Gas prices putting the squeeze on consumers



By Tim Plouff

Being the Hancock County seat, Ellsworth is the hub of government services, health care, retail outlets and the largest community within a 25-mile radius for motor fuels — gasoline and diesel. Ellsworth currently features seven retail gasoline stations (plus some private commercial fueling facilities), a drop of three over the past few years. Four of the sites are branded with Shell, two are suppliers of unbranded fuels, while the largest operation is branded Irving. All but one of these fueling stations is operated by a locally owned family or corporation, and the vast majority of all of the gasoline sold in Ellsworth — ranging from 12.5 to 14 million gallons a year — was refined in St. John, New Brunswick.

With gasoline prices at a seven-year high, up over $1.30 per gallon from a year ago, with heating oil in Maine up over 38 percent from last winter, and crude oil up 33 percent from a year ago (based on the markets of Dec. 2 and the WTI — West Texas Intermediate, which is the benchmark for the world’s most heavily traded commodity), it becomes easier to understand how inflation might also be at record highs — up to its highest point in 31 years. Virtually everything in our economy depends on liquid fuels.

In 2020, during COVID-19’s worldwide explosion, the U.S. economy consumed 18.2 million barrels of crude oil every single day. A barrel is considered 42 gallons for crude, so this translates into 764.4 million gallons each and every day. In 2020, the U.S. was energy-independent, and exporting oil, natural gas and refined gasoline.
So far in 2021, the domestic fossil fuel industry has been under attack. Drilling leases have been curtailed or reduced, pipelines have been closed or denied permits, regulations have been increased to add expense, while the overall tone from our White House is negative to our largest energy sector.

It is all well and good to prepare for a different energy future, shifting our consumption and sources for our energy, but we are far from being close to those options for the vast majority of Americans. Washington’s leaders are playing fast and loose with the facts when they say that they have few tools to help reduce climbing energy prices and stem inflation, when the reality illustrates how their recent efforts have so negatively affected our economy.

Remember those government handout checks that consumers readily embraced earlier this year? You are paying that back now through higher energy costs, higher grocery costs, higher everything costs. The federal government is swimming in record tax receipts, but many progressives want to print more money and send it out to both wealthy and needy residents. Elevated inflation has erased significant payroll gains for millions of Americans, while our dollar becomes worth less.

Of those seven gas stations in Ellsworth, several waited months for underground tank compliance projects and overall site upgrades because the petroleum contractors in Maine, and around the nation, are so backlogged with capital improvement projects. They were not installing EV chargers.

America’s driving fleet is still over 97 percent gasoline and diesel-powered — despite the earnest efforts to transition the public to EVs. That’s over 240 million internal-combustion vehicles to replace with electric battery vehicles or something from another power source.

Given the very real negatives about the rare minerals needed for EVs, the vast strip-mining necessary in underdeveloped nations, plus the trillions of dollars necessary to upgrade to a new supply chain — a totally reworked electric grid and charging infrastructure necessary to handle the flip of hundreds of millions of vehicles — it would seem that Americans should get a grip on the vast expense they will be required to pay for this agenda.

Squeezing the economy by making fossil fuels expensive will have its own toll — especially on communities like Maine, with the oldest population in the country, the oldest housing stock in the country and some of the least investment by outside industry. Maine isn’t reaping the untold billions being thrown about for new EV battery plants and EV assembly lines; states with cheap and available power, easy rail access and better tax structures — like Tennessee and Kentucky — are reaping those benefits.

When an EV station is built in Ellsworth that actually refuels 500 cars a day, then it will be clear that we are moving in a new direction. But we will probably know that already, as we would have been paying for it for far too long via “transitory” inflation and carbon taxes.

Tim Plouff of Otis is retired from a 30-year career in the energy sector. He writes The Ellsworth American’s weekly auto review column.

 

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