Oil Prices...Are People Like Frogs?

Up and down, up and down; so goes the price of oil and gasoline.  We see it go up, but not so much down, but it does, and there is a reason.  You can blame it on any number of things, oil speculators driving the price of oil up, “Arabs” setting prices too high, the U.S. not tapping the Strategic Oil Reserves, or the fact that we are not drilling in the Arctic National Wildlife Refuge (ANWR).  There are other reasons as well, and I think some of them are that oil companies have a plan they do not want us to know about.  It is based on acclimation.

If you look at the chart of gasoline prices and oil prices over the last six years, there is a pattern, see:

http://www.gasbuddy.com/gb_retail_price_chart.aspx?city1=USAAverage&city2=&city3=&crude=y&tme=72&units=us

They do follow the same pattern, but I would argue that it is really the process of acclimation that drives the price of oil and gasoline.  By that I mean, oil creeps up for years, and then the graph begins to increase at a greater rate until it reaches a point where it drops precipitously.  Why does it start to go up faster?...Greed !  Why does it drop?  It drops because people have reached their limit and begin to complain…vigorously.  We complain to their Congresspersons and when the screaming and gnashing of teeth becomes too loud and by too many people, then Congress threatens action, or they may actually act.  The threats are that Congressional hearings where oil executives are subpoenaed to testify in public hearings may be held or are actually held.

Part of the problem is that these same oil executives and their respective oil companies have basically purchased Congress with campaign donations and the like.  Our Supreme Court has ruled that these contributions are “Free Speech” and therefore cannot be controlled, so Congress can be bought, legally.  The only thing that prevents the oil companies from driving the prices to the sky is the fact that, in the end, no matter how good the ad campaign may be at election time, a political opponent can point to a record, and the people can unseat a Congressperson, when he can clearly be blamed for allowing rising oil prices.  So, a complaining and dissatisfied electorate can have an input, but the oil companies are not stupid and they have a technique to limit public dissatisfaction and, therefore, complaint.  They acclimate the public to high(er) gas prices.

Look at the prices of fuel and you will see the price rising, rising, rising and then a precipitous drop.  The drop designates the point at which people begin to complain bitterly and call on their elected officials to do something.  The price goes up a little, the waters are tested, no one complains or they grumble a little and the price goes down a little.  Then the price goes up a little more, higher than the previous price, again, testing the waters, and then goes down a little.  However, these small up and down changes show a larger trend, ever upward.  We get to the point that the price of fuel is just egregiously high and then it plummets, because the threat to investigate why it has gone up offers the possibility that we, the people, will figure out just how bad we are getting screwed.  So, “Big Oil” drops the price to hose us all down, makes Congress look like a bunch of heroes, pockets HUGE profits in the meantime, and starts plotting the next pattern of price increases.  Oh, and all the while is collecting subsidies and cashing in on tax breaks as well (see my blog of April 28, 2011).

What the oil industry is doing is to get us used to the water, so to speak.  They slowly immerse us in higher and higher prices so we get used to it gradually.  Unfortunately for Big Oil, there comes a point at which we just won’t take it anymore, and we complain to people that can do something about it and when we scream often enough and loud enough and in enough numbers that it starts to look like it is in their best interest, Congress finally does something.  We are like the apocryphal frog in a pot of slowly warming water, that does not jump out because he becomes acclimatized to the increasingly hot water.

I guess the answer is to start bitching and pissing and moaning a lot louder, a lot more often, but mainly, a lot sooner, and make sure that our interests become the interests of Congress more quickly.  Now that we can see the pattern, maybe we can get our timing better than before gas gets to $5.00/gallon the next time it starts to go up.