|
::
Point of View ::
There’s nothing we take advantage of quite as much as the little things in life… until they are gone, of course. Coming home to the rush of a cold jet of air conditioning on a muggy summer day, the nostalgia of fondly flipping through the albums of faded family photos, or the enjoyment of sipping a cup of coffee in your favorite lazy chair – they fill us with instant happiness and comfort.
But for millions of Americans hit by Hurricane Katrina it will be months, perhaps years, before these little pleasures are enjoyed again. In a matter of hours, the lives, the careers, the plans of millions of Americans were replaced with the immediate survival questions: How long will we live in this shelter? Where can I find some baby food? Why has no one heard from Uncle Jim? When will I be able to shower? In the coming weeks, families will search for loved ones – the fortunate will reunite and formulate a plan for recovery and the unfortunate will bury their loved ones and struggle through the grief of rebuilding their entire lives without those they love dearest. Millions will return to piles of water-logged rubble that housed their cherished memories – birthdays, graduations, promotions, births, and life – memories washed away by Katrina.
For those of us hundreds of miles away watching the aftermath of Hurricane Katrina through soundbites and aerial photography from the comfort of our living rooms, it is hard to comprehend the sheer enormity of Katrina’s destruction.
If the estimates prove correct, it would make Katrina the worst natural disaster in the United States since the start of the century. Katrina would also be the nation's deadliest hurricane since 1900, when a storm in Galveston, Texas, killed between 6,000 and 12,000 people. And while the before and after photos from space imagery help to convey the massive destruction and damage, there is no picture that can accurately reflect the deep and personal losses of each and every victim.
While President Bush has pledged extensive assistance for victims and the government has put into effect a massive emergency assistance program that included rushing medical care, communications equipment, generators, water and ice into hard-hit areas, yet the efforts still fall short of the need. Today, the House of Representatives reconvened for an emergency session to pass an emergency supplemental request to fund continued FEMA disaster relief. As fellow Americans we can help too. Please consider contacting the American Red Cross today at 1-800-HELP NOW (435-7669) or
www.redcross.org or visit my website at
www.house.gov/forbes to find out how to donate or volunteer.
Our thoughts and prayers are with the residents of Louisiana, Mississippi, Florida, and Alabama. And as we open our pocketbooks or free our calendars to help, we open our hearts as well. These are our neighbors, they are our countrymen, they are Americans. And, we know in our hearts, that should a tragedy of this nature befall us, they would be there too - with open arms, with willing hands, and with a compassion and an empathy that is uniquely American.
::
Gas Prices ::
The rising price of gasoline is a complex
issue with many causes. While government investigators monitor
industry behavior with regard to energy pricing, many factors
impact the price of gasoline - including the pressures of supply
and demand, the cost of imported and domestic oil, the capacity
and cost of refinement and distribution, and state and federal
taxes.
The demand for crude oil and the aftermath of Hurricane Katrina
are the major reasons behind increases in gasoline prices in the
last couple of weeks and days. The US imports almost two thirds
of its crude oil and is competing for world supplies of fuel
with developing foreign nations, especially China and India.
Prices are rising also due to consumer fears about the
availability of foreign oil, the ability of the US to refine oil
in light of Katrina, oil cartel controls, and other factors
overseas.
This website has been designed to answer the most common
questions regarding gas prices. Please take a moment to review
this publication and to also visit my website at
www.house.gov/forbes
to share your thoughts and concerns on gas prices and what you
are experiencing in your community and how it is impacting your
family or business. I look forward to hearing from you. |
Frequently Asked
Questions: The Cost of Gasoline
How is Katrina affecting prices?
Hurricane Katrina & Gas Prices
Why have gas prices risen so dramatically over the last couple
of years?
The Recent History of Gas Prices
What national factors affect gas prices?
Causes of Overall Gasoline Price Fluctuations
Why is gas so high in my area?
Causes of Regional Gas Price Fluctuations
Where does my money go at the pump?
Gasoline Price Components
How do I know I’m not being ripped off?
Avoiding Price Gauging
Where can I go for more information?
Useful Links & Websites
How is Katrina affecting prices?
Hurricane Katrina & Gas Prices
Hurricane Katrina made landfall on August 29, 2005, leaving
behind considerable devastation. In anticipation of the
hurricane's landfall, workers were evacuated from oil rigs in
the Gulf region. Some onshore refineries were shut down in
advance of the storm; others are also down now because of the
widespread interruption of electric power. Assessment of damage
to oil and gas production rigs, as well as refineries, has
begun. It is uncertain when electricity will be restored.
As a result, Hurricane Katrina has shut down oil and gas
production from the Outer Continental Shelf in the Gulf of
Mexico, the source for 25% of U.S. crude oil production.
Additionally, there are a number of oil refineries shut down
along the Gulf Coast in Louisiana and Mississippi that provide a
significant share of the nation's refined petroleum products,
much of which is transported by pipeline for the East Coast and
upper Midwest.
In response to the shortage of refined petroleum products,
President Bush has authorized the release of fuel from the
Strategic Petroleum Reserve (SPR).
For Additional Information:
Impact of Katrina from the Energy
Information Agency.
Why have gas prices risen so dramatically
over the last couple of years?
The Recent History of Gas Prices
The run-up of gasoline prices that began in spring 2004 climaxed
a period of almost five years during which gasoline prices
demonstrated a great deal of regional volatility but less of an
increase at the national level. In 2004 a large number of
factors combined to exert pressure on gasoline prices in all
parts of the country. Some of these factors have affected the
price of crude oil, and others the cost of producing and
marketing gasoline.
