It was recently suggested that Mitt Romney go to California to hold another press event in front of a gas station sign advertising regular gas at $6 a gallon. He could then say, “This is the future of the entire United States if Obama is re-elected.”
Actually, we would be lucky as to keep it at that level by the time 2016 rolled around.
Such a move would echo the time when Romney held a news conference in front of the closed Solyndra headquarters to show the futility of governmental attempts to “pick winners and losers” without considering the realities of the free market.
As it turns out, there are some useful things to say about gas prices in the light of California’s experience—not to mention the fact that average gas prices now are running about $3.85 a gallon.
But the major reason can be explained by just using three simple initials. However, the letters are not “B.H.O.,” as you might reasonably think, although he is responsible for them.
They are, instead, “E.P.A.,” as in Environmental Protection Agency, which is now in the control of environmental radicals out to achieve the dreams of a generation of “green” activists, no matter what the cost to the average American.
Romney has already talked about the administration’s “War on Coal,” a series of regulations that have already resulted in thousands of lost jobs and impending soaring electricity costs all over the Midwest.
That’s because dozens of power plants will soon shut down, or already have, because they cannot economically meet new regulations aimed not at cleaning the air but meeting a presidential promise to drive an entire industry out of business.
That, despite the fact this nation’s coal reserves are sufficient to provide power at present levels for hundreds of years.
As a consequence, a wave of anti-Obama sentiment is sweeping the states whose economies are dependent on coal, to the point where unknown challengers have won near-majorities in Democratic primaries against an incumbent president.
But we started out talking about gasoline, and there are several important points to make about how the current administration is acting to drive the price of this essential commodity through the roof.
First, as Romney pointed out in the debate on domestic issues that he so handily won, the United States still falls far short of the levels of domestic oil production it could and should be reaching because of administration restrictions placing much of the nation’s public lands off limits for drilling.
The president is fond of saying production is up, and it is—on private land—but that doesn’t mean much if we still are overly dependent on foreign sources for such a highly significant resources.
Saudi Arabia and Nigeria continue to benefit from our reluctance to use our own vast resources for our own needs. It’s time to stop funding the spread of radical Islam by the dollars we spend to get to work, use for errands and take vacations.
In addition—and this is a factor in the California debacle, but it affects the entire nation—national refinery capacity is stuck at a 1970s level. Part of California’s problem is that refinery shutdowns have left that state without viable options for more supplies, leading not only to skyrocketing prices at the pump but actual station shutdowns and rationing.
Yet, no new refinery has been permitted in decades, partly due to environmental pressures and partly to NIMBYism where they have been proposed.
And, while I understand that some areas should be off limits to refineries for environmental reasons, I grew up in an oil town, living just a couple of miles from a refinery, and while it wasn’t a pretty sight, it was a very lucrative one for all the families whose breadwinners made good livings working there.
That, in turn, brings us to two EPA atrocities: the ethanol mandate and its dangers to the food supply and to millions of lawn mowers, snowblowers and weed whackers; and “boutique gasoline,” which also contributes to California’s problems and to high gas prices everywhere.
First, ethanol: As Popular Science magazine reported last year, the use of this grain-derived substance (40 percent of the nation’s corn supply goes to ethanol production) not only drives up the cost of cereals and meat, since both people and animals eat the corn that is a major element in its production, its use as a gasoline additive is harmful in several ways.
Since it contains less energy than gasoline, at the 10 percent level (“E10”) it reduces gas mileage by about 5 percent, thus driving up the cost of travel by that amount.
And it harms some engines, particularly in older vehicles and in yard and farm equipment, to the point where, the magazine says, it should not be used in such devices unless the highest grade of premium is purchased and “gas stabilizer” additives are used in it as well.
That’s because, as one large equipment dealer told the magazine, he repairs more than 5,000 small engines a year and “estimates that as much as 75 percent of that work is not due to normal wear and tear, but results from the use of ethanol, which can cause rust and carbon deposits inside the engine, dissolve plastic parts and more.”
And, Popular Science adds, now the EPA has approved a 15 percent blend (“E85”) to which all the facts above apply even more strongly. In fact, a market has developed for retail sales of canned gas without ethanol, now available at a high premium in some hardware and farm stores.
As the magazine quotes the “bewildered” dealer: “It’s driving the customers nuts. Who do they think they’re helping by adding more alcohol to gas? What positive thing is this doing?”
Adding insult to injury is that ethanol production is heavily subsidized with taxpayer dollars, meaning we’re paying higher prices first to the producers and then doubling up at the pump.
Speaking of things that are a long way from positive, that brings us to the special hot-weather blends of gasoline known as boutique blends, which were mandated by the EPA years ago (this didn’t begin with Obama) under the rationale that making different regions of the country use different blends “tuned” to their climate conditions would lessen air pollution.
Whether was that was true at the time of the requirement or not, many scientists now say that modern automotive pollution controls render the boutique blends’ contributions to lower emissions minimal at best.
As Stephen Hayward, writing in The Weekly Standard earlier this year, noted in an article titled “Bureaucratic Gas,” most people may think that Americans can choose between three types of gasoline at the pump: regular, mid-grade and premium, a number that may expand to six if ethanol blends are added in.
Actually, he writes, “The actual number is somewhere above 45, though hard to pin down exactly, according to the Government Accountability Office (GAO). It might even be closer to 70. Thirty-four states use specially blended gasoline, usually during the summer, which is one reason gasoline prices always rise during the ‘driving season.’”
The shortcut answer is that oil companies, which the administration loves to demonize, themselves love the boutique rules, which are adopted on a state-by-state basis with variations set at state discretion. “The proliferation of boutique gasoline suppresses competition and drives up prices,” Hayward wrote.
“The GAO looked into the matter in a 2005 report, noting that the adoption of boutique blends meant that in one East Coast area the number of gasoline suppliers dropped from a dozen to three. Southeast Michigan has just two refineries and one pipeline supplying its boutique blend.
“After studying gasoline markets in 100 cities, the GAO concluded: ‘The proliferation of special gasoline blends has made it more complicated to supply gasoline and has raised costs. Of the 100 cities we examined, most of the 20 cities with the highest prices used special blends of gasoline.’”
And, he noted, the mandate bars gasoline imports from other countries, which don’t produce any of our special blends.
Indeed, summertime gasoline shortages in one region often can’t be made up by transfers from other regions, because they likely use another blend. That’s also contributing to California’s problems.
Gov. Jerry Brown recently authorized state refineries to shift over to the standard “winter blend” immediately, rather than wait until the national changeover date, Oct. 31, but that doesn’t help with out-of-state imports, because other states still will be producing their own blends until then.
Doing away with the boutique blends won’t save a lot of money for individuals—Hayward estimates 10 to 15 cents a gallon—but that would restore tens of millions of dollars to productive uses across the economy, and it would lower the prices of commodities as well.
Ethanol subsidies, which ran about $6 billion a year, expired at the end of 2011, but a federal rule called the Renewable Fuel Standard means it still survives as the most available option for refiners.
If the ethanol mandate were to end as well, people would get more mileage for their dollars, the threat to older engines and lawn mowers would be halted and grocery costs would drop as more corn and other grains were restored to the food chain.
What’s the downside? Some ethanol producers will have to find something more useful to manufacture. But all consumers will benefit from higher mileage, less damage to engines and cheaper food.
Mitt Romney scored points in the first debate by noting that when the government may say it was picking “winners and losers,” but all it had done was pick losers.
Picking one less loser sounds like a good deal to me.
M.D. Harmon, a retired journalist and military officer, is a free-lance writer and speaker. He can be contacted firstname.lastname@example.org.