Fill 'er Up!

By Rich Smith

Yesterday I stopped at the GV Chevron station and filled my tank with liquid gold. Talk about sticker shock, the pump read almost $60, and I own a Subaru. The national price of gasoline is now $3.85 and rising to $4 a gallon. Consumers want to know what is driving this sudden increase. President Obama addressed this issue last week and proposed a “study” conducted by his advisers, to answer this perplexing question. Well Mr. President, just use common sense and save us a few million tax dollars on another study.

The price of gasoline is this high because it can be. In other words, OPEC and the gasoline companies can charge whatever they want for their product and we sheep will pay it. It is called the “milk the consumer to maximize profit” theory of economics. For those who may doubt this is the case, watch for the quarterly profits announced by Standard Oil, Exxon, Shell or BP. These companies will use any handy excuse to maximize their profits. For example, because the rebels in Libya blew up a guard station, or the King of Saudi Arabia went into the hospital for a hernia operation, speculators bid up the price of oil and, in concert, the price at the pump instantly increases. Have these incidents increased oil well or gasoline production costs? No, not by one drop. When OPEC decides to increase the cost of a barrel of oil by $5, why does a non-OPEC barrel of oil produced in Wyoming or in the Gulf of Mexico have to follow suit? Because it can.

Here is evidence that we are being had. How long does it take a barrel of oil produced in Saudi Arabia to arrive at your pump in the form of a gallon of gas? Considering the storage time oil waits for shipment in the mid-East, or the time in transit on tankers, at refineries, stored in large gasoline tanks, and then finally shipped to your gasoline station, the average delay is four months. Four months worth of supply! So why is it that when a speculator or OPEC decides to increase the price of oil by $5, does the price of a gallon of gas at the pump increase fifteen cents? All that oil in transit and gasoline in storage tanks have suddenly become more valuable.

Who benefits from the windfall? Certainly not the gas station owner; the oil companies and OPEC benefit. None of that more costly oil has yet hit the marketplace, yet my pocketbook felt the result at last fill up. OPEC claims they have a worldwide surplus of oil and gasoline demand in this country is down 2%, yet the cost of gasoline is up $1 a gallon from just a few months ago. Obama’s study will do nothing to stop this fleecing of America, by OPEC and the Oil Companies. What can stop them is to buy less of their commodity.

Remember the days of gas wars, where the law of supply and demand dictated price? Let’s all use less and perhaps it will have a lasting effect. I was just figuring that a round-trip to Crouch (18 miles) for a gallon of milk costs about $2.50 for gas. That is one expensive bottle of milk. I think we will wait and combine our trips into town. If everyone did this, say cut back their purchase of gasoline by 5%, the oil companies would get the message.