The High Price of Gas and the Evil Oil Companies
When people talk to me about their financial problems, there is one thing they always mention to me that they feel is a great stumbling block that has been place in front of them, keeping them from getting down the path to success.
"The price of gas is killing me," they say. "We got to do something about the evil oil companies ripping off the hard working people." I've heard it so many times I've got it memorized perfectly.
Let's take a close look and see just how badly we're all getting burnt by the high price of gasoline.
The price of gas is way too high!
The price of gas is high and that has an effect on everything. High gasoline prices cause high shipping prices and this price is passed on to the consumer via higher prices of goods. It's easy to see if the price of gasoline goes up too much it could cause a substantial economic downturn.
However, right now the inflation rate is a very healthy 2.2%. If high gasoline prices were causing problems, inflation would be high. In other words, if energy prices were at destructive levels, they would be causing a recession. There is no economic downturn right now. Interest rates and the unemployment rate are good. The GDP is strong and steady.
Yeah, but I wish prices were like they were in the 50's!
When adjusted for inflation, the price of gas is about the same, or a little lower than it was in 1980. In the 50's and 60's, there were periods of time when the price of gas, in inflation adjusted terms, was higher than it is today.
So, it would probably be inaccurate if you were blaming gas prices for your financial woes, unless you have some very unusual circumstances. Probably $4.00 per gallon gas, for a prolonged period of time, would harm our economy, but the $3.60 that we have experienced for a couple of short bursts, and the $3.00 plus or minus we are paying now, seem to have no negative effect.
Aside from the inflation adjustment analysis, economists believe that the tax cuts that were passed in George W. Bush's first term have negated the effect of rising energy prices. Economists also agree that raising the income taxes back to where they were before they were cut would slow down our economic growth, and then if the price of gas went up again, it really could cause a recession.
In conclusion, I'd have to say we probably could do better, but as of yet, the high price of gas hasn't slowed down our economy to any measurable degree.
The big oil companies only care about profits!
The worst thing the high price of energy has done to this point is cause strong hostility toward our nations' oil companies. This is very much a problem! American oil companies are not evil. Their profit margins are actually smaller than many other businesses' profit margins.
Across the sea, in any of the several countries who would love to see America fall, they love it when we hate our own companies. They would love to see us repulsed by all of our industry. After all, we have set the standard in the world for capitalistic excellence. That is why they hate us. They are jealous of us. We have everything so they want to see us become poor, miserable, hateful, vengeful, useless slobs just like they are. It truly encourages them when we hate our own leading companies.
Could you imagine the shape we would be in without our oil companies. Which industry would survive without them? Blacksmithing? The Great Depression wouldn't come close to an example of the way we would be suffering without our nations leading companies being able to survive. The thought of this would make a terrorist's blow himself up with a smile on his face!
Whatever? Still, the price of gasoline is way too high!
Keep this in mind. Right now New York Unleaded Gasoline is trading for $2.03 a gallon on the New York Mercantile Exchange. You can buy it for that. Of course, you would have to take delivery on 42,000 gallons, but that is what the price is, $2.03. The rest of the price of a gallon of gas that you pay at the pump includes, $.08 a gallon to the gas station and taxes. The gas itself is $2.03.
I just came from the grocery store. I bought, among other things, some bottled water. The container it came in looks like it is a gallon container, but actually, the container size is 3 quarts, 5.4 ounces. This container of water cost me, before taxes, $1.29. By doing a little calculating I found that $1.29 for 3 quarts 5.4 ounces is equal to $1.63 for a gallon.
Now, that's water! Water is cheaper than gas. Now go find something else.