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WHY ARE GAS PRICES RISING? What is an RV’er to do?
April 14, 2012 by Professor95 · 18 Comments
With fuel prices surpassing the $4.00 a gallon mark, to say that there is “pain at the pump” is an understatement.
Dropping 200 gallons of Road Diesel into the tanks on the Volvo while in Florida required handing the girl at the fuel desk $831.00. I couldn’t help but think of a time when diesel was considered “junk fuel” and was typically priced well below gasoline. While I could have completely filled both 150-gallon tanks on the Volvo in my younger days for less than $100, I know those days now exist only in memories held by our over 50 generation.
The soaring cost of fuel (gasoline and diesel) has hit the RV travel market hard. With typical fuel mileage figures for towing a 8,000# trailer behind a gas engine 1/2 ton pick-up ranging from 7 to 12 mpg – even short trips can rack up a significant bill. For example, a 200 mile round trip will consume $80 of fuel, up $20 from last year. The Paradox is that by some estimates the sales of RV towables has risen as much as 30% over the previous year. Economic analysts suggest that families are making shorter trips to camping destinations and staying longer. Some are abandoning brick and mortar homes in favor of towable/mobile homes.
Still, the pain at the pump persists – and it is doubtful that it will get better. As the consumer at the bottom of the “food chain” we must pay for rising oil prices in many ways other than gasoline. Food, transportation, home heating and cooling, tires, clothing, roofing, fertilizer, plastics, and even the cost of a stamp rise with any increase in the price of a barrel of oil.
WHY?
Why is fuel getting more and more expensive when the media reports that we are now exporting more gas and diesel than we are importing?
Why is oil increasing in cost if we are producing more here in the US than we have in recent history?
Generally, we blame the oil companies first – and why not? They are recording record profits. After the oil companies we pass the blame on to the speculators that buy oil futures hoping to make a profit and finally we turn to issues pertaining to government and political decisions. Any unrest or uncertainty surrounding oil producing nations brings panic to oil importing governments. Yes, they all have an impact on the price of oil – but not as much of an impact as one might think. It has been said that if we did away with the capitalist’s right for companies and individuals to make a profit off of the sale of oil and adopted a socialist’s stance where oil was a government controlled commodity we would be paying at least $2.00 more for a gallon of gasoline. Competition, even in this tight market, helps to keep the price of fuel lower in the United States than any other country where the government does not subsidize the cost of fuel.
What about refineries?
We have spent the past 35 years gradually expanding the capacity of our current count of 149 refineries. Finally, two new refineries are now being constructed – one in Arizona and another in North Dakota. During the past 35 years, energy usage has more than doubled in the US. Refineries have a limit on how much gasoline and diesel they can produce depending upon their equipment and size. They are all currently at their limit and if one or more shut down we all get busted in the pocketbook.
So, why not just build a dozen new refineries?
The “not in my backyard” syndrome kicks in. The EPA and environmental groups begin to rumble and get louder and louder. It is now estimated that it would take ten years to bring yet another new refinery on-line, even if we started today. Let’s face it, refineries don’t make good neighbors, we all want them somewhere else. Another blockade is “Big Oil” itself. With Exxon/Mobile, BP, Shell and Valero owning the lion’s share of refineries competition is believed to be stifled. We also have some foreign owned refineries on US soil. Venezuela owns three CITGO refineries and ships much of the refined gasoline and diesel back to Venezuela where it is sold at a ridiculously low government subsidized price. The rest goes to CITGO stations around the US.
Why doesn’t the US drill more oil wells and pump more oil?
Oil itself doesn’t shoot from wells drilled in the ground as it did back in the days of Dallas. Most all of those easily accessible pools of oil are gone. We now are extracting oil from shale deposits. This requires vertical then horizontal drilling and hydraulic fracturing – an expensive process that can impose new environmental dangers. Oil sands are being tapped but leave behind open pits reminiscent of strip mining coal. Off coast drilling for oil has creeped into deeper and deeper waters – again a more costly method of gathering oil.
The oil is there, but the cost of getting it from the source to us has increased dramatically – and will continue to do so.
Being part of a world economy where countries like China and India are buying every available barrel of oil doesn’t help us at the pump either. It is the old story of “supply and demand” that drives up the cost of a product,
So, what are we as RV’ers to do if we want to keep our lifestyle and tow our heavy fuel guzzling rigs down the road?
