Human life has not been the only casualty of Hurricane Ike — the storm also brought problems of a different sort. Following the storm, a gasoline shortage has started across much of the southeastern United States.
Ike forced roughly 20 percent of American gasoline refining capacity to be shut down. It is unclear whether these refineries are damaged from the storm surge and winds; however, they will be out of commission for a while due to power outages.
The net result is that our nation, already low on gasoline capacity from Gustav, now faces a genuine shortage, as inventory has shrunk to the lowest level since 2001.
As supply has dramatically shrunk, the price has skyrocketed. Gasoline is fetching upwards of $5 a gallon in many places, and according to Gasbuddy.com, the price of gasoline nationally has risen 17 cents per gallon in the past week.
It is very popular to accuse the big bad oil companies of all sorts of egregious crimes, now they are charged with price gouging. However, in this case anyway, the oil companies have their hands clean. Instead, environmentalists who oppose the development of our energy resources are to blame.
For decades, environmentalists have opposed drilling for new oil supply, using oil shale and converting coal to liquid fuels. Instead, they smugly tell us to conserve more while offering no workable solutions.
Besides opposing finding new sources of fuel, environmentalists have also nixed proposals for new refineries, new LNG terminals to import natural gas and new networks of pipelines to transport fuel more efficiently. Now when a hurricane comes and smacks the oil patch of the Gulf of Mexico, we suddenly have a shortage of fuel. What a surprise! Liberals’ conservation strategy has failed; conservation doesn’t work when the tank is already empty.
You might be saying, “Well, the price of gas isn’t up in Colorado.” Ironically, due to the poor and dilapidated state of America’s gas pipelines, Colorado’s fuel supply should remain bountiful — there is no efficient way to move our excess inventories to the areas of the country where the supply has been entirely exhausted, and so we will enjoy affordable gas while the south has no fuel at all.
Now oil companies are being blamed for the high prices. The people whining should be happy they have any gas at all.
The oil companies have had to overcome large obstacles to deliver the gas that is available. The companies can’t drill for new oil, build new refineries or expand their pipeline networks, yet the moment they fail to get gas to a station cheaply, the knives come out for the oil companies.
The oil industry is accused of making excessive profits, yet their profits this year have largely been falling. While some of the oil companies continue to make large profits, others such as refining and retailing giant Valero Energy have seen their earnings plummet. Other gasoline refiners such as Tesoro and Western have been losing so much money this year that the firms may fail entirely.
I am a shareholder in Western Refining; it offends me to hear people accusing us of price gouging when we on the verge of bankruptcy. Our company refines gasoline and sells gas at company-owned gas stations — a valuable public service. We barely have enough money to keep the gas pumps on, yet we are the ones accused of ripping off the customers.
Instead of blaming struggling oil companies, look at the true culprits who have caused this gas shortage. By blocking any and all forms of energy development, environmentalists created an acute lack of oil infrastructure in America, and they are reaping the high gas prices they deserve.
Ian Bezek is a junior economics major. His column appears Tuesdays in the Collegian. Letters and feedback can be sent to email@example.com.