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10.8.06

THE REAL REASON YOU ARE PAYING MORE FOR PETROL

Let's face it, we are stuck with high petrol and diesel prices. And we think that there are cut and dried reasons, like it's President Bush's fault, it's the oil companies' fault, it's Halliburton's fault.
But the reality is not so simplistic as those. There are a LOT of factors behind our elevated fuel prices.
Well, of course the WAR is a good reason behind it...as long as there is instability in the Middle East AND we rely heavily on imported oil including that which comes heavily from the Middle East we are going to experience fuel price problems.
But in recent years developments in the global economy, especially in Asia, have fuelled the price rises for petrol.
Take for instance the exploding economies of China and India, each with at least 1,2 BILLION people. With two-and-a-half billion in those economies, and a growing automotive market in both, the oil producing companies are eager to capitalise on those growing economies, in other words, they are sending more and more oil and gas and even coal to the two burgeoning economies. China have experienced economic growth of some 10 percent annually for a number of years whilst India have also experienced strong economic growth under prime minister Manmohan Singh and his predecessor, Atal Bihari Vajpayee.
And this has fuelled the growth of the Indian automotive industry with the Indian automakers approaching 5 million units in 2004. As Suzuki team with local manufacturer Maruti to produce the Esteem and Mahindra have started moving beyond their early Jeep-inspired line (Mahindra produced Willys and Jeep vehicles for the Indian market from the 1940s to the 1960s) and their miniature single-cylinder-powered Champion microtrucks to produce the more modern SUV Scorpio and even branching out into Europe, Tata have begun branching out to South Africa. Additionally, for several years Mahindra tractors have been sold in the United States.
And Indian automotive sales have proceeded at a strong clip. As more and more Indians buy automobiles and become increasingly mobile, the infrastructure has to be further improved, with a national highway system well under construction. India are also starting to become more of an automotive exporter.
The Chinese automotive industry has also begun to really grow. Major homegrown players include Geely, FAW, Great Wall, Heibao, Xiali, and Yangcheng, but the really big production has now shifted in high gears for foreign automakers including GM, Ford, Toyota, Volkswagen, and Honda, all of which are working very closely with Chinese manufacturers. GM are now exporting Cadillacs to China and building larger volumes of Chevrolets and, most interestingly enough, Buicks, for the Chinese market. Volkswagen produce the Lupo and Santana for the Chinese market as well.
Then there are the supply problems, such as the lack of refining capacity in the United States. America have not built a new oil refinery in 30 years. Three zero. That is how long more radicalised environmentalists have managed to gum up the works in America's ability to develop their own oil resources or build oil refineries. Invariably they object to any form of drilling, any form of harvesting, any new refinery construction, placing America into a straitjacket that forces dependency upon foreign oil. And executive orders of the 1990s creating land grabs of large swathes of land in the Western states and arbitrarily establishing national monuments and parks have not helped American energy independence efforts.
Additionally there are high rates of taxation and slim profit margins for the oil companies. An oil company make only 10 cents on $3 a gallon petrol for example. That means that the state and federal excise taxes come heavily into play. Typical federal excise taxes per gallon run 18 cents a gallon and state petrol taxes push the tax amount yet even higher.
And in Britain the fuel taxes are even more acute: In early 2001, when petrol was selling for 84 pence per litre---the equivalent of more than $5 a gallon---retailers made only five pence per litre, a tiny fraction of the 61 pence per litre that went straight to the government.
"Conservation" won't solve the problem, folks: Demanding greater development of ALL forms of energy, traditional and renewable alike, will bring us solutions. We are going to have to put up with a couple of oil wells here and there along our coasts if we are to become energy independent.
But it doesn't stop there.
We could easily establish more renewable sources of energy, solar, windpower, and wave power alike. We need to get behind the effort to place windmill farms along the New England coast...however much Senator Edward M Kennedy, D-MA, may oppose the effort out of concern for his view of the coastline. Aesthetics are easily sorted out; the important factor is resolving the energy supply problem. After all, a wind farm worked in the hills east of the San Francisco Bay Area, why not New England as well?
And then of course there are the biofuels, including even the do-it-yourself ethanol stills that evoke the moonshine stills of the backwoods Appalachian Mountains and Kentucky and Tennessee of the Prohibition era, making fuel from maize and hemp and other plant products.
All possible fuel sources need to be utilised and all efforts need to be undertaken to enable the energy independence, where we can produce our own oil, refine it, build refineries when needed, but also develop biofuels, encouraging the development of such as needed, and even generate energy from other sources, from windpower to solar power to wave power like that which has been in use for as long as 30 years in the UK.
We CAN achieve energy independence...even if we don't ever see $1 a gallon in the United States. Then again, if we implement HALF the methods suggested, maybe we can see LOWER prices..we don't know until we make an effort.

1 Comments:

Blogger Demi316 said...

Gosh how can someone not leave a positive comment after reading that article. I can't believe it's gone quiet this long. As always you make a well thought out argument and I agree with you whole heartedly.

31/8/06 15:09  

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