Possibly the most realistic choice is to do what a fellow camper recently told me: “Just suck it up – life is short and staying home in an apartment listening to the neighbors scream isn’t worth the extra $20 spent in fuel”.
Smaller, more fuel efficient RV’s can also ease the pain at the pump. Every RV manufacturer at the recent RV Show in Richmond had a “lightweight” model on display.
Better driving habits can also help to reduce fuel consumption and as a result, the total cost of filling up. Towable RV’s simply cannot achieve the same mileage at 65 to 70 mph as they do at 55 to 60 mph. Move to the right lane and slow down – save some fuel in the process.
Reducing weight by removing unneeded gear in the RV and tow vehicle can also have an impact on fuel economy. It is amazing what I cleaned out of our rig recently – stuff I have never used that I added just because we had room for it.
Inflate your tires to the maximum allowable pressures to reduce rolling resistance.
Back off on your take-off speed from a stop sign or red light. Sure, someone behind you may not like your lazy take off – but that is his problem, not yours.
Do anything you can to make your rig more aerodynamic. Those wings attached to the top of a pick-up really do work to reduce wind drag. I know because I have used them and observed the difference first hand.
Sadly, fuel is not going to get any cheaper. The expectation is for it to continue to become more expensive. This, of course, translates to more costly RV trips and travel. Quitting is not the answer – losing the experience of RV travel and exploring this great country would be sad. Life is short; time with the children and grandchildren in an environment conducive to talking, sharing, and discovery is priceless.
Somehow, we will keep on filling those huge tanks on the Volvo and keep the big wheels rolling. The value of our RV experiences cannot be counted by the price of fuel.
NOTE: Professor95 (Randy Agee) invites additional and alternative comments to this blog. Information he used in his blog has been collected from numerous sources believed to be reliable, but may still contain errors or reflect opinions. What’s your view?
HAPPY CAMPING TRAILS TO ALL!
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An honest, straight forward explanation of the causes of the cost of gasoline as I have read in a very long time. As a retired petroleum exploration/production geologist I have read many articles that put all of the blame on oil companies. They definitely want to make a profit and much of that goes into the stock price and much of those stocks end up in pension funds. But you honestly point out the other causes for the price of gas and also that we pay less per gallon than another country where the cost of gasoline is not subsidized by the government. I would say that the difference is much more than $2 per gallon. I believe they are paying $8 plus per gallon in England where my son is. I have never read you blog before but I commend you for your forthrightness and your honest look at the situation. I would like to see an unbiased explanation like yours on network news.
Howdy Randy,
As Mr. Russell says, “This is a REAL look at the cost of fuel..” and you have hit the nail on the head..
I had an opportunity to meet one of the engineers, who ‘rebuilt’ the New Orleans City Services
refinery for 7-11/Citgo.. He said they were under the impression to begin with; the refinery was to refine ‘sweet’ Venezuelan crude into gasoline, but what happened was the fellow who was the contact for 7-11, knew NOTHING ABOUT OIL QUALITY and let the Venezuelans SELL HIM THEIR WORST SULFUR OIL, ALL OF THEIR CRUD NOT CRUDE! Citgo then had to spend BILLIONS REWORKING THE FRESHLY REBUILT REFINERY IN ORDER TO REFINE THIS CRAP into gasoline… I told him I was buying Citgo and he said, ” It is the highest sulfured gas on the market and will RUIN your engine!!!”
Thank you, for your work and revelations on this subject…
Hello Randy, N & O,
What kind of mileage does the Volvo get? Probably better than our 2500/3500, 250/350s…
Have fun in Va Beach….later this month.
Mike K.
Mike Kieber wrote: “What kind of mileage does the Volvo get? Probably better than our 2500/3500, 250/350s…”
Yep, that is where the head scratching starts. A 19,000#, ten wheel, 12L diesel engine pulling a 15,000# trailer cruising along at 10 mpg (average). The worst we ever saw was 7.5 mpg in the mountains of West Virginia (7% grades and hairpin turns). Keep in mind we are working with 1,800 foot pounds of torque, a redline of 2200 RPM and a 10 speed transmission. The weight of the trailer is a joke for the tractor. We never got over 7.5 mpg with our 7.4L GMC dually.
