I like to be right: energy prices on the rise

I like to be right: energy prices on the rise

The other day OPEC blamed the current oil prices not on the supply of crude oil but on the lack of refining capacity. Back in September I said the same thing. I am not all the way right though since right now gas in Dallas is almost $3 a gallon not because there is no oil to refine but because they can’t refine it fast enough and even if they could the ethanol that they blend to make the summer mix gasoline is in very short supply (the ethanol in the gas reduces the formation of ozone since it is partly self oxidizing during combustion.) Ethanol is in short supply because it has to be shipped from the Midwest where the corn is grown to the Gulf Coast where the oil is refined. When I say shipped, what I mean is driven, there are no ethanol pipelines, it all comes in tanks on trucks or trains. The summer mix gas in Dallas is 10% ethanol, so for every gallon of gas almost 13 oz is Ethanol, and with 360 million gallons of gas consumed in the US every day, that is a lot of ethanol, that has to be shipped in ~33,000 gallon tanker cars on trains (if you’re curious it would take ~1,100 tanker cars to move just the ethanol to blend the fuel for one day’s use.)
So if you want to place blame for the high prices at the pump, blame the EPA, since they are the ones who mandate the blend and don’t allow the refineries to mix the winter and summer blends. This too increases gas prices since the refineries have to completely sell all the previous seasons blend then clean the storage tanks, before they can start making the new blend. This reduction in inventory causes shortages and sudden price surges.
I offer this bit of proof for my theory, look at diesel oil prices, they are rising but not as fast as gasoline prices, this is because diesel oil doesn’t isn’t blended the same as gasoline, so it is not in as short of supply. When gasoline price rise because of a shortage of oil, diesel oil prices rise faster, because heavy hydrocarbons that make up diesel can be cracked into gasoline if the refineries want to, so diesel oil will be turned into more profitable products. But right now because they can’t make gas as fast as they want anyways, diesel oil isn’t diverted so the inventory is high and the price remains lower.