Fuel Prices

flyover

flyover

New Member
There's a lot of talk about fuel prices. The latest spike will probably be the catalyst to put the rest of the airline industry into bk. But it is necessary to maintain a little perspective. Adjusted for inflation gasoline/fuel prices are about 50% below their highest levels, which were back during the Carter administration.

This is good news and bad. It probably means that fuel could easily double and then be at record adjusted prices. But talking about record prices without adjusting for inflation is quite distorted. In a way it shows that the idea of $25-$30 a barrel oil was awfully optimistic given historical prices. Also one of the biggest factors driving our high gas/fuel prices is the lack of refining capacity in the US. No one has been able to build a new refinery in over 25 years here.



Gasoline (inflation-adjusted)

Since 1920
 
Why is that (the refinery problems)? Is it lack of room? Doubt it. Lack of startup costs? Doubt that, too. Returns on that kinda work are big enough investors would probably line up around the block. I'm betting the all important "environmental" issues. A few years ago, I probably woulda been on the side of the spotted owl and co, but I'm starting to swing the other way.
 
Kellwolf, you hit it right on the head.

There hassen't been a new refinery built in 30 years.

Dozens have been shut down because updating them to comply with new EPA regs is cost prohibitive.

Oil cosumption has steadilly increased.


The other big problem is that unlike JetA, several states have their own "special" blend of gasoline. CA is a good example, their blend of gas is only good for their state and can't be used anywhere else, nor can anybody else's gas be used in CA.

Refiners don't want to overproduce gas for the CA summer (different from winter blend) because then they would have wasted product, so they make just enough, and if/when it runs short refiners must scramble to make extra. This is extreamly expensive, and that cost is passed along to the consumer.

If we would adopt a nationwide standard for gas you would see about a 25 cent drop in some markets.
 
You must log in or register to reply here.
Back
Top