• Jeff Matthews

Too Expensive…at One-Third the Cost of Water?

“There are going to be questions about what major oil companies are doing with all the resources they’re accumulating…they can’t escape that.”—U.S. Senator Pete Domenici, WSJ

Now the witch-hunt begins.

With gasoline prices rising (a minimum of 50c a gallon in my part of the country) in the seven days since Hurricane Katrina disrupted a tenth of the domestic refining capacity and much of the energy transportation infrastructure, politicians whose previous “fact-finding” missions to that hurricane-prone region of the country had no doubt been limited to touring the newest casino, are doing what they do best: they’re blaming somebody else.

The above-quoted Senator Domenici’s official web site, for the record, has a handy “On The Issues” segment devoted to four topics: Health Care, National Defense, Taxes/Economic Growth, and Water.

Energy—specifically why energy policy in this country has promoted truck traffic at the expense of railroad traffic and protected car companies from including SUVs in automobile mileage standards—is nowhere to be found in Senator Domenici’s Fab Four topics.

But now that gasoline prices are up in his district—a natural occurrence when 10% of refining capacity gets shut down for a week—Senator Domenici is all over this one. As will be, I’m sure, my own Senior Senator, Chris Dodd—whose Kennedyesque Big Hair looks really terrific on TV when he starts working up his righteous indignation at whatever it is he wants to get on TV for.

Meanwhile, here at the local Starbucks they sell “Ethos” brand bottled water for $1.85 a bottle. The bottle contains 1.5 pints of water from the Tomhicken Mountain Springs—which happens to be in Pennsylvania, near Pottsville. Cost: $1.23 a pint.

There are 8 pints in a gallon.

So the Starbucks customer is paying about $9.85 a gallon…for water that comes from a self-replenishing spring, gets put into bottles and shipped to the store as is.

Yet that same Starbucks customer is going to complain bitterly to Senators Dodd and Domenici that it now costs $3.25 for a gallon of gasoline that has been shipped via crude oil tanker from depleting oil fields in Saudi Arabia across 3,000 miles of ocean to an offshore tanker port, pumped through pipes to a refinery in the Gulf Coast, refined via an energy-intensive distillation process into a variety of fuels—jet fuel, diesel fuel, kerosene and even asphalt, not to mention three types of gasoline—and then shipped by pipeline to distribution terminals from whence it has been loaded into tank trucks and hauled up an Interstate Highway to a gas station for the Starbucks customer who is complaining about the High Cost of Gasoline to Senators Dodd and Domenici…

…and doesn’t think twice about paying $9.85 for a gallon of water.

Jeff Matthews I Am Not Making This Up

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The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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