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Gas Prices Are Dropping

Labor Day is just a handful of weeks away. Earlier this year, when gas was predicted to go to four dollars a gallon by Memorial Day, I made the prediction that it would easily hit four and a half by Labor Day. Predicting the future has never been my strong suit. Just yesterday I saw the price of a gallon of gas less than three dollars and forty cents. And I wonder how I could’ve been so wrong.

In the past, the price of oil would go up if there was even the slightest, unsubstantiated threat of an altercation involving an oil producing nation. I remember the price of a gallon of gas increasing a dime because there was talk of pirates harassing an oil freighter off the coast of Africa. However, in the past week or two, Russia attacked Georgia and has damaged a significantly pipeline controlled by British Petroleum. The pipeline was shut down which should have been a significant impact to an already tight oil market. And yet, the price of oil continued to plummet.

The threat of a storm in the Gulf of Mexico could send gas up significantly. Last year, a hurricane in the gulf could raise the price of gasoline at least a nickel overnight. In the past couple of weeks there have been significant storms in the gulf. Cristobal and Dolly formed in the gulf in the past month and the price of gasoline has continued to plummet.

The price of gasoline has fallen almost seventy cents in the past few weeks despite what has happened in the past few weeks. And on my way to work tomorrow, when I look at the price of gasoline as I past the station, I would not be surprised to see that it has fallen even further.

There are a number of factors that go into the price of a gallon of gasoline or the price of a barrel of oil. It is more than just the how many storms in the gulf or how many pipelines are stopped in countries at war. Even though there is a long history of these types of events impacting the price of energy commodities by sending them into the stratosphere, the bottom line is how much somebody is willing to turn the thumb screws and make astounding sums of money off of the pain of others.

The public has responded to higher energy prices by driving less, buying more fuel efficient cars, cutting back on unnecessary expenses, and paying more attention to the energy policy of the country. It has become a political issue for us to determine who is the best candidate to lead us into the future. A lot of people who claim to have our natural environment as a top priority are ready to throw that bitch to the curb when given the choice between nature and oil.

We have a choice on offshore drilling. We can better guarantee ourselves pristine beaches or we can risk a spill that can tarnish the environment for years to come. All that talk about accidents on rigs being a thing of the past is the same talk we heard when we decided to open Alaska up to oil drilling. It was virtually impossible for an oil related accident causing significant damage to Alaska’s environment. But one drunken tanker captain later and the previously unknown tanker Exxon Valdez became a household phrase. And contrary to propaganda that shows men in hazmat suits scrubbing rocks with a toothbrush and giving oil soaked birds bubble baths, Alaska has yet to recover from the damage to Prince William Sound.

If we are ready to sacrifice our coastlines to drilling why not put a nuclear reactor in everybody’s backyard. If we can take a chance on an oil spill we might as well be willing to take a chance on a Three Mile Island meltdown.

The fact that oil refineries are already operating at maximum capacity and have to be expanded or more refineries need to be built as well falls on deaf ears. The fact that it would be at least ten years before anyone would see a drop of oil is totally ignored. And whenever all that extra oil starts coming out of those offshore rigs, every drop will go on the global market and go up for bid just like every drop does so now. The only thing offshore drilling will do is make more money for the oil companies that are already making money hand over fist. I guess with all that extra dough they have available at the moment they can afford to buy all the propaganda they need to make this thing a national issue. And in typical American fashion we fall for what sounds like the easiest and most immediate solution without getting all the facts. We will simply believe what the most propaganda tells us.

The high price of oil and gasoline has actually gotten most of us thinking about conservation and saving energy and saving money. That’s a good thing. But the same conditions that have driven us to conserve and to curb our wasteful ways have also made us so irrational that we think that all we have to do is sacrifice our coast to the oil company gods and we’ll save another ten cents per gallon at the pump. In the meantime, somebody in some room somewhere will continue pulling the real strings on how much we’re going to pay for oil and gas.

With gas prices falling we will eventually forget about four dollar gasoline. We’ll think we’re getting a relative bargain when gas gets back to three and a quarter. We’ll go back to excessive energy usage and leave the alternative energy programs for the future. Just like our future tax burden where we continue our deficit spending today so our children can pay for tomorrow, we will extract every drop of oil out of the ground now so our children can figure out energy alternatives. We have a lot of faith in our children.

Energy prices are a funny thing. We don’t know why they go up and we don’t know why they go down. All we know is that we will pay whatever we are told to pay. We really don’t have much of a choice. Unless we make the choice to continue to conserve no matter how low the price goes we will continue to always fall victim to somebody somewhere pulling the strings on gas prices and making astounding profits. But then again, I could be wrong.

Monday, August 18, 2008 Posted by | Alaska, ANWR, Capitalism, Cars, Economy, Life, Oil, Politics, The Economy, Thoughts | 11 Comments