The price of gasoline is going back up. Gas is a commodity and like all other commodities, gas goes up and down in price depending on supply and demand. Or, is it that simple? For the most part, when the demand for gas goes up, the price of gas goes up as well. However, like most commodities there is the spot price and the future price. Those that think the demand for gas will go up as the economy improves might buy future contracts in the hope that they can sell those contracts after the price of gas goes up and make themselves a nice little profit. There is nothing wrong with making a profit especially if you invest your money in a future contract to take delivery of gas on a certain date. The Memorial Day weekend may be one reason the price of gas is going up. Other reasons may be because there is an increasing demand for gas as the world’s economy starts to get back up to speed. Gas, like other forms of energy, drives the economy.
It is important that the United States reduce its dependence on foreign oil. Buying foreign oil is bad for our balance of trade. We already import so much stuff from aboard that the last thing we need to do as a nation is to import more oil each year. I remember the first oil embargo in 1973. I also remember thinking at the time that getting America away from importing foreign oil would be a smart thing to do. Unfortunately, the politicians who were running our government at the time were not concerned with what was good for the country in the long run, but rather what was good for them keeping their seat in Congress. Not much has changed since 1973, except that America imports more foreign oil than they did in 1973.
Now here we are 36 years later and we have pretty much the same situation. The big difference is that after 9-11, Americans appear to be more aware of our dependence on foreign oil. Perhaps after 36 years and all we have experienced as a result of having to import so much of the oil we use, that the politicians are ready for change. I sure hope so.
Stay tuned.
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6 comments:
I hope so too, Fred. But I wonder ....
I read a comment concerning Obama's plan to increase gas mileage in autos, "Is he going to regulate how much horsepower I want".
When will people grow up. We should be saying, "How can I help Obama achieve this goal".
Unfortunately, we are like kids in a candy store...grab all the sugar you can. But we need a parent to regulate how much we "want".
Let's drill in this country while we convert to better sources for the long term.
There is a third reason for gas prices to go up and that is availability. When the public cuts back because of the high per gallon price and the bust in the economy the oil companies felt a little light in the wallet. They found they had too much supply so the best thing they could do would be to control the supply by idling some refiners. We'll call it maintenance so that we don't appear to be price fixing or controlling supply for the demand.
We are Americans and we don't pay European prices thus we demand high horsepower cars and Suv's and when the price of gas is down the auto industry sells more fo the big vehicles. When prices go up we park the guzzlers and ask "why don't they sell that car here" or "when will our auto industry get with the times"? WE, our US Government, drags the execs up infront of everyone and blames them for OUR wants.
I agree, we need to be less dependent on foreign oil but we also need to find ways to produce an electric vehicle that is affordable to the masses, not the few. The ones on the horizon currently do not have that look to them. The Telsa is near $100,000 and the Volt is close to $40,000. Hope you plan on keeping your electric car because the battery replacement won't be cheap.
I'm wondering if we all had electric cars (assuming there were charging stations), what kind of load would that put on our electric grid to produce enough electricity?
Many politicians, back in the mid 1970s cared about reducing our dependence on foreign oil. President Carter was trying to do a lot. I've seen clips from some of his speeches on Youtube. Speeches I heard live on the radio at the time.
Then everyone was caught off guard in the early 1980s as the price of oil dropped. OPEC nations became more addicted to our money and started pumping like mad, rather than having an embargo. Incentive for energy conservation vanished, Reagan was elected president. Most of the nation turned it's back on reducing energy dependence.
Relative to other things in the economy, such as housing prices, energy has been a bargain most of the intervening years.
To reduce energy dependence, we should probably reduce dependence on automobiles. Public transit and bicycles should become a larger share of travel. Metropolitan areas should become more compact and pedestrian friendly.
Two great side effects of this change would be greater health and less people dying in auto accidents.
Electric cars still need power from somewhere. Also today's battery technology stores far less power, per weight of unit than gasoline. It's hard to beat gasoline for portability of power, which is what cars need. I heard an NPR Science Friday on this topic. An interview with the author of a book called Physics For Future Presidents.
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