Sunday, March 25, 2012

Gas Prices: Are They Really Relative To The Barrel?

The recent past has seen gas prices fluctuate greatly, sending the United States and the rest of the world going bananas over the amount they are paying at the pump.  I don't see much of a dent in the pockets of the oil tycoons who still continue to make huge profits while the public is losing more and more at the tank.  I remember when I was a child of about 10 years old or so, $20 used to get you a full tank of gas, so what has changed about the composition of crude oil that it has caused the prices to inflate so rapidly.  Why is it that Israel can have a nuclear program in such a hostile area with nuclear weapons, while Iran cannot have a nuclear program to create energy?  In my opinion, if you take out a country's only export commodity, then it will only provoke the country to want to use force.  Look at the Civil War; the north was nervous about the South's relationship with the English over the production and distribution of cotton to England's textile mills.  How far can a world go to strangle a countries way of life, unless of course Iran does not want to play the part.  In that case, there are only so many things you can say or do to help bring peace and understanding to an area, so in the end, Iran controls its own future.  So where am I going with this:

Many do not know that oil makes up a significant amount of what makes up this world from plastic, your asphalt roads, petroleum jelly, and lip balms etc...  During the refining process, each is made from refining the crude to a certain point to be able to make products like these.  As I go to the grocery store or any consumer marketplace, I do not understand why the only price that has been affected by the rise of the barrel which is about $106, is the gas at the pumps.  The product that causes the most bodily harm is the most expensive; I guess that makes more sense?  At the same, the price of my water bottle has stayed the same; my petroleum jelly has not changed a cent, so how does that make sense?  If the price of crude oil goes up, then I’d assume that every product that is made of oil would go up as well.  Watch, after this blog is published, the cost of the all the products just mentioned will go up!

How far will the problems with oil go before something is done about it?  If capitalism is successful in a free and competitive market, than why is oil the only means used to create combustion to fuel our vehicles and other means of transportation.  If it’s so hard to transfer our vehicles to other means because of monetary reasons than I can say this:  You bailed out the banks who ruined their own system because of greed and horrible government laws, you gave money to GM who'd rather pay out dividends to their employees rather than pay back their loans (sorry you have your job be grateful not greedy), and the list goes on.  If you want Americans spending money in other places besides to big business for their bills and gas, then give us a means of travel that will allow the people to be able to spend money elsewhere!


  1. The price of crude is based around speculative trading strategies. Investment banks can buy futures contracts at certain prices increasing the demand and ultimately the price. They are allowed to practice in the cost of manipulating oil prices even though they would never take possession of said oil at the maturity of the contract, which i think is possibly the biggest cause of our gas prices rising. To answer the question of why you do not see reflective price increases in water bottles, petroleum jelly etc, is because it takes longer for the price of oil to affect them since they most likely have large quantities stored up already. Also the good itself is thought to be highly elastic (an economic turn that means that a slight change in price leads to a sharp change in the quantity demanded or supplied. Usually these kinds of products are readily available in the market and a person may not necessarily need them in his or her daily life)So as their costs go up it will just eat into their profit margins because they can't adjust prices as quickly as gas because people would be less inclined to buy them.

  2. I feel as though its showing the same effect on gasoline because people are driving less too, but since its traded on a global market, the price is driven up because foreign countries need refined oil. I'm not sure if i like oil to be refined in the United States without seeing better prices because of the health and enviromental issues that arise in Texas and the surrounding areas. I'm not saying get rid of oil, but stressing a capitalist market where competition drives the price up or down not a future, so allow for other types of players in the market have a fair shot at means of combustion on a global scale.