anotherlook

Why does OPEC have the power to play the gas price game so effectively with the people? During the holidays at the end of 2008, gas prices were reasonable – that is to say they were at a low that had not been seen for sometime. This gave consumers a little extra money to spend on other things such as holiday dinners and gifts. After the holidays were over, gas prices began a slow upward climb but remained between $2.25 and $2.35 a gallon for the first few months of the New Year.

About two months ago, gas prices broke the $2.35 mark and have been slowly rising until they are now around $2.55 - $2.65 a gallon. I have watched this progression daily and I am amazed at how frequently gas prices fluctuate. Almost on a daily basis they are up by $.02 or down by $.01 but now that summer is upon us and the demand for gas will be higher, so too will gas prices as they creep higher and higher in anticipation of the coming demand.

According to Wikipedia, supply and demand is an economic model based on price, utility and quantity in a market. It predicts that in a competitive market, price will function to equalize the quantity demanded by consumers and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity. In microeconomic theory, demand is defined as the willingness and ability of a consumer to purchase a given product in a given frame of time.

Equilibrium is defined as a state or situation in which opposing forces or factors balance each other out and stability is attained. My question is when will gas prices become stable? Without that stability, living on a budget becomes difficult because the fluctuation in that specific cost affects the budget.

Why is it that the traditional laws of supply and demand do not apply to oil prices? Earlier this week, the 12 member countries that are members of OPEC voted in Vienna to maintain output at current levels even though tankers across the world are overflowing with oil. This decision has the effect of raising gas prices during a period of the year, here in America, when demand will be greater making the supply limited and the cost greater.

OPEC is a permanent intergovernmental organization of 12 oil-exporting developing nations that coordinates and unifies the petroleum polices of its member countries. OPEC seeks to ensure the stabilization (which is not happening) of oil prices in international oil markets, with a view to eliminating harmful and unnecessary fluctuations, giving due regard at all times to the interests of oil-producing nations and the necessity of securing a steady income for them.

It seems to me there is a very distinctive “conflict of interest” taking place in this arrangement and the consumers are paying the cost of this conflict of interest. Of the twelve oil-exporting countries, Iraq is one of them; also among those in control of the oil, thereby the oil prices are Saudi Arabia, Kuwait and Iran. All countries America has had violent contact with.

The thing I do not understand is even “after” the war in Iraq which is benefiting from the cost of oil, we as Americans are donating billions of dollars in relief and reconstruction to this country while they vote to stick it to us with the cost of oil/gas. This confuses and alarms me and I have to ask again – Is America being used by foreign countries that seem to be intent on breaking down the American financial systems? Is America losing its grip on reality or am I missing something?

Dependency is a dangerous thing – have we waited too late to realize this?

And that’s the way I see it!!!

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