Sunday, May 18, 2008


I've given up explaining the economics of high gas prices to people. Truth be told, I'm not an apologist for the oil and gas industry, even though that's what's been keeping me gainfully employed for the last five years, but there are many things the industry does that I don't approve of, but price manipulation isn't one of them. Price manipulation is what people come up with when they are unwilling to face the plain and simple truth -- consumption is coming to bite us all in the butt. You combine consumption with any number of geopolitical factors (Hello Iraq! Hello weak US dollar! etc) and the price of oil is going up and it's going to keep going up. I think we're going to see $4 gasoline in the next 2-3 weeks easily, if not by the end of the Memorial Day weekend. I think it's going to keep going up all summer and no gas tax holiday is going to stop it.

I find it fascinating that ordinarily intelligent people just refuse to believer or understand in the concept of supply and demand. I find it amazing that they believe that oil prices are US-centric rather than existing in a global market where the US is no longer the prominent, influential player it once was. I think people refuse to understand because it's difficult, it's complicated, and they don't want to have to make sacrifices. It reminds me a lot of that book -- "What's the Matter with Kansas?" -- where the GOP made in-roads in Kansas by focusing on a "simple" issue: abortion. It was easier for people to focus on abortion rather than the economic issues and as a result, Kansas went red, when in truth, going blue is probably best for most people there. That's how I feel these days when I'm trying to explain the new oil economy -- people could understand, but they don't want to, especially since the explanation invariably means some kind of sacrifice on their part.

So I've decided to stop explaining because it takes too much effort and no one really cares about complex situations that have no easy answers. If people really want to understand, they will make an effort. But most people like the idea of price manipulation -- even though it's patently false -- because it's simple to understand, even if there is no basis in reality. "Price manipulation" is a great bandwagon for politicians to pander and it allows people to shift "blame" to the oil companies, rather than focusing on why they're driving 80 mph in a Hummer in an urban area that looks nothing like a war zone.

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