When gas prices started this latest unprecedented rise over the last six+ months, I called big oil "dirty thieving bastards." I heard the "supply and demand" and "blame it on Biden" rhetoric, but I said prices will continue to rise until the American public gets good and mad about it. Hitting that US average of $5.50 per gallon was that point. And producers/importers of all kinds of goods took significant price hikes, because they knew it was going to cost more to make or get their products due to the higher gas prices. It is a historical fact that the last several downturns in the economy came about shortly after rapidly rising gas prices.
We all know how the current price inflation of everything has hit most of us right in the wallet. It isn't just "supply and demand," it is more a matter of "the public will "buy it" (not talking about purchasing) because we are all slapped in the face each time we go to the gas pump.
I also said that prices would go up until the American public gets upset, then they will come down a little (much less than they went up) and we'll all be happy with that. The big news outlets are headlining "The price of gas has come down 10% in the last several weeks"... BFD - it still leaves them (big oil) with well over a 40% increase in net profit... but, people won't bitch about that because they are relieved that the price came down 10%. This, too, is predictable, based on the past.
Yes, the price goes up and the price comes down. UP a bunch, down a little.
I also understand that big oil has no responsibility to the American public to keep fuel prices affordable - their responsibility is to their share holders, to make their business as profitable as possible. It's a tough pill to swallow when our economy is driven by the price at the pump. It's a domino effect: other businesses who depend on having their product or raw material shipped to them are hit with (estimating here) a 50% increase in shipping costs. They justify 50% increases in the price of their retail goods, while their actual costs of goods sold may have increased less than 10% overall due to the increased shipping costs. That is why we have the inflation we are dealing with currently.
I'll take an example that is close to my passion: a motorcycle dealer gets hit with a shipping charge that went from $300 to $500 to get a motorcycle delivered. They, in turn, mark up that "shipping charge" to $800, then add on even more bullshit fees that drive up the price of that $10,000 motorcycle to over $12,000. Because they can.
Go to the grocery store. Let's say that case of beans used to cost $10 for 144 cans to get delivered to the store. The shipping cost per can is about 7¢. That shipping price doubles, making it 14¢ per can to be delivered, but the price of the can of beans goes up from $1 to $1.40. Because the American public will say, "It costs them more to get that can of beans to the store." Compound that with all the other goods on the shelf, and your bill at the cash register has gone up way more than the cost of getting those goods to the store.
The price of gas paves the way, inflation increases, your dollar buys less. The price of gas at the pump may have come down 10% in the past month... did you notice the cost of what you buy at the store has come down? It didn't.
A lot of people want to blame the current administration... and, certainly, they gave the gas companies a green light to rapid price increases by a few stupid decisions (like stopping the development of a major pipeline on day one). It doesn't take an economics degree to figure out that the pipeline that wasn't completed didn't drive up gas prices by over 50%. But, it opened the flood gates to those higher prices. And the "talk" of a federal gas tax "holiday" at 18¢ per gallon was insignificant. Again, that was the appearance of politicians looking like they were doing something about the situation. Nothing ever came of that. In the end, everyone got a bigger piece of the pie except the American public.
Gas prices are down about 10% and no one is complaining like they were a month ago. And the beat goes on.
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