2011-03-17 / This Week's Attitude

Soaring Gas Prices Due Mostly To Oil Companies’ Greed

Thiis Week’’ s Attiitude
By Neil S. Friedman

A A As instability continues in the Middle East, especially in Libya, it has led to escalating fuel prices that seem to have risen a penny or more each week for the last few months. Consequently, crabby consumers try to use less gas and save a little money.

The gas price increases couldn’t have come at a worse time for consumers hoping to see a little daylight after two years of a disastrous economy, or, for that matter, the Obama Administration, which had just started to see positive indications that the recovery was finally taking hold. The higher cost of oil has already affected the economy, as the increase has been passed along to consumers due to higher shipping costs — from numerous items shipped to local retail centers to an increase in airline tickets.

To ease the expense of filling up at the gas pump, some will drive less frequently, but for others, especially those who have no choice but to commute to work by car five days a week, that’s not an option. Some may fight skyrocketing gas prices by driving less in the evenings or on weekends, but that would only get in the way of customary leisure and family activities.

This not the first time — nor will it be the last — that American consumers will have to adjust to higher gas prices. After a home, a family’s biggest expense is, by and large, one or two cars. We’re consumers who love the freedom and independence — and sometimes necessity — of driving, so, to accommodate that obsession, we’ll keep paying and griping.

For those with short-term memories, or who’d rather forget the summer of 2008, the average price of gas hit an all-time high of $4.10 a gallon. While motorists greatly dreaded the anticipated $5 level, it never came. But this summer may be another story.

Shortly after I first got my driver’s license my father allowed me to drive the family car for a night out with friends. Naturally, I had to pay for the gas — a mere 50 cents a gallon back then. I’d go to the filling station and ask the attendant for five dollars worth; just enough to cover the evening’s travels. Sometimes my friends chipped in and I’d splurge for ten bucks worth.

As the busy summer driving season approaches, five or ten dollars at today’s prices would barely be a little more than a gallon or two, which, in most cases, won’t get a carload of teenagers more than a ride around the block!

In an ironic twist of fate for consumers, the devastating catastrophe that hit Japan last week resulted in a sharp drop in the price of oil. Since the earthquake and ensuing tsunami that devastated the Asian island nation, the price of crude oil has dropped over three percent because the short-term demand in Japan, the world’s third largest oil consumer, has declined.

Reports indicate that the quantity of oil produced by Libya — particularly the amount that winds up in the U.S. — is a drop in the bucket compared to other Mideast nations. Nevertheless, those who speculate in oil as a commodity have reacted like it’s a disaster, leading to recent rapid price increases.

Several years ago I discovered how speculation often deceptively raises oil prices. So, it would seem, the traders are at it again and, of course, ExxonMobil, Shell and the other companies take the bait and jump at the chance to raise prices, which greatly increases their profits. ExxonMobil’s profit for the last quarter of 2010 was something like $4.5 billion — and that was before oil jumped the $100- a-barrel mark.

But it still amazes me how when oil producers raise the cost of a barrel of oil, the price at the pump jumps a day or two later. In contrast, when the price dips, it could take a month for the reduction to reach local filling stations. Oil companies get huge tax breaks from the government, but those same companies rarely give breaks to consumers.

They’ve got us by the wallets. Ever notice that no matter what brand of gasoline you buy, prices are almost similar at all filling stations. Whatever happened to good ol’ American competition?

As the price at the pumps climbs, consumers will continue to gripe, grumble and complain, but when a vehicle’s gas gauge nears empty, drivers pull in to the nearest gas station and fill the tank as they’ve done since the first Ford came off the assembly line all those years ago.

That’s the way it’s likely to be until someone develops a safe, portable, economical jet pack or some industrious researcher figures out a way to wean us off of a vital energy source from nations that harbor terrorists who threaten our safety.

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