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"And ye shall know the truth, and the truth shall make you free." - John 8:32
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Author:  Bob Webster
Bio: Bob Webster
Date:  April 18, 2006
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Topic category:  Other/General

Gas Price Nonsense

Every time gas prices go up (and they do this time of year), we hear of some new scheme to force them back down. The latest one uses a story about the price of eggs and suggests drivers only buy $10 of gasoline at a time. Self-delusion of that kind will have zero effect on the price of gasoline.

A recent email message related a hypothetical story about the cost of eggs. The story relates how if the price of eggs went up dramatically, the problem could be solved by buying eggs on a daily basis, rather than for a whole week at a time. The assumption in the story being that the only reason the price of eggs went up was because "big egg distributors" were artificially jacking it up (profiteering).

The email message goes on to claim that rising gasoline prices are analogous to the egg story (which they are not) and then asks:

If you believe this scenario, dream on. But at some time, you'll have to wake up.

Of course, the problem with the "eggs are oil" story is that there is no real analogy.

The price of oil is driven by supply and demand, which is reflected in the crude oil market prices that are driven by the expectation of supply and the expectation of demand.

Summer in the northern hemisphere, where most of the world's oil is consumed, is a time of greater gasoline consumption.

Iran is a major oil producer for Europe ... as is Iraq. Instability in the Middle East and Persian Gulf damage the expectation of supply.

Leftist Democrat Senators who block efforts to explore for oil in promising arctic wastelands artificially put a crimp on worldwide supply by forcing the US to compete for other sources. This moronic policy is completely political. Extracting oil from ANWR has little likelihood of an adverse impact on any legitimate environmental condition. This artificially-created supply shortage also damages the expectation of future supply.

Population continues to grow worldwide, much of it in the northern hemisphere. This, plus the coming summer months, creates an expectation of increased demand at this time of year.

Increased demand plus decreased supply = higher prices for crude oil.

Higher prices for crude oil (went from $20/bbl to $70/bbl over recent years) causes prices of gasoline to go up comparably.

$70/bbl is 3.5 times the price at $20/bbl.

Today's price for regular gasoline is about $2.799/gallon. That is about 3.5 times the $0.799/gallon it was when oil was $20/bbl.

So it has nothing to do with eggs and everything to do with supply and demand and the price of crude oil on the international market. And a lot to do with artificially constraining supply for moronic delusional political purposes (those opposing oil extraction from the ANWR).

No amount of silly non-analogies is going to change that, any more than will boycotts or extra trips to buy gasoline because we're not buying a full tank.

This is NOT rocket science, folks. But it does take some maturity to deal with it.

You want lower gasoline prices?

The answer is simple: Increase supply (Drill in ANWR). Decrease demand (buy more efficient automobiles).

Arguments that try to blame the price of oil on "big oil" are both simplistic and childish. This is particularly so when many of those who so readily oppose drilling in the ANWR (northern regions of Alaska that are an arctic wasteland in night sky half the year) so readily buy gas-guzzling jumbo SUVs (the ones that get 15 mpg or less) or come from the "jet-set" of overpaid performers who think nothing of buying their own fuel-hogging jets to flit around the country.

Bob Webster
WEBCommentary (Editor, Publisher)

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Biography - Bob Webster

Bob Webster, a descendant of Daniel Webster's father and early American patriot, Ebenezer Webster, has always had a strong interest in early American history, our Constitution, U.S. politics, and law. Politically he is a constitutional republican with objectivist and libertarian roots. He has faith in the ultimate triumph of truth and reason over deception and emotion. He is a strong believer in our Constitution as written and views the abandonment of constitutional restraint by the regressive Progressive movement as a great danger to our Republic. His favorite novel is Atlas Shrugged by Ayn Rand and believes it should be required reading for every high school student so they can understand the dangers of tolerating the growth of unconstitutional crushingly powerful central government. He strongly believes, as our Constitution enshrines, that the interests of the individual should be held superior to the interests of the state.

A lifelong interest in meteorology and climatology spurred his strong interest in science. Bob earned his degree in Mathematics at Virginia Tech, graduating in 1964.


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