I’ve been quite happy with the decline in crude oil prices lately for a number of reasons. My first hope is that reductions in energy costs will be good for the economy. All kinds of things should be less expensive. My second hope is that it will get the nuts off of this idea that we can drill our way to happiness. I’ve seen a lot of Republican furor that we need to drill in Alaska, drill offshore, drill under my mother’s house, drill drill DRILL!!
So, it’s been bashed into our heads that supply and demand are the key factors here. That a lack of supply and concern over future supply has pushed the cost of crude up, which in turn has pushed the cost of gasoline up. I got to thinking about this and the only answer I could formulate was BULLSHIT! The cause is collusion and price fixing.
Let’s start with the supply and demand issue. From a complete layman’s perspective, without any hard quantitative data to back it up, I’ve been told that supply concerns are easing. A number of factors, including conservation (spurred by high costs), higher inventories, dodging hurricanes in the Gulf of Mexico, and OPEC’s continued production levels have made crude oil a worse bet for investors. So, the price of crude has come down. Currently, it’s hovering around $104 a barrel. That’s quite a slide from its highs around $150. So, if we follow the laws of simple economics, the cost of gasoline should have slid from about $4.00 a gallon to somewhere in the neighborhood of $2.65.
Now before you go saying that I’m insane, by looking up some national averages on the Interwebs I’ve found that in April of this year, crude oil was running around $104. The national average for gas at that time was about $2.65. So I pose the question, why is the cost of gas at my local station $3.69?? I have a quick answer, greed.
The oil companies have been saying for years that the key is refining capability. So, when they had record profits did they start building any additional refineries? No, they did not. The oil companies have started to tell me that the issue is supply and they need to drill in new places. Why on Earth would I believe they would spend the money to go find the oil, bring it out of the ground, ship it to refineries, and then sell it to me? It seems, using their logic, that this would increase costs. Costs that they would, of course, pass along to the consumer.
So I keep hearing about how Sarah Palin stood up to the oil companies but I also hear her shrill voice screaming “drill, drill, drill.” If she and the McCain camp really wanted to stand up to the oil companies, why not encourage them (through a series of incentives and dis-incentives) to explore new forms of cheap, clean, and plentiful energy? Wouldn’t that really be standing up to them?
I’m not saying that Obama has put forth a plan that I find to be the end-all-be-all solution, but I’m getting sick and tired of hearing how Sarah Palin is the fucking second coming. Not only does Sarah Palin hate freedom she doesn’t get energy policy either.
If drilling and increased supply were the answer, then reduced crude costs would equal gas well under $3.00 a gallon. It’s time that the Democrats, the news media, hell the Republicans tell the American people this. Big oil is destroying our economy and instead of being outraged, too many people have drilling fever.