Past energy crises have demonstrated that oil is traded in a
world market, in which events in remote areas affect the price
of crude for almost everyone. In recent years, these events
included:
- Decisions by
the Organization of Petroleum Exporting Countries (OPEC)
cartel, after having reduced production quotas in 2002, to
raise them only slowly and reluctantly;
- Unexpected demand growth in China;
- Disruptions in oil production in major exporters,
including Venezuela, Iraq and Nigeria;
- Decline in the value of the U.S. dollar, the currency in
which oil is traded in the world market, compared to other
major currencies, particularly the Euro.
- Uncertainty and fear of major disruptions in Iraq and
Saudi Arabia, in the context of the war in Iraq and the
threat of terrorism. |
Just
as a number of factors led to increased crude prices, a
combination of features in the U.S. refinery industry
contributed to an increase in gasoline prices.
- U.S. demand
for gasoline has increased as economic growth has resumed.
- Domestic refining capacity has declined, both in number
of refineries and in total capacity
- The structure of the refining industry has changed. In
1981 most refining capacity was owned and operated by
integrated oil companies that supplied their own crude
oil, refined it, distributed it, and marketed the
products. Refining was only one part of the company's
profit-making operation, and frequently was not an
important profit maker. Now the refining industry is
characterized more by independently owned, nonintegrated
firms. When refineries are the sole source of revenue to
the owners, it becomes more important that the operation
be profitable, leading to pressure to raise prices.
- The refining industry has been operating with lower
inventories of both crude oil and gasoline, as a means of
cutting costs. The side effect has been reduced ability to
meet unanticipated demand, leading to greater price
pressure.
- Gasoline markets are fragmented regionally because air
quality requirements have led to numerous different
formulations to meet varying standards. In meeting demand
for these regional formulations, called "boutique fuels,"
refiners lose flexibility to meet local variations in
demand elsewhere, leading to increased price pressure.
|
What national factors affect gas prices?
Causes of Overall Gasoline Price Fluctuations
Several outside forces influence the price of gasoline. These
include time of year, environmental standards, and domestic or
world events.
|
- Gas prices
will go up during the summer and holiday seasons. Nice
weather and vacations increase the American summer gas
demand by 5% compared to the rest of the year. This
results in higher gas prices before and during the summer
season.
- Crude oil
prices are determined by worldwide supply and demand, with
significant influence by the Oil Producing and Exporting
Countries (OPEC) as they determine how much oil to produce
and sell to other nations. The more crude oil OPEC elects
to produce or release, generally the lower the price. OPEC
holds 2/3 of the world’s estimated crude oil reserves.
- Worldwide
demand for oil has sky-rocketed, causing the competition
for the existing oil to increase its price.
- The
United States is currently experiencing a shortage in oil
refineries. Without the necessary number of refineries the
oil cannot be transformed into gasoline fast enough to
meet the demand of the American people.
- Fears of
a terrorist attack crippling the market have driven oil
prices up as much as 15 dollars a barrel.
- Domestic
instability within oil exporting nations will also lead to
jumps in gas prices. The possibility of major disruptions
in the oil market will cause the price of crude oil to
increase. |
For additional information:
Energy Information Agency's Primer on Gas
Prices
Why is gas so high in my area?
Causes of Regional Gas Price Fluctuations
There are several reasons why there is fluctuation in regional
gas prices. These include:
|
- Americans living farther
from the Gulf Coast (the source of half of the gasoline
produced in the US) tend to have higher gas prices because
the cost to transport gas from the refinery affects the
price at the pump.
- Like any
product, gas prices are influenced by competition.
Consumers in remote locations face a trade off between
higher local prices and driving to an area with
competitive lower priced alternatives.
- Some
areas of the country have stricter environmental programs
targeted at reducing air pollution. These programs require
reformulated gasoline and restrictions on transportation
and storage, leading to an increased pump price. |
Where does my money go at the pump?
Gasoline Price Components
|
- The cost of crude oil is the
largest factor in determining gasoline prices. 50 percent
of the price of gasoline is reflective of the cost of
crude oil. Local gasoline prices take about seven weeks to
reflect changes in crude oil prices.
- The cost
to refine oil and the process to transform crude oil into
gasoline make up 21 percent of the total cost of gas.
- Local,
state and federal taxes are levied on gasoline, accounting
for 19 percent of the total cost.
- Gas
prices fluctuate based on where you live, taking into
account the distance from ports and the difficulty of
transporting gas to certain locations. Costs incurred by
gasoline company’s advertising campaigns are passed onto
you, the consumer, and account for approximately 10
percent of the total cost of gasoline.
 |
How do I know I’m not being ripped off?
Avoiding Price Gauging
Most experts agree that it is difficult
for a consumer to make a definitive judgment as to whether they
are the victim of price gauging.
Gouging is distinct, by definition, from price fixing, which is
the collusion of multiple gas stations to set prices. Gouging is
the act of an individual station taking advantage of supply
problems (and even perceived supply problems). The actual
definition is determined by state governments, who define what
taking 'unfair advantage' of a crisis is. Attorneys General
monitor these situations closely.
If you see prices at a station that far exceed your regional
average, that's when to take note, save your receipt, and get in
touch with the Virginia Attorney General's office at
(804)786-2071. You should also take down the prices of all the
varieties of gasoline available at the station, from regular to
high grade.
AAA offers the Daily Fuel
Gauge Report which allows consumers to
see both national and regional averages for gas prices.
Where can I go for more information?
Useful Links & Websites
• Energy Information
Administration
• United States
Department of Energy
|
|
|
