[Winona Online Democracy]
The problem, with fuel prices, has more to
do with refining ability and not with crude oil supplies. More and more
news reports are starting to acknowledge that the volatility is based more on refining
than ever before. Rita is a prime example as Houston sits on 25% of the US
refining capacity. It is not the drilling rigs in the Gulf that
drives the cost.
Listening to the reports it would seem to me
that two things on the supply side need to be pushed in congress. One ---Set
a national standard for fuel so that refining could be simplified as one type
would be required to work and be legal in all states in all vehicles. Two
– Remove all tax incentives in the oil industry until refining capacity
is increased by 25% and then index that number to match consumption. If
anything it would produce a glut of gasoline resulting in lower prices.
While many would argue that we want to
reduce consumption – I would argue that consumers will sort through the
issue and make the choice that works for them. Our problem now is we have
limited choice’s which then enables supply and demand forces not to work.
Refiners may be delighted to have very restrictive laws limiting their
expansion and others from entering the market place as it simply allows them to
do less to solve the problem and to reap the benefits of higher profits by
producing less.
If the price gets to low, government can
tax the commodity, as it does now to influence our choices. Using fuel
taxes to subsidize mass transit, promote windmills etc. will always be an option
once over supply is put back on the table.
Paul Double
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