Gasoline prices spike as heavy vehicle drivers grumble
The CBS Evening News carried a story [Real video link] Thursday March 4 featuring a parade of puzzled gas station customers. As they fill their large sedans, SUVs, and minivans, they are heard to say things like, “The price of gas is horrible,” and “What’s going on”?
Hmmm… Take a look at what you’re driving! If world unrest, crude speculators and a squeeze on “refining capacity” are to blame, as the report suggested, the 2-3% growth in heavy vehicle fuel requirements on the demand side, also reported, must have something to do with that. Of course, the Bush approach will be to take the regs. off of refineries and build some more capacity, quick and dirty.
Another March 4 story from the Dow Jones/AP wire, “High gasoline prices: Supply worries boost oil prices”, fills in more details:
Supply worries returned to the New York Mercantile Exchange’s petroleum complex Thursday following signs of growing unrest in Venezuela and renewed U.S. government concern about high gasoline prices…
The vulnerability of the U.S. to supply shocks, such as a disruption to Venezuela’s production of crude oil and refined products, has left traders “tense”, said James Steel, director of New York research for brokerage firm Refco.
Is there a portent for the future? The stories say, “oil supply is not the issue”. This is probably true, in the short run. But limit to capacity at any point along the entire system from wellhead to gas station pump limits the overall capacity (per day rate) of fuel delivery to the end user. When (in one? two? three? several? decades) geological limits are approached, nothing will be able to be done to increase that overall capacity.
So this may be a taste of times to come. We should think now about ways to achieve fuel demand reduction in order to alleviate strain in system capacity, ie we should in America be driving smaller cars. But that message would be at odds with the heavy vehicle marketing campaign now saturating our small screens 24 hours per day on all channels.