Friday, January 9, 2009

Why are Alaskans paying the highest prices at the pump?

In May of 1973, at the start of the OPEC oil embargo, the price for regular gas at the pumps in Palmer, Alaska was about 47¢ per gallon.

The major suppliers in the Alaska market at the time were Standard Oil, Tesoro, and Texaco.

In Palmer, the Texaco station was about 200 yards from the Tesoro station, in the building where the Alaska Fireplace, Co. is now located.

Tesoro was fairly new to Alaska having recently built a refinery at Nikkiski to process Cook Inlet crude into fuels for Alaska.

Texaco and Standard Oil moved refined fuels into Alaska by tanker.

(What?!!! That was done here? Ohhhhh. Uh . . . wait a minute, why then, has crude been moved from Valdez to the lower 48 and not refined fuels all of these years? Just think of all those jobs and infrastructure that could have benefited Alaska! Oh, it has to be refined Outside, because it’s . . . what? Too expensive to move it from Alaska refined? But, fuel was shipped to Alaska refined. Oh. Don’t ask. Oookaaay. Uh, I was just in Iowa where refined fuels come to the state by pipeline and then distributed. Gas there was $1.64 for unleaded without ethanol at the pump. What do you mean that’s there and not here?—The foregoing for all you Rick Rydell and Dan Fagan listeners out there who believe “big oil can do no wrong”.)

When the embargo was officially announced, and oil production cut by OPEC, Texaco and Standard Oil raised their prices immediately to about 92¢ a gallon at the pump citing decreasing supply issues and market forces.

Then “little” Tesoro stated publicly that Tesoro had no intention of raising its prices at the pump.

What do you think happened?

The other two oil companies sued Tesoro for unfair trade practices.

Tesoro claimed that there was no reason for it to raise its prices.

After the press on the issue had quieted down, Tesoro quietly raised its prices to match those of its out of state competitors and the suits by Tesoro’s competitors were dropped.

Two things came of that situation which had little or no notice from the press.

Tesoro began refining fuel for Texaco and Standard oil for the Alaska market.

Tesoro has matched its competitors’ prices ever since.

How do I remember this?

I was working for MTA at the time making $3.25 an hour as an apprentice central office switchman who was married with a kid on the way. The price of gas mattered even then.

Upon my return from Iowa on the 23d of December, the local price of gas at the pump was about $2.35. This morning (31 Dec.) the price was $2.45 per gallon for unleaded at the big Palmer Tesoro on the hill.

All because the Israelis bombed the Palestinians who have no oil, as the pundits would have us believe?

Our Legislature recently completed an investigation of pricing at the pump and pronounced no price fixing or other factor which would cause artificial inflation of our fuels in Alaska. That the prices are just what we have to pay.

Uh, huh.

I believe that the Palin Administration should fund a comprehensive study to be performed by the University of Alaska Fairbanks and Anchorage to determine whether or not we are paying a reasonable price for gas at the pump. The scope of the study should begin back in the last year Alaska was completely reliant upon refined fuels being shipped in by tanker through the present.

As in, “How much for how long have we been overpaying . . . or not”?

Why the U of A?

U of A would use business grad and undergrad students not beholding to the oil companies or any group whose re-election is dependent upon funding from oil companies.

I do not believe the State could hire a consultant to do the job, as the result would be clouded by politics.

The Legislature is certainly the last entity that I would trust to provide an unbiased finding.

It is time Alaskans had the truth about the cost of producing fuel and why we pay the highest prices in the U.S. for fuels at the pump versus what the real price at the pump should be.

How about it, Sarah?

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