"Congress should look in the mirror"


It's not a crisis so much as a stage for populism
Quite a pile of links to crunch today. First up is this article from OpinionJournal.

If Congress wants to locate genuine gas price villains, it should look in the mirror. Domestic refining capacity is stretched in part because environmental laws discourage the building of new refineries. Meanwhile, new mandates for ethanol and other "boutique" gasoline blends make it harder for the industry to meet refining shortfalls. The Lundberg Survey estimates that the ethanol mandate alone adds 10 cents to each gallon, and that 36 refinery snafus this year have cut U.S. gas supplies by about 8%. Refiners are also currently switching to mandated summer gasoline blends--another contributor to the current price spike.

Congress's ethanol craze is a special problem because it further reduces the incentive to invest in new refining capacity. Gasoline refining is a low-margin business in any event, and only a very brave, or very foolish, CEO would invest heavily to refine more gasoline when Congress is bent on replacing it with ethanol in the future.

I've covered this several times already, here and here are the most recent. Sometimes I swear I could do this by the numbers.

Nice to be validated though.

— NeoWayland

Posted: Mon - May 28, 2007 at 04:55 AM  Tag


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