Sunday, February 24, 2013

DRY AT THE PUMP



By Arthur H. Gunther III
thecolumnrule.com

Though gasoline pump prices have jumped about 50 cents per gallon in recent weeks, the real worry is not about price but supply. In high-demand periods such as summer, and in transport disruption as occurred  during the recent storms, shortages will happen, worsened by panic buying.

It was just last April that CNNMoney reported that nearly 50 percent of the refining capacity on our East Coast has either ceased operation or would do so soon. The claim is that the older operations are losing money because they cannot efficiently (read profitably) refine cheaper, heavier types of crude from oil sands in Canada, Saudi Arabia, Venezuela and other places. 

Analysts are concerned, CNNMoney reported, that there will be insufficient tanker, barge and pipeline delivery to Northeast markets. 

This is a matter of national defense, for the homeland cannot be secure without dependable gasoline and other refined oil supply. The economy would be jeopardized, as would government operation. People would, of course, panic and snarl what supply lines do exist. Heating plants in homes and in public and private business would shut down. 

If no investment is made by the oil companies in East Coast refinery replacement, if the focus is again only on the short-term bottom dollar, as has been the case for at least 20 years in American business, our area will face sure supply disruption.

Yes, tankers can bring in gasoline from refineries on the Gulf Coast, Europe or Newfoundland, but they must arrive in an endless supply chain. The famous D-day invasion was almost stalled and reversed by weather-related supply disruption. Imagine what even a mild storm could do to interrupt delivery of gasoline.

And terrorists might easily take advantage and interfere with international shipping.

Of course, speculators already see the opportunity here. The major Wall Street muscle that is behind such speculation drives up prices for quick investor profit without any hint of conscience over suffering Americans. These speculators do not even take delivery of the gasoline and other refined oil. There should be no speculation in any major commodity market since greed is the key motive, not the public welfare.

Congress seems unable to handle even the most mundane matters, let alone this brewing crisis. Budget sequester and its economic fallout lie ahead, and maybe that’s good in a sinister way since if we have less money to spend, we won’t run out to buy gasoline that may not be had at any price.

Where is our leadership?

The writer is a retired newspaperman.