GAS PRICES ARE UP: A recipe for Cooking the American Consumer in Boiling Oil.
By David Blume
As I have documented in my book Alcohol Can Be A Gas! and reported in recent articles and interviews, it is a fact that oil prices always drop steeply before an election and rapidly ratchet back up following inaugurations with no political pushback. There are no repercussions because most elected officials are too grateful for the funding they've been receiving over the course of the campaign and because Big Oil is cunning enough to drop its prices heading into election periods. They do this to drop below the current issues horizon line the media decides to focus public attention on during elections, (such as the debate over the types of ties worn, candidate high school and college party affiliations as well as practices; you know the real relevant stuff campaigns give way to as they progress).
The best example of price manipulation by Big Oil in current times was the 2006 midterm election in which the price of oil started inexorably rising the very day after the election. I have this documented and can provide charts that track oil and gas prices through this period, but that really isn't the focus of this piece.
In this article I am looking at the fact that, since President Obama and his team have taken office, and more specifically since February 12, 2009, the price of oil has risen about 1% per day (a whopping 45% increase) and yet no one is alarmed or talking about the new cost of living increase the petroleum industry has injected into the veins of our struggling economy.
Regardless of the strategy, the results are the same for Big Oil, it is making bank, though admittedly the tactics used to get there now look more like a recipe from a French cookbook rather than a page from Rockefeller's rules of capitalism.
Coming into the recent election if you were in the oil business you had to notice that every new speech then candidate Obama gave, touched on eliminating America's dependence on fossil fuels (yikes, that is your bread and butter). Given that most Presidents have a honeymoon period after the election in which they can pass almost anything they propose, the last thing you want to do if you are Big Oil is put yourself in the gunsights of White House sharpshooters drafting renewable energy legislation. Thus the prudent course of action (as unsavory as it may be to the many stockholders that have become addicted to dividends based on $140 a barrel oil price) is to drop prices back to a market relief level.
Even though that temporary price drop means making some millions less than you'd like to record, if you were the present Oilygarchy, you would have to take comfort in knowing that while there is a tumultuous hue and cry regarding failing banks, industries and individuals, you are not among those. In fact, with a little patience you can regain the momentary set back by gradually raising the price of oil essentially deep-frying the unaware consumers as they sit shell shocked by the present economic condition.
It appears to me that the Oilygarchy feels they are just about out of the woods and into the kitchen now since the price of oil has begun to heat steadily. The U.S. is wallowing in the worst depression since the 1930's, yet miraculously (and allegedly) through the recent record setting cold winter, we didn't use as much oil as we needed last summer. The lack of demand supposedly explains last Fall's price reduction, but with no transportation index data to support a demand increase theory, the demand must be up, e.g. (so is the price of crude).
On February 12, 2009 the daily price of oil was at $33.98 a barrel. As of today, Tuesday April 7, 2009 the price of crude is $49.08 or a 45% increase in just 53 days. When you put it in black and white like this it's a bit shocking.
It is as if the Oilygarchy chefs have summoned up the old "cooked frog" recipe and while the American consumer has been mesmerized with news about the myriad other economic failures and of course the war, we are being boiled alive. If this had happened instantly right after the election we American consumers would be outraged. We would have jumped out of the pot and started screaming to our elected leaders and Representatives about monopolies and price fixing. But, as I pointed out earlier, the Oilygarchy chef's now know this and like the recipe for cooking the hapless amphibian they have gradually raised the price of oil slowly and steadily. Instead of facing a public that is recoiling in anger from the price heat, the media and we consumers have been deliriously bobbing about it the warming oil over the last month and a half, preoccupied with bailouts, job losses and whether the President's wife is wearing too many sleeveless dresses.
The rate of the current oil price increase has been about 1.2%. That's the price increase PER DAY not per year. This steep climb however has not been perceived clearly since the price of gasoline has been inexplicably disconnected from the price of oil, making it hard for the public to track this steady increase. Gasoline prices have vacillated up and down a few cents at a time so in an average week you can't really get a sense of what is going on, but when you stand back you can see we are back on the usual post election track. So John Q. Frog doesn't quite notice the change in temperature and thinks everything is okay when it comes to the price of fuel.
There is another important fact to note here and that is: world oil production has been flat for the last 3 years with no new refineries coming on line and with all the current refineries running at nearly 98% capacity. This means we have virtually no reserve in the oil system. Unfortunately the same can't be said for global population growth and its resultant insatiable demand for energy that continues to increase every day (despite what oil companies tell us). In fact, in October 2008, during the steepest part of the economic meltdown, US oil use did NOT go down, it went up by 10,000 barrels per day. So the relief the public has experienced with artificially low oil prices cannot go on forever and it looks like prices are now off to the races again.
If the current per day the increase in the price of oil continues, by early June we will hit the OPEC target price of over $80 a barrel. About that time the supertankers rented by Morgan Stanley, Citicorp, et all, full of taxpayer bailout funded $33/barrel oil, will sail into our Gulf ports earning the profiteers billions of dollars.
In the meantime, the Oilygarchy Chef's hope all of us croakers have a nice swim in MegaOilron's hot tub and buy a new SUV while we're are at it. If high prices, funding wars and polluting the planet don't sound that attractive and you are ready to jump out of the pot you might consider switching your vehicle over to flex fuel, making it able to run on alcohol fuel or gasoline.
Alcohol fuel's projected retail price increase over the next year is less than 10 cents a gallon. That means it could cost as little as $1.20 a gallon after tax credits in some states like Oregon and Illinois. The federal tax credit for installing an alcohol station just went up from 30% to 50% with the new stimulus package and when the new Energy Bill is ready hopefully there will be other deep incentives to wean America off of volatile and monopoly controlled climate destroying oil.
We can make a change and we can get our butts out of the stewpot, but we have to be aware of what is going on and what we can do. Join the forums on www.alcoholcanbeagas.com or join your local Farm to Fuel organization and let's take back our future now. The Alcohol Fuel revival is ON!
About David Blume
David Blume is the Executive Director of the International Institute for Ecological Agriculture, (I.I.E.A.). He is a globally renowned Permaculture and Alcohol Fuel Expert and is author of the Amazon best selling book Alcohol Can Be A Gas (www.alcoholcanbeagas.com). Mr. Blume is the leading advocate for Alcohol Fuel and the role of the American Farmer in developing a truly sustainable energy and food policy for the post-oil era.
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