President Obama goes out of his way to Raise the Price of Gasoline

Posted by PITHOCRATES - September 14th, 2013

Week in Review

Why is gasoline so expensive?  Because of President Obama.  He has shut down drilling wherever he can.  Reducing the American supply of oil (and increasing its cost) to refine into gasoline.  And he has been depreciating the dollar with his quantitative easing.  The Federal Reserve’s stimulus that is doing nothing to stimulate the economy.  But because oil is priced in U.S. dollars per barrel this devaluation of the dollar results in higher oil prices.  Because it takes more of a devalued dollar to pay for the same amount of oil those dollars once bought.  And then there’s this (see Valero Asks Obama Administration to Waive Ethanol Mandate by Mario Parker posted 9/10/2013 on Bloomberg).

Valero Energy Corp. (VLO), the world’s largest independent refining company, called on the Obama administration to waive the country’s biofuel target immediately, saying the cost to reach it has skyrocketed…

Refiners are required by law to use 13.8 billion gallons of ethanol in 2013. Renewable Identification Numbers are attached to each gallon of ethanol to track compliance. Once the additive is blended into gasoline, refiners can retain the certificate to show compliance or trade it to another party. RINs prices have risen more than eight-fold so far this year.

RINs have increased because of falling gasoline demand and higher biofuel consumption targets, Klesse said in the letter.

Gasoline demand will drop 0.5 percent next year, according to a forecast today from the Energy Information Administration, the Energy Department’s statistical arm. The Renewable Fuels Standard, set in 2007, calls for 14.4 billion gallons of ethanol to be used in 2014, up 4.3 percent from this year. The target increased 4.5 percent this year from 13.2 billion in 2012…

Ethanol is typically blended in a formula of as much as 10 percent in gasoline. While the EPA has approved blends of 15 percent, refiners haven’t adopted the higher concentration, citing engine damage concerns.

They only blend ethanol with gas so the percentage of ethanol in the gas doesn’t exceed 10-15%.  Because putting more into the gas could damage the engine.  So for every 10 gallons of gasoline they only need one gallon of ethanol.  For if they bought more than one gallon per every 10 gallons of gas they would have more ethanol than they could use.  With a fixed amount of ethanol required (14.4 billion gallons) instead of a percentage these refineries have a problem.  Because they need to buy 600,000 gallons more of ethanol in 2014 (a 4.3% increase over 2013) while gasoline demand will fall 0.5% in 2014.  Because of President Obama’s horrible economy.  Which means they will be blending less ethanol with gasoline in 2014.  Despite having to buy 600,000 gallons more.

They can’t use this extra ethanol.  And they sure don’t want to buy it just so they can store it someplace.  So instead they want to buy these Renewable Identification Numbers (RINs).  That certifies a gallon of ethanol has been blended with gasoline as required.  Even if it has not.  Which becomes a pretty handy thing to have (these RINs).  As you can avoid buying ethanol that you can’t use to meet the new higher requirement.  For people are buying less gas because of President Obama’s horrible economy.

These government regulations are greatly distorting the free market.  Increasing the costs of the refineries.  Who pass it on to the consumer in higher gas prices.  Which hurts Americans because they have to put more of their paycheck into their gas tank instead of using it on food or clothing for their children.  Pulling more money out of the economy.  Which helps to make President Obama’s economy so bad.  So why doesn’t he lower the number of gallons required when the number exceeds the amount the refineries need to blend with gasoline?  Because he doesn’t care about the cost of gasoline.  The higher the better for him as fewer people will be driving.  Which will create a greater demand for mass transportation.  Which will create more union jobs filled by people who will vote Democrat.  Also, the higher the price of gasoline the greater the tax revenue the governments collect at the state and federal level.  Which is what’s really important to governments.  Not food and clothing for children.

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