With gas prices hitting the $4.00 mark, the great gas debate is going to be touted by all sides of the political spectrum and media power houses. Undoubtedly, the blame is going to be pointed in various places, ineffective solutions will assuredly be offered to gain votes, and the general public will be none the wiser. It's no secret that the average American simply doesn't understand whats occurring and that's why politicians are continually able to hoodwink the public with inept solutions. So lets get educated.
The truth is that we are not in an "all the sudden" energy crises, its been coming for awhile now. The gas prices are of no surprise to those in Washington and the global economy. So what's causing them?....well I'll tell you whats not.
As our presumed Democratic nominee Barack Obama would like you to believe its not gasoline company profits that are spiking the pumps. To listen to Barack Obama talk economics is about as useful as nominating Britney Spears to represent the Southern Baptist Convention- it leaves you asking, "what?" The truth is refiners are making almost the same profit on gas today as they were a few years ago. Some people even believe that there making less of a profit. The reason is because gas prices are not as high relative to crude oil prices.
In fact according to the Energy Information Administration at the U.S. Department of Energy the refining companies only account for 8% of the total cost of gas. Now can someone please explain to Mr. Obama the fallacy of his gas rhetoric. It's simply illogical.
Secondly, the high gas prices are not caused by oil company profits either. It's the other way around. The profits are merely an effect, not a cause. Oil is a commodity, meaning it carries with it an actual value. It by no means is a right or an obligation. It's simply, worth what it's going for. It's determined by the law of supply and demand like any other commodity.
It's not the evil Wall street speculators either, as both presidential candidates have espoused. To speculators the number one rule is "the trend is your friend." Which means wherever the trend in prices on commodity's are going that's where the speculators capitol is going. As long as the U.S. continues to refuse to refine the vast quantity of oil it has in various parts around the nation, the more the trend goes up. However, speculation does exaggerate the problem by inducing the trend into a classic bubble, but the bubble will eventually pop.
So what's causing the high prices? First of all it's Washington's taxes. Taxes were recently slated as being the cause for approximately 12.3% of the price at the pump. Now remember how the gas companies profits only represent 8%? Those are the people who Barack Obama blames for the whole stinking mess, when the actuality is our government makes more of a profit from gas then they do. You won't hear tax mongering liberals like Obama admit that though, in retrospect you would be lucky to hear any republicans admit it either.
Beyond Washington's taxes you have....Washington's mandates. The chemical recipe that makes up our Oil is mandated by the bureaucrats in Washington, not chemical engineers. The effect is high cost producing and low efficiency ingredients that are required in the the oil. Ipso facto- Ethanol. Ethanol is highly expensive, and very corrosive. To even put it in the gas raises the price because it takes special refining equipment to implement the stuff, which effectively also raises the maintenance costs. Ethanol is great in one respect, it buys votes.
However, the main reason for the high prices is none other then our friend "supply and demand." With nations like India and China quickly growing industrially, you have people trading in their bicycles for automobiles. The reverse effect is that the demand spikes. This is so much the case that the demand is actually outstripping supply. Furthermore, the price is representative to the imbalance of the demand worldwide. To that the blame goes on the U.S.
Instead of harvesting our own vast supplies of oil, the U.S. prohibits it. Which in turn causes a strain on everyone worldwide. Environmental extremism is not only costing you big bucks at the pump, but is absolutely nailing the global economy too. What's more frustrating is that the environmental effects of drilling around the U.S. would be so minuscule, the environment might forget to even notice.
So the blame goes on us. We refuse to play a bigger role in the refining, we over tax it, we fill it with expensive and inefficient ingredients and then we blame the guys that get it out of the earth. If Washington was to even rumor about beginning to start a surge in domestic drilling gas prices could fall as much as $0.40 in a week some experts say. So we have two options: meander around like mindless idiots and refuse to tap into the vast quantities of oil that we possess, or get to business and not only increase our economies capitol but take a bang out of the buck at the pumps. You decide.
