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Gas Prices April 23, 2006

Posted by June in Around the World, Artist Thinker Articles, Bureaucracy, Communism, Liberalism, Politics, Socialism.

I hear people griping about the price of gas these days. True, the price is high; but that's what happens when hurricanes shut down oil refineries, when environmentalists require specific blends of gas, when inflation goes up, when OPEC raises the price of crude oil, when supply goes down and demand (such as the increase for demand in China and India) goes up, etc.

There's all this talk about windfall profits and how we should steal from oil companies to satisfy our own envy and greed. "But the oil companies deserve it! They purposely raise the price of gas because they know we need it!" is the cry. Well, where was that kind of talk only a few years ago when my father was worrying about whether or not he would have a job the next day, when the price of gas dropped to such low levels that companies could no longer keep paying their workers and began laying people off by the thousands and companies were shutting down one after another? Why didn't the evil oil companies or that one single person who controls the price of gas just simply raise the prices? Are they stupid or something? Did they suddenly get a philanthropic stirring in their hearts?
See how stupid that sounds? Supply and demand — that's the biggest factor in the current jump in price. If everyone collectively stops using so much fuel, stops going on those extra drives, carpools, walks when possible, etc. the price will fall back down.

One thing we could do to help lower the cost of oil even on average years when supply hasn't been cut down by a shortage of oil refineries or that special mandatory blend of gas is replacing the other blend and when the increase in demand caused by summer driving sprees isn't in effect is the one thing that these very same people who cry out about the prices refuse to allow, which is to allow for drilling in Alaska. Allowing American companies to get oil from our own country would lessen our dependence on foreign oil, most notably OPEC oil, which all too often comes from countries that have it in for the US. This would allow American companies to have access to cheaper crude oil, which will in turn force OPEC to lower its prices to compete and maintain their market.

"What about alternative fuels?" You might ask. Well, if such a thing exists or is even on the horizon, then why aren't you buying the cars that will allow for those fuels? If that's really an alternative right now or even in the near future, then it's the consumers' fault for not moving to those fuels, not the oil companies'. Capitalism accommodates the consumer. If there's a demand and if it's conceivable, you can bet it will be there. If you really want alternative fuels, start demanding it and start buying it. Don't start blaming other people when you, inevitably, don't because those new cars and fuels are more expensive, as I've been hearing about the alternative fuels that are being tested right now such as ethanol.

Oil is used for things other than gas, too. I definitely haven't heard of an alternative for those products. So oil will be around for a very long time, even if a viable alternative fuel shows up.

One thing that would really help would, probably, be if someone can find a cheaper way to make oil in an artificial manner. I've heard of these machines that allow for the synthesis of oil from shale; but I heard that it ends up being more expensive than bringing it up from the ground. I have a hard time understanding that since the things I've heard my dad in the past talk about how he gets oil from the ground are extremely complicated and expensive. (He once had to run off to deal with an oil rig that had dropped a 3 million dollar piece into the ocean. They never did recover it… That was only one piece of one oil rig.) These machines must be hard to operate and expensive to make.

Still, in the end, it is the consumer, OPEC, inflation, and these environmental regulations that determine the price, not oil companies. If you want a lower price, the immediate solution is to conserve your gas. Another thing that can be done is to get rid of environmental regulations. We can also decrease dependence on foreign oil by drilling in Alaska or more drilling in the Gulf of Mexico as Mexico is doing. The final uncertain alternative is to discover new fuels.




1. inaeth - September 10, 2006

One thing that most people forget when talking about this industry is the massive amounts of government subsidy that the oil companies receive, which complicates the economic factors that are involved with pricing, just like in every other industry that receives such aid.

For instance, on the news two weeks past on one of the political blogs that I get RSS feeds from was the story of an independent gas retailer in South Carolina. This was a family run business, and the sole income of the family that owned it. They thought that they might be able to raise their profits more by lowering the price of gas. In effect, they were cutting their profit margins, in the hopes of building a loyal clientele base and making up for the cuts in increasing the numbers in their customer stream. So, they cut the price, but then the STATE jumped in and told them that what they were doing was illegal because of the complex myriad, laberynthine laws and regulations that governs the industry! Are you as shocked as I am? They were still making a profit off of the gas, so they were not undercutting their competitors for the shor term, which most people now know to be unethical, immoral, and illegal. No, they were just being competitive and told that they couldn’t!

Are you as shocked as I am about this?

When it comes to industry like this, it gets complicated very quickly because of all the unnecessary competition regulations and “safeguards” that are interwoven in the Federal and State regulations.

You are right: The only way out of this is to support those companies that are on the cutting edge when it comes to alternative fuel sources and those companies that are doing their very best to increase efficiency.

2. Interesting News Articles « The Cathedral Arctic - September 13, 2006

[…] June’s article on Gas Prices is a great starting point for researching the huge difficulties in economics, politics, and sociology when it comes to understanding the dependence the world has developed on the petrochemical industry. It is an indisputable fact that some companies have been negligent in their responsibility to safe-guard the pollution that inevitably develops from refining oil, as well as the negative impacts our exhaust has on the environment and weather patterns. However, the best remedy to this, as I stated in her comments section, is to support those companies that are doing something about it! The Stirling Heat Engine, while and old technology, is promising for the future in new and inventive ways to pave our way to energy independence. There is an interesting article in Discover Magazine about the new industry that is growing out of the frustration a lot of people are experiencing in regards to high energy prices. They had another one on a company combining Stirling Engines and Solar power to become the biggest producer of alternative energy in the nation, but for some reason I can’t find the article right now. I will post it when I remember the title of the article. […]

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