OPEC and High Gas prices
OPEC and prices at the gas pump are hitting the headlines
again. This should not surprise savvy news readers. Prices at
the pump start bouncing around every year, just about the time
Americans start making vacation plans.
There is only one certainty when it comes to the oil
industry: change.
LET'S LOOK A LITTLE ABOUT THE HISTORY OF OPEC
While OPEC and its voting members no longer are as powerful
as they used to be, when they decide to collectively swing their
paddle at American consumers' backsides, we still say ouch.
I still remember the winter President Carter gave us a
lecture about sacrificing by keeping down the temperature and
wearing warmer clothes.
Since that time, there have been massive shifts in the
aggregate oil market. This includes massive shipments down from
the Alaskan pipeline and production from tapping into previously
reserve supplies.
Then came the decade of the fuel-efficient cars. Washington
dictated that we have fuel-efficient cars; and we did. (Safety
standards were constantly pushed, but it was awhile before all of
the new regulations came together.)
Ride share programs were promoted and lanes on many of the
California freeways began sporting odd figures which resembled
diamonds. Americans did their share in trying to change their
commuting habits.
Times changed again and the world was feeling a little safer
and car designers went back to doing what they like doing --
putting out vehicles which are not as easy to crunch in crashes.
We now have the age of the mini van and SUVs.
None of the above takes away from one fact that consumers
and investors both seem to forget in between oil price headlines.
The oil industry is one of the most volatile in the aggregate
world market (next to the money markets).
America is going to do its best to ensure that OPEC, in some
form, remains a cohesive force. Dealing with individual member
countries to ensure a better deal for the American market would
create a politician's nightmare.
The other not so obvious reason that "we," as a country, do
our best to ensure the stability, or the lasting power of OPEC,
is that every time OPEC feels a crunch by market changes, oil
industry stocks take a nose dive and their lobby in Washington
D.C. goes to work to make our Congressmen and Senators' lives
miserable.
CONSUMERS VERSUS THE INVESTOR
These two groups are different sides of the same coin when
it comes to who loses and who gains from oil industry changes.
While consumers have been recent yelping over what they find
at the pumps, investors rub their hands together in glee over
anticipation of increased quarterly dividends or larger rates of
return on a sale. The consumer versus the investor is a part of
an eternal saga when it comes to the oil market.
Bottom line to the whole picture, however, is that America
needs to have a healthy energy industry in order to keep a
healthy economy. Before we can cope with the hard boiled fact
that the oil industry moves up and down probably by more unseen
'winds' of nature than any other market in the global economy,
'we,' (the American public) need a little reminding about how the
laws of supply and demand work.
THE LAWS OF SUPPLY AND DEMAND, ETC.
We all can understand that larger the supply of a good, the
less a seller is able to get at the cash register.
Even more important is to understand what happens to
consumers' buying habits when prices start spiraling up.
Reactions by consumers differ, depending on what type of
commodity is involved. If we are talking steaks and evening
performances of the latest movies; all but hardboiled steak
eaters will change to chicken for awhile and movie goers will
start making matinees their preference.
When we are talking prices at the pump, motorists are going
to yell for awhile before having to go to the aggravation of
changing their habits. (A fact which was never considered by the
Carter folks.) Oil companies are aware they can push the
envelope at the pump awhile before losing customers.
Savvy consumers better their chances for staying a few
notches ahead of upward prices at the pump by keeping abreast of
the oil industry. Options include: plan driving vacations a
little earlier in the spring, right after the frost disappears.
Then, of course, there is also the train.
During the times of the year when pump prices make both you
and your wallet cringe, talk to your boss about flex time and the
possibility of telecommuting.
If you are the type who likes to get involved, start a
letter writing campaign to your favorite lawmakers. Let them
know that you unhappy that more has not been done towards pushing
alternative energy sources. Start a website and talk about your
frustrations. Gather others of like mind to start a newsletter
which deals with the energy markets.
Prices at the pump, are something, we can influence if we
are willing to work at it. If we remain silent, our children
could be forced to face more problems than a few cold winters
with gas lines. We are, as hard as it is for America to admit,
not self-sufficient when it comes to energy we need to keep this
country running. We can make better choices.
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