Tuesday December 16, 2008
Gas Prices
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Idaho gas prices have mirrored the ever-increasing trend of prices throughout the nation. At times in recent weeks, reports have put Idaho's per gallon price among the highest in the nation. This is a concern of many Idahoans and one that I share. It is important that we make certain that Idahoans are paying fairly for their gas, and I would like to see lower gas prices in Idaho and the U.S.
As you may know, the retail price of gasoline is influenced by many factors, making it nearly impossible to isolate one reason for the price increase. Factors contributing to gas prices include the cost of crude oil to refiners, refining costs and profits, distribution and marketing, federal and state taxes and location. Crude oil is the major influence upon the price of gasoline, but the amount to which the price affects gasoline varies over time and among regions. A main factor contributing to the high cost of gasoline in Idaho is Idaho’s location in the Northwest. The majority of gasoline available in Idaho comes from a single pair of pipelines from a refinery in Salt Lake City. The cost involved in transporting oil from areas of the nation with the largest oil refining capabilities to the West Coast is high, and this translates into high gas prices for Idahoans.
Additionally, prices may differ depending upon location. Oftentimes, the further a gas station is from an oil refinery, the higher the distribution cost, which translates into higher prices at the pump, but being located close to an oil refinery does not necessarily result in lower prices. Other factors besides location can affect prices. Prices may vary from one gas station to another based on each individual gas station’s contract with its supplier. Competition may also account for the difference in gas prices. For example, in Coeur d’Alene, a town with approximately 20 gas stations, there may be more opportunity for competition among gas stations than in towns such as Lewiston, which has about 16 gas stations, and Kamiah, which has three stations. Having more stations may increase the likelihood of having several stations situated in the same location competing for customers, which would result in lower prices than in smaller towns, even if the smaller towns are closer to the refinery in Salt Lake City.
Because of high costs, regulatory red tape, and public opposition, refiners haven’t built a new facility since 1976—more than thirty years ago. The system is under such strain that any outages or disruptions are quickly felt in the market in the form of increased prices. The lack of domestic refining capacity also increases our reliance on foreign sources of refined gasoline. America now imports about a million barrels of gasoline every day - that means that about one of every ten gallons of gas Americans get at the pump is refined in a foreign country.
Ultimately, we need to find ways to reduce our reliance on gasoline and oil. As a member of the Senate Finance Committee, I have been working to promote federal policies that encourage developing new sources of energy and conservation practices. Also, I have worked to provide incentives for renewable fuel sources, including biofuels such as cellulosic ethanol & biodiesel, as well as policies encouraging the advancement of alternative vehicles such as hydrogen fuel cell cars, plug-in hybrids, and flexible-fueled vehicles. These initiatives have great potential to ease the current strains on demand in our energy sector.
Idaho’s Attorney General Lawrence Wasden shares our concerns about the high prices Idahoans are paying and has undertaken an investigation regarding the prices. He recently sent a letter to the oil companies asking for an explanation. With transportation in our country accounting for two-thirds of our oil consumption, I support efforts that focus on conserving and diversifying our transportation fuels and resources. I will continue working with my colleagues in Congress to find ways to assure consumers pay the lowest and most reasonable prices for gasoline.
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