Op Ed: Pain at The Pump, Why Are We In This Predicament?

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Why does the United States have to import 60% of its oil from foreign countries, many of whose governments don’t have our best interest at heart? Below are our top 15 suppliers of crude, as reported by the Energy Information Administration: Canada, Saudi arabia, Venzuela, Mexico, Nigeria, Angola, Iraq, Algeria, Ecuador, Brazil, Kuwait, Azerbaijabn, Libya, Columbia & The United Kingdom.

Why have no new refineries been built in the United States in over 30 years? Gasoline prices are closely related to refinery capacity or the lack thereof. After all, not one drop of gasoline gets into your tank that was not processed through a refinery. When disasters, such as hurricanes, power outages, etc., occur, gas prices often spike because the remaining refineries have extreme difficulty keeping up with demand. Bureaucratic red tape, opposition from environmental groups and low rate of return discourage investors from taking the risk. According to Alexander's Gas & Oil Connections:

Why does the industry appear to have built its last refinery?
Three reasons: Refineries are not particularly profitable, environmentalists fight planning and construction every step of the way and government red-tape makes the task all but impossible. The last refinery built in the US was in Garyville, Louisiana, and it started up in 1976.
Energy proposed building a refinery near Portsmouth, Virginia, in the late 1970s, environmental groups and local residents fought the plan -- and it took almost nine years of battles in court and before federal and state regulators before the company cancelled the project in 1984.

Industry officials estimate the cost of building a new refinery at between $ 2 bn and $ 4 bn -- at a time the industry must devote close to $ 20 bn over the next decade to reducing the sulphur content in gasoline and other fuels -- and approval could mean having to collect up to 800 different permits. As if those hurdles weren't enough, the industry's long-term rate of return on capital is just 5 % -- less than could be realized by simply buying US Treasury bonds.
"I'm sure that at some point in the last 20 years someone has considered building a new refinery," says James Halloran, an energy analyst with National City Corp. "But they quickly came to their senses," he adds.

Why are there so many different gasoline blends depending on where in the country you live? Common sense will tell you that standardizing fuel blends would significantly simplify gas distribution logistics concerns. If all refineries produced the same product, it would not be such a crisis if one of them were to go off-line due some sort of disaster or technical problem. The others could easily compensate and keep supplies relatively stable. Such is not the case today. As stated on The Price of Fuel:

Many states require specific formulations of gasoline--there are currently 18 separate gasoline formulas for different regions of the country-and it is often difficult to import gasoline supplies from one region to another.

Why do we not have a comprehensive two-pronged energy plan that addresses both short and long term concerns? The short term plan should have us tapping the vast oil deposits we have right under our feet and just off our shores. We should be going after these sources at break-neck speed. This would greatly reduce our dependency on foreign sources of oil and allow us to tell the petroleum pimps to go pound sand. Implementing the short term plan would buy time for us to vigorously pursue legitimate, realistic and feasible alternatives to fossil fuels. Growing corn for fuel is not a good answer to the problem. Are you enjoying higher priced, eggs, milk, beef, bread etc? Turning America’s bread basket into a gas station is a terrible, terrible idea. This year, for the first time ever, the Unites States actually had to import wheat from China. The government needs to get out of the way and allow our free enterprise, profit motivated, capitalist system to solve this problem. Government intervention will simply gum up the whole process. Where government “help” is concerned…less is more.

Why do we keep electing and re-electing politicians that fail to come up with real solutions to this complex problem?