Gasoline is Expensive - Deal with It
White House announced it was getting into the commodities game in an
effort to protect consumers from some of the geopolitical factors
spilling over into the retail gasoline market.
OPEC and the IEA both said
in their monthly reports that market perceptions were behind higher
energy prices, not physical shortages.
With most U.S. consumers still
economically gun shy, gasoline consumption is down amid high retail
prices. But on the business side, protection against potential oil
shocks in the long-term could help push a reinvigorated U.S. economy
over the recessionary hump.
Apart from the murky waters of economic
nuance, however, President Obama said that, no matter what, American
commuters need gasoline. Speculation aside, maybe that's the problem.
gasoline prices make for angry constituents. That means politicians,
especially politicians fighting to keep their paychecks, start pointing
their legislative guns at Wall Street almost as soon as the gavel
Market indices don't particularly care one way or the other if
consumers and lawmakers are frustrated, but they are concerned
nonetheless. U.S. lawmakers in March complained
to the Commodity Futures Trading Commission that nobody was watching
energy markets closely because perceptions are trumping real-world
scenarios. Demand is down and supplies are up, which typically means
prices drop. But not so fast, the critics say. Someone must be cheating.
Energy wonks note
correctly, that hedging your energy bets is a good way to protect
against future shocks. Imagine how much plane tickets would cost if the
airline industry practiced a just-in-time policy for its fuel needs. The
same would likely hold for refineries and oil producers.
doesn't mean much for the average consumer when gasoline prices can
increase as much as 10 percent overnight because Iran's Press TV ran a
false report about a Saudi pipeline explosion, or U.S. refineries closed
for maintenance or the weather suddenly turned colder or any of the
other reasons cited for volatility in consumer gasoline prices.
getting close to the so-called driving season in the United States when
Americans take to the road for their summer vacations. But gasoline
demand is down more than 3 percent compared with the same period last
year. That may be because of improved fuel economy, a lack of general
consumer spending or because of sluggish employment numbers means nobody
has a job or vacation to drive to anyhow.
Yet, the government said
gasoline prices are starting to come down. But no matter. U.S.
lawmakers, including the president, made a big show of their rhetoric
on gasoline, jobs, energy security, American families and the like.
"Obviously rising gas prices means a rough ride for a lot of families," said
Obama. "Whether you're trying to get to school, trying to get to work,
do some grocery shopping, you have to be able to fill up that gas tank."
therein lies the problem. Most commuters go to school, get to work and
run errands using a vehicle that runs on gasoline. Gasoline is a
necessity and that's in part why the debate ensues. Without massive
subsidies, gasoline is going to get more expensive no matter what the
And until commuters move beyond the carbon mindset,
that ride to work will continue to be a rough one.