Part of the progressive agenda should be a much larger investment in transit and intercity rail than the current federal budget (which is rather anemic). Why? Gas prices are high and are only getting worse.
That's according to this interview in Business Week with the chief economist of Tesoro, a gas distributor. The economist blames the higher cost of crude with the at-capacity refinery industry and sees nothing but upward pressure on gas prices.
Especially since D.C.-Republicans are tagged as the Party of Oil, progressives should embrace alternatives to economically-draining high gas prices as future-oriented problem-solving, quality-of-life-enhancing leaders. A nice block from the interview is below the jump.
Westfall doesn't paint a pretty picture for motorists as Americans begin the peak summer driving season. Prices are likely to stay high for the foreseeable future, he says, hitting consumers in their pocketbooks. The Government Accountability Office (GAO) says that consumers already have spent $20 billion more on gasoline this year than last.
That's Lynn Westfall, the chief economist. And for a portion of the Q and A:
What's been behind the recent runup in gas prices?
First of all, you have to remember that 60% to 70% of the cost of gasoline is the cost of crude. When that doubles from $30 a barrel to $70, prices go up. This spring we had a number of refineries not running well. In the past, the industry had spare capacity. If a refinery was down we'd run the rest at a higher utilization. Gasoline demand has grown at a rate of 2.5 refineries every couple of years. We can't expand existing capacity at that rate. The industry is running at full capacity.
Sounds like someone should build a new plant. Hint, hint.
You're looking at seven to eight years and costs in the billions. Kuwait was looking at building a refinery. It was originally projected to cost $6 billion. Last November the price had run up to $10 billion. By February, it was $16 billion and the project was canceled. In the U.S. we're looking at twice the cost because of pollution controls. Now are you going to go to your board of directors and argue for an investment like that?
So, I'm all for making gas gouging a federal crime, but the structure of the industry is a bigger problem. In my book, especially with transit agencies around the nation cutting back service, progressives should be leading the charge to give Americans more options and hedge our economy against ever-rising gas prices with expanded (not contracted) public transportation.
I'm not sure why the DLC Dems always seem to want to show their 'fiscal responsibility' by cutting transit operating funds. That was the first time I realized the President Clinton's budgets weren't so great.
Sort of cross-posted at the Improving Amtrak Incrementally blog from the Midwest High Speed Rail Association.