Capitol Report
By State Representative, Leon D. Young
Leon D. Young
In case you haven’t notice or just don’t care, it’s been really tough sledging on Wall Street as of late.
The Dow Jones Average has plummeted more than 1100 points in just two days.
This, in turn, has sent global investors into serious panic mode.
There is general consensus among most financial observers that the current downturn in global markets is directly attributable to a number of economic factors: China’s slowing economy, the devaluation of the Chinese currency (Renminbi) and the over-abundance of crude oil that signals less demand.
Fact: Crude oil prices are the biggest single influence on prices at the pump — making up two-thirds of the cost a gallon gas.
With that being said, why aren’t we seeing falling gas prices at the pump?
After all, law of supply and demand states that when an item is scarce, but many people want it, the price of that item will rise.
Conversely, if there is a larger supply of an item than consumer demand warrants, the price will fall.
However, despite the supply glut that has sent oil prices tumbling, at the pump continue to rise.
Industry analysts contend that the rise in gas prices is being driven by California and the greater Chicago area, where major refineries are having trouble processing crude oil into gasoline for the consumer.
British Petroleum (BP) recently shut down its largest crude-oil processing unit in Whiting, Indiana after heavy damage from a malfunction.
While, on the other hand, California’s gas prices are still feeling the blows from an explosion in February at Exxon Mobil refinery in the Los Angeles area.
The pain at the pump is currently being felt in Wisconsin, Illinois, Indiana, Michigan and Ohio. This is because BP’s refinery is running at minimum rates as crews search for the source of leaks that forced the shutdown its biggest crude processing unit.
The 1,400-acre refinery on the southwestern shore of Lake Michigan covers parts of Whiting, East Chicago and Hammond, Indiana.
Interestingly enough, the refinery problems in the Midwest came at the peak of summer driving season, leaving some to speculate that the situation was somehow orchestrated to drive up prices. Needless to say, there is no relief for us in the Midwest at the gas pump, as the nation stands awash with crude oil.