Oil futures rose above $70 a barrel today to their highest-ever closing price, fueled by the diplomatic row over Iran’s nuclear program and ongoing shortages in Nigeria’s production. Light, sweet crude for May delivery ended at $70.40 a barrel…. The price of oil has translated into high gasoline prices for motorists even before the usual summer spike in demand. Regular gasoline now averages $2.78 a gallon across the nation, according to the Automobile Association of America, 24 percent more than at the same time last year.
We Americans spend a lot of time whining over the price of gasoline, especially when you consider what people are paying for it in other countries. Still, the pump price here is what it is, and it has a huge impact over our actual and perceived financial well-being. When we were paying $1.75/gallon a year ago, yes, $3/gallon seems a bit on the high side…and, if you’ll excuse me, I’m about to do some whining.
With gas prices approaching (and in some places exceeding) $3/gallon, many Americans- perhaps even most of us- find ourselves feeling more and more squeezed. In an era when multinational oil conglomerates are making record profits, and when departing CEOs are being showered with millions of dollars to ease the “pain” of retirement, why are everyday Americans being subjected to what amounts to an enforced redistribution of wealth?
She Who Endures My Myriad Eccentricities and I are like anyone else: we fill our cars with gasoline because there is no alternative available. And gasoline is not a dicretionary purchase. To get where we need to be, we need our cars, and to do what they do, our cars need gasoline. So, while I understand market economics and the effect that supply uncertainties can have on a commodity like oil, I am no less angry about the current state of affairs.
Perhaps if oil companies were less profitable, I might be more sympathetic to the price and supply uncertainties they face. What angers me is that oil companies are raking in record profits, and they’re doing it on the back of the middle class, everyday Americans like you and me who are simply trying to makes ends meet. Let’s face facts; we’re a captive market, dependent like crack addicts on the product they sell. We can no sooner do without gasoline than we can with water.
In some parts of the country, service stations are posting prices of more than $3 a gallon. Most analysts expect additional increases in coming months….
Analysts warn that oil prices - which have doubled over the past two years - are unlikely to fall soon. For one, the diplomatic showdown over Iran’s nuclear ambitions is escalating, raising the prospect of sanctions against OPEC’s second-largest oil producer. Analysts and traders fear that international penalties against Iran might crimp the country’s oil industry, slow energy investments, or remove sorely needed barrels from oil-hungry markets.
Another source of concern for oil markets is Nigeria, another OPEC producer, where armed rebels have threatened more attacks against the country’s energy sector in protest of President Olusegun Obasanjo’s plan to seek a third term next year. Militant attacks in the Niger Delta have forced oil companies to slash production by about 500,000 barrels a day, or more than 20 percent of the country’s daily output since the beginning of the year.
“Without question, this is the worst political-risk year we’ve seen for energy supplies since 1973,” said Ian Bremmer, the president of Eurasia Group, a consultancy in New York, referring to the year of the Arab oil embargo.
“The likelihood of escalation from the two biggest threats out there - Iran and Nigeria - remains very strong,” he said. “In both cases, the worst is still ahead of us.”
These reasons are all well and good, but they hardly change the reality on the ground for everyday Americans. I’m sure that Adam could explain the exigencies of market dynamics to me, but I’m not sure I really want to hear oil companies obscene profiteering being defended. I want to stop being squeezed by an industry that already makes far too damn much money to maintain even a shred of credibility.
I work hard for my money. That’s what I have to do to make a living and help support my family. I have no problem with that, because it’s what I’ve chosen to do. What I resent the hell out of is being continually squeezed by an industry making outsized profits and blaming “market forces” for their windfall- as if they just somehow fell into all this money and can’t do a thing about it. What a load of crap….
Maybe I’d be better off if I just quit my job and started buying stock in oil companies….
