Fwd: Re: US Gasoline Prices

[Chris Dyer]

I concur. Ride a bike, bus, train, Nikes...now THAT's a boycott.  Oh, and 
quit using plastics.


>From: Kelvin <kelvin at ptdprolog.net>
>CC: <quattro at audifans.com>
>Subject: Re: US Gasoline Prices
>Date: Wed, 18 Apr 2001 18:20:00 -0400
>
>There are at least two reasons why a worldwide boycott wouldn't work,
>aside from the near impossibility of implementing it:
>
>      1) Gasoline is a fungible product. The gas you buy from the Texaco
>station is very likely to have been produced in the very same refinery
>run as the gas offered by the Exxon (Esso in the UK) station across the
>street. In other words in a given geographical market gasoline is often
>supplied to every named outlet by from one to three refiners. Each
>distributor simply dumps in their proprietary additives at its terminal
>to give their product its unique twist. After all 91 octane gasoline is
>91 octane gasoline no matter who makes it. So if you try to punish
>Exxon/Mobil by patronizing the Hess station down the block, the odds are
>you are still buying gas produced by Exxon/Mobil.
>
>      2) The price of gasoline is driven by the balance in the supply and
>demand equation. Although the members of OPEC control less than 50% of
>the world's crude production, they can influence the price of crude. And
>they do. They cut production late last year because they thought the
>price had fallen too far. And their production cuts have brought the
>price back up. So long as no member of OPEC or a large producer who is
>not a member, like Mexico, Britain, Norway, or the US, gets cash hungry
>and begins producing crude in record quantities, OPEC will manage the
>supply to meet the demand and keep the price stable. And we'll pay the
>price no matter where they set it, so long as we live by our cars. And at
>current price levels for a barrel, the US is producing all the crude it
>can produce. However, if the price were to rise to say $50/barrel (it's
>now about $30/barrel), US producers (and producers elsewhere) would bring
>on line new supplies in the form of new wells and reopened old wells
>where the production costs exceed $30/barrel but are less than $50/barrel.
>
>      In short there is little we as individuals can do about the price of
>gasoline, even including legislating it. To do that, which is what the
>bright lights in California tried to do with the price of electricity
>recently, is intellectually the same as the attempt a century ago by some
>members of the Indiana state legislature to legislate the value of Pi at
>an even 3, in the belief that the value 3.1416... was a plot by
>pointy-headed intellectuals to make our life difficult.
>
>      As far as the current price of gasoline is concerned, it's actually
>not as expensive as it was during the OPEC embargoes of the 70's when the
>price ran to over a $1.40, which would be more than $3.00 today. And even
>the prices in the 50's, when we imported almost no oil from abroad and
>gas was considered cheap, ran around 25¢, which today would be well over
>$2.00. So I really see little reason to gripe. In the US we spend less on
>gas today as a percent of our income than at any time in history. And if
>you don't like the price in the US, move to Europe. You'll like their
>prices(probably $3.00 to $5.00/gallon) even less, although those prices
>are driven by extraordinarily high taxes, at least from the North
>American perspective.
>
>Kelvin Kean
>Pennsylvania
>
>

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