Trilby Lundberg is publisher of the Lundberg Survey, a national survey of gas prices quoted regularly by major news organizations, including CNN.
Lundberg says government subsidies for alternative fuels "has already added a great deal of cost for gasoline consumers here in the U.S."
In an interview with CNN.com, Lundberg explained why gas prices soared this spring, decried the politics of global warming, and chastised the media for not taking the time to thoroughly report the complex, yet sometimes dry explanations behind fluctuations at the pump.
Q: What are the trends, what are the things that you see that maybe are not always reported?
A: You ask what elements have not been reported. For one thing, there are several reasons that there was so much refining capacity down [this year].
One was holdover work from the 2005 hurricane damage. Many in the public may not realize that [it] was not possible to fully repair all that since the second half of 2005. Another cause was environmental protection regulations that have made maintenance and repairs far more complex than they were in prior years.
Third is specific to the use of ethanol that makes getting ready for summer's lower vapor pressure requirements more complex and more costly to achieve. ...
On top of all this there were accidents, there were fires, explosions, power outages at power companies. Two of those here in the United States that were not terribly serious, but were somewhat amusing to read about, was the invasion of a power station by a raccoon and an invasion of a power station by an opossum.
Q: What was different about this summer?
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A: The U.S. average retail gasoline price at $3.18 on May 18 was not only a [record high] in today's dollars ... but it also smashed the all-time high in terms of inflation adjustment. [There] was also [a] record high number of refining repairs and maintenance projects.
Q: Where will we be in five or 10 years in terms of gas prices?
A: I think the chief determinants will be these three things: whether or not there is a disruption in world oil supply, intransigence in petroleum politics among some of the producers, and U.S. interference with its free gasoline market. The various energy bill proposals that are on [the] table in Washington, D.C., can have a deleterious affect on price or on gasoline demand or both. Forcing subsidized non-petroleum fuels on consumers can greatly add to cost.
If an energy bill passes which does nothing extreme to effect price or demand, then our chances of having gasoline prices lower in future or at least lower than they otherwise would be are enhanced. And I say that because the world gasoline market is becoming a reality. ... There is a much more international aspect to the gasoline market than ever before. ...
As our demands have exceeded our refining capacity -- because adding capacity here in the U.S. is slow, difficult and costly -- those in other countries where adding refining capacity is not so slow, difficult or costly, they are doing just that. They are adding capacity not only to satisfy their domestic and regional demand for gasoline, but also to export internationally as merchants.
And one of the plum destinations for that gasoline will be the United States. So there will be much more capacity in the world being built, ... [and] the higher the price has gone here in the United States, the more excited these foreign refiners and future refiners have become. They're building them practically all over the world, some from the ground up, except here in the United States. So I expect there will be much more gasoline supply in the world, and that the supply tightness that we've seen in 2007 here at home is not likely to be repeated. And therefore that would favor lower prices.
Q: What are the effects of alternative fuels?
A: The [government] subsidization of alternative fuels -- non-petroleum fuels -- has already added a great deal of cost for gasoline consumers here in the U.S.
To further mandate these uneconomic sources that cannot compete -- even with heavy subsidy -- would make gasoline prices higher and hurt consumers. When the market is ready -- if it ever is -- for such fuels, then they will not need subsidy. Meanwhile, the much heavier use of ethanol in the United States is affecting world prices -- not only U.S. gasoline prices, but world prices for those consumables that use corn. And the planting of so much more corn here has displaced planting of other crops, so that there are other indirect effects. And they're all negative.
Q: So you see these as hurting Americans more than helping them?
A: Yes. The use of tax money to prop up these uneconomic sources of fuel is itself a negative for consumers. ... The use of ethanol, despite all that subsidy, makes gasoline prices higher than they otherwise would be, through the difficulty of achieving EPA regulations and the final gasoline product, and through the requirement from the 2005 energy bill that minimal volumes of ethanol are sold. ... It's even been shown that the cost of tortillas in Mexico has been affected by our new government-mandated consumption of ethanol, which has raised the cost of corn.
Q: As far as conservation, what are the trends you are seeing?
A: I'm hoping that consumers will see through the rhetoric about consuming less, demanding less, as faulty. It is not a given that consuming less will be good for our economy or for our personal freedom. It is not even established for our environment that we [should] deprive ourselves of gasoline for our personal mobility as well our commerce. And to suppose that it is good to do that, and pretend that we have consensus and put our heads together to deprive ourselves of this great product that makes the country go around, commercially and individually, I think is flawed. I'm hoping consumers and voters will see through that and be able to ignore some of the most extreme suggestions.
I think that there has been friendly as well as unfriendly brainwashing taking place. And when I say friendly and unfriendly, I'm talking about decades of extremist views that have now achieved mainstream acceptance. And the No. 1 item among those affecting current oil politics in Washington is the boogeyman, also known as global warming.
I don't accept it as established fact, nor do I accept that it would be caused by petroleum consumption, nor do I accept that the human species should not affect its environment. So even if it were someday to be shown to have some small effect on the environment, I see no crime. In fact, taking into account the many, many millions of people around the world that envy our way of life, it would seem more humanitarian to wish them the kind of plentiful petroleum products and vehicles ... that we enjoy ... to lift themselves out of [a] backward, poor way of life.
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Originally Posted by InfiniteNothing
Well-said.
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