The price of gasoline

[SuperScout]

Arthur B. Robinson is President and Research Professor at the Oregon Institute of Science and Medicine and publisher of Access to Energy, a "pro-science, pro-technology, pro-free enterprise" newsletter. More information is www.accesstoenergy.com/.

A few years ago, Professor Robinson led the "petition project" to inform American politicians and the national news media that an overwhelming number of American scientists, including large numbers of physical scientists, were highly skeptical of the core arguments concerning global warming theories. The product was thoroughly vetted and phony names were removed. The petition and the results of the project are available on the Access to Energy website.

There is a short quotation from an interview with Paul Drissen in the Competitive Enterprise Institute's Monthly Planet that serves well as an introduction to Professor Robinson's article. Drissen is a former prominent member of the Sierra Club and Zero Population Growth. Mr. Drissen said, "I'm still an environmentalist. But ideological environmentalism has become a crisis creation industry that ignores our progress and feels justified in using lies, intimidation, and even terror to advance its interests and agendas. It's anti-technology and anti-business, except for its own multi-billion-dollar, high tech international operations and the large foundations that fund it. Worse of all, it's anti-human. Eco-radicals insist that the world's poor remain "indigenous"--and miserable--while [environmentalists] enjoy the nutrition, electricity, clean water, and health care available in the developed world.

[Prof. Robinson's article]
Enviro Shortages, by Arthur B. Robinson
Access To Energy, March 2004

The pseudoenvironmentalism industry, which is a consortium of enviro-scare ?non-profit? businesses with billion dollar cash flows and backing by activist foundations with tens of billions of dollars in assets; unprincipled businessmen seeking profit from enviro lies; a litigation industry that has perverted the justice system for profit; politicians seeking office at any price; media and press organs that seek to rule the United States with propaganda; and a vast governmental bureaucracy that justifies by it-
self ?protecting? the enslaved American public from any con-venient fear available is now having a wonderful time blaming high fuel and other energy prices on everyone except them-selves. Yet, current energy shortages are entirely the work of this industry. Technological advance is steadily and inexorably lowering the realizable cost of energy, while this gaggle of dishonorable opportunists suppresses these technological benefits. ?Soaring Global Demand for Oil Strains Production Capacity? by Bhushan Bahr, The Wall Street Journal, March 22, 2004, p A2, reports that oil-refining capacity has now become the limiting factor in world fuel supplies.

The cyclical fluctuations caused by seasonal demand for heating oil are evident, but demand clearly passed refining capacity for the first time this winter. With the drop in demand this summer, the demand curve will probably decline below refining capacity, but next winter, unless weather is unusually mild or the world economy is markedly depressed, demand will again exceed capacity. So, while fuel prices this summer may once again respond to world oil prices, this dependence is disappearing. The overall upward trend in demand is a world phenomenon, with much of the increase coming from the rapid development of Asian countries and other emerging economies. It cannot be diminished by American paper shufflers. This will likely be reflected in commodity future prices for heating and diesel oil and gasoline, which may rise sharply relative to crude oil prices during coming years.

?Saudi: U. S. Laws to Blame for Gas Prices,? Fox News and Reuters, April 4, 2004, reports that Adel Al-Jubeir, foreign affairs advisor to Saudi Crown Prince Abdullah, stated that lack of refining capacity in the United States is a key reason that gasoline prices are rising. He further noted that, ?There has not been a refinery built in America in the last 20 years. So if you produce more crude oil but you can?t refine it, it?s not going to translate into gasoline.? Not only have enviro pogroms prevented the building of new refineries me the United States and caused the closing of some existing refineries, but also enviro regulations cause misuse of refinery resources.
Al-Jubeir noted this problem with the example of a refinery in Springfield, Illinois, that cannot sell gasoline in the Chicago market because the regulated fuel formulas are different. Nowhere is this craziness more evident than in California. Regardless of high Oregon fuel taxes, gasoline prices rise 40 cents per gallon as one drives over the border from Oregon to California, while diesel prices remain constant. California has regulated fuel formulas so extensively that the shortage of refining capacity has already driven California gasoline prices far above the point dictated by crude oil prices. At each California fuel pump, one reads, for example, a draconian warning that the ?State of California? has determined that the current fuel additives in gasoline cause cancer. Not mentioned is that the enviro industry of the State of California caused the passage of regulations requiring refiners to put these additives into gasoline.
How, then does Presidential aspirant Senator John Kerry respond to higher fuel prices? He says, ?By treating the Saudis with kid gloves, the president is giving them the green light to produce less oil and drive prices up.? Kerry is also a long time supporter of the ?human caused global warming? industry. He even personally authored an editorial in The Boston Globe trashing us for organizing a petition drive in which 17,000 scientists (about one-third of these are PhD physical scientists) signed a statement opposing Kyoto and indicating that C02 is good for the environment. With resources to continue sending out letters, we could easily have obtained more than 50,000 signatures. Kerry enthusiastically supports Kyoto-mandated world shortages of hydrocarbon fuels, so why is he critical of the Saudis?
As a prominent enviro industry spokesman and supporter, Kerry might also explain his prominent role in the process that has prevented the building of nuclear power plants in the United States for more than a generation, caused a shortage in deliverable natural gas even though world reserves of gas are sufficient for the next 1,000 years, and crippled the American coal industry in favor of Asian imports. Perhaps we could make an effort to harness the heat from the vast forest wildfires caused by the enviro industry, but enviro litigation prevents the use of fire-killed trees for lumber or fuel.
Energy is the currency of technological progress. This currency cannot be created by government printing presses. The realizable price of energy has markedly declined as a result of technological progress. The actual price in the United States, however, continues to rise as a result of the activities of the enviro industry. As national leaders, through their political choices, in the enviro suppression of energy and technology, Californians well deserve the first fruits of their accomplishments. Now paying $2.50 for premium gasoline, next winter they may be paying a lot more.

[This article helps explain, in painful detail, why gasoline prices are as high as they are, and why they may go even higher. When governments start tinkering with the supply and demand laws with regulations that bring higher costs to our wallets and deadlier chemicals to our environment, it may be time to relook the regulatory issue in its entirety. It also demostrates, once again, the now predictable flipflop positions of Kerry.]