You’ve probably heard that oil prices are way down – and expected to go even lower as world demand weakens. And you might be wondering why gas prices in the U.S. are going up. The answer: American refineries are producing less gas.
That’s right. When oil prices go down, refineries cut back. That reduces the gasoline supply. And prices at the pump stay high – or go higher. Doesn’t that make you wonder about the logic behind the Republicans’ “drill-baby-drill” war cry in the recent elections?
Let’s say the Republicans had won and the oil barons had been turned loose on the Gulf and other environmentally fragile offshore sites. And let’s say they found oceans of oil and were able to get it to market in record time. And let’s conjecture that the increase in supply sent oil prices plunging. That would mean cheap gas for American SUVs, right?
Wrong, baby, wrong. The reasons are many and varied. For one thing, oil is bought and sold on the world market and increasing production in America would have no direct connection with domestic gas prices. Then there’s the part played by the refineries. They don’t have to produce more gas just because oil is abundant. That’s no way to maximize profit. They make more money by cutting back.
I don’t know why oil companies and their political stooges keep pressing for more drilling rights. Demand for oil is not likely to ramp up any time soon. The International Energy Agency says global demand will continue to fall in 2009 (because of the global economic mess that the oil profiteers helped to create). But I know this: they aren’t doing it for the good of the American motorist.