Straight Talk About Gasolline

 

Straight talk about gasoline.

        What follows will be relatively short and sweet. We continue to hear abysmally ignorant and Right-Wing partisan smack talking, blaming President Biden for high fuel prices. Sadly, facts have little impact on these blissfully and aggressively ignorant bumpkins. It’s as if they think that, like Dorothy Gale in Oz, Joe Biden can just click his heels three times and say, “I wish gas was cheaper.” No amount of factual data seems to reach these rubes who want only to genuflect to Trump and bash anyone who isn’t him. So here goes one more exercise in critical thinking.

        In 1929 a gallon of gasoline cost 21 cents per gallon. In 2022 it has hit $4.17. The horror, the horror! In fact, we in the USA have been spoiled by artificially low gas prices for almost one hundred years. If gasoline costs had simply kept pace with the rest of the cost-of-living commodities (based on the actual consumer price index, or CPI) a gallon of regular gasoline today should cost $6.03 per gallon. Fact, not partisan fiction. The CPI in 1929 (pre-crash) was 9.7. The CPI now is 28.87 times as high at 281.15. That means that gas, if it simply followed all other commodities, should be 28.87 times as costly as in 1929. And this isn’t the highest we’ve ever seen, adjusted for CPI, either. That was in 2008 when it was $4.11 (national average). Adjusted for inflation, that 2008 price was the equivalent of $5.46 per gallon. Did you blame Bush 43 for that? If not, you might want to STFU about the current POTUS as a factor in high fuel prices.

         The most dangerous individuals are those who don’t know what they don’t know. If memory serves (and it does) the gasoline price spike of 2008 was an immediate result of the financial crisis triggered by Wall Street under-regulation and malfeasance. Read The Big Short to get the sad story. Although the Bush administration had been very lax in financial market oversight, no one blamed ole George for gas prices.

        Today, the market has lost about one million barrels of daily petroleum-refining capacity compared to since early 2020, when the U.S. was producing about 19 million barrels of refined petroleum a day. Trumpist  bullshit notwithstanding, the US was then importing, in 2019, half a billion barrels of oil annually from the Middle East. In the first two years of the Trump administration imports were actually closer to three quarters of a billion barrels yearly, and only dipped in 2020 because of the COVID pandemic and much lower US consumption. We as a nation in recent modern times have never been fuel self-sufficient.

         This current spike has zero to do with Keystone XL. Zip. Nada. Keystone XL never pumped a drop of oil. Rather, it has a great deal to do with a Russian madman’s insane megalomania. It also has to do with voluntary production slowdowns during the worst of the Covid pandemic and the fact that the Energy industry is still playing catchup.

         “How fast?” is a valid question, but remember that the profits right now are immense for the Energy giants and it is a simplistic supply and demand equation. For the companies which also own the crude production processes, it’s the same oil, extracted at the same cost, refined at the same cost and then sold in a market economy. Shortage creates demand and, when demand exceeds supply, prices are raised. If you truly want a command economy you’ll have to move to a totalitarian state like, oh I don’t know,….Russia?