U.S. driving slid for the eighth straight month in June, making the decline more pronounced that the drop that occurred during the 1970s oil shock.
The U.S. Department of Transportation said Americans drove 12.2 billion miles less in June than a year earlier. With that, the decline since November is now 53.2 billion miles, topping the 49.3 billion decline three decades ago. Rural travel has fallen 4% since late last year, while urban driving is off just 1.2%. (See the Federal highway Administration data.)
"We can't afford to continue pinning our transportation network's future to the gas tax," Ms. Peters said Wednesday. "Advances in higher fuel-efficiency vehicles and alternative fuels are making the gas tax an even less sustainable support for funding roads, bridges and transit systems."
http://online.wsj.com/article/SB121863859386836963.html?mod=googlenews_w...
Economics
Sure it is.
We drive less, use less gas, the prices drop on inventory excesses, refineries cut back production in reaction to the excess inventory
Driving less also reduces the gas taxes collected, which are used for the repair, rebuilding and construction of new highways and roads.
There was an article locally some time ago, about the cost of repaving one mile of city streets and the article, there was mention of the declining help from the feds.
In part due to the declining tax revenue from fuels.
We are driving less, which lowers the tax revenue, we are using more efficient vehicles, which lowers the tax revenue and yet the costs of repairs, the cost of the materials all go up.
Economics is part of the problem, the other part of the problem is that leadership has failed to act, until bridges start to collapse from lack of maintenance and then millions and millions in aid are rushed to the scene and people decry the spending.
refineries can't cut back excess production. They can't make money if they're running below 100%. And it costs serious $$ to shut the system down and re-start.
On top of that, gas has a short "shelf life."
Anyway, I just wanted to add that little nugget for you. Not disagreeing with your point, just an FYI more than anything.
Reading about refineries, though, most do not operate at 100%.
They can make this or that and adjust the product as needed.
I did not mean to imply, that the refineries would shut down, but the output would be reduced to compensate for the excess in the tanks across the country, as has been reported with regards to gas futures trading.
Some reports indicated that while we consume less, the inventory levels are dropping and that was reported to be a factor in gas prices risings, in the not too distant future.
U.S. refineries operated at 85.9 percent of capacity, down 1.1 percentage points from the week before, the report showed. Analysts forecast a 0.5 percentage-point drop.
Petroleum-product imports fell 17 percent to 2.6 million barrels a day, the lowest since the week ended April 1, 2005, the report showed. Crude oil imports dropped 5.3 percent to 9.66 million barrels a day, the lowest since the week ended July 4.
Inventories of crude oil fell 316,000 barrels to 296.5 million, the department said. Supplies were forecast to rise 300,000 barrels, according to the median of responses by 13 analysts surveyed by Bloomberg News.
U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 2.8 percent from a year earlier, the department said. Gasoline consumption averaged 9.4 million barrels a day over the period, down 1.9 percent from a year ago.
http://www.bloomberg.com/apps/news?pid=20601091&sid=azAEiH85GhXM&refer=i...
My experience, having a dad that works at Sun, is that the number you quoted is aggregate capacity.
So if our refineries in aggregate are capable of churning (to keep it simple) 1000 barrels of oil per day, and a refinery shuts down its "drip" for maintenance/market forces/etc, and that refinery is capable of churning 141 barrels of oil per day, the aggregate result is that we're running at 85.9% of capacity.
Refiners themselves have VERY low profit margins. Even today. Even when gas was $4.25 a gallon, some refiners were losing money.
Remember, these places are like cities. They have their own fire departments, security staff, huge populations of engineers and specialists, loads of "perishable" equipment used to capture pollutants that by EPA regs must be replaced every X hours its being used.
The net result is the fact that a refinery that's forced to run at less than 100% capacity is losing money.
You can see this locally w/ Sun Oil. In the 90's they tried to sell the refinery because the company, mostly based on the east coast, didn't have enough retail outlets to move the gas produced. When that happens they have to sell more on the wholesale market (to places like Kroger and Costco) and they lose a lot of $ compared to selling retail.
They didn't get any acceptable offers so they instead chose to ramp-up their retail efforts. So they lowered franchisee costs (look around at all the.. uhh.. minority owned Sunoco's some time), and they also competed heavily for the Ohio Turnpike outlets that they held for quite a few years (although I think they've since lost that contract).
Refining is a messy business, in more ways than one.
A positive side effect of us driving less.
Let traffic deaths...
http://www.nytimes.com/aponline/washington/AP-Traffic-Deaths.html?_r=2&o...
Thanks once more.
There is money in the oil business.
Some may find it difficult but for the most part, the profit statements tell us the story.
Oil is global and is used in so many things, that a loss in one segment of the business is more than likely made up in another.