Search the Web

Google
Showing posts with label gas prices. Show all posts
Showing posts with label gas prices. Show all posts

Wednesday, March 19, 2008

Why are gas prices so high?

Well, once again, the same tired e-mail is circulating telling us how we can supposedly force the gas stations to lower their prices at the pump. Ridiculous!!! Think about it. why would gas prices be any different than any other commodity? If there is plenty of...milk, and you don't like the price at store A, you drive to store B, check the price and, if it is lower, you buy your milk there. Now, if enough people discover that store B can save them money on milk, store A might possibly be forced to either lower their price on milk to compete, or settle for selling less milk, right? Simple theory. Fundamental example of a free market economy. Now, it is unlikely that one person switching stores would have any impact at all, but this person tells all his or her friends where to buy cheap milk, and together, they all spread the word, so that soon, store B is having trouble keeping up with the demand. To slow the demand, and perhaps to take advantage of the increased flow of customers, store B raises their price on milk. Meanwhile, store A realizes that they have lost business, and to some extent, they lower their milk price. Now both stores are selling some milk, and customers are happy. That is what happens when there is plentiful supply and sufficient demand. But let's look for just a minute at the gas situation. We have, on a global scale, finally crossed the line between a supply driven gas price to a demand driven price structure. Why? That's very simple. We now have more demand than supply. With China soon moving from a few million vehicles to hundreds of millions, that demand is not likely to drop, is it? Here is a whole new demand source for a constantly dwindling supply of fossil fuel, and the supply that remains is increasingly more difficult, and expensive, to get to. So, boycott whatever company you want to for however long you like, the supply won't grow a bit, and the demand will still have grown tremendously. You may SHIFT the demand from one company to another, but you won't shrink that demand. So it is well past time to quit sending this silly e-mail around the world, and focus instead on how to shift a significant part of the demand to some other fuel source, like hydrogen, solar power, etc. We have now produced something over a trillion barrels of oil so far, and some "experts" believe that there is still about 2 trillion more barrels in the earth...somewhere. Much of it might be under very deep water, and we're exploiting that already. Much of it is in oil shale, and technology is making that more practical to get too. But if you believe anything about the oil crisis, believe this. IT WILL NOT BE ENOUGH.

Now, that is just my opinion, based on all that I've read on the subject, and on what I recall of a very well researched lecture I saw on TV several months ago in the wee hours. I'd be happy to hear your opinion, or to try to field your questions. I'm no expert, so your input can only help.