Source: Patrick Henningsen
It’s official: Americans have now been safely conditioned to accept $4 per gallon of gasoline.
It worked. While fuel prices skyrocket and stabilize at new highs, a powerful and highly organized cartel of corporations are now reclining in their boardroom chairs and patting each other on the backs for finally conquering the will of the formerly ferrell American consumer.
For an economy begging for recovery, these new price highs cannot mean good news. Why are gas prices so important? Gas prices directly influence inflation. They affect almost every other domestic service and essential commodity we use on a day to day basis – deliveries, labor, materials, food, postage and list goes on.
There’s only one problem with this fuel price picture: it is going against the universal laws of free market economics. The law of supply and demand dictates that demand should drop if there is a glut in market supply, and we should then expect a drop in price. Unfortunately for American consumers, just the opposite has happened.
Hidden within a recent Washington Post article about ‘cutting our fuel consumption’ is proof by their own admission:
The response to $4 gasoline is reinforcing a trend toward lower fuel consumption. This will be the third year in the past five with historically high oil prices. Even before the latest price spike, gasoline consumption had dropped 6 percent from 2007 through 2011, the EIA said.
The Federal Highway Administration adds that the number of vehicle miles driven over a 12-month period ending January was lower than in any year since 2004.
In the case of gas, there are three major factors which have actually lowered demand in the last year.
The first is that due to an increase in fuel efficient and hybrid cars, contributing to a drop in overall gas consumption in the US to its lowest levels in a decade.
The second is that due to the protracted recession America has endured since 2008 – consumers are spending less, and driving less.
The third is perhaps the most crucial, and certainly the most important in terms of moving markets – or so we thought. From January 2012, for the first time in history, the United States has become a net exporter of gasoline. In other words, we now export more than we sell domestically. By the numbers, if it were a true free market at work, then Americans should expect to pay less than $2 per gallon of gasoline.
Meanwhile, mainstream media pundits and ‘economic experts’ are all left baffled, and argue endlessly amongst themselves about what America needs to do in order to survive this latest economic raping. “We need to conserve fuel”, or “We need to drill more in the US for fuel security”, or “We need a Keystone Pipeline”. Politicians seem equally confused, including a clueless President Obama, who will likely use this election year issue to promote his laughable, grade school idea of a “green economy”.
Asking Americans to ‘drive less’ may help in certain small quarters, but it will not change the larger problem of paying $80 or $100 to fill your gas tank, and it will not stop the inflation ripple advancing due to higher gas prices.
Asking auto manufacturers to produce cars that get 100 miles to gallon – a technology which has been around since the 1930′s, will not happen either. No one has ever been able to break the collusion between the gas retailers and the auto makers, who agreed long ago that high mileage engines are not good for their bottom line. Small strides have been made with hybrid cars, but the progress if sadly insignificant. We have to live with the fact that Americans have been conditioned through advertising to believe that 30 miles per gallon is somehow ‘great mileage’.
Neither journalists, nor politicians, or economic ‘experts’ for that matter, will tell Americans the real answer as to why, in the face of an unprecedented record lows in fuel demand – our gas prices are steadily climbing to record highs? The answer is simple: it’s called price fixing.
Normally, legislation exists to combat industry cartels who work together in secret, in order to fix prices and profiteer their way to new galactic levels of wealth. Cartel corruption starts internationally, where price fixing is legal and accepted with OPEC oil-pumping nations who meet together to regulate the price of oil internationally. This on its own could still be overcome, but the problem becomes even more pervasive after that oil leaves the refinery in the form of gasoline.
A corporate cartel has not only fixed the price of your gas, it has done far and beyond the point of normal profit ratios. The cartel responsible for robbing Americans of their wealth includes the following big four companies:
1. Exxon Mobil
3. Conoco Phillips
These companies are not Capitalist – as naive liberal sages like Naomi Klein and Michael Moore, or the Occupy Movement would like to improperly label them. They are actually collectivists – a group of men who have consolidated resources, along with power in government circles, in order to control our markets. You could even call them fascists, men who have discovered the perfect convergence of government and corporate interests, and leaving the consumer out of the market equation in the process.
It’s more than just a price hike. By working against free market principles and managing the economy, this type of cartel price fixing also achieves a tremendous transfer of wealth, from one group of society to another. And that type of wealth transfer always trickles upward.
Could these companies be dragged into court for monopoly crimes, price fixing, or anti-trust violations? Individuals could do it, but would be met with an army of lawyers and would likely face intimidation. In theory, the government could mount a legal challenge, but in reality, they will never challenge the big four because the big four own the Washington establishment.
It’s not a bright outlook, but it is important that consumers reject the false debate which America is about to be battered with over the next 7 months during the 2012 Presidential election trail.
Europeans have been criticized as being too passive, traditionally accepting 20-30% higher gas prices than Americans. Gas companies must laugh at how the Europeans have been ‘neutered’ to accept anything. Has the same thing happened to America? Have we been neutered?
Will consumers, media and our weak political class grow a backbone in the face of such an inflationary crisis?
It’s time to challenge the economic ’experts’, and demand that pundits and politicians address the real cause of our economic pain – corporate cartel price fixing, and then drag them into court.