RSS
$6 per gallon?
The old saying is: “Yeah, but what does that have to do with the price of bananas?”
Well, when it comes to oil, a lot. OPEC’s president says oil could hit $200 per barrel. The problem, of course, is that the price of everything which is shipped (which is pretty much everything other than online services) is affected by the price of oil. I recently reported on a trucker revolt in downtown Indy. Those revolts have been spreading throughout the country. When trucking companies are hit with high oil prices, does anyone think they absorb the cost? Of course, they don’t. That cost gets priced into the goods we buy.
Last year, we hit $100 per barrel for oil and, at that time, the price of unleaded gasoline was nearly $3 per gallon. When (note I did not say if) the price of oil hits $200 per barrel, gas prices will likely be $6 per gallon. I drive a fuel efficient import (made in Marysville, Ohio before anyone gets all kooky and talking about how they bought a Ford, which was built in either Canada or Mexico, tells how I should support American cars) and the other day my 12 gallon tank cost me over $40 to fill up, with $50 bills not far off. Those sorts of bills used to be reserved for the SUV driving populace. Forty dollars used to be my entire budget for gasoline for an entire month. Consider this: semi trucks typically have 300 (some have 325) gallon tanks. At $4.16 for a gallon of diesel, which is a decent price right now, it would cost the average trucker nearly $1,250.00 to fill ‘er up.
I used to work at the fuel desk at a truck stop (third shift - drank tons of coffee), and it was a gigantic sale when someone spent $300 to fuel their truck. Now that would get them about two truck stops down the road. I understand their angst and realize that if nothing is done, we’ll soon feel their pain.
Diverting grain to be used to create fuel is not the answer. First, it is extremely expensive to accomplish - more than to drill for oil, or buy from the Middle East. And, second, it drives up the cost of almost every food item, which of course impacts poor people, who spend more as a percentage of their income on food, disproportionately.
Surprisingly, Barack Obama, who seems to be clueless whenever he begins to talk about actual policies as opposed to grand ideas like change, is somehow opposed to relieving the consumer from the burden of government taxes on fuel. Hillary, at least, gets it. McCain has been out front on this issue. But even McCain’s plan is a stopgap measure. First, a hiatus on the gas tax would eventually impact our roads, which the tragedy in Minneapolis teaches us are in a deplorable state. But, second, that sort of relief, while welcome, is temporary. The real problem is that demand has far outstripped supply and OPEC refuses to pump more oil.
