Saturday, April 5, 2008

Defying the system of economics

I drove past the gas station the other day and I couldn't help but notice that the price of fuel went up 11 cents OVERNIGHT, bringing the overall cost to $3.56 a gallon. That of course, is just at Chevron, the price is $3.65. Those of us in the San Francisco Bay Area have the honor of having some of the highest prices in the US.

I've reached the conclusion that the "law" of supply and demand is no longer relevant. For one thing, fuel supplies have been up, oil production is strong, and the demand for gasoline has been going down...yet the prices continue to rise, completely defying the system of economics. The question is, who's to blame? Some blame the oil companies, others blame the government, whether it be the Republican Administration OR the Democratic Congress (both of whom have done very little). To be honest, I don't really care who's responsible, I just want someone to fix it.

The real issue:

I couldn't help but laugh when I read this. Just recently, another report was released and offered further proof that the hysteria that is global warming is nothing but a crock, just as I have said on this blog many times. It always seems that these global warming predictors are finding ways to contradict themselves, including the back and forth predictions on hurricanes. Instead of running all these adds proclaiming that we need to "solve" global warming, we should be working to find alternative and more efficient energy...without having to make up some fictitious problem starring Al Gore and a bunch of other alarmists. There is no doubt we have an energy problem, but we should be trying to solve it without having another pretense. Talk about the need to cut back on fossil fuel consumption and the need for a new energy source is everywhere, but it seems that its always followed by the warnings and fear tactics about global warming and how it needs to be stopped. In the end, the threat of $4 per gallon gasoline will probably frighten people a lot more than Al Gore getting up on a lift, pointing to a chart, and preaching about how the destruction of humanity is imminent (unless of course, we listen to him).


WriTerGuy said...

Your economic assumptions are incorrect: fuel supplies are not up, oil production is not strong, and demand for petroleum products is not going down - if you look past the US and see the global picture. There are gas lines in China, as an example. And the Tata Nano. Also, there are other factors in play, most notably that fuel futures are tied to the strength or weakness of the dollar; if the dollar weakens, investors get out of dollars and get into petroleum energy, boosting the oil price. So if you want someone to "fix" this, you can start by finding someone to fix the sagging dollar.

On another subject, doesn't the "global warming is a crock" ref you give actually say exactly the opposite? Not that I disagree with your conclusion: energy efficiency is the answer, or at least the obvious start.

C.H. said...

First off, the article I linked to talks about the prediction that global temperatures will be cooling this year. Obviously, that is what the thermometers are telling us. The global warming crowd will try and spin this into a "la nina" event (which it could be) but this only proves that human beings do not know as much about how the earth's climate works, as I have said on this blog many, many times. At the end, of '06, there were some predictions suggesting that '07 would be the warmest year on record, and obviously, it was not. My point was that the predictions are frequently changing, and often contradicting what we were hearing about at first.

As for fuel supply, there is no oil shortage. OPEC recently decided they would not increase output because they would be trying to meet a demand that does not exist. China is a country of a billion and a half people that is expanding faster than it can develop, so yes, they will have fuel shortages as thousands of cars are added to the road every day. World demand though (including the US) seems to be going down, and the actions being taken by oil producing nations seem to back that up. And yes, gas inventories may be dipping, but they are still above average here in the US.

I completely agree with you that someone needs to fix the falling dollar (although I'm not sure how), because yes, that is definitely a factor in rising oil prices, as you pointed out. However, a sinking dollar should not be pushing prices up to $112 per barrel. In the end, I'd say that speculators and the media are also playing a role in the economic situation.

But think about this...oil hit almost $112 a few weeks ago, and gas prices here hit $3.47. Oil dips $10 dollars, a report comes out that people are driving less, then prices go up even higher, the highest yet in fact.

C.H. said...

Here's another interesting article about the supply of oil and the fuel inventories. It says that oil is up, but gas is down slightly (although in the upper average range).

Andy said...

The secretary general in the global warming (or apparently, cooling) article is one of those climate crisis proponents that ultimatately proves the hysteria wrong himself, so those of us who disagree with the notion that humans are not entirely responsible for global warming can simply sit back and watch.

You mentioned hurricanes. After Katrina, we were hearing that Global warming was heating up the oceans and would produce more hurricanes, then we hear that climate change is actually preventing hurricanes from forming. The same goes with global temps. If its getting hotter, the alarmists blame climate change, and if it gets cooler, they also blame climate change. Its as if they are trying to have it both ways.

Personally, I have no doubt that the earth has gotten warmer. But is there really anything we can do about and, it seems there are a lot more questions than answers about how the earth's climate fluctuates.

Average American said...

Global warming has been around since before man first invented fire. Earth's oceans were 500 feet lower than they are right now about 8000 years ago. That pretty much wipes out the idea that we are the biggest cause of it. Besides, the end of the world is coming in 4 more years, right?!

C.H. said...

Great point Average American, I couldn't agree with you more. If you read some of my older posts, you'll see that I've pretty much said the same thing since I started blogging.

There are much, much more serious things happening in the world today that require attention from the int'l community (look at the post above this one on Sri Lanka)than the climate change hysteria.

BTW, its good to see that you're back, AA.