Tuesday, April 25, 2006



My absence was probably hardly noticed but I think that I have to get back into the groove. Political season is in swing and things are happening. Now, the local radio scenes has changed a lot in the last month or so. A lot of programs I liked switched around, left, or changed stations thus I am scrambling to figure out who I am going to listen to at any given time. Torn. I like to listen to Rush Limbaugh from time to time as he makes some good points, usually after I have made them, but good points none the less. So I have tried listening to the station he is now on. It drives me insane. They have almost exclusively two personalities on each program. Fair and balanced or some such bull. I do like it, but for them to have five programs every day like that, just not my thing. Especially when some of them are retarded and will quite often resort to a "OMG BUSH=HITLER+KKK!!!!!111".

But as I listen, I hear some of the dumbest people call in. One such person suggested a boycott of gas station goods aside from gas. He wants us to buy only gas from gas stations and nothing else. So these businesses will complain and lower gas prices because no one is paying for anything besides gas....sounds like a great plan? I know, I used those same words. First, this plan, especially in the state of Minnesota, means nothing to gas stations. There is a mandatory 6% markup on gasoline in the state by law, thus the gas station owners are making money on the gas. Second, it makes the assumption that gas station owners won't INCREASE their prices to make up for the lost revenues from the other goods. Now, while there may be competition between gas stations, if they are all losing money, they will all raise prices. This plan makes me baffled that some people are allowed to operate in the business world.

I have stumbled onto a group of people that cannot fathom economics. I have never taken an economics course. I have never studied economics in depth. I did study history and historical trends and when one thing happens, another thing happens, such as tax cuts and economic stimulus. Now, there is something that happens when people like this are allowed to infiltrate the ranks of normal people. They destroy businesses. Ken Lay is one of these people and look at what happened. These same people are the ones who suggest boycotting certain gas stations because it will signify that oil from x country isn't what the American people want. But I digress...

Gas prices what they are, people seem to be taking all the roads but the right one. You have the government figureheads running around screaming "Gouging" and "Price Fixing" and "Monopoly". You have the common man saying that it is OPEC's fault. You also have the people saying that it is good because people will change their driving habits. The people all seem to not understand the basic price for gas.....DEMAND!!!

There is a map here showing the cost by county for the entire country. Take a look at it. If the cost of gas was really a constant and mattered in either of the peoples comments above, it would be as diverse as it is. There are 3 things that are driving gasoline prices and no one seems to be talking about them. I will clear them up now.

1. Too many states have different requirements for "clean gas". California has much stricter standards for the quality of their gas, more additives, lower emissions and thus add to the cost of the fuel plus since California is the only state to require such additives, the cost goes way up because they have a high demand, but only a few refineries can produce it. Meanwhile, states like Idaho, Wyoming, and Montana have low requirements for petrol production and are clustered together using the same type of gasoline thus making it easy to produce and ship. Minnesota currently has a low requirement for fuel additives versus our neighbors in Wisconsin and have a lower gasoline price because of it. However we will join California prices very soon when the ethanol requirement goes to a minimum of 20% (thus destroying everyone's car engines too...Did you know it takes more energy to produce ethanol than it generates? More on that later).

2. There is a low supply of petrol across the nation even though there is an ample supply of oil. The oil cost of gasoline is but a tiny fraction of the cost. Only half the cost is crude oil. Over 40% goes to taxes and refineries in about a 50/50 split between them. The cost in taxes is about 60 cents on a $3 a gallon gasoline. Boot the government and gas comes down a lot, especially since the gasoline tax is spent on things that aren't even close to being associated with gasoline. Also, boost the refineries that can open, remove envirowacko policies that are preventing people from opening new businesses to compete. That 20+% of the refining costs will quickly drop to 2-5%. Boom, instantly we are over $1 per gallon less than we were before. Then we just need to hurt the oil traders.

If you don't understand this after reading it a couple times, please do the world a favor and sell your car and live in a hippie enclave.
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