Are We Willing To Pay The Price?

Posted: 13/03/2008 in Uncategorized
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A couple of people mentioned that Summer time is right around the corner and the price of gas should go down as the demand for heating fuel will be gone. If only it were that simple. I mentioned last fall that hard time were coming, and they are going to be here to stay. Many people have an inaccurate vision of how the world works, thanks in part to the News Bite team on your local TV and radio stations.

Prices are going to remain high, and in fact will continue to increase, in my opinion. Hopefully, I’ll be proven wrong, but most of my predictions have come pretty close to the mark. Like I’ve said many times before, there is more to the picture than meets the eye. Usually supply and demand regulates the market, but that is no longer the case. Studies show that output is matching, and maybe slightly ahead of demand, so that should not escalate prices.

What is escalating prices are a couple of actions being taken by different nations. For one, Iran recently opened a new trading board for the trading of Mideastern oil and energy futures. Where the New York and Chicago used to be the dominant players, new players, with lots of cash, and nothing to loose are now in the game. A second problem that is keeping prices high is the fact that developing nations, especially China, are in desperate need of oil and its derivatives to meet their growing energy needs. And they have no problem paying a higher price for the products. Why? Because they know they will get the oil. The US industrial sector is in decline, and our demand for oil for that sector is rapidly declining.

In our haste to embrace the fallacy of global warming, we are wrongly pushing alternative fuels and carbon output reduction as a way to solve this suggested, but unproven disaster confronting us. The big price gouger we have to deal with is gasoline and diesel fuel. Transportation is our biggest consumptive sector for oil today, not industry. We can bring the prices down, but it will require significant sacrifice to do so.

One of the problems we are dealing with here is that we are actually fighting a war for dominance in the worlds markets. The value of the dollar is slipping against almost every other currency on the planet, so energy costs us more in the world market. People seem to feel that victory is won by those who fight the hardest, but this is not so. Victory is won by those who are willing to pay the most for it. Are we willing to pay that price? If not, what will it take to convince us that we are losing the battle?


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