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Virtuous Madness

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The President wants convenience stores to cut profits and fix high gasoline prices. Can they? Distribution and marketing account for 5% of gasoline’s price at the pump (WSJBidenomics 101” July 5, 2022). That was 22 cents a gallon in May. Out of that, labor, freight, utilities, real estate, and credit card fees took 10 cents. So, store operators and local distributors got 12 cents for their efforts. They can’t fix the President’s gas problem with 12 cents.

Tax collectors took 49 cents without breaking a sweat. They can’t fix high prices either. Neither can Big Oil. Majors own fewer than 5% of the gas stations in the U.S. They quit retailing because there’s no money in it.

How about refiners? They make gasoline, diesel, jet fuel, fuel oil, etc. from crude oil. They’re making money now. The U.S. crack (not that kind) margin was a record $55 per barrel (42 gallons) in May. That’s the difference between revenues from refinery products and cost of crude oil. It varies with crude price, seasonal demand for products, and refinery capacity. It’s been high recently despite high crude prices because of summer gasoline demand and a shortage of refinery capacity. Why a shortage?

Thirty-year crack margins (excluding the Ukraine disruption) averaged about $10.50 a barrel. That doesn’t justify investments in new refineries. They are expensive to build and hard to permit due to government regulations. No major refinery has been built in the U.S. since 1976.

There’s more money in crude oil. Prices are high. Russia makes more from higher crude prices now than before Ukraine. The Saudi’s do too. U.S. crude producers, too – despite efforts to shut them down. What caused high crude prices?

Stopping the Keystone Pipeline from bringing heavy crude from Canada to Gulf Coast refineries to make diesel caused a shortage. Restricting U.S. offshore oil leases discourages long term exploration for big barrel reserves. Threatening U.S. shale producers discourages drilling for quicker smaller reserves. Sanctions disrupt world crude trade. Crude prices rose on supply shortages and uncertainty. Commodities do that.

The President favors the liberal world over America’s interests. Globalist politicians shutter reliable fossil fuel and nuclear plants in favor of unreliable renewable energy. California and Texas lead the way to electric grid chaos and blackouts from intermittent wind and solar power. Why?

The answer is: Green Energy Madness. That’s the belief that electricity from wind and solar will supply our needs. (Solar generated 2.8% of U.S. electricity last year.) And belief in the theory that burning oil, natural gas, and coal will lead to future climate catastrophes because it releases carbon dioxide to the atmosphere. That’s a theory. Not a fact.

But it is a fact that England and Europe suffer energy shortages because they shut down their nuclear plants, natural gas, and coal plants to rely on unreliable wind power. They will suffer more this winter. The European Commission knows this. So, it now says nuclear and natural gas are Green.

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