsynthetic.asp
Ethanol from corn is a windfall for farmers but is it good for motorists.
After 4 months Congress is already rethinking. Unintended consequences include higher food costs for wheat, chicken, beef, pork, less grain for export, reduced gas mileage and incompatibility with older cars.
Harness your anger at the pump. Call or write your US Senators and demand a Manhattan Project to create an American synfuel industry within the decade.
If you don???t raise your voice the international companies, lobbyist and politicians will assume you are fat dumb and happy and ready to pay even more.
In Kentucky call
Senator Jim Bunning @
202-224-4343
and
Senator Mitch McConnnell @
202-224-2541
Posted By: Driver of wagons @ 05/07/2008 1:51:05 PM
Comment:
It was only a matter of time!
In this one move, the White House ended McCain's accountability for his use or abuse of the primary public financing system while putting him in position to take money for the general.
For this maneuver to have been arranged for the benefit of Senator McCain, of all people--the John McCain who has regularly, severely criticized the FEC as a "corrupt" agency--is a remarkable turn in his career as a reformer. A Commissioner who acted to enforce the law, to just raise an important question of enforcement, has been stripped of his post. This was clearly in Senator McCain's interest, this raw power play. It is also in his interest to have the FEC, back in business minus Mason, arrange for his money for the fall campaign.
He goes on to make a case that's going to be central to Obama's logic for forgoing public financing, despite his pledge to join the system: That McCain is a hypocrite on this reform issue.
For all the time that McCain has savaged the performance of the FEC, he has LED the sizeable crowd of critics who believed that the agency is too beholden, on the whole, to the narrow interests of parties and their candidates. Yesterday, Republicans could not have acted more narrowly in just this vein: effectively firing a Commissioner to immunize their Presidential nominee from enforcement action in a pending case but making sure that there is enough of an agency left to get him the money needed to finance his campaign.