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Just how bad have gasoline prices really gotten? Here's the answer: folks in Los Angeles ($4.36 per gallon) and Chicago ($4.51) look at New York City ($4.12) as a relative bargain.
(Isn’t it the east coast that has the worst refinery problems, lost capacity and over-reliance on Brent crude?)
With steadfast consistency we continue to see the U.S. average price of gasoline climb steadily as the world awaits what might happen in the Middle East. What comes next?
Will Iran be the aggressor? Will Israel launch a first strike? Should Israel believe inertia is in its own best interest? Will President Obama commit U.S. troops to Israel’s defense? As early indicators of answers to any of these questions develop, global crude oil prices move accordingly. American consumers lose patience, not only with the price at the pump, but with anyone who might be in a position to do something about it.
As you'd expect, all kinds of potential remedies emerge; some from predictable places. Others, less so. Senators David Vitter of Louisiana, John Hoeven of North Dakota, and Richard Lugar of Indiana came up with a plan (SB 2100) that would prevent President Obama from tapping into the U.S. Strategic Petroleum Reserve unless the Keystone XL pipeline is approved. That may have some traction.
But even more attractive is an idea proposed recently by Lucian Pugliaresi, president of the Energy Policy Research Foundation, and Stephen Schork, an energy expert who is the founder and editor of The Schork Report.
In recent weeks both Schork and Pugliaresi have presented clear and sensible arguments for expediting the Keystone XL pipeline and making low cost Canadian crude more accessible to east coast markets. Refineries there are too dependent on Brent crude that is bought at a significant premium (sometimes $20 per barrel more than WTI crude oil) and that’s one reason why Pennsylvania refineries are closing.
How might Canadian crude reach the northeast? Rescind the 1920s Jones Act. That was a protective piece of legislation that required all goods transported between U.S. ports be carried in ships built, owned, operated and crewed by Americans. Since the existing fleet is committed to long-term charters, the Jones Act is what prevents the U.S. energy industry from shipping Canadian crude from Texas up into the northeast where it is badly needed.
And as Pugliaresi noted, the east coast refinery losses grow much worse this summer. If Sunoco is unable to find a buyer and closes its Philadelphia refinery in July, as scheduled, that will be the third Pennsylvania refinery (and the largest of the three at 335,000 barrels per day capacity) to close since Sept. 2011.
Rescinding the Jones Act is a reasonable move. It’s logical and it’s smart. But this is an election year… I guess it hasn’t got a chance.