Gas prices have been steadily climbing for most of this year - though the costs nationwide have dropped slightly in the past week -- and are threatening to become the most important issue of the summer. The countrywide average price for a gallon of unleaded regular gasoline now stands at just above 3 dollars, up a full 25 cents from the same time in 2006.
A large portion of the gas-buying public are heaping abuse on the 'Big Oil' companies, who are reaping huge profits from the high gas prices. However, in an industry as Byzantine as the oil/gas business it is difficult to locate one determinative factor to point the finger at. Commentators have run the gamut, from accusing oil companies of pure greed, to pointedly noting the lack of domestic oil refining capacity, to acknowledging that the supply of oil may be decreasing globally -- although those who assert the latter are discernibly in the minority at present.
Gasoline consumers all around the country are justifiably concerned about the rising prices. Recently in Texas the average price of retail gasoline rose for a 14th straight week. A weekly AAA-Texas gas price survey showed uneven price trends, with costs reaching record highs in some areas but falling in others. Auto club spokeswoman Rose Rougeau said that Texas cities Amarillo and El Paso were at all-time highs, while costs edged lower in eight other cities. Rougeau posited that strong consumer demand, lessened domestic output because of refinery problems and lower gas imports apparently are all working to keep prices high.
In nearby Arizona, gas costs also recently rose for about 14 week in a row. According to an AAA-Arizona survey, the statewide average for a gallon of regular gas was 3 dollars and 9 cents per gallon. That's one cent below last summer's steepest price, and moving closer to the all-time record of 3 dollars and 13 cent per gallon set in Sept. 2005.
Getting back to the theories of why gasoline costs keep going higher, the dearth of oil refining capacity seems to be the most popular response. Some industry commentators blame Congress, saying that the legislative body is preoccupied with forcing auto companies to meet unrealistic targets for fuel efficiency, while not taking the time to address the oil refining problem. On May 8, the Senate Commerce Committee voted to raise fuel economy standards to an average of 35 miles per gallon by year 2020 for cars and light trucks, with standards rising on a four percent annual basis until 2030.
According to some industry observers, Congress has depressed the construction of new oil refining capacity through proposed legislation that punishes refiners when prices rise, that imposes extensive and expensive permit requirements for construction of new refineries and expansion at existing sites, and that allows for an increase in tort risk.
Construction of more refineries would certainly ease the problem of supply, but because they have been proven to be so damaging to the surrounding environment, it is very difficult to find a community that will support a new refinery. Under the logic of 'NIMBY' (Not In My Backyard), consumers like to get gas at low prices, but they don't want a refinery close to home.
Matthew Paolini is a consultant with
Citybook.com for the
Phildelphia, PA business Yellow Pages division.
