Good Wednesday to you. I had planned to write this blog at some point (and will probably end up writing several more until something changes) but events today have forced my hand. I am constantly droning on and on about this subject to my wife (she's probably giddy that I now have a blog). The topic for today my dear friends is the price of gasoline.
As I said, I planned on writing this for a long time, hoping to get this message out to as many people as I can (or as many as the two of you readers know). I have been incensed for a long time at the seemingly disproportionate gas prices that we American consumers are paying, relative to the price of a barrel of oil. I have done what I could previously. I have emailed the Indiana Attorney General, my state representatives and senators and the representatives and senators for Indiana in Washington, DC. To date, I received a reply from the Indiana Attorney General and the representative for my district in Washington. To sum it up succinctly, both were basically a load of BS, word service aimed at placating a taxpayer without really doing anything about it. I have come to the conclusion that nothing but an en masse movement by the American people will do anything to change our current predicament.
Allow me to share some numbers with you which illustrate just how lopsided this affair has become. The figure that I most often see bandied about concerning the relationship between the price of gas and the price of oil is 70% (this would be about the only useful tidbit from the response by the Indiana Attorney General). That is to say, that 70% of the price of gas depends on the price of oil. So, were oil to be higher, you'd expect the price of gas to be higher and vice versa, right?
Well, consider these numbers.....in the summer of 2008, the United States set it's all time high for the average price of gasoline at a little over $4.11 a gallon. The price of oil at that time was $150 a barrel. As I type this today, the average price of gasoline in the United States is around $3.66 a gallon and the price of oil is $93.92 a barrel. Even if you consider Brent crude oil, it's only at $103 a barrel.
If the price of gas when the price of a barrel of oil was $150 averaged $4.11 a gallon, then why is it now $3.66 for a gallon of gas when the price of oil is, at most, $103 a barrel?
Allow me to explain. If we take the current price of oil $103 divided by the price of oil in the summer of 2008 $150, we get 68.7%. So, by logic, assuming all other things are equal (and we'll touch on that in a minute) the price of gas should logically be 68.7% of the high average of $4.11 in the summer of 2008. With me? Okay, let's do the math. 68.7% of $4.11 would be $2.82 for a gallon of gasoline. You're probably saying to yourself "Wait a minute self. Steve already told us that the average price today for a gallon of gas in the US is $3.66. How can there be such disparity between the price of oil and the price of gas?"
My detractors of course will say that the answer lies in the remaining 30% of the price of gas that doesn't involve the price of oil. That somehow, there is some major factor that is causing the disproportion between the price of oil and the price of gas. Okay then, what is it? As Americans, we are commonly told that our gas prices spike when there is unrest in the Middle East or other parts of the oil producing world. Yes, there is currently an ongoing civil war in Syria and Iran is being Iran, playing games about its nuclear ambitions, etc, etc. But all of these things would impact the price of gas, because they impact the price of oil due to fears that there may be a supply disruption. Then there are the arguments about switching to summer blend gas and how there are more additives needed for summer gas to keep it from evaporating, blah, blah, blah. Again, I can understand a small increase due to this, but for the average for a gallon of gas to be almost a dollar higher than logic would dictate given the price of oil? That doesn't wash. Oh, and then there's my favorite.....refinery maintenance. The excuse makers for the gas companies say that they routinely have to take a plant down to do regular maintenance and that lowers the supply of gasoline. Two items rebut this...first of all, the maintenance issue would have existed in 2008 also and gas prices have been out of whack in relation to oil prices for a long time now. Far longer than any maintenance issues should have impacted.
Before I conclude, allow me to share some other facts with you. I'm not sure if you're aware or not, but the US is currently in the midst of an oil boom in places like South Dakota and Montana. Due to this, last year, for the first time in our history, the United States became a net EXPORTER of oil. What that means is that the United States exported more oil last year than it imported. And you want to hear the biggest surprise of all? By the year 2020, the United States is projected to be the BIGGEST producer of oil in the world folks. That's right, bigger than Saudi Arabia, bigger than Iraq, bigger than Russia, bigger than anyone else. So, why then, are we still getting it up the keester at the gas pumps?
My theory (and it is shared by others) is that our own capitalist system is screwing the American people. In many countries, they take care of their own people first (or at least their own rulers). They make sure they are adequately supplied before they sell to others. In the United States, our oil companies are allowed to sell to the highest bidder. Right now, that is China. China is being very aggressive and paying premium prices for all the oil and gas it can get. As a result, OUR oil companies are selling to China and other countries first to make more money and leaving the American people out in the cold. I'm not sure what you know about China, but they are certainly not our friends. They may make a lot of our merchandise, but make no mistake, that is not because they love us all. It's because it makes them money. I have little doubt that if China thought it prudent and feasible, there would already be Chinese troops on their way to our great land. Why on Earth would we allow a situation where one of our biggest threats gets all the gas and oil they can handle? In my opinion, this is a serious National Security issue and I believe with my whole heart that our government needs to take steps to stop it. American oil and gas companies should be forced to look out for the interests of the country that gives them the opportunity to make all that money, before selling it to a country who would most likely like to see us wiped from the Earth.
I urge EVERY person who reads this blog to pass along what I have told you today and to act. We are 350 million strong and it's about time that our senators, representatives, and president get off their asses and help the people who elected them to office. I, for one, am sick and tired of excuses, sick and tired of getting screwed in more ways than one and sick and tired of our elected government officials doing nothing but taking free vacations and other gifts from wealthy oil companies. I hope you will join me in my fight. Have a great afternoon!
P.S. The event that forced this blog perhaps a little sooner than I would've liked is that gas prices today in the Indianapolis metro area hit $4.25 a gallon. It's only $4.25 in HAWAII
Steve: Been a peeve of mine also. It's so obvious that the prices are no longer based on supply and demand, as much as they are just based on how much we can afford. I still say the economy started crashing when they got gas up around 5 bucks a gallon. If it were the taxes, or a justified increase, I could see it, but they are making record profits at our expense. Not sure a boycott would work.. but something needs to be done for sure. Rick
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