Wednesday, April 28, 2004

The Inevitable Gas Crunch

Via Vodkapundit comes this article:

Running On Empty (

detailing the situation facing motorists in America. Living in Southern California, I'm used to habing to pay upwards of thirty cents more than the national average for a gallon of gas. What I did not know is that the US is not only a net importer of oil, but it is also a net importer of refined gasoline. Our refineries do not have the capacity to produce all of the gasoline we use. As the government adds more and more requirements for the formulation of gasoline, the fewer and fewer foreign sources will be capable of providing what we want to buy. I would doubt seriously that any of the gas that I buy in California is imported as this state has even tighter regulations than the national standards.

As a free-market libertarian, I'll bite the bullet and stick with my principles. The only way to ride the inevitable price increases is to let it happen. Much as I know that it will slow down the economy in general, allowing market forces to work things out will be the path of least pain. The article's reference to increasing the fuel efficiency mandates would be redundant as people will increase the importance of fuel efficiency in their purchasing as prices rise. Standard engine SUV's will take a big hit, with manufacturing in those lines facing lay-offs and reorganizing. The flip side of that is going to be a harder push toward hybrid vehicles whose efficiencies start in the 40 mpg at minimum, and bigger numbers in that stat will be a key selling point, so look for increases there.

I don't see much expansion in refinery capacity in the near future. The article points out that it takes three years, minimum, to go from planning to production, and that does not take permitting into account with all of its attendant political hassles. Hydrogen fuel cell vehicles are not likely, in my opinion to get much traction from this unless gas prices hit about $4 per gallon, and then add another five or six years at that level so that the switch-over costs are competitive.

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