Gasoline 9/14/21

Thoughts by Richard Bleil

Have gasoline prices dropped? I’m not sure; it’s been a while (with my electric vehicle and lack of travel) since I’ve been at a pump, but that’s the usual model. Biden asked for an investigation as to why gas prices are still high, which is usually the time that they drop, as does the investigation.

Gas companies like to claim that the price of gas is tied to the price of oil, but it’s not, at least not as strongly as they want you to believe. Earlier this summer, there was such an oil glut that they were having trouble with storage space for it all. The price of oil went negative. They were literally paying oil refineries to take the oil off of their hands. While I didn’t expect gasoline to go free (or better), I did expect a price drop. Instead, the price of oil actually went up. So much for gas prices being tied to oil.

Gas companies are anti-capitalism. The main theory of capitalism is that competition will keep prices low and quality high, and yet, all of the gas companies seem to have the same price for gas within a very small margin. The reality is that they are cooperating with one another to set the price of gasoline to where they want it to be. There has been threats of investigations into this anti-trust practice, but that’s always when the prices, quite fortunately and coincidentally, fall. Boy, they’re so lucky, aren’t they?

I’m old enough to recall the gas wars of the 1970’s. Back then, the price of gasoline was creeping up to (gasp) a whole dollar a gallon. OPEC (a union of the middle eastern oil producing nations) was playing with the price and production of oil, leading to what was at least viewed as a crisis of oil shortage. This was about the time that the push to open wildlife reserves and coastlines in the US for oil exploration. Lines at the gas pumps were sometimes blocks long (I often wondered how much gas people were burning waiting in line to get gas), and in some parts of the country it was so bad that they had to restrict who could buy gasoline, alternating days depending on if your license plate was even or odd.

In the height of the crisis were “gasoline wars”. Gas stations would try to undercut one another on their gas prices for more business (kind of like Black Friday sales; the number of customers is already ridiculously high but they throw sales on top of it to get even more business). Gas stations were often on all four corners of large intersections, and the prices would go down and down and down. Near the neighborhood where I lived, there was one little independent gas station that was constantly beating the mega-name gas stations on the other corners. This is a good thing, right? That is good for the consumer, isn’t it? This is capitalism, yes?

No. The other gas stations, instead of playing the “quality” or “trust” cards, or even dropping their prices to compete, decided to sue the independent gas station. Now, correct me if I’m wrong, but America has an economy based on free market and capitalism, right? Surely, they would decide to support the small independent station that was practicing its free-market rights to set their own price, right?

Wrong. The courts sided with mega oil (big shock) and forced this small independent gas station to raise their prices so the mega oil big boys wouldn’t get their little feelings hurt as they lost business in the one remote tiny corner of the nation.

This might not seem significant. One independent gas station had to raise their prices (and undoubtedly lose profits because of decreased volume), but there are a couple of significant implications here. It raises doubts about ours being a capitalist nation, and instead an oligarchical one where the wealthy even control the prices of independent business owners. But, in my mind, it also hits at who really controls the pocketbooks of the individual people, by which I mean the US citizens.

Yes, this means you’re paying more at the pump, but it also means you’re paying more in the grocery store, more in the home stores, and more in the supply stores. Gasoline has a special place in the economy of this nation, because increased prices hit delivery prices as well. I’ve never seen this delineated elsewhere, but I’m convinced that fuel prices are directly related to, and a major contributor, to inflation. As the wages of the American worker remains stagnant (worse, actually, as wage increases have not kept up with inflation), the price of gasoline has continued to increase, as has the price of goods in the stores. Service prices will then increase as well, as supply prices increase even in places where travel is not part of the business.

The American OPEC needs to be investigated. Anti-trust laws need to be examined to see if the major fuel providers in this country have been guilty of violating them, and the investigation must proceed whether or not prices miraculously drop. It’s time for a real investigation.

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