High Gas Prices - An Opinion

The Wall Street Journal Online has a great article on the subject of higher gas prices, and supports extactly what I have felt is the crux o...

The Wall Street Journal Online has a great article on the subject of higher gas prices, and supports extactly what I have felt is the crux of the matter: high demand....

http://biz.yahoo.com/..../summergas.html

If you don't want to read the whole article, here are some key quotes...
  • It all depends on refineries, weather and drivers' tolerance for expensive fuel.


  • Still, pain at the pump hasn't kept Americans from driving, which is part of the reason gasoline prices keep rising. Many workers need to drive to earn a living, and cutting back isn't an option.


  • The latest Energy Information Agency data show gasoline demand in the past few weeks rose 2.3% from the same period last year, outstripping growth in refinery capacity.


  • The U.S. has filled that gap by importing fuel. The problem now is that imports aren't as readily available as in the past.
I've read from other bloggers, including biker bloggers, that the problem is just greed. Plain old greed. They read reports that oil companies are earning record profits, and therefore, have no excuse not to discount prices or increase supplies. I dispute that.

My contention is that gasoline prices are affected by the old principles of "Supply vs Demand". That principle says that when demand goes up, prices go up. When demand goes down, prices go down.

If you take a look around, you'll see that people are still buying gasoline despite how high the prices are. Even though they are complaining about it, they are still buying it. As long as they are willing to buy it, it's not "too high" at all.

You can argue that people have no choice but to buy gasoline, but that's not true. People can still carpool, they can still take the bus, they can still ride their bicycle, or their scooters. They can opt to work 4 days a week, for 10 hours a day, and they can even telecommute out of their homes.

But the fact is that people don't want to make these concessions. To them, driving solo in the comfort of a cage is worth a lot to them, enough so that they're willing to pay $4.00 a gallon to do it. That means, gas prices are not "too high".

But still, there are people who argue that oil companies should voluntarily increase their supplies, just to give hard working Americans a break. Why? Why should they? If people are capable of affording the higher prices, and unwilling to modify their driving habits, how is it that gasoline is too expensive?

Gas prices will never reach a critical point until people start buying less of it. That's when we'll discover the threshold of what's affordable and what's not. Otherwise, nothing is going to change as long as people are unwilling to modify their driving habits.

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  1. Great post. I have been eagerly waiting the day that gas is $7/gallon. Not because I want to pay that much for gas but for what it will do to people's worldview of consumption. Most American's don't even view public transportation as viable transportation. A lot can't understand why anybody would want to drive a compact car. Bikers are just crazy. The reason why gas prices are so high is that the people who are complaining are not willing to make a change. Wake up! The government can't fix this. It is up to each person to take care of their back yard so that collectively we can make a difference.

    ReplyDelete
  2. I have to laff a bit at this one. While I agree that in some Urban areas mass transit and car pooling is a viable option that many are not utilizing, they are options that in the majority of our country are not even available.
    Let's look at the income level of the oil companies top executives, the levels of the distributors, and the franchisee's that sell it.
    Most of them make 3-4 times what you and I make per year. Let's look at what the stock holders are getting Do you own stock in the Oil companies??
    My nearest co-work lives 10 miles from me and if our work schedules were to be compatible would have to drive 7 miles out of the way to carry me back and forth. This is why carpooling is becoming less viable nation wide. I live in a rural area no mass transit availble here. I am forced to pay the high price or lose everything
    how about you?? The goverment can help by reducing road use taxes and putting prisonsers to work on the roads in chain gangs again.

    Just my Humble Opinion

    ReplyDelete

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