Wednesday, August 31, 2005

Gas Prices

Go fill up NOW, folks.  I know I'm leaving right now to do just that.  We'll have $3-$3.50 gas prices for a couple of months, so go buy gas while it's still below $3 (according to WMAZ).  And for those of you who feel like reminiscing, does anybody else remember this?

http://www.usatoday.com/money/autos/2001/11/16/gas.htm

So what is the difference in November 2001 and now?  First, OPEC has since cut production.  Second, the Chinese demand has increased by over 40% in the last 4 years, according to the Energy Information Administration (throw in the surge in Indian demand, and overall world demand has skyrocketed).  Third, political instability in some oil-producing regions (Venezuela) and anti-American sentiment in others (the Middle East) are leading to some disruptions in supply.  Fourth, Katrina is the fourth named tropical storm to pass through the Gulf region this hurricane season (weather.com), disrupting drilling and (much more importantly) refining capabilities.  You'll hear some on the left talking about the oil companies making huge profits and price gauging all of us.  Don't listen to them.  The oil companies make less than a 7% profit margin (American Petroleum Institute; http://api-ec.api.org/filelibrary/Third%20Quarter%202004%20Oil%20and%20Gas%20Profit%20Margins.pdf).   Add in the other factors present, and the oil companies are making much larger NET profits, but not because they're the ones raising the prices.  In fact, the government makes more money than the oil companies when you pay for gas.  Total (federal and state) gas taxes come up to about 44 cents per  gallon, which varies by state (this was the tax rate indicated on a few pumps in  my home county in North Carolina this summer).So what solutions  are there for the high gas prices?  Here's a hint:  They all involve smaller government!  First, cut government regulation on the oil market.  There are over 40 different blends of unleaded gasoline being sold in the United States.  Fortunately, the EPA today (and Sonny Perdue in Georgia) cut the volatility and sulfur regulations, effective until September 15.  This should be done permanently.  There is no reason why a gas station in Georgia should be selling unleaded fuel any different from that sold in Iowa, or California, or New York.  This will bring down the cost for the oil companies, and therefore the cost for us as consumers at the pump.   Second, allow the oil companies to drill for and refine more oil in America.  Under the Gulf of Mexico are oil reserves that dwarf those in the Middle East.  Let's start pumping oil out of there so we can increase worldwide supply and bring down costs in America.  Of course, we would have to refine the oil somewhere.  That somewhere is going to have to be in the United States.  As it stands now, the biggest problem with gasoline supplies is that we do not have enough refinery capacity.  A refinery has not been built in the United States in over 30 years.  Let's start building them now.  Third, allow for the production of nuclear energy in the free market.  Nuclear power is the cleanest and most efficient form of energy known to man, and the waste is much easier to dispose of than the radical left would have you believe.  Let's use that resource to decrease the overall oil demand.  Fourth, cut the gasoline tax.  It's just another way of Uncle Sam getting into our pockets.  Let's make him take his hands out of our pockets a little bit.  In other news, I should be on the air starting next week.  Keep watching to find out--I'll let you know before my first day on the air.