One might think the situation in Japan will cause crude oil prices to drop and gasoline prices in the US to drop also. With at least four of their refineries down due to the earthquake, Japan will not be importing crude oil until those refineries go back up again. That should put downward pressure on the world crude prices.
But, we have been importing finished gasoline in greater quantities over the years. Our refining capacity has not kept up with demand for years. Here are those data:
With as much as 15% of our gasoline coming from imports, we will not escape the upward pressure on gasoline prices Japan will put on the market. Japan will be scrambling for every barrel of gasoline they can get to cover the shortfall from losing four refineries. World-wide refiners will be more than happy to accommodate Japan at a price.
Gasoline normally headed for the US will either be re-directed to Japan or will be sold at a transportation-adjusted price equivalent to the value in Japan.
Here’s another example of America stupidity. You don’t want to build refineries for 35 years because they are dirty and could have safety hazards? Fine. The evironmentalists prevailed. Now the bill is coming due.
We won’t be advantaged by the crude oil price drop, should one occur. The extra cost for our gasoline will more than offset the crude advantage.
Meanwhile your president plays golf during the Japan crisis.
