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Oil Fact vs. Fiction

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    The Schork Report Editor Stephen Schork and PFGBest's Phil Flynn discuss what will bring down oil prices.

  • Duration 6:41
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-- also wanna bring in -- short independent oil analyst and editor of the short report he joins us via Skype from Philadelphia.

I'm Stephen the national average for regular gallon of gasoline three dollars and 73 cents is up 35 cents a gallon from a year ago.

Let's separate fact from fiction here what do you think can be done to lower the price of gas.

-- First confirmed it's the most obvious answer Melissa it used to -- -- that the Jones act the Jones act it was a law passed the united teens what is what maritime law.

Which states that all interstate commerce -- of our -- to be transacted on US Brussels.

So right now Melissa we have very cheap crude oil in Canada that's come down from Canada that's it essentially not states.

By June 1 this Canadian oil very expensive but forty dollars below the global price will be finding its way down -- the Gulf Coast.

Now if we're not allowed to -- got oil we're not refined products are not -- to East Coast markets you know words don't it's going to Latin America.

Now if you sit in the Jones act this summer.

You're allowing foreign flagged vessels to load -- oil that gives you a greater inventory at a vessels.

-- take very cheap oil from Canada and North Dakota.

Refine it and then shifted up to the East Coast that is the most logical that is the most real -- to fundamentally solve this problem in the short.

Steve that's really interesting you know I haven't number I've heard that theory a couple of years ago I haven't heard it for awhile still what it out that that's.

It's just gonna -- a lot of people are talking about the price of gasoline.

Not being controlled by supply and demand right now we know we're exporting it gets a 117 million gallons a day -- the final product -- -- my neighbor prime product demand is down 10% it's from its all time high back and I think it was either 2007 or 2008 the problem is the price of crude oil.

Would it would -- short solution -- Lower the price of crude oil the effect -- yeah I think.

-- great -- even you know we're talking about the Jones -- mostly this summer really had to do with the battle's been able to come into the Gulf of Mexico.

Clean up the tanks you know be -- that couldn't comment and help clean up all the mess in the golf -- we -- -- let him into the country.

Which made to clean up in the golf.

After the spilling yes absolutely -- this is an old act enhanced slowed down demand -- there some reason sport.

We don't have control over the vessels we don't know how safe they are we don't know -- double hold.

So that's part of the issue as well but I'll tell you what it is a very interest -- thanks.

-- Stevens got the point absolutely right the problem with oil is like a traffic jam right now we have all this oil but the highways.

Just can't handle the traffic we need to build more pipelines.

We need to.

I build -- more directional we've got to get rid of the highway that in the long -- gonna bring down.

Oil and gasoline prices all over the country and maybe even in the world.

All right says even if it apples or just compared haircuts.

-- -- -- about rescinding the Jones acted to Phil's point about the might -- security issues there won't -- easiest to do -- the Jones act as you suggest -- -- -- PR as secretary who is suggesting or did suggest.

Well low with regard -- all all all you know welcome to secretary Chu I mean this is a man.

Secretary of energy crews -- on the record saying that biggest problem Americans had a few years ago it was.

That we weren't paying enough -- gasoline -- -- Europeans are headed.

Europeans are not paying more than eight dollars a gallon for the -- -- So this is a man who -- -- sorry I'm not taken a lot of the problem out -- go to the strategic petroleum reserve.

Why are we gonna release these oil for why we're gonna -- -- oil.

That's that's doesn't have a public oil.

We have a problem with refinery charting that oil -- -- gasoline.

But I'm still -- I just can't that we can't we can't let you get -- -- that -- because we're exporting finished product I mean this is the point that.

He's being brought up on the network over and over again is that there's plenty of refined product out there that's not the problem in demand for it.

Is lower.

EEG G so demand is -- we look at the supplies and supplies are -- the fault so we don't have a shortage of supply we have limited demand.

And we are producing so if we cannot sell it here in the United States and we can't because the demand is low.

That oil petroleum product has to do some work that's going to go to place where people want to -- it.

Now here in Philadelphia lead once more be -- beside her on the East Coast refinery industry.

Crude prices -- -- -- refiners can't make money on the East Coast.

We've closed down more than half of the Republican -- yummy East -- over the past few years so we're seeing now is rightfully.

Here of -- supply shock the gasoline.

Perhaps even though demand is weak restore not hot enough supply offset -- summer demand where.

This where you come back to Jones act that it -- take that cheap oil refining down on the Gulf of Mexico.

-- a lot of foreign flagged vessel bringing it in Europe are.

That is so real celebration -- -- short term problem.

We're out of time but I have to let they'll respond to that before we -- because this is the controversial point do you mean last have had a hard time with -- There still is it possible that refiners on the East Coast are not making money.

Yeah and it's possible they're not making money in part of the problem too is the demand is picking -- I'll tell one other thing about -- Stephen -- they were talking about them refinance.

Thank goodness we are exporting oil and gasoline right now because if we weren't we.

Demand is bad all over the country there's a major shift.

Hot in the refining capacity in this country and we might not have to ship oil what we may have to do.

For the East Coast is reverse some of the pipelines we have a lot of pipelines that come out of New York Harbor.

You don't send oil out of New York Harbor we need to reverse some of those maybe have some of them come back -- But why is because refiners not making money -- the price of crude is so high it's killing the margin -- -- what I I am I missing -- while tell you why do you read and new regulations they are hammering the East Coast refiner demand is down right now.

They have to compete with foreign vessels as gasoline coming into the country.

EPA -- to them with new regulations.

Let's see you know I wanna -- requiring we keep it went from one dollar OK but the problem is really take millions of doubt I wanted to.

That we can't want it and -- we upgrade the refinery that's gonna cost millions so -- The dollar you come up with -- OK I wanna look at about investment attended this show has ever confront very decent guy I thank you so much we appreciate your time.

Thank you.

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