Fuel prices soaring again

Just in time for our cross-country vacation


This local station is one of the cheapest around here. From this starting point, what happens if we have a hurricane?

Good time for BPs Alaska pipeline operation to be shut. We're only going as far as Minnesota. The west coast could have the biggest problem, according to the story cited. Small comfort.

We'll travel round-trip 3750 miles and put 150 gallons into the old Subaru, so our budget will push $500 for fuel this time. Oh for the days when we could do it on $200. But you see, that extra $300 is not stopping us from going. What would it take to cancel? Maybe a near doubling to $5 or $6/gal would stop us, maybe.

Greg Palast says today,

Why shut the pipe now? The timing of a sudden inspection and fix of a decade-long problem has a suspicious smell. A precipitous shutdown in mid-summer, in the middle of Middle East war(s), is guaranteed to raise prices and reap monster profits for BP. The price of crude jumped $2.22 a barrel on the shutdown news to over $76. How lucky for BP which sells four million barrels of oil a day. Had BP completed its inspection and repairs a couple years back — say, after Dan Lawn’s tenth warning — the oil market would have hardly noticed.

But $2 a barrel is just the beginning of BP’s shut-down bonus. The Alaskan oil was destined for the California market which now faces a supply crisis at the very height of the summer travel season. The big winner is ARCO petroleum, the largest retailer in the Golden State. ARCO is a 100%-owned subsidiary of … British Petroleum.

BP could have fixed the pipeline problem this past winter, after their latest corrosion-caused oil spill. But then ARCO would have lost the summertime supply-squeeze windfall.

Doubtless BP and friends are up to no good on this one. But I'm of two minds on Greg Palast's reporting on oil and the multinational oil companies--especially with respect to Iraq. On one hand, he does some excellent muckraking, as shown above. On the other, he is dismissive of peak oil, and this is discrediting of his entire analysis, to my mind. He sees big oil in an epic struggle to maintain high prices by preventing the huge natural oil glut from crashing the market. But, as Richard Heinberg pointed out in a long letter concerning Palast's ``potshot'' at peak oil in Armed Madhouse, Palast has a lot of his facts wrong.

Sure, monopoly practice is strongly extant. However, if natural, geological limiting conditions were not beginning to be felt, it would be much more difficult for oil interests to engage in the manipulations we are seeing.