Blame Only Ourselves for High Gasoline Prices | RefinerLink
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Blame Only Ourselves for High Gasoline Prices

By Steven Pagani

Feb 28, 2012
 

It’s easy to place blame on others else for matters that we cannot directly control. The price of transportation fuel is something that many feel powerless in influencing, but we shouldn’t be so quick to point fingers.    

 
 

I am no different than the average consumer.  I commute to work every day, and I also pay big bucks to re-fill my gas tank every week when my gauge runs empty.

 

While I cringe each time I see the cost of every refill, I do not place blame on anyone but myself for the high cost of fuel today.  Many less informed people like to believe that Oil Corporations have deft control over the price of fuel in the market.  Others like to blame the government.  Few truly believe that we operate in a free market where actions of the general public drive the changes that we see.

 

The business of oil is a global market in the truest sense.  Crude oil is shipped from one part of the word to another, and so are many refined products such as Jet, Gasoline, and Diesel.  To believe that any one agency or corporate body can control global free market trade is just plain unreasonable.  On the other extreme, it is just fear mongering. 

 

I’m not going to deny that actions cannot influence the market, surely they can.  But what I strongly believe is that our position today is an aggregate of many actions that have a compounding factor that no one entity controlled or anticipated.  Are you a disbeliever?  Let’s take a look at current events.

 

  • Libyan Uprising creates geopolitical disturbances that elevate crude prices
  • Increased midcontinent US Oil production generates margin relief to some domestic refiners
  • Poor refining margins result in East Coast, Northwest Europe, and Virgin Island refinery shutdowns
  • Iran Nuclear Crisis jolt oil prices

 

 

 

Do any of these activities appear planned by any one group?  Do you disagree with the causal link between these global events and the price of oil and transportation fuel?  Do you actually think that any one entity had the ability to drive or counteract these disturbances by quickly switching a knob?

 

If people want to place blame on the high cost of fuel, we should accept accountability for our own actions. 

 

  • We are the ones who want to minimize domestic production of oil
  • We are the ones who want to enforce stricter environmental regulations
  • We are the ones who want renewable fuels
  • We want higher efficiency motor vehicles

 

All of the actions above have created an ultra-competitive environment that has little ability to buffer the impacts of product supply disruptions.  I am not saying that any of the above desires are wrong, but these actions have consequences.  As we over-constrain the industry’s ability to manage market disturbances, volatility increases.  This volatility occurs against the favor of the consumers, and we should be conscious of that relationship. 

 

Human beings have an affinity to conflict, and we can never expect geopolitical tensions to ever ease.  We must instead increase our understanding on why oil and refined product prices fluctuate.  Accordingly, we need to modify our expectation to be more receptive to the supply & demand fundamentals. 

 

Alternatively, find ways to reduce your dependency on fuel.

 
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