DV Journal

If you are like most American drivers, you are frustrated with the price of gasoline. Even though prices have come down in recent weeks, most of us are still paying $4.50-a-gallon or more.

Pennsylvania’s gas average was $4.55 Monday, down a penny overnight and 12 cents lower in the last week, according to AAA. The five-county Delaware Valley area gas average was $4.56 Monday, down one cent overnight and 11 cents in the last week.

President Joe Biden is selling that as good news for consumers. On July 22 he tweeted, “Gas prices have declined by an average of 60 cents per gallon over the past 38 days. Five straight weeks of gas prices coming down.”

He retweeted that message on Monday with an addition, “Make that 65 cents down over 40 days.”

Still, that leaves gas prices $2 per gallon higher than when he took office ($2.38 per gallon).

Biden is clearly hoping to get some goodwill out of lower-than-record gas prices. His supporters point to his release of one million barrels of oil a day from the nation’s Strategic Petroleum Reserve, while Biden has blamed the oil companies and gas stations for keeping prices “artificially high.”

Earlier this month Biden, who has taken heat over the high prices, called on gas stations to lower them saying, “Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.”

But gas station owners don’t have much control over gas prices. They are at the end of a chain that leaves them little wiggle room as to what they charge at the pump. That is if they wish to turn a profit, a profit that is perhaps two cents per gallon.

John Coughlin owns North Penn Auto Service which features two full-service stations in Towamencin Township.

Like other owners, he deals with the fact that the price he pays for gasoline is constantly changing, based on the “rack price.” That is the price dealers pay at the distribution terminal where fuel is loaded onto trucks for delivery to service stations. That price is not subject to negotiation and continually fluctuates because of ongoing changes in market conditions, such as Russia increasing production.

“The rack price is set at 6 p.m. every day,” Coughlin explains. “It flows all over the place.”

As a result, the price a consumer pays at the pump fluctuates considerably as well, as seen in recent months.

But regardless of how much the price fluctuates, up or down, the service station owner’s profit margin remains unchanged: Likely around two or perhaps three cents a gallon.

“It’s a tough way to make a living,” Coughlin said.

Alex Baloga, president and CEO of the Pennsylvania Food Merchants Association, which represents convenience stores that often have gas pumps, said many things factor into the price of oil, such as the supply chain, labor shortages, the war in Ukraine, COVID, and increased travel causing demand to rise.

“The price is not set by the retailer,” Baloga said. “We’re here to serve the customer and provide the best price possible.” As for the cost increases, he said, “We take this very seriously.”

“I think it is challenging for both consumers and businesses alike,” he said. “These (prices) are out of your control. I can understand (customers’) frustration.”

Rich Booker is an attorney based in Wayne who formerly worked for the Sun Oil Company.

Booker agreed the price of gasoline is impacted by several factors, including what traders think the price of crude oil will be months or perhaps a year down the road, based on the principles of supply and demand.

The futures price impacts what refineries charge for fuel. That cost is then passed along to terminals that distribute fuel to individual service stations. By the time the owner or manager of your local gas station or convenience store receives their supply of fuel, they are absorbing all those costs and are also paying state and federal taxes.

“They have no pricing power,” Booker said. “They pay for it at the terminal tank. They’re getting one or two cents per gallon.

“They can’t cut (the price). “If they cut it three cents they would lose money on every gallon.”

And far from pushing higher prices, according to Jeff Lenard at the National Association of Convenience Stores (NACS), higher gas prices drive down local businesses’ profits. That is because stations cut into their profits in an attempt to soften the financial blow.

And gasoline has never been the primary profit center for those businesses.

“Convenience stores, which sell an estimated 80 percent of the fuel purchased in the U.S., rely on in-store sales, not fuel sales, to drive profits,” according to a statement from the NACS. “But high gas prices are hurting customer traffic in stores and ‘basket’ size: Nearly half of all retailers (49 percent) say that customers coming inside the store are buying less compared to three months ago when gas prices were $1.50 a gallon lower.”

