Nah, it can't be us. Quote: Who to Blame for High Gas Prices?
Suzanna De Baca -- Expert Business Source, 6/11/2008 12:12:00 PM
The other day when we were just sitting around shooting the breeze out in the garage, feeling that driving somewhere to talk was a waste of gas, one of my husband’s friends asked me, “So, who is getting rich?”
I thought he meant ‘Who is getting rich in general?” so I said, “Well, farmers have been having a pretty good year, and some hedge funds have posted decent returns.”
He looked at me funny and said, “No, I mean who is getting rich off of these high gas prices? I’m looking for someone to blame.” He laughed when he said this, but since I knew it had just cost him over a hundred dollars to fill up his large pickup truck I realized it was not that “funny ha ha” kind of laugh.
Chances are if you’ve filled your car or truck up with gas lately, and that means pretty much all of America except a few car less urban dwellers, you’ve experienced that sick feeling in the pit of your stomach and wondered what the heck could be making gas cost so much. Someone has to be responsible for this unbelievable run up in prices.
I’ve overheard people pointing fingers and swearing at the gas stations, Congress, the President, Big Oil, foreign countries, car companies, and environmentalists. Some say it’s the falling dollar. Others blame speculators. We seem to desperately want someone to blame. After all, if you can figure out who is at fault, then maybe you can determine when and how things will get better, right?
But the factors that have driven up the price of gas are much too complex to be pinned on one person, institution or government alone.
In a May 13, 2088 New York Times article with the not-so-encouraging title “Get Used to It -- Sky-High Oil Prices Are Here to Stay,” Marty Jerome explores what he calls the “stubborn upward spiral of oil prices.” He interviews members of the media and energy experts on whether we are in a bubble (as opposed to just a really painful run-up of prices) and, in essence, who is to blame.
The experts debate the issues in the article, going back and forth – saying it can’t be speculators since there is no evident tightening of supplies; but on the other hand, the economic slowdown will in turn slow demand for imported goods, weakening other world economies, thus weakening the price of oil, which indicates that it is speculators fault all along. It’s enough to make your head spin.
Other experts conjecture that the escalation in price is the result of the Fed’s repeated cuts and the declining dollar. Jerome then quotes Severin Borenstein, director of the University of California Energy Institute, who maintains the run up in prices is the result of real supply and demand being “currently aligned.”
Moving away from Jerome’s article, many people immediately point the finger at Big Oil companies. Sure, they are certainly profiting. While the rest of the stock market has roller-coastered around for the last several quarters, oil company stocks have held up just fine or actually increased. But while Big Oil benefits, are they simply the lucky ones? Did these companies actually cause the price of gas to go up at the pump? Are their margins really increasing as exponentially as the price per gallon? A look at any oil company’s annual report says no—margins are not soaring in this environment.
What about oil producing nations? Are they getting rich off the high price of oil in the US and around the world? Are these countries limiting production, thereby pushing up demand? There doesn’t seem to be evidence of that either – do they really have huge amounts of excess capacity? OPEC, which took the heat for gas prices in the 70s, no longer has the control it did in prior years; OPEC now only pumps approximately 40% of the world’s petroleum, according to numerous sources.
Some folks say that it environmentalists who are driving the problem, citing opposition to drilling in the Arctic National Wildlife Refuge as blocking access to US oil. But drilling there would not produce enough to change the price dynamic.
If the experts can’t agree on who is getting rich or who is to blame, then how can we naïve consumers figure out what is going on?
A few controversial writers have hinted that maybe we –the consumers—are to blame? What? Us? How could that be?
For the last two decades, we’ve consumed more gas and oil than ever. We have purchased bigger cars, built larger houses that consumer more energy, and have driven where ever we wanted, when ever we wanted. Families that used to have one or two cars now have a car for every single driver. Energy efficient cars are now best sellers, but that trend has been a very recent innovation. No one was touting hybrids in the mid-90s, when giant SUVs were the choice of suburban families and the affluent alike.
Carpooling, a trend that started in the 70s, is virtually non-existent. Maybe what is happening is the natural result of unchecked consumption and few government policies or programs to discourage it.
So maybe we can blame Big Oil, the government, other governments, investors, or even environmentalists for these painful gas prices. But maybe we also need to look at ourselves, our own cars and trucks, and our own habits.
But it feels a lot better to blame someone else when you’re pumping $4 gas, doesn’t it?
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