I’ve been thinking about gasoline By Fred Cederholm

Column for on/after July 9th

I’ve been thinking about gasoline. Actually I’ve been thinking about volatility, global unrest, apocalyptic predictions, recent history, pump prices, ethanol, and DC rhetoric. When I filled up my PT Cruiser on July 5th at the local Casey’s, the price was $2.93 point 9 per gallon. Friday, when I pulled in to get gas for my weekend mowing; the same gas was now priced at $3.09 point 9 a gallon. This was a 16 cent increase in two days! There were similar jumps at all the fueling installations along the Lincoln Hwy (Route 38) from Rochelle to DeKalb.


You see, the long 4th of July weekend was over and most families were getting back into the normal “dog days of summer” when the above mentioned price spike occurred. There were no new wars, there were no pandemic outbreaks, and there were no natural disasters. Crude oil reached a new high as the $76.00 per barrel ceiling was tested, but not breached.


The Middle East was rattled by the escalating events between Israel and the Gaza Palestinians. The Far East was rattled by test missile launchings by the North Koreans. The Western Hemisphere was rattled by uncertainty of the outcome of the Presidential election in Mexico. Meanwhile, the planet was diverted by the World Cup in Germany. (Italy won!) It was the undercurrent of fear which had apparently rattled the oil market. In 1933, FDR said: “the only thing we have to fear is fear itself.” This maxim now applies to oil/gasoline pricing.


Anyone familiar with my columns knows how I closely track Uncle $ugar’s oil consumption, global suppliers, world events, and regularly comment thereon. When oil prices left the $30.00 per barrel range some 30 months ago, I honestly felt the escalation was a temporary aberration. I mean… as recently as 1999, oil was testing $10.00 per barrel on its way down. I felt predictions of $100.00 per barrel crude and $ 5.00+ per gallon at the American pumps were ludicrous. I saw these as nothing but attempts at 15 minutes of fame (or notoriety) by the energy pundits and gurus. Now… I am not so sure that was or is the case.


Despite the habitual and ongoing record-challenging prices, consumption and imports of crude and distillates (domestically and worldwide) have not diminished one iota. True, some global crises and catastrophic events have come and gone over the past two-and-a-half years, but… each “temporal” event/crisis/situation has been supplemented AND supplanted by an even bigger and more volatile one. Is this planet any safer/less explosive, or are the promises of a secure and ongoing global energy supply any more credible than they were 30 months ago?


If you crunch numbers figuring the projected crude costs, refining costs, refining ratios of distillate output (by category of product) per barrel, add on Federal and State motor fuel taxes, transportation costs, etc.; $5.00+ per gallon at the pump pricing for US/us isn’t some horrific speculation --- it would be a certainty! With gasoline already at $7.00 per gallon in Oslo, $6.50 in Hong Kong, $6.40 in London, $6.30 in Brussels, $6.15 in Rome, $6.10 in Frankfurt, and $5.00 in Tokyo; don’t expect much (if any) sympathy from drivers elsewhere abroad. It is of little consolation that gasoline is now selling for 12 cents a gallon in Caracas.

Ogle County, Illinois is in the heart of corn country. Over a year-and-a- half ago, ground was broken for a mega-ethanol plant less than five miles from my home. There is at least a year’s more construction time required for its completion, and THAT was before it was just “decided” to retro-redesign it to more than double the projected output capacity. Ethanol MAY be a partial solution – way down the road (pun intended), but despite political rhetoric in this beginning of the 2006 campaign stumping season, don’t expect this to be a mitigating factor anytime soon. The first “Ethanol 85” pump in Ogle County was only just announced.

We’ve been sold a bill of “goods” regarding our energy policies (or lack thereof). I want to know what candidates for election in November intend to do to REALLY fix this. We know what incumbents have done (or haven’t) to get US/us where we now find ourselves. Opening up Uncle $ugar’s checkbook - fast and loose - will get us as far as it did in the aftermath of Katrina/Rita. Just what will $5.00+ gasoline do to this debt-driven ro-bust economy? I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright Questions, Inc. 2006 all right reserved.


To “audit” this column and to learn more about the subjects discussed, please check out:

Franklin Delano Roosevelt’s First Inaugural Address – March 4, 1933 (You’re familiar with the excerpt, but please re-read the entire speech in the context of our current situation.)

http://www.bartleby.com/124/pres49.html

WHAT A DIFFERENCE 20 YEARS MAKE IN CRUDE OIL PRICES
http://www.oilcrash.com/articles/simmons1.htm

Gas prices, a round-the-world sampling
Oslo is not the place to fill up. Caracas on the other hand...
http://money.cnn.com/2006/06/09/news/economy/global_gas/index..htm?cnn=yes

Gasoline (and Diesel) motor fuel taxes by state (current)
http://api-ec.api.org/filelibrary/2006-gasoline-diesel-taxes-summary.pdf

Gasoline motor fuel taxes by state (2002) http://www.energy.ca.gov/gasoline/statistics/gas_taxes_by_state_2002.html

Rising Gas prices Boost State Tax Revenue
http://www.suntimes.com/cgi-bin/print.cgi?getReferrer=http://www.suntimes.com/output/news/gastax06.html

Monthly Motor Fuel (Consuption reported by States (1998 to 2005)
http://www.fhwa.dot.gov/ohim/mmfr/mmfrpage.htm

How US Gasoline taxes by State Compare (January 2006)
http://www.laughtergenealogy.com/blog/notes/gas-tax-rate.html