Booker notes overall demand has gone down slightly in recent years as Americans drive cars that are more fuel efficient or are hybrid vehicles. But the surge in prices that started last spring was related to several factors including the pandemic.

“There was no demand (during the pandemic).” Booker points out. Refineries were operating very slowly (or) were shut down.

“Then they opened up again. Demand increases and there’s not enough refinery capacity to meet the demand,” he said. “There was a rise in the demand after the opening up and there was not enough gasoline that could be produced in the country anymore because of all those factors and the lockdown.”

Even after refineries were again operating at full capacity, they were unable to produce enough gasoline to meet the demand, he said.

Booker cites Biden’s decision to close the Keystone Pipeline on the first day of his presidency as a key factor in the price increases.

“When Biden shut down the Keystone Pipeline, immediately the target price of the next month’s next year’s crude oil went up 15 percent right there.”

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Similar to most Americans, the high cost of gasoline is something I must consider as I move across the country. Either by car or airplane, it just costs more to get around.

Like clockwork, gas prices are also becoming politicized. Republicans want to blame President Biden, and the White House is trying to offer solutions that will do little to bring down gas prices. After all, the cost of a gallon of gas is mostly reflective of the price of a barrel oil, which is set on world markets and affected by everyone from the Saudis to Russian President Vladimir Putin.

With such unsavory forces in control of energy prices, it is only natural for the American people to demand answers from lawmakers about lowering gas prices.

But the harsh reality that many people don’t realize — or even acknowledge — is that our oil addiction is hard to break because we lack alternatives to replace petroleum that are cost-effective and secure.

One possibility offered, traditionally by progressive Democrats, is a full transition from gas-powered vehicles to electric vehicles, or EVs. Indeed, the Green New Deal touted by lawmakers like Sen. Bernie Sanders of Vermont and Rep. Alexandra Ocasio-Cortez of New York calls for “reaching 100 percent renewable energy for electricity and transportation by no later than 2030.”

It would be a wonderful thing for our planet, to walk away from petroleum and all drive EVs. But, we need to be honest about the challenges posed by EVs.

First, there are national security concerns. Specifically, China dominates the markets for rare earth metals, which are critical components for the batteries that power EVs. We don’t produce these mineral commodities — like lithium — in America. Even if we managed to tap into lithium resources domestically, China still controls cathode and battery manufacturing.

China would use this power over America as leverage to get us to bend to its will. Let’s not beat around the bush, China has become a totalitarian regime engaged in genocide. Beijing shows little respect for people’s basic human rights. With this in mind, do we want to both enrich China and depend on them to power our economy? Of course not.

Second, EVs are more expensive than gas-powered vehicles. How can we demand low-income Americans to spend more on their car or truck? If we want to subsidize the purchase to make an EV affordable for every single person, through tax credits or cash rewards, a good part of our nation’s budget will be dedicated to this endeavor.

Third, the American people are not in favor of going all EV. My organization recently commissioned a poll on this matter, and consider these findings:

—41 percent of respondents believe the shift toward EVs is happening and that additional federal investments are “not an effective use of taxpayer money.”

—When asked to rank federal spending priorities, funding for “increasing the number of electric vehicles” came in last, behind these more popular priorities (in order of favorability): “funding for ending childhood hunger,” “funding to fix our roads and bridges,” “funding for police training and hiring,” “funding to build K-12 schools,” “funding for wind and solar energy,” and “funding for public transportation.”

Our poll is clear: there is not the political will to spend billions of dollars to help people afford EVs. Think about this, every American without a driveway will need to have access to a publicly subsidized charger. How can the government possibly provide this charging capability to everyone? With skyrocketing inflation, Americans are simply trying to afford basic necessities. It’s no wonder EVs are lower on their immediate priority list.

Ultimately, I can foresee a future that is fully EV. Many of the challenges facing EVs could be resolved through innovation and smart government investments in clean technologies. But until we get there, let’s be realistic about EVs, and continue to support policies that help make gas-powered vehicles cleaner, and more fuel efficient.

