Bending the Third Rail
Because We Should, We Can, We Do
Friday, March 23, 2007
Gasoline Explanation
From my local paper:
California's price spike since Jan. 1 "does seem to be attributed almost entirely to refining margins," Bushnell said.

On Jan. 1, the refinery margin was 59 cents per gallon of gas, according to the state Energy Commission. On Monday, the most recent measurement, the margin was $1.12 a gallon.

The refinery margin is calculated by subtracting the market price for Alaska North Slope crude oil from the wholesale price of gas. The result includes the cost of operating the refinery as well as the profits for the refining company.

The last time the refinery margin exceeded $1 a gallon was in May - when pump prices peaked and the margin hit $1.08. The margin then fell steadily to about 50 cents a gallon by year's end.

Allow me to explain in English.

Refiners are gouging.

Increased "margin" is nice business-speak for profit. Because refining capacity is tight, they can gouge. Why is refining capacity tight? Because oil companies are not building new refineries. Some of that is the fault of oil companies, part of it due to NIMBY.

I actually am all for higher gasoline prices. History has proven that high prices are the only motivation for conservation and innovation away from a petroleum based economy. It's just irritates me that the oil companies are reaping the financial benefits. How about an increase tax on oil company profits?