Tuesday, July 3, 2007

High Energy Costs

From the Christian Science Monitor:

Kilowatts, gallons — they all add up. Energy is now sucking money out of Americans' bank accounts at a record level — hitting $612 billion at an annual rate in the month of April, the last month of data. Over the past two years, energy bills as a share of income have risen and are now at their highest point since 1987, but still below the levels of the 1970s and early 1980s. For low-income households, some economists estimate energy consumption as a percentage of income is closing in on 10 percent.

Ignoring the crying about the "price paid by the little guy..."
Why are the prices so bloody high?

Political unrest in places like Iran and Venezuela? Well yea. To a small degree.
Global demand? And the increase in places like China? Not really. Otherwise places like England would have a surge.
Evil oil companies making a profit? Well duh... But that's what companies do. All businesses are in the game to make a profit.

So what's the frigging hangup?

Idiotic liberal politicians who have about as much business sense as your average six year old dictating how the game is played.

Whereas the evil gas companies that: find the oil, drill for the oil, transport it, convert it to multiple different types of gas, put in unneccessary additives, etc. etc. etc. are demonized for adding a (overexaggerating) quarter to the price that it costs them to make it so they can make a profit...no one on the compassionate left is complaining about the federal government making between 60-80 cents a gallon, when their only contribution is to raise the price of gas at every stage of its development.

Let's look at the government's role in the price of gas.

1) The government limits the places that the oil companies can dig. Whereas we have no shortage of places that the oil companies could dig for a modest fee to the government, they must instead pay massive prices to private land owners or foreign governments for their oil.
2) The government makes it almost impossible to build new refineries or upgrade the old ones. This adds more transportation costs. If we drilled in Alaska, and built a refinery there, the price of that gallon of gas would be almost 75 cents less than any we imported from overseas. Instead, if we drill in Alaska, we have to transport the crude oil to a refinery in (let's say) Ohio. It is then refined and the gas Alaskans need is sent back. Efficient? Hardly. Costly? Quite.
3) The federal government mandates that oil companies add ethanol to gasoline. Ethanol costs a lot to transport. It degrades quickly, and reduces fuel performance. So not only does it INCREASE polution and INCREASE the cost per gallon of gas substancially...but it DECREASES the number of miles you get per gallon, making you have to buy more. Fantastic!
4) They recently eliminated tax cuts for the oil companies. It costs the oil companies more to do business...and they pass that on to us.
5) The federal government, despite all the costs that they add to the product, then add Special taxes on gas to the tune of 60-80 cents to the gallon. This is before state and local taxes, and even sales tax are included...so we get taxed on the tax.

You know, it's great that the newscasters care so much about "us little people", but perhaps in their zealousness to help us...they could at least mention the part the federal gov't plays in raising the price of a gallon of gas by over a dollar per gallon.

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