The Real Reasons Why Gasoline Will Cost More

The Real Reason Why Gasoline Costs More - Alan Caruba - Jul 29, 07
You’re looking at a world that needs new production estimated at four million barrels per day and it’s not going to happen. You don’t just create production or refining capacity overnight. It requires lots of money, something the free market Big Oil companies have been willing to risk up to now. That’s something Communists don’t do.

There are other options, but right now the Democrats that control the U.S. Congress, led by Speaker Pelosi and Sen. Harry Reid, are howling like moon-besotted coyotes that the United States must become “energy independent.”Congress is refusing to allow known, vast oil reserves in Alaska to be extracted, nor facilitating exploration and extraction of other potentially vast reserves of oil and natural gas off the continental shelf of the United States. Indeed, they want to punish Big Oil for whatever profits they may have garnered from their investments in the Gulf of Mexico.

The vast matrix of insane “environmental” laws and regulations has made it impossible, i.e. unprofitable, to build a single new refinery in the United States since the 1970s. The New York Times recently reported that mechanical breakdowns in U.S. refineries “have created a bottleneck in domestic energy supplies”, helping to drive up the cost of gasoline. Even if an oil company was to begin construction tomorrow, you’re still years away from it coming on line. Instead, the Democrats are wailing about “global warming” and “climate change”, demanding the imposition of “cap and trade carbon credits” and, in general, racing toward the worst possible choices for a nation whose energy needs are being ignored in the name of fraudulent science and pure politics.These are things you need to think about as the cost of a gallon of gasoline goes up at your local gas station or the price of heating oil rises as winter closes in on the northeast and elsewhere.

When gas and heating is over the equivalent of 5 dollars a gallon it will become a critical issue. However at that point it will take 10 years to do anything about it. There are only two things that can prevent $5 gas for the next decade. One is a serious world recession and the other is the end of all the issues like terrorism, environmentalism as well as greed from the oil producing nations.

World recession or depression is a real possibility in the new few years and energy prices could help bring it about. If there is a world downturn the consequences for oil prices will be favorable but the economic costs to people on earth will be even greater than high oil prices. The second possibility will not happen soon enough to benefit people in this decade but a successful war against radical Islam might make for lower oil prices in a decade if we can get Iraq and all other oil production up to its full potential. Environmentalism and lack of refinery issues will also need to be fixed and that will also take a decade or so.

Therefore, if there is not a world downturn expect $5 gas in normal times and $10 gas in times of disruptions for at least the next decade. The political consequences will be immense. People who can do so might start considering moving off grid or where they can use public transportation facilities. If there is a world downturn the consequences for oil prices will be favorable but the economic costs to people on earth will be far greater.

Unless there is some magic breakthrough in energy we will have immense problems in the near future. The main focus on all levels should be to find a solution to the upcoming shortage of cheap energy. Some think that solar will provided the answer to cars. It will not. Due to Global warming hype we will soon have much more expensive electricity and a shortage of electricity will develop as well. At that time you may wish to plug your car into your power plug to charge it but your house will have already used your daily ration. If you want more than your ration to charge your car you can do so but it will cost ten times more per KWH.

The sooner we get serious about these problems the better off we will be. Meanwhile, prepare to pay $100 every time you fill up your gas tank and expect to pay $600 a month to heat your homes in cold states in the winter or expect a depression. A Depression or run away inflation is the likely outcome for many other reasons anyway but when the recovery comes we will still be hit be the same old problems if we have not dealt with the energy issues.