By ALBERT J. HESS April 30, 2011 12:00 AM
I would like to pose a response to gas prices.
On the opinion page of April 25, it was mentioned that on April 24, $50 bought three quarters of a tank of gas (Massachusetts average price $3.88 per gallon equals 12.9 gal.).
It was further stated that a week earlier (April 18) $40 bought a full tank (17.2 gallons) or $2.33 per gallon.
It is highly unlikely that gasoline was on sale anywhere in Massachusetts on April 18 for $2.33 per gallon.
Yes, it always is shocking to see gas prices rise, in great big numbers, on most any busy street corner.
The longer look at gas prices in Massachusetts shows a $1.08 per gallon rise in price over the last six months. for the average driver with a 20 mpg car who drives 1,000 miles per month, this translates into an increase in fuel cost of $32.78 per month. That certainly won’t buy dinner for four. Or even lunch at McDonalds if they all opt for an ice cream cone for dessert.
If the petroleum industry were allowed to operate in a full and free-market capitalist mode, totally free of any government intervention I have no doubt that gasoline prices would rise to at least $8 per gallon. one of the costs that we are now seeing at the pump is the result the Gulf oil spill.
This spill was caused by an “accident” while exploring for American oil by a large multi-national oil company. There are no large American oil companies left. they are now all multi-nationals.
The billions and billions of dollars of clean up, liability, and legal costs will impact BP’s short to medium term profits. the increased government oversight; improved safety procedures and equipment; and perceived self-insurance risk of the exploration phase of energy production (that will be one of the outcomes of this accident that will, in the end, be legitimate costs of doing business) will in time show up at the pump.
Hopefully one of the benefits of these costs will be fewer and smaller spills into American waters.
Yes, Americans do have the technology to extract more petroleum from more difficult-to-reach deposits. use of this technology increases the cost of exploration and production, and exposes us to risks both known and unknown.
“Drill baby drill,” was a vacuous political chant.
Exploration costs are still a small portion of the pump price relative to the downstream costs. None of the above addresses the afterlife costs of petroleum.
The recent tragedy in Japan has illuminated — no pun intended — nuclear power afterlife costs (like a tattoo, the big money is not in getting a nuclear power plant but in getting rid of it, and its by-products).
The Gulf oil spill gave us some idea of the cost of spewing millions of barrels of raw hydrocarbons into the water. Regardless of your take on global warming, it seems downright unrealistic to think that there are no afterlife costs for the by-products of refining and burning billions and billions and billions of barrels of hydrocarbons.
It may take decades and decades to finally come up with the fully burdened cost of a gallon of gasoline. my guess is that $8 per gallon is way low.
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