WHY FILLING YOUR TANK COSTS AN ARM AND A LEG
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WHAT do the French and a possum have in common?
No, this isn’t a column about scents, you ugly American!
Today I’m writing about the excuses being given for the outrageous price of gasoline these days – and the French, a possum and a raccoon are just some of the smelly critters allegedly to blame for the sad state of your household budgets.
I say “allegedly” because nobody really checks on why gasoline refineries aren’t working nearly as hard these days to fill the tank of that gas guzzler you should have gotten rid of years ago.
These are privately owned facilities, and if a company wants to shut them down, nobody can tell it otherwise.
That’s why you’ll be paying record gas prices this Memorial Day.
And since Washington is unwilling to even try to change the driving habits of Americans – nor anxious to clean the fossil-fuel stink from our environment – we are going to have to endure constant assaults on our wallets.
Gasoline right now is near a record high because American refineries are working at only 89 percent of their capacity.
The experts say that the joints that turn crude into fuel should be humming along at 93 to 95 percent of their output at this time of year.
That’s where the possum and the raccoon come in. We’ll get to the French later.
A while ago a possum ran into the power lines at a Los Angeles refinery owned by ExxonMobil in what was probably a suicide – having failed, no doubt, to get a part in a Disney film.
The raccoon thought it was such a good idea that it, too, sabotaged a plant.
And an 18-day strike of French dockworkers recently caused imported gasoline supplies to drop.
If you Google a Web site called Energy Assurance Daily, you’ll see all the other things that go wrong with refineries – everything from itty-bitty fires to, well, itty-bitty power outages – and you’ll see just how easily it is to crimp supplies.
Now I’m not saying that oil companies are purposely creating a shortage of gasoline. Nah, who would ever think they’d do that?
Well, actually some people do.
One energy trader thinks that oil companies would just as soon keep gasoline in low supply which will help keep prices up.
That’ll continue to happen, he believes, until the price starts to slide and economics suddenly takes over.
“If crude starts sliding, they are going to be cookin’,” he says, meaning they’ll make a lot of gas.
“If they see an inkling of prices starting to fall off, they are going to be sitting on very expensive crude.”
Because of low production and formulation shifts, gasoline supplies are 11 million barrels below where they should be this time of year.
One expert says “that’s not a lot.” Others think the amount is significant enough to be troublesome.
The folks at the U.S. Department of Energy don’t believe companies are intentionally reducing supplies, and take gasoline producers at their word about animals and Mother Nature messing up the market. But they also can’t be sure.
Doug MacIntyre, a senior oil analyst with the U.S. Energy Information Administration, says the number of unplanned plant outages has been unusually large this year.
But he says the government doesn’t keep track of which plants are down for normal maintenance and which ones are closings for emergencies.
Could some of the closings be something other than true emergencies?
Could companies be trying to keep the price of gasoline up?
“You can’t rule out anything,” admits MacIntyre. But he adds that such a tactic would be extremely dangerous for a corporation.
“To hold back in the hope that (the price) goes higher just strikes me as a very risky proposition.”
Still, experts say that oil companies got clocked last winter when warm weather caused demand for home heating oil to be lower than expected.