Oil, Gas, and Gusts of Hot Air
I went to fill up my car today, and gas was $1.99 a gallon. It’s been YEARS since gas prices were this low. Naturally, this prompts me to ask an important question of our left-leaning friends:
Are the oil companies no longer evil?
After all, several months ago it was the greed of evil oil company executives that caused record high gas prices, right? Therefore, does this present plummeting in prices mean that big oil CEOs have had a come to Jesus moment? Have they been visited by three spirits in the night? Have their consciences finally caught up with them?
Perhaps this is a manifestation of the watchful eye of a democratic congress. Perhaps Pelosi is double-fisting her Speaker’s gavel, ready to play whack-a-mole with any greedy oil executives that dare pop their heads up and announce price increases. I’ve even heard murmurs that there is a dastardly plot by the Bush administration to artificially decrease prices until he leaves office, and prices will spike again when Obama takes over. Sigh.
Or perhaps… wait for it… Oil prices have nothing to do with greed. *Gasp!* But how can this be so? We’ve been told over and over that board room fat-cats are the cause of all our pump-price woes! Could we be so wrong?
Think about it... If greed were the primary driving force behind oil prices, and prices were adjusted at the whim of a faceless and money hungry corporate aristocracy, why on earth would we be seeing such dramatic price plunging? Wouldn't keeping oil prices level, or offering a minimal reduction, do more to sate a voracious greed than selling at record lows? Truly, I am at a loss. If anyone here maintains that greed hold the reigns of the oil industry – more so that any other industry, of course – please share with me a narrative that properly reconciles your assertion with the prices we currently enjoy.
In my estimation, there are two primary reasons that oil prices have dropped. Neither has anything to do with greed or lack thereof, and neither is difficult to understand:
1) The value of the dollar continues to climb, meaning that US oil companies enjoy greater purchasing power vs. foreign oil producers. As the dollar gets stronger, US companies are able to buy more oil from the Middle East, South America, and Canada for the same amount of money. Since oil companies operate almost entirely on percentages, that difference is passed on to us at the pump.
2) The continuing pressure on Washington to increase domestic oil production is producing a market-wide cooling effect. Since the future supply of oil is now likely to grow at a faster rate than demand, a declining oil price is a safe prediction. Speculation on oil futures is down, and oil producing nations are anticipating an increase in production from US domestic sources, meaning the overall oil market is preparing for more competition – always a good thing for the consumer - and adjusting prices accordingly.
Of course, there’s no guarantee that the value of the dollar will continue to climb, or that an increase in domestic production will actually happen. If the dollar sinks, or if local sources remain untapped, we will surely see oil prices climb back up the chart.
When and if that happens, I’m sure that the greed of Big Oil will again be trumpeted as the culprit. But, if you’re reading this, maybe you won’t fall for it next time around.
Are the oil companies no longer evil?
After all, several months ago it was the greed of evil oil company executives that caused record high gas prices, right? Therefore, does this present plummeting in prices mean that big oil CEOs have had a come to Jesus moment? Have they been visited by three spirits in the night? Have their consciences finally caught up with them?
Perhaps this is a manifestation of the watchful eye of a democratic congress. Perhaps Pelosi is double-fisting her Speaker’s gavel, ready to play whack-a-mole with any greedy oil executives that dare pop their heads up and announce price increases. I’ve even heard murmurs that there is a dastardly plot by the Bush administration to artificially decrease prices until he leaves office, and prices will spike again when Obama takes over. Sigh.
Or perhaps… wait for it… Oil prices have nothing to do with greed. *Gasp!* But how can this be so? We’ve been told over and over that board room fat-cats are the cause of all our pump-price woes! Could we be so wrong?
Think about it... If greed were the primary driving force behind oil prices, and prices were adjusted at the whim of a faceless and money hungry corporate aristocracy, why on earth would we be seeing such dramatic price plunging? Wouldn't keeping oil prices level, or offering a minimal reduction, do more to sate a voracious greed than selling at record lows? Truly, I am at a loss. If anyone here maintains that greed hold the reigns of the oil industry – more so that any other industry, of course – please share with me a narrative that properly reconciles your assertion with the prices we currently enjoy.
In my estimation, there are two primary reasons that oil prices have dropped. Neither has anything to do with greed or lack thereof, and neither is difficult to understand:
1) The value of the dollar continues to climb, meaning that US oil companies enjoy greater purchasing power vs. foreign oil producers. As the dollar gets stronger, US companies are able to buy more oil from the Middle East, South America, and Canada for the same amount of money. Since oil companies operate almost entirely on percentages, that difference is passed on to us at the pump.
2) The continuing pressure on Washington to increase domestic oil production is producing a market-wide cooling effect. Since the future supply of oil is now likely to grow at a faster rate than demand, a declining oil price is a safe prediction. Speculation on oil futures is down, and oil producing nations are anticipating an increase in production from US domestic sources, meaning the overall oil market is preparing for more competition – always a good thing for the consumer - and adjusting prices accordingly.
Of course, there’s no guarantee that the value of the dollar will continue to climb, or that an increase in domestic production will actually happen. If the dollar sinks, or if local sources remain untapped, we will surely see oil prices climb back up the chart.
When and if that happens, I’m sure that the greed of Big Oil will again be trumpeted as the culprit. But, if you’re reading this, maybe you won’t fall for it next time around.
