Gas prices

Dennis Putnam dap1 at MINDSPRING.COM
Sat Apr 10 14:47:47 MDT 2004


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At 01:37 AM 4/10/2004, you wrote:
>IMO, the prices are rising because of the recent mergers, and lack of
>competition.

There is actually a host of reasons. One, there has been no increase in
refining capacity in 30 years. Demand for fuels far exceeds refining
capacity. Another is that oil companies now have a patch work of various
fuel blends varying from state to state and in some cases municipality to
municipality, which themselves adds refining cost but also increases the
storage, distribution and transportation costs. We can thank the
envro-wackos for both.

Actually there is a fair amount of competition at the distribution end
depending on where you are. GA doesn't have all the enviro-wacko laws
(yet?) and since it is the confluence of all major pipelines there is a
plethora of independents. Having the lowest fuels tax in the country
doesn't hurt either. Also many states heap a sales tax on the final price
of fuel (including the other taxes, talk about double taxation) so that
accelerates the rate at which prices increase. Currently prices vary from
$1.679 to $1.489 within 10 mile radius of my house. What amazes me is that
while I pump gas at the local Super Wal-Mart for the low price, I can watch
people pumping Exxon across the street at the high price. It all comes from
the same pipeline so go figure. That is the reason oil company prices are
so high, at least in part.

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