The sudden jump in gas prices with no end in sight has many people coming up with explanations as to why. Could it be price gouging by the oil companies? By oil producing states? The fashionable explanation are speculators, aha that's the culprit. With hefty profits these are the fast and easy answer yet when there is a real estate boom there are no such charges brought upon agencies or mortgage companies. Same could be said in any market where there is a sudden run up in price. The problem with oil companies are its historic reputation of robber barons or foreign sheiks living lavishly beyond imagination. Oil companies "big oil" as it's called are a favorite whipping boy in politics. When we pay more for oil there never seems to be a market explanation. Greed is the first to blame.
But where was the greed when oil was $11 a barrel. Since deregulation in the early eighties and the sudden drop in oil it stands to reason that if the sheiks and the barons could profit enormously now it could have done so all the time. Why not be greedy all along?
Although profits by all the market players, to them, are a good thing in the short term it could only spell disastrous in the long run. For some reason Europe has had higher then average fuel prices yet they seem to bear it. America is another story.
The US has an historic propensity towards market efficiency and invention for alternative products. We invented fuel cells and electric engines not to mention speed of light communications with information exchange where good ideas are hatched and shared across the electronic spectrum in an instant.
If there is a market reason for the sudden jump in oil prices it could be that countries in eastern Europe and Asia that have shed their state run economies towards
free enterprise has put a heavy demand on oil. We have mentioned that easy money policies always precede high commodity prices and with a dollar losing value it takes more of them to buy precious metals and oil. The former scenario is welcomed the latter is an anomaly.
Habits and more important ideas will spell the end of oil as a major commodity. The worst thing that can happen to a product is if it pushes the consumer for its replacement. Many of the ideas that are being improved upon now were new during the last oil crisis when the world was less free. To be more precise it was a time when an individual had to be in a certain few places on the planet to put his or her
imagination to a test let alone getting people to fund it. Now that has changed. The only advise is to let it happen. Governments ought to resist the temptation of artificially lowering the price with regulation or legal fiat. Let the market (ie: free minds) do its job.