Randy
Question for any who may have info:
What’s wrong with the natural gas conversion? Gas is cheap, compared to diesel, and it burns hotter, therefore using less to travel the same distance. It’s cleaner, and, by all accounts, better for the environment. I’m told the conversion for diesel is minimal. That doesn’t mean cheap, but less costly than a conversion to, say, propane/butane. Why not?
Thanks to whoever can contribute some wisdom.
Larry
Larry,
Great idea, but it is sort of like getting a horse first or the buggy first. We don’t have NG filling stations and the reason we don’t have NG filling stations is there are not enough NG vehicles to justify the cost. We don’t have NG vehicles because we don’t have NG filling stations………
I’ve converted several small gas engines to LPG and shared the details on RV.net. The process is not too difficult, but our EPA will not allow you or I to do a conversion of an engine over 40 HP unless the conversion is EPA certified. Not many are and the ones that are can cost a bundle.
Lastly, we cannot create or destroy energy – only convert it. The bottom line is the available energy in a gallon of NG is about 82,000 BTU, LPG is 91,500, gasoline is 125,000 and #2 diesel is 138,500 BTU.. By volume, it will take a lot more NG to give us the same amount of energy as diesel.
I think we will get there – we will have to. But a lot of new infrastructure needs to be developed first and that is not progressing at a very fast pace.
Randy (Profesor95)
There is another long term solution to these prices….VOTE to get these long term do nothing guys out of congress and oh by the way we need a new President.
Thanks for the good article. I don’t have any answers, just a couple comments.
What we take out of the ground is oil, what we put in our cars is gasoline. Between the two are the oil companies. I’m not going to totally blame them but they do p***s me off. They are always at the top of the list of earnings and always setting record profits, while taking large subsidies from us taxpayers.
If it will take ten years to get production from a new refinery, we ought to get started don’t you think? You are right about NIMBY. I grew up in southwest Philadelphia and had the refineries as neighbors. Very aromatic to say the least.
The History Channel ran a show (I saw it twice) called Prophets of Doom where several experts projected trends in their field of expertise to indicate when doomsday would arrive. One of them of course was oil. He made three points that I had not thought about before.
1) Our life style is based on a “one time gift from the planet” — oil, coal, natural gas. We have not paid the planet one cent for the petroleum products we have extracted from the earth. All we have done is pay other human beings for the cost of extraction. Nor have we paid back the planet for the cost of the resulting pollution.
2) Petroleum based fertilizer has allowed humans to feed themselves in numbers far beyond what this planet can naturally sustain. If (when) we no longer have that fertilizer available, immediate starvation will result for about half the world’s population.
3) Petroleum has given every person in the developed world the energy equivalent of 200 slaves.
Like I said — I don’t have any answers. Maybe just that when I run out of gas, I want it to be with my 5th wheel in the middle of the wilderness. I don’t think being among people will be very pleasant.
Thanks for the opportunity to vent.
Thanks Mr Agee,
I live in Québec. Canada and actually in Myrtle Beach, SC with a fiftwheel and a RAM 2500. Of course I noticed an increase for gaz price, but I’ll tell you that regular gazoline at $3,73US a gallon is like $1 Can a litter in Montréal. Unfortunately, in Montréal the gaz price is $1,47 Can a litter. So I’m not very chocked with the increase in the US.
I appreciate your article though I would have like to know your sources when you mentioned that :
«It has been said that if we did away with the capitalist’s right for companies and individuals to make a profit off of the sale of oil and adopted a socialist’s stance where oil was a government controlled commodity we would be paying at least $2.00 more for a gallon of gasoline. »
Not that I favoured a socialist stance or country, but I believe that regulation instead of deregulation could be of some help in such a basic product. For example, it is right to make a profit, but it is also right to pay a fair share of income tax, witch by the way big companies often can avoid. Secondly, why our governments still allow fiscal paradize that benefit to few billionnaires and allow them not to pay their fare share to the conuntry. Thirdly, why not tax speculation witch benefits to people who buy and sell without contributing in anyway to the product produce by workers of any country? Why pay a CEO 400 times the salary of an employee who is working for him? Is’nt it abusive? Why give stock options to CEOs and let Counsel hire mercenaries to lead the companies and focus only in short term profit instead of steady profit in the long run? Capitalism is in jeopardy right now, multinational firms is over-exploiting the resources, they delocalise their production in countries where there is cheap labor to exploit and they socialise the risk while they privatise the profit. This has to change if capitalism want to live. Otherwise I fear we are going into a dead end that will cause great social trouble not so far from now.
