Wednesday, September 28, 2005

Economics of gas

We have two vehicles...one gets around 25mpg, the other about 15mpg...care to guess which has been parked most this month? Right.

Two years ago, people were commenting on the lack of refineries built in the US in the last 25 years. Guess how many have been started in the last 2 years...right, none.

People are commenting again...but of the 250 billion asked for by Louisiana, none is going to refinery building. Refineries are running full tilt and making money hand over fist, but the market isn't building more...why? Well, because we don't want more refineries. The environment would be hurt...it would mean lower prices, more consumption and that is BAD.

A recommendation that oil companies (those vertically integrated monsters) divest themselves of one part (preferably two parts) of the exploration/refining/retailing trifecta is being suggested. I have a different suggestion. How about we get rid of the requirement to blend 50 different types of gas to satisfy local environmental requirements. It would require no new refineries and no long term efforts of divesture...it is a place to start.

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