Rising gas prices

Americans are faced with rising gas prices estimated to reach $2 and even $3 per gallon by the peak travel season this summer. Many are complaining about the constantly rising prices as they stand beside a self-service pump filling the tank of their SUV. This is the same SUV that in standard size get 15 MPG and in the giant size get 10 MPG! The american love affair with SUVs has finally begun to take its toll. The demand for gas is now outstripping the refined supply and as the old law of supply and demand kicks in, prices rise.

Some might ask why don't the oil companies build additional refinery capacity to increase gas supplies. At $100 million or so, it's an expensive project. Also the NIMBY response would kick in as everyone wants more gas but nobody wants to live down the block from a refinery. And from a practical matter, why should the oil companies go to the trouble of building additional refinery capacity when they will make more selling the gas supply they have.

In short, we are left at the mercy of the oil companies and the SUV owners who have traded in 25 to 33 MPH vehicles for vehicles getting 1/2 to 1/3 the gas mileage and who drive just as they did before.

5/8/01
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