Gas Prices

There are several simple reasons why gas prices are rising.

No, China is not one of them. I ran those numbers. China runs on coal, not Arab oil.

The U.S. runs on Texas oil, more than Arab oil.

But, oil ins't the problem.

Oil refineries are closing.

The remaining oil refineries are poorly run. To take my usual cheap shot at the GOP, the private industry of oil refining is run worse than any GOP nightmare. That nightmare in the GOP is always a government run program.

Here's a story that covers some of that. From that very liberal conspiracy member, the New York Times. You may need to register to read the full story.

Oil refineries across the country have been plagued by a record number of fires, power failures, leaks, spills and breakdowns this year, causing dozens of them to shut down temporarily or trim production. The disruptions are helping to drive gasoline prices to highs not seen since last summer’s records.

These mechanical breakdowns, which one analyst likened to an “invisible hurricane,” have created a bottleneck in domestic energy supplies, helping to push up gasoline prices 50 cents this year to well above $3 a gallon. A third of the country’s 150 refineries have reported disruptions to their operations since the beginning of the year, a record according to analysts.

“There is a lack of investments in modern equipment,” Ms. Merritt said. “The overwhelming preponderance is that if you have inadequate engineering and equipment, poor process safety management, and poor staffing, you’re set up for a catastrophe.”

Ms. Merritt, who was appointed by President Bush and will retire after her five-year term ends in August, also said the Occupational Safety and Health Administration does not conduct enough inspections. “There is no enforcement,” she said.

Meanwhile, demand has been rising relentlessly, providing little respite to the nation’s aging energy infrastructure. Even as consumers complain loudly about high prices, they show no signs of scaling back. Gasoline consumption reached 9.66 million barrels a day in the first week of July, the second-highest level on record.

No refineries have been built in the United States in over three decades, because refiners say they are too costly. Instead, they have been expanding their existing refineries. (to avoid compliance with EPA regulations. My note.) (roughly 300 refineries were in operation in 1980, today only 149. My note)

All this is happening as the industry goes through another golden age. After 20 years in the doldrums, the refining business has never been so good for oil companies. Refining margins — the difference between the price of crude oil and the value of refined gasoline made from it — have shot up as much as $25 a barrel for some types of crude oil, compared with about $5 a barrel just a few years ago.

So why hasn't the GOP's magic "Invisible Hand" of the greed industry fixed this problem and kept oil prices low? Because there is no "Invisible Hand" of a Market God.

And, that is how we should look at the GOP. Idol worshipers at the pagan temple of Greed.