There’s been a lot of talk recently about $2.50 a gallon gasoline and that it seems reasonable for us to expect this as Americans. There has also been a lot of finger-pointing during the lead up to elections at those who are not be doing enough to control such costs. However, the fact is we continue to have the lowest prices for gasoline in the “free-world”.
In the United States, the government really has little to do with the price of gasoline. Drilling for more off shore oil, running more pipelines, or drilling in the Arctic will do little more than increase the volume of gasoline American petroleum producers have available to sell to Central America, the Caribbean, Brazil and China.
Consider this – we currently have an 8 percent surplus of petroleum during what has been a 10 year dip in demand. So why hasn’t this lowered the price of gasoline? Because we live in a free-market economy where the goal of every corporation is to maximize the return on investment of shareholders. So what they are doing is selling off surpluses in order to keep domestic prices up, increasing profitability and a return on investment. Legislate the opening of new domestic oil supplies and what do you think they will do? Lower our gas prices? No, they’ll sell off the new surplus and make even more money.
Face it, the petroleum corporations don’t pity the poor American citizens who pay at the pump. Consider the following graph from 2005 (selected because it’s the most extensive I could find). That year our average price per gallon was $2.19 in the United States. So if you more or less double the prices below, you’ll see we pay less than most countries around the world. The only places that pay less are countries like Saudi Arabia and Venezuela, and those prices have nothing to do with abundant access to oil – it’s because their governments own and operate their petroleum industry. They are not “free-markets”. Rather they are led by what we refer to as “tyrannical” dictators. In other countries, prices are set by “socialist” federal governments, as was the case when I lived in Spain during the early 90s.
|Nation||City||Price in USD Regular/Gallon|
|Puerto Rico||San Juan||$1.74|
Notice in the graph that the Netherlands pays more than anyone else, yet they are the home of “Royal Dutch” Shell. Certainly they could get a break on the price, couldn’t they? Now before you begin cursing the greedy corporations and their shareholders, take a look at your own pension investments, 401ks and mutual funds portfolios. What are you heavily invested in and why do you think your returns are bouncing back?
So what is the solution? Well, we could all immigrate to Venezuela; we could demand our government take over the petroleum industry, or we could throw in our lot with the petroleum corporations by buying shares and getting our cut of the insane profits.
However, one other option would be to continue finding ways to use less while we invest in and develop new resources for energy that do not depend on fossil fuels.