Gail G. Welch Posted on 7:02 am

Myths and Reality – Fuel Prices

“Cost of Gas Myth Number 1”: Our fuel cost crisis is all about “Supply Shortfalls”

No doubt. The cost of gas seems always positioned to go up. It’s virtually a knee-jerk reaction to assume there’s only a problem is the cost of gas ahead of us.

There is. Yet except for the factors, most of us believe.

The supply side of the gas cost equation is as robust as ever before. Conventional wisdom reported in the media and also driven by fears that Typhoon Katrina was the beginning of our existing “fuel cost problem”, says the globe is running out of gas. Consequently, there have to be fuel rate walks. So, the rate of gas will certainly climb, media mania states.

Actually, Katrina really did not damage the Gulf States’ oil framework. For all of its damaging power, Katrina only momentarily interrupted production. The media hype did far more to encourage Americans the catastrophe bid up gas costs and – more specifically – the price of gas, to levels believed to be permanent.

Actually, the world is awash in its supply of fuel, despite greater gas rates. In 2002, the CIA World Factbook stated the world’s proven books were 1.025 trillion barrels. In 2003, British Oil’s Analytical Testimonial of World Energy gave a much greater figure, 1.15 trillion barrels. Either suffices to fulfill an existing needs – while maintaining gas costs (and also its concomitant cost of gas) – for the next 40 years.

Also in the USA, gas costs need to not be increased offered the increase in recent discoveries. The Rumbling Equine Oil area alone has an approximated untapped 1.5 billion barrels.

According to the Power Details Management (United State Department of Energy), since 2003, the united state alone had more than 30,000 oil areas, reflecting big residential oil capacity. Gas rates need to not be continually rising, offered the quantity of shown sources.

In Might of 2005 Aramco principal Abdallah Jum’ ah kept in mind the demand for 23 million barrels per day of Saudi oil manufacturing “… was not a problem” for the Saudis, that sit atop 260 billion barrels of proven reserves. Additionally, the nation approximated an additional 200 billion barrels in possible reserves. If you are looking for more information then feel free to visit NewsnReleases for more great tips and information.

” Cost of Gas Misconception Number 2″: Gas cost boosts are “lasting”.

Anxiety creates all types of illusions. That is exactly what has occurred when it comes to our “fuel cost – the rate of gas” self-inflicted (media) torment. In June 2005, the very respected Cambridge Power Associates, Inc. anticipated the supply of oil would certainly catch up in the future with demand. That would always imply a decline in gas rates. The cost of gas should show that impressive truth.

Not as well long ago, also Chevron Chief, David O’Reilly, traditionally a little a pessimist, mentioned that high gas prices were unsustainable. His August 2005 declaration:

” I do not think $70, $60, or $50 is sustainable. At these rates, demand development moderates and there is brand-new capacity beginning.”.

” Rate of Gas Misconception Number 3″: Our federal government is doing all it can to foster “actual solutions” to our gas rate problems.

Allow’s face it. We are not simply awash in products of oil. We are flooded with an oversupply of administration, (specifically) Legislative disturbance, as well as political posturing.

Since 1981, the united state has seen a sharp decline in the number of running refineries. According to the Energy Information Firm, “In between 1981 as well as 1989, the variety of U.S. refineries dropped from 324 to 204, standing for a loss of 3 million barrels daily in operable capability (from 18.6 million barrels daily to 15.7 million barrels each day).”.

By 2003, refinery closures lowered additionally to 149. No doubt, expansion in some refinery ability has repaid about 2 million barrels each day. However, that does not start to compensate for the enormous losses. Fuel rates are absolutely reflecting the loss of refinery capacity in the united state Your cost of gas at the pump is a Legislative, regulatory-induced problem, not supply trouble.

There hasn’t been a new refinery integrated into the United States for over thirty years. In short, the price of gas is dependent upon, as well as we are at risk, foreign oil production.