You can ring the, um, let’s call it the “bullshirt” bell, loud and clear…
Yesterday the head of Chevron stood up in front of a crowd and said just that: Obama can lower gas prices if he wants. This guy must be running for political office somewhere, because the integrity of veracity seems to have completely departed from him. This statement came as part of a whining tirade that included a lot of threats about increased taxation of their industry. Doesn’t matter that their revenues are up 24% in just this last quarter. Yes, that’s right: 24%.
Now, back when I worked as a mechanic in a gas station, one of the Reps from the oil company came through and gave us a chat on what really regulates pump prices.
Short version: It isn’t politicians, it’s the oil companies. This is by their own admission.
The motor fuel market is supply-and-demand, and by tightening supply, continuing high demand creates a justifiable rise in pump prices. Right now, we have a tight situation in our local area because of the big refinery fire up in Anacortes. That sucker’s going to be offline for a year or more. Motor fuel for our area now has to come from – get this – Singapore. So gas prices are going to spike for a while, and yep, they already have. Nationally, the average price is supposed to be $3.80, but our prices are generally $4.05.
But here are some interesting behind-the-scenes facts that are scaring the pants off the big oil companies. The Seaway Pipeline owners want to reverse the flow of their pipeline from the current direction (Gulf to Central US). This means that less-expensive product will suddenly be available for worldwide shipment. So you can guess already that phalanxes of lawyers are already being mobilized to fight this move.
Stocks right now in Cushing, Oklahoma, are roughly 38 million barrels, the highest in about a year and a half. So don’t let any candidate for any office tell you that we need to get more crude oil on hand, and doing that is the solution to all our problems.
Moving crude by pipeline is fairly safe, and really, really, I mean REALLY cheap. It’s on the order of $1.10 a barrel, whereas by train is about $5 per barrel, and by truck an astonishing $24 per barrel. The Seaway pipeline can move about 375,000 barrels a day.
This will be interesting to watch what happens with this story. If we see it covered at all.
But in the meantime, don’t let anyone fool you by saying that Government regulates pump prices.