The cost of crude oil now accounts for about 73 percent of the gasoline pump price. World crude oil prices are at record highs due mainly to high worldwide oil demand relative to supply. Other contributing factors include political events and conflicts in some major oil producing regions, as well as other factors. Local officials tabled two measures asking Congress to do something.
Phillips County Budget Committee members decided to table two proposed resolutions until Phillips County Judge Don Gentry can see what other Arkansas counties are doing with similar proposals. The two resolutions deal with rising gas and food prices and the impact it has on every American.
One, asks Congress to address and solve the fuel crisis permanently by encouraging the use of cellulosic ethanol instead of feed-based ethanol, which causes “further negative economic impact on citizens by raising food prices and causing possible shortages.” The other calls upon Congress to mandate a conversion from fossil-based fuels to alternative fuel sources “in the most expeditious manner possible.”
Justice of the Peace Barbara King said that there was “a lot of controversy” surrounding the issue. “They have 68 million acres of federal land leased, why won’t they let them drill that?” asked King during the session held in the county judge’s office.
JP Clausey Myton commented that there were environmental issues involved.
“It would be good to drill for the oil and put the environmental issues aside to curb gas and diesel prices,” commented Myton.
King said that the first resolution was better than the second. Rising food and gas prices was discussed.
“Our biggest problem with oil is speculators,” commented King.
King added that the speculators blamed the current crisis on Saudi Arabia. The U.S. Energy Information Administration says that higher crude oil is to blame for soaring fuel prices.
“EIA analysis of the petroleum market points to the cost of crude oil as the main contributor to the record high gasoline prices that we are now experiencing,” she said.
The cost of crude oil now accounts for about 73 percent of the gasoline pump price. World crude oil prices are at record highs due mainly to high worldwide oil demand relative to supply. Other contributing factors include political events and conflicts in some major oil producing regions, as well as other factors.
Besides that, gasoline prices in the United States typically increase during the spring and summer due to seasonal increase in demand and the additional cost of producing summer-grade “reformulated” gasoline required to meet air quality standards in many urban areas,” said the EIA Web site.
These are some comments from the EIA’s short-term outlook on oil prices:
West Texas Intermediate (WTI) crude oil prices were on a rollercoaster ride upwards over the last month, increasing from $113 to $133 per barrel over the first 3 weeks on May, then falling back to $122 on June 4 before surging to over $138 by June 6.
Supply uncertainties in several oil-exporting regions, coupled with healthy demand growth in the emerging market countries, continued to pressure oil markets. The overall picture of strong demand and tight supply is expected to continue. WTI prices, which averaged $72 per barrel in 2007, are projected to average $122 per barrel in 2008 and $126 per barrel in 2009.
Regular-grade gasoline is expected to average $3.78 per gallon in 2008, or 97 cents above the 2007 average price. The U.S. average regular gasoline price, currently over $4 per gallon, is projected to peak at $4.15 per gallon in August. Retail diesel fuel prices are projected to average $4.32 per gallon in both 2008 and 2009, an increase of $1.44 per gallon over the 2007 average.
World oil consumption is projected to grow by 1 million barrels per day (bbl/d) in 2008. U.S. consumption of liquid fuels and other petroleum is expected to decline by about 290,000 bbl/d in 2008 because of higher petroleum product prices and slower economic growth. Adjusting for increased ethanol use, U.S. petroleum consumption is projected to fall by 440,000 bbl/d in 2008.
The Henry Hub natural gas spot price averaged $7.17 per thousand cubic feet (Mcf) in 2007 and is expected to average about $11 per Mcf in both 2008 and 2009.
Gentry said Drew and Desha counties had resolutions in place already.