By H.W.C.

Oct 17, 2005

It Is Time to Save Gas

On September 1^st, three days after Hurricane Katrina came across the United States, I received calls from my friends, and they all asked me to fill up the gas of my car as soon as possible. They claimed that there would be a shortage of gasoline in the United State. That day, unfortunately, I had to wait thirty minutes in the gas station and pay one dollar more for each gallon of gasoline. The people in the gas station not only filled up the tanks but also the gas cans which they just bought from Home Depot. What was going on with the gasoline supply and demand in the United States? According to The New York Times, on September 1^st, the gas price hit as high as $5.85 per gallon in Atlanta and averaged more than $3 per gallon over the nation (Ramirez 3). Shortly after Hurricane Katrina came, Hurricane Rita came to the United States. Hurricane Rita gave another threat to gas prices in the United States. The Energy Information Administration (EIA) reports that the retail price of mid-grade conventional gasoline stayed between $2.83 to $3.13 per gallon in the aftermath of Katrina (“U.S. Retail Gasoline”). Currently, the refineries are restoring from shut-down that lessens the overwhelming gasoline prices. However, the United States still faces the problem of high gasoline price in the long-term due to the high domestic demand and the tight supply. In addition, the dependency on foreign crude oil imports will further drive up the price as well. It is time to save gas now. Saving can be done by customers shifting to more efficient vehicles, and the government should improve the mass transportation system for the long term.

As many economists say, the price of a product is determined by “Supply and Demand.” While there is a shortage of a product, the price will go up. Reversely, while there is a stockpile of a product, the price will go down. Nowadays, the demand of gasoline for transportation in the United Sates is overwhelming. As the EIA reports, the United States currently consumes 20 million barrels of crude oil a day and half of these are used in transportation (“Where Does”). Although the demand of gasoline is so high, the production of gasoline is not enough. The disaster of the hurricanes uncovered the problem of insufficient production of gasoline. According to the Energy Compass:

The crippling of up to 15% of the country’s refining capacity helped push up retail gasoline prices to all-time highs. . . US refiners were already operating at an average of almost 95% of their 17.1 million barrel per day capacity. . . The week before the storm, gasoline imports were about 1.3 million b/d. . . (Piotrowski).

The refineries in the United States are already producing gasoline with their maximum capacity, but the United States still cannot produce enough gasoline and has to import extra gasoline to meet the domestic demand. Hurricane Katrina only corrupted 15% of the total gasoline output; unfortunately, all other factories did not have extra capacity to offset the loss in production. As a result, the gasoline price was skyrocketing. Some people suggest that we can build more refineries to match the high gasoline demand. However, it will not be easy to build new refineries. The energy industry will face many problems before they can build new refineries, such as resistance from local residents due to the concern of pollution problems. It usually takes years for the energy industry to build additional factories. Therefore, the production of the gasoline will not increase dramatically in the foreseeable future by building new refineries. As a result, we need to think about how to shrink our usage of gasoline before we can increase our production.

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