Friday, July 25, 2008

The Oil Post


On June 18 President Bush lifted the Executive ban on offshore drilling for oil and called on Congress to lift their ban. You may have noticed that since then, even though we are still in the peak summer driving season, that the price of a barrel of oil has dropped over 10% and the price of gas has fallen about 7%. Funny how the price of gas shoots right up when oil shoots up but then lazily drifts down in price when oil drops.

Incidentally this ban was imposed by his father. Remember him? Mr. Wishy-Washy? If the lesser of two weevils is elected we'll have another one! Just a cheery aside.

The liberal eco-freaks say we can't drill our way out of this energy conundrum but we certainly can't conserve our way out of it. This lifting -o-the ban is a good first step, causing the speculators to spaz out and sell which causes the price to drop. Speculators? Yeah, they're the traders that drive up the cost of oil, speculating that in X months or years there will be Y demand for oil and thus the price should be Z. No reality or market demand behind this, just edumacated guesswork. Until recently the only ones who could participate in the oil speculation market were those with vested interests: oil companies, airlines, small rocks and furry woodland creatures. There is an obvious interest in being able to keep prices low and reasonable so that they can sell their products at a lower and more reasonable price than their competitors. However in the past few years it's opened up and anyone and their brother's cactus can participate. If you have a 401k or mutual funds you are probably participating in this speculation... you bad boy, you.

This isn't the only reason oil has gone up. The weak U.S. dollar has less buying power when it comes time to buy those barrels, but that's another post.

Oh, and I'd like to state that the "windfall profits" of the big oil companies (the ones who arranged to buy the oil, have it shipped, refined it, arrange to have the gas delivered, all that mundane stuff called "work") amounts to about ten cents per gallon. Taxes on gas are around 18% of the price, currently 73 cents per gallon. What did the government due to earn such a hearty "windfall profit"? They allowed the companies to exist. And this ten cents per gallon profit is most certainly taxed again when it gets back to the company and when it is used to pay employees who pay sales tax out of the money that is left after they pay their income taxes out of that money that was generated ten cents at a time. Consider this - without taxes your gas would currently cost $3.27.

That's enough for now. Wake up! Class is over.

4 comments:

Big Doofus said...

Obviously your blog's marketing department has also made some budgets cuts with regards to images.

I'm going to get one of those Fred Flintstone cars for my commute.

But seriously, nice rant and well written. I love the fact that someone besides me or Scott may read this and wonder why you included "furry woodland creatures" and my "brother's cactus." Priceless.

Uvulapie said...

Are you saying there's a reason why I'm shunned by nearly everyone at my church and never invited to sit at the Captains table on cruises?

Big Doofus said...

Well, yes, but for an entirely different reason. Two words:

Shower. Soap.

Uvulapie said...

I've donated plenty of soap to the food bank and have never been arksed to attind any showers. Maybe it's my snazzy sense of style!