Have you noticed, a significant increase, in the prices, at the fuel pump, in the past few months? While prices, are still. well below their historic highs, they are also far above, the levels, in more recent times! In the past, prices spiked, when demand grew, at a far greater pace, than supply. But, since, that is, somewhat, easily manipulated, by oil suppliers, such as OPEC, and other organizations and associations, the very concept, of, supply and demand, becomes, rather challenging, to fully understand! It often seems, prices, at the pump, are affected, predominantly, by the big, petroleum companies, and nations, which supply it. We often blame, foreign nations, although, in recent days, the United States has become the single, largest supplier of this resource. In the past fifty years, the price, at the tank, has increased, ten – fold, far more than most other consumer products, and the overall, inflation rate! With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, some of the factors, which might affect, this behavior, etc.
1. Pricing behavior: Why do you believe, when crude oil pricing, increases, the pump – price, immediately, goes up, also, but, when prices, for crude, go down, there is almost always, a lag – time, before consumers benefit? Although, the reality is, when the suppliers costs increase (cost of crude), it takes approximately 90 days, before distributors feel that rise, but, we have consistently, found out, the prices rise, almost immediately! Is this, what we have now accepted, as normal, acceptable, corporate behavior, or, is this corporate greed, at its greatest, example, of greed? Some believe, fuel prices, are manipulated, and, since, demand, is not at, its historic, highest, an objective observer, might agree!
2. U.S. Policies: While Einstein, in referring to forces of energy, etc, proclaimed, Every action has an equal, and opposite reaction, this concept, is, generally, equally true, of the potential ramifications, of many of this nation’s policies, etc. Since President Trump, announced, and demanded, greater enforcement of specific sanctions, versus Iran, the overall price, of petroleum fuel, has risen considerably. Some of this is reality, while another possibility is perceptions, but, when this is combined with, OPEC’s curbs, etc, we witness, the actual economic ramifications.
3. Why do prices rise, much faster, than they drop? I’m sure you’ve noticed, and observed, whenever there is an announced, that oil futures, are rising, pump prices rise, nearly immediately, while, when there is a drop in the futures, the corresponding decrease, occurs, far less quickly! This is, probably, due, to, a combination of factors, including, greed, competition (or lack of same), supply and demand, and, merely, because, they can!
Since fossil fuels, have a finite live, and level/ number, it would be wise, to discover, use, and take advantage of potential alternatives, which are sustainable, etc! In addition, increasing the production, and usage of cars, less dependent on fossil fuels, and more, on, electric/ hybrid, would also make sense. Other nations have created, limits, for the future, on, gas – powered automobiles, while, President Trump, has removed us, from the Paris Accords, denied climate change, etc. Wake up, America, and demand, your leaders, begin to behave, more responsibly, and in a more relevant, sustainable manner!