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Republican gubernatorial candidate Bill McSwain, lagging in the latest polls, is hoping his plan to slash gas taxes will fuel a campaign surge.

At a gas station in Lower Merion last week, McSwain touted his plan to cut the state gas tax in half.

If he is elected governor, the former U.S. Attorney promised to permanently cut the state gasoline tax by 50 percent, saying that temporary solutions are not enough. He also promised to restore “fiscal responsibility” by cutting wasteful government spending and repealing unneeded regulations.

“For too long, hard-working families across the commonwealth have had to grapple with uncontrolled government spending and a crippling gas tax,” said McSwain. “This is unacceptable. Why are we as a state punishing our own citizens who are working hard to support their families? As governor, I will permanently reduce the state gas tax by 50 percent and restore a business and family-friendly culture so that our economy can thrive.”

McSwain was introduced by local businessman Bill Heeney, owner of Instant Courier, Inc.

Heeney said, “Pennsylvania businesses have suffered under eight years of the intrusive and controlling policies of Tom Wolf. It’s time for a governor who will support and empower business owners, not stifle them. That governor will be Bill McSwain. Bill is a leader who will stand up in defense of working families and who will implement the pro-business and pro-energy policies necessary to get our economy back on track. There is no one better to lead our commonwealth into a new era of prosperity than Bill McSwain.”

He held a press conference last week to talk about his plan to reduce Pennsylvania’s highest in the country gas tax by 50 percent.

And Delaware Valley gas prices have reached an all-time high. An AAA report released Monday said Pennsylvania’s gas average is $4.50 and it is unchanged overnight and up 15 cents in the last week. And the five-county Philadelphia area gas average is $4.64 Monday, up a penny overnight and up 27 cents in the last week.

McSwain’s campaign faced headwinds after President Donald Trump issued a stinging denouncement last month. The former president is angry the then-U.S. Attorney did not do more to pursue claims that the 2020 election was stolen.

As of this writing, Trump has not endorsed a candidate among the nine Republicans running to be the gubernatorial nominee. Only Attorney General Josh Shapiro, an Abington native, is running on the Democratic side.

McSwain, however, did garner the endorsement of the prestigious Commonwealth Partners Chamber of Entrepreneurs. Commonwealth Partners is a free-market advocacy group with a statewide reputation on the political right.

McSwain, 52, is a West Chester native. He graduated from Yale University in 1991, then spent four years in the U.S. Marine Corps as an infantry officer and commanded a platoon. After his service, McSwain attended Harvard Law School.

McSwain and his wife, Stephanie, have four children.

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A little-known federal mandate designed to encourage renewable fuel use has morphed into a form of ‘energy bitcoin’ driving up gas prices, critics say. And the costs are endangering energy jobs right here in the Delaware Valley.

 Fueling American Jobs Coalition, a collaboration of union workers, local gas station owners, small retailers, and independent American oil refiners, is pushing for reforms that could protect workers and ease pain at the pump.

“Union jobs are at stake,” said Jim Snell, business manager for Steamfitters Local 420, one of the unions participating in the coalition. “It ties in directly to this whole RINs issue.”

Renewable Identification Numbers (RINs) are part of the federal government’s Renewable Fuel Standard (RFS) system used to address carbon emissions.

“When refiners are not able to essentially generate enough fuel from the RFS they must buy or sell those credits,” Nick Loris, Vice President of Public Policy at Conservative Coalition for Climate Solution told Delaware Valley Journal. “If the refiners can’t comply by generating their own fuel, then the demand for these credits increases, and that increases the price of these credits anywhere from 30 cents to a few bucks.”

High gas prices are hurting the Biden administration politically. An ABC/Ipsos poll found 70 percent of Americans disapprove of how Biden is handling the issue, and the White House is reportedly looking at temporary changes to renewable fuel regulations to address the problem. According to White House press secretary Jen Psaki, the administration may allow the sale of gasoline with higher blends of ethanol this summer — the so-called “winter blend” — to keep supplies up and help bring prices down.

