Why Gasoline prices are high

Excluding some of the war factor, and the N.Y. speculators.I will make it as simple as I can. I am an EX. Refiner. I was in the refining business under Gov’t price controls mid 70’s and decontrol, early 80’s, which closed
over 1/2 the refineries in the Continental U.S.

In 1980, there were
approximately 340 refineries in the U.S. currently we have 149 refineries
operating. That number was updated from the NPRA(National Petrochemical
Refiners Assoc.) on 5/19/04. In 1980, we had 13 Refineries operating in
Oklahoma we now have 5. There has not been a new refinery built in the U.S.
since that time. There in lies the first problem in basic supply and demand
economics. To build a new refinery it would takes an average of eight years
getting the permitting. Our next problem is that historically the refining
business has returned on investment approx. an 8% return. Not a very good
business and surely not one that you would want to get into with the
environmental and liability issues. Lastly, and most important is the Gov’t
issues. ie; Clean Air Act, MTBE(Oxygenates), Vapor Pressure, Sulfur,
Emissions, just to name a few. What this has produced is approximately 37
different grades of motor gasoline( This number is approx.) The DOE nor the
NPRA has a definitive number. The NPRA told me it was a good ballpark
number.These different grades of gasoline have been imposed on us by State,
City, County, Gov’t regulators. This is a distribution nightmare.All these
different grades of motor fuel require tankage, pipeline inventory, etc. Do
we get the picture yet? Do you still think crude prices or the Big Oil
Companies are to blame? It is our legislative branches of Gov’t who set the
ground rules for how we produce gasoline, and how we tax it. One of my past
job responsibilities was gasoline blending. The industry has lost motor fuel
volumes due to the new Vapor pressure restrictions. In addition, to the
Oxygenates ie; Ethanol, MTBE, TAME, that in certain area’s you have to put
it in MG, you once were able to blend Natural Gasoline,Naphtha’s, Butanes,
and other aromatics in the motor fuel pool year round. This has been greatly
reduced during the summer months and thus has shrunk the supply of
Motorfuel. Solution: Get government out of the business, which wouldn’t
happen. Second, why not make a single grade motorfuel( 3 octane’s) that all
refiners can make and would be environmentally acceptable. That’s too simple
for our Gov’t. Build new refineries, not in my back yard. Release SPR crude,
who’s going to run the crude when our refineries are already running at
capacity.Lets hope we all buy a Honda civic for our next car.
> >
> >Lee R. Carlson
> >Ican Energy Co./ Mangum Oil & Gas
> >7229 S. 85th E. Avenue, Suite 200
> >Tulsa, Oklahoma 74133-3134
> >Office: 918-249-3555
> >Fax: 918-250-2699