How to Reduce Gas Prices

Every time I turn around I'm getting some email forwarded to me with a plan to reduce gas prices. I can't believe the number of people who buy into this total crap! Not buying gas for a day or boycotting certain brands will not have any effect on the anybody but the poor retailer who sells the stuff to consumers for pennies of profit on the gallon.

Gas prices, like other things in the marketplace are controlled in part by supply and demand. When supplies of a commodity exceed consumption, prices are reduced to promote sales. As consumers, we can't control the commodity trading and OPEC greed but we can effect supply and demand. I think this is one reason all the boycott and gas-out schemes seem to gain acceptance. Most people understand this concept.

Our legislators have made it so no new refineries can be built. 20-30 refineries have been closed because the equipment was so old, it was no longer economically feasible to keep them running. Upgrading the facilities to match federal air quality standards is a very expensive operation. The refineries can also use this as an artificial way to control the supply. Another thing that effects supply is storage capacity.

My idea to reduce fuel prices wouldn't cost the refineries or anybody along the line a penny to implement. I'm sure there are also reasons why it may not work due to the different fuel mixes etc, but I think it's worth considering. As I stated earlier, storage capacity can effect supply.

If consumers would flat out stop buying mid-grade fuel (something few people need and actually buy), every tank devoted to the storage of mid-grade fuel could be converted for storage of the low-grade fuel that most of us buy. I'm talking about every tank from the refiners to the pumps. This would double the storage capacity of regular fuel. Mid grade fuel consumers would now become either low-grade or premium buyers. So in doing this, there would be no change in the rate of consumption.

Mid-grade fuel is low-grade fuel that has undergone more refinement. Think of all the energy that could be saved by not producing higher-grade fuels altogether. Energy costs also effect the cost the consumer sees. My guess is these costs  are distributed evenly across a three grades regardless of the type of fuel being produced. Bottom line though is that it takes longer and costs more money to produce mid-grade than low grade. The cost of energy is a production cost...a reduction of that cost can reduce prices.

With more storage capacity available for regular fuel, the refineries could be producing more low grade keeping supplys high enough that they could easily shut down and re-tool for seasonal blends with no interuption in supply at the pumps. All they do is keep making low-grade for a longer period of time  This should also reduce the justification for artificial price hikes during these periods. And the demand would never (well maybe someday in the distant future) be greater than the actual supply.

You want to drop prices even more write your Congressman. Don't complain about the gas companies and demand they investigate...Demand lower taxes. The government, both state and local, make more money per gallon than the refineries or the station operators combined. Demand legislation that requires development of "year-round, environmentally friendly" fuel instead of seasonal blends. Demand reductions in dependancy of the purchace of foreign oil.

On a more personal level, try alternate transportaion methods ...leave the car at home once in a while. It all adds up eventually even though you may never live long enough to see if you destroyed the planet or actually made a difference.

Read and post comments | Send to a friend

2 responses
Ditching mid-grade fuel is very sensible, and some places already do this. Costco, which sells gas at some locations, only sells 87 or 93 octane fuel. They don't even bother with the mid-grade stuff. Public transportation is a joke out this way as I'm sure it is in your neck of the woods. I do my part by not driving at all most weekdays as I work from home.
Thanks for the support.
I did a Google search "Who needs premium fuel" and came up with some interesting facts. From the pages I visited, there seems to be a myth created by the Oil Companies that higher grade fuel is better for your car. Over 70% of the vehicles on the road today are "designed" to run on low grade. Many of those people "think" that they are getting better milage or more horsepower by buying premium fuel instead of the recommended fuel.
There is lot's of different views on this
What the idiots who throw thier money away don't realize is that they are paying for a product that requires more crude oil to produce than the true benefits they recieve for buying it. If someone wants to reduce our countries dependency on foreign oil then my suggestion makes even more sence.
Our public Transprtatin is also a joke. At one time Santa Cruz Transit was considered a model system within the state. We got spoiled. It sucks here also in comparison.