Oh the things $35 could buy me.
I think that every time I stick that small metal gas pump into my car and watch as the digital numbers climb.
I hate wasting money; in fact I’m not sure I’ve met anyone who is fancy with the idea of wasting money, there’s nothing more frustrating.
Now, I understand that gasoline is a necessity in my life; I suppose I could take public transportation, but have you been on a public bus lately? I fear contracting herpes if one drives by my car.
Maybe I sound like a privileged brat, but I like driving my car, I enjoy controlling my travel, I enjoy listening to the music I want, and driving the speed I desire.
So it’s frustrating that gas has become a wasteful expense, and the worst part is it shouldn’t be.
Do you know how gas prices are determined? It’s actually kind of complicated, but I’ll attempt to make it as easy as possible. There’s a bunch of dudes that run a bunch of countries that make up the Organization of Petroleum Exporting Countries, or OPEC. These dudes have a meeting and they examine the demand for their product (oil), and how much they’d like to make (really great job huh?). Then they determine how much they should produce in order to get the amount per oil they want.
Yup, it’s really that simple. Obviously there’s more to it, but as of late it appears that’s the way these guys operate. They feel like oil should be $100 a barrel, so what the hell? Let’s make it $100. Why not? I will clarify one thing, they don’t simply snap their fingers and raise the price, they achieve it by reducing or increasing production, which then drives the market to increase or decrease the price (it’s the basic principle of supply and demand).
OPEC wields a lot of power, after all they are responsible for 40% of the world’s oil production, and without them we wouldn’t be driving our cars around, at least not for $3 a gallon. So we don’t want to make OPEC angry, but at the same time we’re not going to get pushed around by them.
Oil prices are as much a political issue as they are an economic issue (you’ll find that those two are normally all tangled up together). When gas prices spiked in 2007 and 2008 many people blamed Bush, I’m sure you’re all shocked. But in reality there’s not a lot the president can do about gas prices, he could meet with OPEC and attempt to get them to amp up production, but these dudes are set in their ways, and they’ll control their output to get the desired effected on the input into their wallet.
Gasoline prices are going to become a massive issue in the coming year, there’s no sign that OPEC wants oil prices lower than $80 a barrel, and the economy doesn’t appear to be getting better at the lightning quick pace we were promised by president Obama. It’s only a matter of time before people begin blaming gas prices and food prices for the struggling economic recovery.
But I will stress one thing, use common sense. There’s not too much Obama can do about the rising gas prices. He’ll talk about investing in clean energy and renewable resources, and while that’s not a bad thing, we have to understand that costs money, keep that in mind for just a few sentences.
Another point the left will likely make is that “windfall” profits from the oil companies must be recouped and their ridiculous cash grabs much be brought to an end.
That’s all fine and dandy except for a.) they don’t have the legal authority to just claim a company is making too much money and then seize their assets and b.) that whole renewable and clean energy thing is going to cost money, who do you suppose is going to pay for it?
I hate to point out the glaringly obvious, but money doesn’t grow on trees. If we all want renewable and clean energy, we better be willing to pay for it, and that payment starts with good ole’ research and development. Because you can’t purchase clean energy if it doesn’t exist, again pointing out the glaringly obvious.
The nice thing about oil companies is they make a lot of money, and they enjoy making a lot of money, and they would like to continue making a lot of money because as previously mentioned they enjoy it. They’re not dumb, they realize that renewables are the future and the money will be there with time, it only makes sense that they begin to adapt to that growing trend and work to produce and invest in renewable energy.
That’s probably why Exxon spent more money on research and development in 2009 than any previous year. That’s also probably why Chevron is spending over half a billion dollars on research.
Valero sees it too; they’ve acquired multiple ethanol plants in the Midwest, and are producing over one billion gallons per year of capacity out of those plants.
BP is there as well, not only have they invested heavily in wind energy, they’ve invested over $4 billion in alternative energy since 2005, that includes a massive investment in 2009 of $55 million to produce bioethanol and biodiesel.
There’s a reason the right always questions the left’s commitment to capitalism, because they don’t seem to understand it. I’ve heard so many people claim that all the oil company’s care about is money, and that’s a problem.
That’s not a problem, it’s a good thing. Allow me to explain.
As we’ve previously established oil companies love money. Who provides them with money? The consumer, so it stands to reason that they should do everything in their power to keep the consumer happy. Now, because they love money, instead of sitting on it or writing fat checks to executives when they make billions, they invest their money in technologies and renewable energy, because they realize that’s where the money will be in the future.
It’s quite simple. Now let’s use some common sense. If we tax the companies that are investing the money in research and development, they’re likely to cut down on their allocations to R&D, which would be devastating to the renewable energy market.
We might all be frustrated by higher gas prices, and as much as I’d like Obama to sweet talk the 13 OPEC countries and attempt to raise production, it’s unlikely. But remember to not fall for the liberals’ oil company scapegoat. The oil companies are the ones investing in the future, without them we wouldn’t have made it as far in renewables as we have today.