I really believe there is no big thing that ordinary people can do about a resource that is limited and is going to be rarer in the future. But I do believe that letting Corporations doing business the way they do today is an error.
I don’t think that we shall get rid of capitalism, because i think that it is a good system that allow an individual that work hard to be rewarded and to be encouraged to work harder. But I do believe that capitalisme need some repair in areas mentionned here. And only our governments can achieve that, ordinary people can only ask their elected official for those change, but it is a big deal when people stop thinking capitalism is’nt sick right now.
Alain Michaud
Pointe-aux-Trembles
Québec, Canada
p.s. I speak french, so excuse my poor english writing
I really don’t think it is as bad as everyone says. Back in the’50′s I worked at a gas dock, a place for fueling boats. We sold gasoline in the 30 to 32 cent/gallon range, and diesel in the 18 to 19 cent/gallon range. But, and don’t ask me why, we had to charge road taxes of 6 cent/gal for gas, but not for diesel. So, if you add the 6 cent tax to the diesel price, you’d get 24 or 25 cents/gal for diesel. Not a huge difference.
With modern refinery processes, like cat cracking, a refinery can make gasoline or diesel from the same feed stock. Costs are about the same. And, actually, since diesel has more heat value per gallon than gasoline, you’d think it would be more expensive than gas (which it has been, lately.)
Also, I made minimum wage of $0.75/ hour. For an hour’s work, I could buy about 2.5 gallons of gas. Minimum wage is now $8.00/hour. So, for an hour’s work, yo can still get about 2 gallons of gas. And, consider all the new regulations that refineries must comply with.
Sure, $2.00 gas would be nice, but that’ll never happen. Be glad you aren’t in Europe, paying the equivalent of $7 to 8/gallon.
RVing on a scale of economics is still cheaper than any other form of vacation travel.
Consider $200-300 bucks per night for a hotel/motel – consider the cost of three meals per day per person. Consider the cost of a rental car once there. Consider the air travel cost.
I like to smell the road and the scenery and get there when I do- on Tulsa Time.
One thing not mentioned is most of our North Slope Crude (it is high in sulfer) is exported.
Also gas would be cheaper if we could get rid of government corruption
As accurate, fair and balanced an explanation of the price of oil and gas as I have read!
I am sure that most of what is being said is true. However there is a very large element of greed, and while I have no beef with capitalism that is not to say that the lack of concern for this country is not a good thing. We all want to make lots of money but there comes a time when it is excessive. Companies that don’t pay a fair share of taxes who send jobs overseas and look to increase profits rather than doing the right thing. We have gone too far with the idea of me first. The problem is not just oil it’s how we view ourselves in relation to the rest of the country and world. I can not abide the corruption we have all seen. Some even blame others because goverment has not stopped them but I believe it all starts went each person and how we see ourselves and the rest of the world. Shame on the corporate executives and the boards of directors.
just a comment on the ‘wings’ deflectors on the trucks…. we have a ram 3500 short bed… and a carri-lite 36extrem5. the combo is already pretty aerodynamic. yet we purchased one of those deflectors (the kind the that collapse when you dont need them)… after testing on a long trip (va to ontario – ontario to nb, pei etc and back) we discovered no matter what angle we set it at our mileage decreased. the thing cost us 500 plus… no matter what we did we could not get an improvement — b4 the deflector we were getting around 14-15mpg… after – 9-10…. we sent it back – costing us another 150…(oversized item cost us an arm and a leg in shipping it back)… ended up being around 200 out of pocket (plus the lost mileage) for our little test… now we get around 14-15 mpg again – no extra add-ons needed. so it really depends on the rig set up.
One thing from the article bothers me. If the cost of getting the oil and refining it is more expensive. How are the oil companies making record profits? The oil companies are passing the cost on to us.
Its like a cost+ contract. Why make it more efficient when we get paid for the it anyway?
There are a lot of things at fault here, I myself am one of the people who drives a pickup and really has no need for one.
Interesting that here in California the news just announced that the price per barrel has gone down significantly, yet the next day gas prices at the pump rose in some cases over twenty cents per gallon. Hard to believe there isn’t some profitering going on.