Why gas prices are increasing and the black side of more fuel efficient vehicles.

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Who would have thought that during the worst economic retrenchment precluding the Great Depression, the price of Gasoline would continue to race upwards?

Numerous factors affect gasoline prices, despite many of them have no direct correlation to the actual commodity at hand.

In order to break even, a refinery needs about $70 for a 42 gallon barrel of crude oil reflecting the cost of exploration to end sale.  Today, Crude reached $60 for the first time in 6 months.

Meanwhile, we are told that stockpiles of fuel have reached unprecedented levels not seen in 20 years.  This is not a result of continued massive refinery production, but more a dramatic cutback in worldwide end user consumption, be it commuters, truck, airline, ship and rail traffic.  

Furthermore, some see an end to the recession, and the stock market is rising, dragging with it base commodities such as fuel, obviously a vital resource during economic growth.

Another key factor in Crude Oil pricing is the US dollar.  As the Dollar declines, reflecting our horrendous financial dilemmas, money moves into solid commodities, specifically Crude Oil.

Additionally, several major Oil Companies think we are near maximum production, meaning our crude oil resources will become scarcer, resulting in less product and higher prices.  These same companies are shedding their retail stores and their fuel transport operations.  They see the future, and it is not rosy.

Even I find these numerous points overwhelming, and the steadfast experts are, as usual, consistently wrong.

Ironically, the Federal Government squanders well over $10 billion a year supporting the Ethanol industry, a dubious ingredient in our gasoline, with numerous producers recently going bankrupt. Huge subsidies do not justifying the benefits.

Ethanol significantly reduces your vehicles mileage, your emissions are more polluting and vast amounts of water and fossil fuel are required to produce Ethanol.  "Renewable Fuels" are the behemoth of the future, a "Pork Funding" if ever there was.

Turning the Corner

President Obama's announcement of significant increases in vehicle fuel efficiency in a few short years are extraordinary.  Presidents Carter and Reagan sought similar initiatives, and failed miserably.  President Carter's "energy crisis" predictions of 30 years ago are today a grim reality.

I applaud and endorse these new standards and would expect even more, but there is a dark side to these new fuel economy standards, not yet publicized.

When you buy a gallon of gas, there is a Federal Sales Tax of 0.184 cents, funding Highways and Infrastructure building and repair.  It does not even come close to meeting current or projected expenses.

Federal and other Governments are reeling from the dramatic fall of tax revenue from all sectors.  Quick calculation shows the Fed will be the end loser in lower fuel consumption.

There will be but one way to supplement or replace the huge loss of tax revenue from lower fuel consumption and more efficient vehicles.  

In the not to distant future we will likely be taxed on a "vehicle miles traveled," toll roads and likely an increase in the Federal Sales Tax on Gasoline.  

And to add more misery to our already thin wallets, when and if the economy recovers, we will have to start paying for the massive debt we have created all but overnight, its name being INFLATION, and an ugly beast it will be.  

Be it the direct cost of a gallon of fuel, or indirect by way of taxes, there is no doubt that the cost of driving our vehicle will undoubtedly double, perhaps triple in the coming years.

In Europe a gallon of fuel is well over $6 or higher.  The majority of this is taxes. Meanwhile, cars achieve in excess of 40 miles to the gallon.

The days of the "Big American Car" are likely over.

More revolutionary than "fuel efficient" will be vehicles powered by Fuel Cells and Electricity, technologies that exist but are not readily available, and perhaps, by technologies unrecognized.

Fossil Fuels have but one place to go,.... the Museum, and the sooner the better.

Authors Bio:
Anthony C. "Tex" Pitfield was born in Montreal, Quebec, Canada.

In 1962, his family moved to a working cattle ranch in southern Alberta, (just north of Montana), where he grew up in a cattle and equipment oriented lifestyle until his early teens.

He finished high school in Vancouver, British Columbia and, in 1977, after further education in both Calgary and Montreal he entered the Investment Industry.

Over the next 13 years, Mr. Pitfield advanced through the industry and was located in Montreal and Toronto.

Mr. Pitfield moved to the United States in 1990.

In the spring of 1999, Mr. Pitfield came upon an opportunity to deliver gasoline in the greater Atlanta area for several small "jobbers", and Saraguay Petroleum Corporation was established on September 1, 1999.