I get tired of being lied to by those we choose to lead us.
Hoping to overcome longstanding Congressional objections to drilling for oil offshore and in protected areas of Alaska, we are being told that the current oil price crisis is the simple result of the law of supply and demand.
Demand is growing worldwide, particularly in India and China as the economies of those nations rev up ever faster. But OPEC denies there's any unmet demand.
Disinclined as I am to agree with anything that the Arabs, Iranians or Hugo Chavez have to say, it would appear that they're correct.
If demand for oil really exceeded supply we would be experiencing shortages, not just higher prices. I remember shortages: I was a brand-new driver in 1973 and 1974 during the Arab Oil Embargo.
Gas prices went from 35¢ a gallon to 60¢ a gallon -- when it could be bought at all.
Long lines. Signs that said 'no gas today.' That's what happens when demand really exceeds supply.
Not this. Not what we're seeing now. Today, you can buy gas anywhere you want in America, any time you want it. You just have to pay an average of $4.08 a gallon. (It's higher than that in Chicago right now. Last weekend I paid $4.18 a gallon for regular unleaded and that was the cheapest I could find anywhere. Long Suffering Spouse said it was up to $4.36 or so yesterday.)
That last link would take you an article on Bloomberg.com which also says that the per barrel price of oil has dropped a bit in the last couple of days, from a high of $139.89 to around $134.
Did you ever wonder how much oil is in a barrel? Wikipedia says that, although oil is no longer shipped in barrels, the standard measurement is one barrel equals 42 U.S. gallons. A little less than half of each oil barrel is refined into gasoline; the rest becomes jet fuel or heating oil or some other product. But once we know how many gallons there are in a barrel we can figure out what the current market price is in dollars per gallon. All we have to do is divide the price per barrel by 42.
Thus, assuming a price of $134/bbl, the market price is approximately $3.19 per gallon of oil.
Time Magazine reported in its April 22, 1974 issue that the pre-embargo price of Arab oil was $4.65/bbl. "Panic bidding" brought oil prices up to $17/bbl during the embargo, according to this article. By November 1975, Time reported that the price for "new" oil was $14/bbl.
Translating, before the embargo, when gasoline prices were in the 35¢ per gallon range, oil cost 11¢ per gallon. By November 1975, after the crisis was past -- but with prices still up at 60¢ a gallon -- oil cost about 33.3¢ per gallon.
The price of gas has gone up by a factor of nearly 12 since pre-Embargo days... but the price of oil has increased 29 times its pre-Embargo price. The price of gasoline has gone up 680% since late 1975 -- but the price of oil has gone up 950% since then.
No, I can't figure out what all this means either... except that I know it's not just as simple as supply and demand. That's a fiction. I'd like some facts.
-------------------------------------------------------------------
A note about some of the links in this post: Time Magazine has a free, searchable archive of articles from the 1920s to the present day. This is a fabulous resource that I only recently discovered. Are other newsmagazines offering similar archives?
2 comments:
well i never really thought about what a gallon of oil cost. that was very interesting!
smiles, bee
tyvc
It's embarrassing to admit, but I'm knee-deep in Texas oilfield country and don't even understand all of this stuff. But I agree that there's no shortage and we're continuing to all but beg the Mid-East folks to screw us in the backside - something we've been all too happy to do for the past 30 years.
It's sad & funny that people are only just not freaking out about the price of gas. So, a massive 8-cylinder Expedition was a suitable and reasonable choice for a single occupant passenger commuter vehicle when gas was "only" $3.50? Jeez, I was breaking a sweat when gas hit $3 per gallon - what took everyone else so long to wake up?
Post a Comment