The Price of Gasoline?

I missed my opportunity to blog this when gas was $4.00 a gallon, but it’s still somewhat relevant I think. It took a bit to get my thoughts together, then down came the price. It’s on it’s way back up again, so I’ll complete my original thoughts on this.

Yeah, I know… It’s a touchy subject, but…

Gasoline has been increasing in price for some time now, and usually in the summer months, it seems to be at it’s highest and doesn’t seem to want to go back down.

Consumers are outraged! How can they pay over four dollars ($4.00) a gallon! Fights, muggings, hijacking tankers, and murders have occurred over gasoline. And the price still goes up, and there is all the talk of oil being at a record price close to one hundred fifty dollars ($150) a barrel. Oil companies are making record profits. Analysts are expecting prices to go up, and up, and up. Is there no end in site!

Consider this:

While energy costs in general have been increasing, so have other costs. In my lifetime, I have seen prices soar. Take a look at what things cost in 1955. Items like Milk (then $.92 a gallon) has risen to over $4.00 a gallon, and is a renewable resource. Feed a cow, get milk. How much does it cost the farmer to get a gallon of milk to market? We’re paying for that, but no one really cares about ‘Big Milk’.

Seriously now…

Gasoline is a commodity that is in high demand. People drive, use gas, have to buy more, and the supply is used up.

Oil is a renewable resource, kind of like milk is, although it takes dead animals to make it, and thousands of years. Not too practical. All of the ‘easy to get’ oil is pretty much depleted and it’s now a matter of drilling for heavy crude. This means the cost of production goes up as well, and profits for ‘Big Oil’ will be less. It takes more to get the heavy crude out of the ground, sometimes it requires helping the crude along by injecting steam to heat the oil up to where it will be a little thinner and flow a little easier. This costs money. The consumer ultimately pays for the cost in higher prices.

It’s exactly the same with any other commodity. Car’s, for instance! The Ford automobile in 1955 was a mere $2994 (from the source above). Try buying a new one today for that! You can’t, because it costs more today to manufacture a car. The consumer pays for it.

My point is, prices of things, the things people want or need, will continue to go up as demand increases and supply diminishes. It always has and always will.

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