Pandering season seems to start earlier and earlier all the time:
President Barack Obama said Thursday that the Justice Department will try to “root out” cases of fraud or manipulation in oil markets, even as Attorney General Eric Holder suggested a variety of legal reasons may be behind gasoline’s surge to $4 a gallon.”We are going to make sure that no one is taking advantage of the American people for their own short-term gain,” Obama said at a town-hall style meeting at a renewable energy plant in Reno, Nev. [...] With the 2012 campaign in mind, the White House is anxious to show the public it’s taking action to address rising gasoline prices. The national average price for a gallon of regular gasoline was $3.84 on Thursday, about 30 cents higher than a month ago and almost a dollar higher than a year ago.
The thing about chalking up prices purely to unnamed speculators is that, in order to speculate, you need something to speculate about. Simply overpaying for something accomplishes squat. So the real question is what the features are of the environment which the speculation is taking place in. Here’s some answers for that:
- Relative demand. The U.S. has 5% of the world’s population, while consuming 26% of the world’s oil.
- Political unrest in the major oil producing nations. Pumping and moving oil gets kinda difficult while dodging bullets…
- Inflation & the position of the dollar. Obviously if the value of a dollar goes down, it’ll take more dollars to get the same amount of product.
- Huge subsidies to oil companies via the tax code.
- Last, but definitely not least, the military behemoth used to guard global oil transport on our dime.
According to the article, the average pump price is currently $3.84/gallon. On a micro level, this sucks for most of us because we’ve subsidized ourselves into a highly car dependent lifestyle, and our wages aren’t keeping up with the ongoing adjustment. On a macro level though, much of the rest of the 1st world has been paying more than that for practically eons, and a large chunk of the real cost of gasoline comes not at the gas station where we get our lottery tickets & Colt 45, but on tax day. Together, they’re saying not “damn gas prices…”, but “we need more money and a infrastructure re-think”.
But that and a nickel won’t keep you in power.