Thanks for the info!

The thing is that there are dozens of different gasoline formulations required for different areas due to EPA fiat. There are also state and local regulations which often complicate matters.

As a tangent, this brings up the tension of federalism v. states rights, with the European Union (I almost said federal republic, heh) often being more centralized than the United States.

The thing is that there are dozens of different gasoline formulations required for different areas due to EPA fiat. There are also state and local regulations which often complicate matters. That is one of the reasons that gasoline costs more in California. The refineries have to guess in advance how much gasoline is going to be purchased in each zone, produce that gasoline, ship it to the area and then change the formulation for the next zone, ship that quantity there, etc…

If they guess wrong and produce too much for an area, the excess inventory sits there wasting capital that has interest cost. If they guess wrong and produce too little gasoline for an area, it takes a while before that information feeds back to the refinery, the production schedule can be altered the different mix can be produced and delivered. In the mean time, there is a shortage of gasoline in that area so local prices go up. There is the additional complication of stricter volatility standards for the summer months which essentially doubles the number of required formulations and makes it illegal to sell “winter gasoline” during the “summer gasoline” months.

All this stuff adds to the cost of gasoline. How much extra do these regulations add to the cost of gasoline? I don’t know. It would take a talented economist to figure it out. Given the orthodoxy required on any matter related to the environment, I don’t expect any honest analysis from academia. Is it worth the extra cost due to improved air quality? I genuinely do not believe that anybody has any interest in providing an honest answer to that question.

Barnett makes the point that if not for Oil, our relationship with the Greater Middle East would be similar to our relationship to Sub-Saharan Africa.

I agree.

The difference is that he takes this as an argument for oil-wealth, and I take it as an argument against.

Asian colonization will be a lot easier to institute in SSA than GME because it is not complicated by black gold, and the social degeneration that comes with it.

Mark in Texas,

Interesting!

Are refineries forced to formulate gasoline for their local standards, or can they chose to formulate for the higher standard of another part of the country?

The way around this is to make gasoline a fungible commodity again. The EPA should come up with ONE required gasoline formulation. It will be more stringent than many rural areas need but it will be less stringent than some urban areas currently have. The result is that any gasoline can be shipped to any gas station and spot shortages will be eliminated. This would probably drop the price of gasoline by more than 18.4 cents nation wide.

From a political standpoint, the problem with doing this is that it is too complicated for a sound bite but cutting the gas tax is simple and everybody can understand it.

I’m not sure a crash program works toward our goals here—lessening negative influences while maintaining positive ones. Isn’t one of Barnett’s best points that a cold turkey approach is very destabilizing to the ME and that it simply increases resentment there by going quickly away from petroleum?(A hacked his caboose break on this, but I hope you know where I’m trying to go).

The purpose is to lesson the political power that oil producing regimes have over us, and to lesson the power that oil has over those regimes. The market price isn’t much of an issue.

Lexington,

Good point.

And is this a blogging first? Getting called on the carpet by one’s mom?

Quite honestly, I think the best thing to do is nothing. Let people figure it out on their own. Trying to save them with gov’t programs is bound to make more problems than it is worth right now(unless we’re talking about somehting like the Tennessee Valley project or massive road building exercises ala the 30s).

Economic re-adjustments *do* happen and that isn’t a bad thing, in the long run.

Since this is only part of the year, the incentive to improve mileage for the routine work-related travel is still in place. This seems like a pretty good balance betweent he policy goal and populism. He could have said repeal it entirely.