Quote:I heard today on the radio only 7% of our fuel comes from the Gulf area.
Just about 25% of the U.S.'s total consumption comes from the Gulf's (of Mexico) refineries. Of this 10% is imported oil that is off loaded at the LOOP (Louisiana Offshore Oil Port), the nation's only deepwater tanker terminal, which typically receives almost a million barrels of foreign crude oil a day.
Katrina has affected a number of factors in the U.S. delivery of Petrol.
1. Both man and unmanned oil rigs had been shut down in anticipation of the storm. This goes for the LOOP also.
2. The extensive network of pipelines that carry the product from the well heads to the refineries has been damaged by underwater mudslides caused by Katrina.
3. A large number of refineries in the area were shut down as a precautionary measure pre-storm and only now are some coming back up.
4. The large pipelines going from the refineries to the Midwest, southeast, and northeast areas of the country were affected by this storm. The experts feel it won't be long before these will be restored (weeks or less). The one to the northeast has now been brought online and this, coupled with the end of the summer drive season, is the reason we in this area have seen a small decrease in gas at the pump.
Just a word about prices and price controls:
Prices are merely an economic signal. They inform the consumer as to a product's or service's value or availability. When "well meaning" politicians pass and enforce price controls this signal is obliterated. Recent calls by some members of Congress to criminalize "price gouging" are similar to the passing of the 55mph speed limit -- it makes felons of regular law abiding citizens. Absent price controls President Nixon would have had no need for this move (another phenomenon attributed to price controls--you see price controlsare like telling a lie that then leads to another and so on) The example of the ?'70's gas lines has been cited but more contemporary examples abound. Recently Indonesia has let gas prices rise to alleviate "subsidy pressures". Then there was the recent gas shortage in one of the Chinese mainland's provinces where the price is controlled. The solution there was to quickly take gas from other areas (probably less affluent and certainly less potentially politically noisy) and shift it to the area where fights were breaking out in the gas lines (sound familiar?).This is merely robbing Peter to pay Paul.
Further, many define "price gouging" as when a station owner charges much more than the current mark-up for gas he had purchased at a lower price. But the station owner's concern is not the gas from his last delivery it is that of the next. If he cannot pay for that next batch, he is out of business, in which case the consumer gets no gas at all.
Thirdly, many criticize the "Big Oil" companies for not increasing production so that all our lives will be easier. But how are they to do this and, more importantly why would they do so, if price controls guarantee they will lose money on their investment? The signal of higher prices informs these companies it might be time to try to tap those fields where extraction is more expensive but now profitable. None of us go to work to make our boss's lives easier or better so why should any oil company do this? Oh, by the way if you own stock in the oil companies this lesson is not lost on you, but to those who so complain about these companies and own mutual funds?-check the prospectus under the heading Energy Sector before slipping into self righteous indignation.
JM
