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Effect Of Gas Prices
Matthew Paolini
Gas prices have been steadily climbing for the past few months - though the costs nationwide have dropped slightly in the past week -- and are threatening to become the biggest concern of the summer. The national 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.
Many have directed their ire at the 'Big Oil' companies, who are reaping huge profits from the high gas prices. However, in an industry as complicated as the oil/gas business it is difficult to locate one determinative factor to point the finger at. Analysts have run the gamut, from lambasting industry executives, to pointedly noting the lack of domestic oil refining capacity, to admitting that the supply of oil may be decreasing globally -- although those who assert the latter are distinctly in the minority at present.
Gasoline consumers all around the country are justifiably worried about the rising prices. Recently in Texas the average price of retail gasoline climbed for a 14th straight week. A weekly AAA-Texas gas price survey showed uneven price trends, with prices reaching record highs in some areas but falling in others. AAA spokeswoman Rose Rougeau said that Texas cities Amarillo and El Paso recently set new record highs, while prices edged lower in eight other cities. Rougeau posited that strong consumer demand, decreased domestic output because of refinery issues and lower gas imports apparently continue to keep prices high.
In nearby Arizona, gas prices also recently rose for roughly 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 a penny below last summer's costliest price, and creeping closer to the all-time record of 3 dollars and 13 cent per gallon set in September 2005.
Getting back to the theories of why gasoline costs keep going higher, the lack of oil refining capacity seems to be the most repeated response. Some industry experts blame Congress, saying that the elected officials are 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 in 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 penalizes refiners when prices rise, that levies onerous and costly permit requirements for construction of new refineries and expansion at existing sites, and that allows for a degree of tort risk.
Building more refineries would certainly ameliorate the gasoline supply problem, but because they can be so damaging to the surrounding environment, it is very hard to find a community that will endorse a new refinery. Under the logic of 'NIMBY' (Not In My Backyard), people like to fill their cars up at low prices, but they don't want a refinery close to home.
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