How much should a gallon of gasoline cost?

Charts are from the U.S. Energy Info Admin.  Hat tip to Jay Bookman of  blogs.ajc.com.

March 2012’s price for a barrel of “sweet-golden-crude oil” is right about $105.  Most people’s eyes glaze over pretty fast when you talk about the price of a barrel of oil.  They have little or no idea…of what that means.  If you step back a couple of years and saw that $75 to $80 dollars was the pretty steady price for oil back then – you could extrapolate that High Test prices of $3.25 were fairly average.

The “Halley’s Comet” arguments regarding oil prices are rather humorous when you think about it.  (1)  The world wants more oil.  China, India and all the developing Third World Countries are increasing the demand of a finite commodity.  (2)  Iran, Korea, Pakistan, Iraq, Yemen, Saudi Princes and Moguls, OPEC and possibly many smokers who require Ronson lighter fluid….are among the excuses for uncertainty in oil markets.  (3)  Not drilling enough and thousands of Goverment and Global regulations which restrict Off-Shore drilling locations, Water Shed locations, Environmentally sensitive areas and of course the giant list of Goverment Bureaucrats holding back the evil Oil Companies that all want to Drill, Drill, Drill and deeper drill. (4) Democrats who just hate cars. (5) Republicans that just hate cars. (6) Tribal Wars in the Sudan, Somalia and poverty all over the globe! (7) Commodity Speculators that are betting they can ramp up the price of oil and sell it out before it hits the top of the market. (8) Oil Companies and Oil Moguls around the the world that love to ramp up the cost for bigger and ever bigger profits. (9) State, Local and National Governments around the world that get a tax on every gallon of gas sold and quickly stick those mega bucks into their own private “bridges to nowhere” and other suitable projects – including a microscopic amount for education and healthcare; to cover their unbridled greed. (10) Energy Companies – Electric and Natural Gas which gives them an excuse to raise prices to every consumer on the planet and having these prices approved by Government agencies loaded with ex-energy executives and special interest folks who just can’t say no!  (11) Shiites and Sunni problems across the Globe, along with Japanese Earthquakes, needless bell ringing in Mongolia and the fact that we cannot create enough Corn for Ethanol which we can export at a huge profit without demanding that U.S. Gas supplies contain at least 15% Ethanol.  Finally, don’t forget the big one:  (12) President Obama!  Drain that Strategic Oil Reserve before Mitt Romney gets in.

As you can see, the temporal price of oil has lots of excuses.  You start to add the Prius, Kia, Toyota, Chevy Volt and various other hybrid so-called solutions to the mix and your head almost explodes from the stupidity of it all.  Oil companies have no qualms about telling folks that “they have plenty of oil”.  They have so much oil that they don’t really need the “Keystone Pipeline” which brings crude Canadian Oil down to Galveston, Texas in order to be refined and sent to China and India at inflated prices.  They don’t need to drill in Africa, cause there is far too much oil there.  The entire country of the Sudan has shut down the entire supply because of Inter-tribal and Revolutionary Pirates.  The Oil Companies want to drill in Wyoming, Utah, Colorado, South Dakota, Alaska and lots of other places they “just haven’t drilled enough on yet”.  Will all this drilling relieve our need for oil?  Well, we already have enough for us…what we need is more oil for the rest of the world – they say.

All these issues however do not clearly explain why a gallon of high test gas is currently around $4.59 a gallon.  More some places of course.  There is always that one Gas Station that wants to be on the news for having the highest price and has the local news crews and vans there when they get to work in the morning.  So, for example let’s say we just cleared the slate!  Let’s pretend this is the first day we ever sold gasoline.  We would look at the supply, we would look at the demand in our country and we would then set a price that made sense.  In 1949, they used to have gas wars.  The price for a gallon of gas was between 19 and 23 cents.  They gave out coffee mugs, cookware, silverware, t-shirts and even stuffed animals for the kids.  You didn’t even have to fill up.  You could buy five gallons of gas and walk out with all the parting gifts.  In the days before the OPEC Oil Embargo, Blue Chip stamps were all the rage.  You got lots of Blue Chip Stamps for signing up and then when you filled up the book could redeem great gifts; like cheap radios from Japan, Cookware and more.

Well, today we get nothing.  No one washes your windshield.  No one puts air in your tires.  No one even talks to you…unless it is a audio computer that wants your zip code to verify you know who you are.  In those old days, a ’49 Ford 2-door coupe had 130 Horsepower  V-8.  It got about 16 to 17 miles to the gallon, unless of course – you had a lead foot.  Today, a typical Mercedes C-Class has almost 400 Horsepower and gets about 16-17 miles to the gallon.  Is there some sort of amazing coincidences going on here.  Now, the Prius and other hydrids run from 25 to 65 miles to the gallon.  Of course those autos costs about $50,000 dollars and how long do they last?  No one knows for sure.  It is interesting to note that in the old days, each auto had a standard 20 gallon tank.  Based on the current price of high test…if you came in dry to the gas station:  Your price out the door to fill up would be just about $92 dollars.  But the manufacturers are pretty smart and limit the amount of gas you can carry…down to about 11 gallons.  They seem to want to keep the price of filling up to about $50 dollars.

Ram Trucks, Nissan Tundras, Ford Trucks, Chevy Trucks all are the modern day – “I still want a Hot Rod vehicle!”  They have the 20 gallon gas tanks and the 400 Horsepower engines that still get around 13 to 17 miles per gallon.  These are the gas guzzlers along with the SUV drivers that are truly the worst gas guzzlers of all.  Cadillac Escalades, Lincoln Navigators, BMW, Range Rovers and the list goes on and on.   Hey, drive whatever you want, but then don’t complain because you can’t afford the price of gas.  Downsize folks.  Demand that the manufacturers of automobiles offer vehicles that get 85 Miles Per Gallon at an affordable price.  Remember the Pinto?  Remember the Corvair?  Remember Olds F-85?  The list is endless.  Light cars, with small engines that got very good gas mileage.

Finally, let’s demand that all oil production in the U.S., remain in the U.S. for domestic consumption.  NO exporting our oil for whatever price the Big Boyz think they can get on the Global Market.  Let Sudan and the rest of Africa make the cash on Exporting Oil.   Let’s offer a turn in your gas guzzler program implemented by the manufacturers.  Turn in those Extended Cab Trucks or equivalent  and get a vehicle  that get 45 MPG or more and get a $3000 dollar rebate.

The truth is:  High Test Gas should be about $3.65 cents a gallon.  That takes in inflation, development costs and demand.  We need to put our foot down and make politicians put in the incentives necessary to develop micro-turbine powered 150 MPG vehicles that are affordable.  We don’t need to ban or tax any vehicles currently on the road.  We need to make new technology safe,  better and more affordable.  They will then “sell themselves”!  You should be able to buy anything you want on the web – with virtually any additions you can think of included.  “Yes Virginia, you can still get manual roll up windows!”

How much should a gallon a gasoline cost?  A lot less than we have to pay now!