Friday, August 26, 2005

Today's Oil Quandry

There is a famous, if anattributed quote, from the Vietnam War commander stating, "In order to save the village, we had to burn it to the ground," or something like that.

Well, the same holds true for gasoline prices. The only way we will ever bring prices down is if they maintain their current march toward $70, $80, etc. per barrell. Only then will the American consumer, the true arbiter of oil pricing, get angry and decide to do something about the situation. As long as gas is more or less affordable there will be no change in American buying patterns and oil will continue to rise.

However, if as a group Americans decide enough is enough and demand change, through purchasing hybrid cars or screaming at their Congressman to push for more unconventional fuel sources, then prices will stabilize.

As I've said here before, there is no hard reason for prices to skyrocket other then the fact that commodity speculators and Exxon and a killing. Supply might be tight, but it's within accepted parameters the same holds true for refining capability. Speculators are looking for any reason these days to bump up the price and inflate their wallets. Hurricanes, Pat Robertson, Iraq, the NY Mets latest winning streak have all been cited as harbingers of doom by the Mercantile Exchange folks as a reason to push the price higher and higher.

If Toyota and Honda hybrid car sales go through the roof then and only then will changes take place on the pricing front. It is supply and demand. Remove the demand and prices plummet. It's a fact folks.

The killer aspect to this situation is that America will have to suffer for years paying $3 plus per gallon until the switch is made.

But just think of the repercussions. As it could turn out cheap gas could be the least important benefit. President Bush will will no longer be beholden to the oil companies and in turn to Arabian oil. We can leave the Mideast and let the Sunnis kill the Kurds who in turn can kill the Shiites. We can come out of the closet and support Israel in the fashion that nation deserves. It is clear the reason we side against it so often is fear of an oil cutoff from Saudi Arabia. Greenhouse emissions will be reduced, which will shut up the annoying Europeans.

It is such a win win situation that I find myself hoping prices stay high so we Americans finally get it through our thick heads that we can kick our oil dependency. It did not happen in the 1970s, nor in the 1980s, but third time's a charm.


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