Loris thinks temporarily waiving blending requirements for refiners could provide some relief.

“Spring is the time of the year where some of these refiners will shut down and switch from winter to summer grades of gasoline,” he said. “Studies have estimated that can add five to 15 cents per gallon, and while it’s a sensible regulation, it helps reduce smog, that temporarily reprieve of this regulation can help avoid an even higher cost increase at the price of the pump.”

Then there is the cost of the RINs themselves. Instead of a regulatory tool to help cap emissions or promote renewable fuel production, they have become a form of “energy bitcoin” with an intrinsic value of their own. According to the Fueling American Jobs Coalition, a group promoting reform of the RFS system, the price of RINs rose 1,250 percent between January 2020 and January 2022.

“It’s clear it has become its own phony market, much like carbon credit trading that is wrecking the European Union and its members,” Dan Kish, distinguished senior fellow at the Institute for Energy Research. told DVJournal. “The middle-men make all the money and the farmers who produce ethanol and consumers end up paying the price.”

“We’re spending more on RINs than to run six refineries—more than on all other operating costs combined,” said Brendan Williams with BPF Energy in a recent interview on WPHT radio.  “RINs are raising fuel costs, putting jobs and fuel supplies at risk.”

Some of those jobs are at the Monroe Energy refinery in Trainer, Pennsylvania.

“A stone’s throw away, also on the Delaware River but inside Delaware, is a refinery called PBF,” says Snell. “Those two facilities are union facilities, and if either one of those refineries is suffering, struggling, which they have been, it’s going to threaten the closure of those refineries, and that puts my members out of work and members of the Philadelphia building trades along with Steamfitters 420.”

Meanwhile, it is not just building trades at risk. Snell notes workers at the refineries are represented by the steelworkers union.

“But I’m here to tell you that down the street, so to speak, if that refinery was to close due to the RINs issue, (it would be bad),” says Snell. “They’re not crying wolf. They’re doing everything they can to keep that place open. But somebody might just come in and say ‘that’s it, lock the gates, it’s over,’ and that’s what we’re scared to death might happen.”

Supporters of renewable fuels and the RFS do not think reforms are necessary. 

“Some oil refiners want to have it both ways,” says Renewable Fuels Association President and CEO Geoff Cooper. “First, they argue RINs are a cost they have to ‘eat’ and they can’t pass on. Then they say they fully pass on their RIN cost all the way to consumers in the form of higher gas prices.”

Cooper disputes those claims.

“The truth is, refiners don’t really have to buy RINs at all—if they just purchased and blended the biofuel volumes as required by law, then they would not need to purchase RINs from refiners who blend more biofuels than required,” says Cooper. 

In any event, Cooper says it is broadly understood that refiners who choose to buy RINs instead of blending biofuels pass RIN costs on to wholesale customers, but not to retail pump prices. 

“Even the biggest U.S. refiner (Marathon Petroleum), the American Petroleum Institute, and EPA itself agree that all refiners, both small and large, recoup the cost of RIN credits through higher wholesale prices for gasoline and diesel,” says Cooper. “Meanwhile, RIN prices do not have an effect on retail fuel prices, according to EPA and independent university researchers. The primary driver of retail gasoline prices has always been crude oil prices—that has not changed in the RFS era.”

Snell is not pleased. He hopes legislators will do something fast. If they do not, it may be at their own peril.

“If I’m one of these people up for reelection in the fall, the one thing I want to see is the price of gas going down,” says Snell.

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Republicans are trying to parley rising gasoline prices into new voter registrations as the midterm elections approach, and they are going straight to the pumps to do it.

Both here in the Delaware Valley and around the state, volunteers have taken their voter contact efforts to gas stations to entice disgruntled drivers to switch parties and register as newly minted Republicans.

