"Spring," according to an ancient Chinese proverb, "is sooner recognized by plants than by men". Here in the U.S., the seasonal demand for gasoline grows like crabgrass while the blame for high gas prices blooms like an ugly weed. So who's to blame? Is it the oil companies? Washington politicians? Your next-door neighbor with the petroleum-based lawn fertilizer and the new SUV?
There are plenty of places to rant and rave on the Web, but this isn't one of them. So let's look at some facts. In particular, let's focus on three factors that we'll call the "three little pigs", a reference to that childhood tale about three young pigs who built houses made of straw, sticks and bricks. Then, like the wolf in the story, we'll try to knock each of these houses down. Here's the first one . . .
EPA Regulations
Trilby Lundeberg, head of a fuel-market research company called the Lundberg Survey, attributes the springtime spike in gasoline prices to a variety of factors, including U.S. Environmental Protection Agency (EPA) regulations. "Ever since 1989, the first year that federal EPA regulations set caps on vapor pressure in gasoline, the tendency has been for gasoline prices to rise in the spring rather than in the summer," she claims. Warm-weather fuels may reduce smog, but they're also more expensive to make than winter blends, adding an extra 3 to 15 cents to the cost of a gallon of gas. Summer blends also drive up prices because refinery production drops while plants prepare for the switchover.
In addition, notes Matt Routt, a senior consultant for Energy Security Analysis, Inc., "everyone jams the exits at the same time." In short, gas station owners have about a week to switch from winter fuels to summer blends. Distributors and truckers who capitalize on this demand can add another 8 to 12 cents to the cost of a gallon of gas. The EPA's mandatory ethanol requirement doesn't help either. Because ethanol has a higher vapor pressure, it's even more expensive for refineries to meet the EPA's summertime regulations. When California adopted its own ethanol mandate, Lundberg notes, gasoline prices rose by 10 cents per gallon.
Is the house of Lundeberg and Routt made of straw, sticks, or bricks? You decide.
Editor's Note: Part 2 of this story is now on CR4.
Resources:
http://www.quotegarden.com/spring.html
http://www.shol.com/agita/pigs.htm
http://www.reason.com/news/show/119300.html
Steve Melito - The Y Files
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