Newton talks ABCs of gasoline
Published 3:05 pm Thursday, September 4, 2008
By Angie Long
Representative Charles Newton took a break from talking politics with the Greenville Lions on Monday and instead focused on a topic many people have on their minds these days: gasoline.
Newton, owner of Newton Oil Company in Greenville, explained his role as one of the “middlemen” in the gasoline business.
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“We’ve been called gasoline jobbers, distributors, marketers – and probably called a few other things along the way,” Newton said with a good-natured grin.
“Basically, we pick up the gasoline in Montgomery and then sell it to area service stations.”
According to Newton, here’s how it goes from crude oil to your gas tank:
Refineries take the crude oil and make it into gasoline, which is then sent through large pipelines, including a destination in Birmingham. From Birmingham it is carried to terminals in Montgomery.
“That is where the trucks in central Alabama go to load up on fuel and then deliver it to area stations,” Newton said.
As to how the current prices on gasoline are set, Newton explained distributors are contacted via computer once a day and told what price to charge.
“The price stayed stable and low for so many years, that even a quarter-cent change was considered huge,” Newton said.
“Now we can see as much as a 15-cent increase from one day to another.”
Newton candidly admitted the constant rise and fall of gas prices has him mystified.
“It has never made much sense to me,” he said.
“For example, there will be a big fire at an oil refinery in Texas and the price of gas will jump up the next day. That gas was already in the pipeline long before the fire happened – why should it affect the price so suddenly?”
According to Newton, gas in August of 2001 was $1.35 a gallon. In 2004, it was $1.79 a gallon.
The cost has doubled over the last four years.
If you think the government is being enriched by the price hikes, think again.
When consumers buy gas, they are paying 39-49 cents per gallon in federal, state and local taxes, Newton said, with a tax of 47 cents per gallon on diesel.
“Note that is not a percentage tax, but a per gallon tax. Prices go up but the amount going to taxes doesn’t. So we are not bringing in any more money for our roads and bridges, and all the other factors – the cost of materials and equipment – are going up,” Newton said.
He said the cost has also doubled for distributors to keep inventory on hand at area service stations.
“Who’s getting rich? I would say it’s the executives and the major shareholders in these big oil companies. They are publicly owned companies and they have to release their earnings – and the earnings are tremendous,” Newton said.
He said without a doubt, alternatives for fuel would have to be found.
“Fossil fuel is a limited resource and we are far too dependent on the Middle East, which is not a good thing for our country,” Newton said.
“There are too many smart people in this country for us not to explore alternatives – hydrogen cells, hybrids, ethanol, whatever – that will work to run our vehicles.”