Fw: thoughts about gas out

Mary Calhoun moriah at preferred.com
Thu Mar 23 15:43:19 JEST 2000


Friends,

The message below was posted on the Friendly Nuisances list last week, and I
repost it here because it doesn't yet seem to have been on
sayma at kitenet.net -- and because it gives some rather cogent information on
the topic.

Mary Calhoun
Foxfire FM
SAYMA

----- Original Message -----
From: Nancy M. Whitt <nmwhitt at samford.edu>
To: Thais Carr <Tenndillo1 at aol.com>
Sent: Friday, March 17, 2000 2:38 PM
Subject: Re: thoughts about gas out


>
> On Fri, 17 Mar 2000 14:10:02 EST Tenndillo1 at aol.com wrote:
>
> > This was passed along to me & I thought he had some valid points.  I
confess
> > as I fill up my Toyota Corolla I chuckle at the gas-guzzling SUV's
> > surrounding me on all sides.  One thing I noticed almost immediately
both
> > times I visited Ireland was the almost total absence of gas guzzling
> > vehicles.  Yet somehow they manage to shuttle their kids, haul horses
(with
> > Toyota pickups most often) & all those other things SUV-owning friends
tell
> > me they need theirs for.
> > Thais Carr
> >
> > <<
> > Why a "Gas Out" Won't Work
> > by Gary Foreman
> > gary at stretcher.com
> >
> >        I don't know about you, but I'm sure tired of rising gas prices.
And
> > based on my mail, many of you feel the same way. Lately I've received
> > dozens  of copies of an email encouraging people to support a "Gas Out"
> > April 7-9. Everyone would refuse to buy gas those days. The email says
that
> > last year's effort was successful in sending a message to those that
> > produce gasoline and we need to do it again.
> >        You're not going to like what follows. In fact, some of you will
> > probably think that I work for the oil companies. I don't. But I can
pretty
> > much tell you that "Gas Out 2000" won't work. It might draw some media
> > attention. But it won't change the price you pay at the pump by one
penny.
> > And if you'll consider the facts, you'll understand why.
> >        According to the American Petroleum Institute, Americans consume
> > about  8.4 million barrels of gasoline and 3.5 million barrels of
heating
> > oil/diesel fuel daily. That's about 13 percent more than we used 10
years
> > ago. We import a little more than half of the oil that we consume. So
use
> > is up and we're still very dependent on the OPEC.
> >        If we compare historical gas prices we'll learn something
> > interesting. Retail prices peaked at $1.35 per gallon in 1981. In 1998
they
> > were as low as $1.22 per gallon before jumping all the way to $1.44 in
> > February 2000. And the trend continues.
> >        But that really doesn't tell us what's going on. A number of
> > different costs go into that gallon of gasoline. The retail price
includes
> > the cost of crude oil. The oil companies incur costs to refine and
> > distribute it. They also keep some profit. Finally, our government adds
> > taxes.
> >        Let's begin by considering taxes for a moment. In 1981 the
average
> > gallon of gasoline carried taxes of 14 1/2 cents. By 1998 they had crept
up
> > to an average of 41 cents per gallon. We were paying less at the pump,
but
> > that hid the fact that taxes had nearly tripled.
> >        From 1981 to 1998 the price to get a gallon of oil to the pumps
> > dropped from $1.21 per gallon to $0.71. Unfortunately for consumers,
that
> > was the low point. By February 2000 it had gone up to $1.03 per gallon.
> >        So there are two increased costs that we're seeing today. The
extra
> > 26 cents per gallon in taxes and recently the 30+ cent increase in the
cost
> > of the gas itself. Which leads us to the next question: why has the cost
of
> > gasoline increased so dramatically?
> >        Two things must happen for there to be gas at your local station.
> > First, someone must get a barrel of oil out of the ground. That's the
cost
> > of crude (unrefined) oil. Then someone must refine the crude into
gasoline,
> > distribute it to gas stations and make a profit on it.
> >        Since early 1999 crude oil prices have jumped from $11 to $30 per
> > barrel. OPEC had suffered through declining prices for a decade. Last
> > spring they decided to produce less crude oil.
> >        The strategy comes from Economics 101: if something is rare, it's
> > more  valuable. OPEC has the ability to make crude oil rare by reducing
> > production. They'll sell fewer barrels, but get a higher price per
barrel.
> >        Compare the low 1998 prices to now. In 1998 the crude oil needed
to
> > make a gallon of gas cost 30 cents. Today it costs 68 cents. The
shortage
> > has added 38 cents to the cost per gallon. No question, we've discovered
a
> > bad guy!
> >        But what about the oil companies and gas stations? Are they
getting
> > rich, too? As it turns out, the gas companies are actually getting less
now
> > than they did in 1998. Back then they were getting 41 cents per gallon.
Now
> > they're only getting 35 cents. So clearly the blame isn't with Chevron,
> > Hess or Joe who owns the corner station.
> >        Some of you probably think that we just demonstrated why the "Gas
> > Out" is so important. So let's suppose for a moment that the event is
> > wildly popular. Everyone joins in.
> >        So how much effect will the action have on OPEC and those who
pull
> > the oil out of the ground? Probably not much. Whether you buy gas on
April
> > 8th or not doesn't affect them. The gas you buy today was produced
months
> > ago. Buying a day or two later has no effect on them. A two-day
disruption
> > is no big deal. It happens every time there's a snowstorm.
> >       But, I can still hear some of you saying that we need to let them
know
> > that we're mad and demand changes. Know what? You can yell and "gas out"
> > all you want. OPEC is already measuring if you're really serious. They
can
> > tell by monitoring two things. First, are we buying bigger or smaller
cars?
> > Second, is the demand for gasoline going up or down?
> >        OPEC has already started to talk about increasing production.
> > Kuwait's oil minister, Sheik Saud Al Sabah, was receptive to a
> > recommendation from Saudi Arabia, Venezuela and Mexico to increase
> > production. Why would they produce more now?
> >        It's simple. They want to make as much money as possible. If
> > Americans shift to smaller cars like we did in the 1970s, demand will go
> > down for years to come. So they want to raise prices to just below the
> > point that you'll use less.
> >        Another reason that the "Gas Out" won't work is that on March
27th
> > OPEC will hold a meeting to determine how much oil to produce once the
> > current agreement expires in April. That's well before the "Gas Out."
> >        One place that the "Gas Out" could help is in triggering the
> > President to release some of the strategic oil reserve. According to the
> > Department of Energy, 565 million barrels of oil are being held for an
> > "energy emergency." In the past reserves were tapped during the Gulf
War.
> > If the President "feels your pain" he has the ability to release some of
> > the reserves.
> >        So if a "gas out" won't help, what can you do? One very practical
> > thing: use less gas. Carpool, take public transportation, combine trips
or
> > get your car tuned up. Anything you can do to save gas will put more
money
> > in your pocket. And that's the one "statement" that oil producers will
> > notice. More importantly, you'll notice it in your wallet, too.
> > __________
> >
> > Gary Foreman is a former Certified Financial Planner who currently edits
> > The Dollar Stretcher website <www.stretcher.com>
> > >>
>
> -----------------------------------------
> Nancy M. Whitt
> Professor of English
> Chair, Department of English
> Samford University
> Birmingham, AL 35229
> Phone: 205-726-2458 Fax: 205-726-2112 E-mail: nmwhitt at samford.edu
>
> "Do I contradict myself?
> Very well then I contradict myself,
> (I am large, I contain multitudes.)"
>
>       Walt Whitman
>



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