“Disappointed families and workers are flipping their registration, as well as registering for the first time, thanks to pain at the pump brought on by the Biden gas hike,” said RNC spokeswoman Rachel Lee. “Pennsylvanians cannot afford more of Joe Biden’s costly war on American energy. As Keystone State families and workers suffer from the Biden Gas Hike, Republicans are registering voters in a mounting red wave ahead of November.”

Republicans reject the Democrats’ claims that rising gas prices are “Putin’s price hike,” as President Biden has put it.

“Before Russia invaded Ukraine, the average cost for a gallon of gas had already risen by $1.14 since Joe Biden became president,” she said. “The average American household could spend up to an additional $2,000 on gas this year because of the Biden Gas Hike.”

One of the volunteers is Bucks County resident Kim Bedillion, president of the Pennridge Area Republican Club.

“Trips to fill up the tank are causing hardships like never before, and as we are talking to voters at gas stations, we’re hearing that from people of all backgrounds. Republicans’ success in registering voters at gas stations shows just how fed up Pennsylvanians are with the Biden gas hike,” said Bedillion.

The Philadelphia GOP is also actively registering voters as the May 17 primary approaches. The final day to register to vote in the primary is May 2.

Shamus O’Donnell registers voters at an event for Sam Oropezo, who is running for the state Senate in Philadelphia District 5.

Its message is, “Streets that everyone feels safe to walk, in every community — meaning not just in elite progressive neighborhoods; providing the tools to everyday Philadelphians to lift themselves up and thrive both economically and socially.

“The freedom for families to choose where to send our children to school, and necessary improvements to our city’s schools — focusing on basic reading and math, not radical curriculum.”

Meanwhile, in Cheltenham, yard signs are springing up all over the township inviting people to join the Cheltenham Township Republican Organization (CTRO).

While registration shows 20,000 Democrats to fewer than 4,000 Republicans, CTRO Chair Myron Goldman hopes to bring more voters into the fold.

“Cheltenham is, in effect, a one-party township, but there is a functioning Republican organization,” he said. The Republicans field candidates and serve as watchdogs over the commissioners and school board.

“We regularly run voting registration drives at various locations in the county and also contact new move-ins to have them register Republican,” said Julia Vahey, executive director of the Montgomery County Republicans.

Felice Fein, vice-chair of the Chester County Republicans said, “The Pennsylvania GOP regional director, John Gavin, and his team are doing an organized voter registration drive throughout Chester County. They do occasional events everywhere from gas stations to restaurants. Currently, they and the Republican Committee of Chester County are focusing on people who recently moved into Chester County and encouraging them to register in time to have their voices heard in the primary election. The Pennsylvania GOP team and the county committee members are knocking on doors and providing voter registration forms as well as mail-in ballot applications if the residents are interested in voting by mail.”

Democrats still have a voter registration advantage in Pennsylvania, but the numbers are significantly narrower than during the 2018 midterms. That year, there were 4,111,325 registered Democrats and 3,270,882 Republicans, with 1,172,291 unaffiliated voters. That was a 25 percent registration advantage for Democrats over the GOP.

In the most recent available data, there are currently 4,003,113 Democrats and 3,434,125 Republicans — an advantage of just 16.5 percent. And historically Republicans have outperformed their registration numbers, which is how they held their majorities in the Statehouse in 2020, as well as picking up the state auditor and treasurer’s offices.

With predictions of a red wave — and President Biden’s approval rating down 20 points since he took office just over a year ago — Pennsylvania Republicans feel optimistic.

“Thanks to the RNC’s permanent, data-driven ground game, the voter registration gap in the Keystone State continues to narrow,” Lee said. “Republicans have closed the voter registration gap by over 200,000 registrants in the last two years. In just the last two weeks, Republicans have shrunk the gap by over 2,700 registrants.”

“Killing American energy is a promise Joe Biden has actually kept,” Lee added. “On his first day in office, Biden canceled the Keystone XL pipeline, killing 11,000 jobs.”

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