Geeky Weekly

My 315 cents on gas prices

Everyone is talking about gas prices, but why, I don’t see anything out of the ordinary happening. Supply is down and demand is at record levels. Pull out your remedial economics thinking cap and figure out what that means, you’re right HIGHER PRICES! People who simply believe gas prices are high because the evil oil companies are gouging us and taking food off our plate are narrowminded and ignorant. Here’s a list off the top of my head of things that could push up the price of gas:

• Increase of price of crude oil (which is not set by oil companies, thank the commodities market and OPEC for that)
• Decreased refining capacity
• Cost of transporting gasoline to stations (those big trucks run on gas too don’t they)
• Current supply interruptions, Nigeria, who supplys the US ~13% of our oil is completely shutdown because of political turmoil
• Futures market is being bid up, caused by anxiety of future supply interruptions
• Switch over from winter to summer blends (know how gas prices go up at the time leading into summer, they have to use a different cleaner burning formula, during transition it kills the productivity of refineries)
• People aren’t changing their lifestyles and driving less
• People are still buying big cars (~25% of cars sold last year had a large V8 engine)
• The government has increased excise taxes on gasoline over the past few decades, not reduced them.

That’s just off the top of my head using information gained from reading and listening to the radio.

I don’t see much changing. Hybrids aren’t an attractive alternative yet (unless you mind paying $5000 over sticker which would take a decade to make up with the savings on gas) and their isn’t enough ethanol being produced to make a dent (3.4 billion gallons of ethanol produced a year compared to the 131.4 billion gallons of gasoline used per year in the US).

So what do I think? Let the market go where it will and keep the government out of it. If people are willing to pay over a dollar for a 12 oz bottle of water then they have no room to complain about gas.

Tagged with: cars, economy, government, taxes
Posted under: Political Stuff