Blame gas prices on the Prius?

(5/25/07 - KTRK/HOUSTON) (KTRK) -- Gasoline prices this holiday weekend are up 23 cents a gallon over last year, but apparently it's not changing many people's driving habits.

AAA Texas says more people will be driving this Memorial Day weekend than last year, and next year, the price could be even higher. One of the biggest reasons, the US doesn't have enough oil refineries and plans to build more could be in jeopardy.

But maybe we should just blame it on the Prius.

We'll call it the Twinkie phenomenon.

The 150 calorie delight just isn't selling as well as it used to. According to snack and wholesale bakery magazine, the Twinkie brought in $21 million less last year than the year before. That's a 20% drop. When people buy fewer Twinkies, the company makes fewer Twinkies. In fact two Twinkie factories closed in 2005.

Here's how it relates to gas prices.

So when President Bush says stuff like:

"Let us build on the work we've done and reduce gasoline usage in the United States by 20 percent in the next 10 years."

It doesn't give oil companies much incentive to build or expand oil refineries. Right? Who's gonna spend more money to make something people will buy less of?

"It's just basic economics 101," said Barbara Shook of the Energy Intelligence Group. "If the demand isn't there, why spend billions of dollars on a facility that won't be used?"

Shell and a Saudi Arabian company are planning to spend billions to expand their Motiva refinery in Port Arthur, making it the largest in the nation, adding to the gas supply and hopefully helping to bring down the price. But the mixed signals from the president and the federal government are forcing industry to rethink some things.

Just this week, Shell's CEO said the attention on alternative fuels will have an impact industry wide. At this point, Shell says they are still planning to expand here, but they're watching closely.

Which brings us to the Toyota Prius getting 60 miles to the gallon, Prius drivers buy less gas, which is what the president said he wants. But the rest of us may be paying the long term price for the popularity of alternative fuels.

So can we blame the high price of gas on Prius owners?

"It's hard for me to be a judge, but put the pieces of the puzzle together, I might be thinking what you're thinking," said Prius salesman David Womack.

It's easier to see the future of the Twinkie than it is the future of fuel in America. But the business sense is the same, don't buy the Twinkie, they won't make the Twinkie. Don't buy as much gas, big oil won't expand refineries.

The real issue here isn't Twinkies or hybrid cars, but refinery capacity. US refineries are running at full tilt and it's still not enough gas for US drivers.
(Copyright © 2007, KTRK-TV)

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