Alphecca

Oil Prices

Gas prices here in the US have been rising for some time now. Some of this is actually due to refineries having to produce more MBTE-free gasoline as more states ban the additive. Some of it is caused by (I suppose) problems in the mid-east. A very cold Winter didn't help. And now, OPEC is flexing their muscle. From the Christian Science Monitor:

Is OPEC trying to establish a new paradigm, with a new floor for cyclical oil prices at $28 or above? It's certainly possible, say experts. A number of trends might be pushing the cartel in that direction.

For one thing, world demand for oil is heating up. China and other East Asian nations in particular are using more as their regional economy booms. The developing countries of the Pacific Rim are expected to double their oil imports by 2025, according to some estimates.

For another, the decline of the dollar relative to the Euro and other major currencies costs OPEC money, because its oil is priced in dollars. Raising prices might help compensate for this slide.

And many OPEC nations need the cash. The days of petrodollar excess are over. Saudi Arabia and many other Middle Eastern oil exporters have been running budget deficits for a decade or more. Their governments are struggling to pay for current entitlement programs, plus projected investments.

At the same time, their populations are rising sharply. As the average age of the populace decreases, demands for education, housing, and new jobs increase. Saudi Arabia has one of the region's most critical population problems: It has grown so fast that oil revenue per capita is now just one-fifth what it was in 1980.

I don't have an actual problem with gas and oil prices rising. I can't, given that I believe in capitalism and that's what's at work here. Cheap oil is not a right. And as is always the case with the laws of supply-and-demand, those who have it get to set the price they want, or force the price up by drying up the supply. This is a business decision. If the world wants mid-east oil, it will have to pony-up for it.

Because of high production costs and taxes, people in most countries already pay quite a bit more for gasoline than Americans do. Maybe this would be a good time for us to reflect on our gas-guzzling ways. If you want to drive a ten-ton vehicle, fine, but don't bitch about the price of fueling it. What the hell, look at what most people are willing to pay for a lousy cup of coffee!

Arrangements can always be made to reduce prices, or give tax credits to farmers and truckers.