Viewpoints: Letters / Opinions
A FEW THINGS WORTH KNOWING ABOUT GAS PRICES
By David G Hanger
September 23, 2015
The following are excerpts from a SAN ANTONIO EXPRESS-NEWS business section article dated September 6. The title of the article is “PRICE OF GAS ON THE SLIDE, EXPECTED TO REST BELOW $2,” By Vicki Vaughan.
“There will be tens of thousands of locations across the country that will be below $2 a gallon” after September 15, when refiners switch to making less costly winter blends of gasoline, said Tom Kloza, chief oil analyst at the Oil Price Information Service.
The post-summer drop in demand for gasoline and a glut of crude on the world market have pushed oil prices lower. That’s the key driver behind falling gas prices.
But the swoon in gas prices is going deeper this fall than last. A year ago last week drivers were paying almost $1 more for gasoline.
And after the Labor Day holiday, demand for gas is expected to drop significantly. In the summer, the nation had “a real driving season, which is usually more mythical than real,” Kloza said.
Gas demand from Jan. 1 to Aug. 21 was up 4.2 percent, a significant increase. The growth rate accelerated during the summer months, according to data from the Energy Information Administration. The demand helped prop up prices at the pump, even as the price of oil was falling.
But once the switch is made to producing winter blends of gasoline, consumers can expect “a steady slide” in the price “that will increase as we get into October and November,” with November and December likely being the weakest months, Kloza said. “And Texas and San Antonio are places where you would see $1.75.”
In any case, refinery maintenance isn’t usually a big deal, petroleum economist Karr Ingham said.
“It’s a seasonal, short-term spike, if anything,” Ingham said. Those guys aren’t in the business of idling a refinery for a month. The effect it has on prices is very short-lived.”
As gas prices decline, consumers---who mostly used the savings on gas to pay down debt earlier this year---now are opening their wallets more often.
Preliminary data show that GDP growth “was considerably higher” in the second quarter than in the first, said Bernard Weinstein, an economist and associate director at the Maguire Energy Institute at Southern Methodist University in Dallas. “Things are starting to change. We know that consumer spending is picking up,” Weinstein said. “Consumers are starting to use that extra cash, and that is starting to affect retail sales.”
…….The extra dollars in consumers’ pockets “is having some impact, and I would expect that continue,” Weinstein said. “Gasoline prices are likely to remain low for an extended period” because of a 2.5 million to 3 million barrels-a-day glut of oil on the world market.
“From the consumers’ perspective, it’s a plus, and it should be good for the holiday shopping season,” he said.
The article concludes by pointing out that barring a catastrophic hurricane hammering gulf coast refineries, gasoline prices will remain low and declining for the foreseeable future.
That is, of course, everywhere but Alaska.
As I noted previously, the price of gasoline In Ketchikan on July 1 was comparable with the price for gasoline in Seattle and Portland. Since that time, while the price of gasoline has declined for everyone, the price for gasoline in Ketchikan has been jacked up considerably and remains at $3.50 a gallon, while the price just dropped here [Texas] to $2.01 and will be a dime to fifteen cents lower than that a week from now. This has been a consistent pattern for at least the past four years.
“Keep them dumb and keep them desperate,” is the motto of your current crop of politicians, none of whom have even opened their mouths to object to this massive and very distinct con. You have a group of duds sitting in chairs for the sole purpose of getting a nifty little paycheck, a free medical plan, and membership in PERS. The rest of the country is going to have a fat Christmas, but you are not. I certainly hope that Crowley [Ketchikan Fuel Products] has a big party for his politicians because they have helped that bunch out immensely, while dumping all over you.
I asked the question ten days ago now, “Where do these elected officials and bureaucrats get their gasoline?” The only concern about gas prices any elected official to date has expressed is for the fleet prices the government has to pay. There has been no response to my very legitimate and simple question, so I have to conclude someone is hiding something.
Whatever the case, doing nothing about this corrupt rip-off is a sell-out to the monopolist; THUS GAS PRICES HAS BECOME ONE OF THREE MAJOR LOCAL POLITICAL ISSUES IN THE FALL ELECTION.
(The other two are the massive cost overruns on this hospital projoke, and the fact none of you got to vote on any of those tens of millions dollars spent; and the “Fiefdom Extraordinnaire und Exclusionaire” that has become your city government.)
Let us review what the oil and economics analysts have told us, and remember none of them work for Crowley [Ketchikan Fuel Products].
- Winter blends are cheaper than summer blends. That is why Alaskans pay so much more through the fall and winter—because winter blends are cheaper to produce thansummer blends. Thus when our monopolist jacks his price sky high, then lies about why, he not only gets to double dip, but triple dip, and even quadruple dip because his price jack is always when both the production price and the demand price are attheir lowest point. (And Alaskans are so dumb they will not only put up with this crap, but will persistently re-elect the duds who let it continue.)
- The retail gasoline price decline is both “deeper” and much earlier this year than last. The price of gas did not drop below $2 a gallon until mid- to late-December last year. This year it has already dropped that far and will continue to drop throughout the fall. So our monopolist has already been cashing in big-time at our expense, and as each day passes that gouge just gets greater. The fact that last year the retail price was 40 to 50 cents more a gallon at this time distorts the reality that our monopolist is cashing in at a faster and higher rate this year than last.
- Refinery maintenance shutdowns do not significantly affect the retail price of gasoline. Read again what the experts say, and remember in the future this pathetic “big lie.”
- Consumers used the savings from the reduced retail gasoline prices of late last fall through the winter months to pay down debt, obviously a positive thing; but are now using the savings from reduced gasoline prices to buy new stuff. In other words the significance to consumers of reduced gas prices has been to pay off what they owe, and now is moving the whole economy upward because folks are buying things, clearly an even more positive trend. A fat Christmas is forecast. But Alaskans will not have a fat Christmas because of monopolistic price gouging, and the diversion of that fat Christmas for thousands of families into the hands of a handful of moneygrubbing greedheads.
What otherwise you are being told is that as Alaskans you are not really U.S. citizens, that for you different rules apply. While the rest of the country benefits ‘en masse’ from substantially reduced gasoline prices brought to them by that good old-fashioned American thing called ‘free enterprise,’ you are a sheep in the field, a dumb beast to be fleeced, to be used, to be cheated, routinely and indefinitely.
And you play the part so well.
David G Hanger
Received September 22, 2015
- Published September 23, 2015
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