Motorists shouldn't expect gasoline prices to ever fall below $3 again, an official with AAA said on Tuesday.
“The days of a national pump price below $3 is probably a thing of the past,” Chris Plaushin, director of federal relations with AAA, told the Senate Energy and Natural Resources Committee at a hearing on fuel prices. ...
Committee Chairman Ron Wyden (D-Ore.) and Sen. Tammy Baldwin (D-Wis.) said refineries play a role in volatile gas prices.
They said the U.S. gasoline market is becoming more dependent on a smaller number of complex refineries. When outages occur — for maintenance, from storms and other issues — prices shoot upwards, they said.
Wyden also suggested that some refineries might also be collecting a windfall on crude oil.
“Supply is up, demand is down, but prices at the pump are still stubbornly high,” Wyden said.
via thehill.com
Isn't this impossible? First, whenever there are outages in refineries then supply goes ... down! Secondd, here is a graph of the four week average production/consumption (i.e., equilibrium quantity from the textbook) from the EIA. It looks to me like production/consumption has increased overall since 1990, with a pre-("great") recession peak and then constant except for a dip at the beginning of 2012.
The next line of the article is this: "Several witnesses said oil prices are determined on the global market." I agree. It seems very difficult to make the case for domestic market manipulation and windfall profits.
The rest of the article goes on to quote (a) those who benefit from government policies that favor increased domestic production crediting lower than otherwise prices on increased domestic production and (b) those who would benefit from removal of ethanol requirements blaming higher than normal prices on renewable energy standards.
