A Guest Column from Carl in PA
Carl in PA has offered this post for use on the Real Deal. It is much appreciated, as Murph and I are bogged down with various things at the moment. Please, anyone who wishes to offer a full length post, do so. With the world soon to change beyond comprehension, time is of the essence. We also need to hear different takes on things. So, if you have something to say, I would suggest doing it quickly. This gig could end any day now! Enjoy.
Get Some Fu*#ing Perspective
OK, once again, the Madness of King George has revealed itself in another
spout of disingenuous drivel, expressing his concern for high fuel prices and
his promise to investigate any price manipulation. Aw, come on ...
Are the markets manipulated? Of course they are - this is the oil business
we're talking about - they are manipulated by definition! In actuality, all markets
are - supply and demand drives prices, and astute businessmen always work
to make one, the other or both work to their advantage.
Now don't take me as being a defender or apologist for the oil companies. They
are malignantly powerful and have been at least part of the driving force behind
pretty much every ugly war for the last 100 years.
So gas is between 3 and 4 dollars a gallon now, and last weekend there was
a time you couldn't even get it in my podunk little Pennsylvania town. They said
it was because the refineries were switching over from an MTBE blend to an
ethanol blend. Seriously, I don't buy it. But so what ...
But lets pull back for a minute and take a long hard look at things ...
Did you ever really think long and hard what it takes to get gas into your tank?
Some company has to travel to some remote god-forsaken baked, frozen or
submerged corner of the world, frequently inhabited by suspicious and hostile
locals (assuming that the piece of real estate in question is habitable at all),
hauling a lot of cumbersome, expensive equipment. They then have to spend
considerable time and effort drilling holes in the ground, simultaneously keeping
polar bears, poisonous reptiles, enormous scorpions, seawater or the aforementioned
hostile locals at bay. Chances are they won't find anything in these holes.
Assuming they get lucky and they do, they then have to haul in additional
cumbersome and expensive equipment, often having to build a transportation
system to do so (and yes, maybe trashing the local ecology in the process).
At this point the polar bears and snakes may have lost interest, but some of
the formerly local hostile natives now see an opportunity to cash in, so the
usual rounds of mordidas need to be dealt with (it's amazing how quickly a
taxing bureaucracy can materialize out of thin air in a region that formerly
didn't even have rudimentary mail service).
Now, this black toxic gunk needs to get transported someplace, frequently
a multi-billion dollar shipping facility, where it is loaded onto a multi-billion
dollar ship the size of Luxembourg, which then plies its way across one or more
oceans - oh, and by the way, the mileage on those babies is something
under one foot per gallon of fuel.
Some days or weeks later it ends up at another multi-billion dollar refining
center, where it is turned into gasoline, jet fuel, lubricants, napalm and starter
fluid for your charcoal grill.
From the refinery it is piped to distribution centers (both expensive to build
and maintain). From there it is trucked to a convenience store where Rajiv
or Akbar will sell you a gallon for about $3, his profit on that gallon may be
about 8 cents.
OK - so after all this, for $3, you get a substance that will propel your
4000-pound vehicle, containing your sorry ass, as well as that of your
naggy fat wife and your litter of whiny brats, approximately 20 miles, back
and forth to the mall (or worse Walmart) so you can waste your money
buying loads of essentially worthless crap, much of it cheap plastic stuff
made in China, made from (of course) oil.
All for less than the price of a happy meal.
THREE DOLLARS ?!?!?. Now consider all of this above and tell me still
that gas is expensive. What does a gallon of Coca-Cola cost? Probably
more than twice that - all they do is filter water, pump in some CO2, add
sugar, flavor and color, and truck it to the same convenience store where
you complained about the price of gas. Rajiv makes a lot more on the
Big Gulp he sells you than he does on the gas. You don't bitch at Rajiv
about the price of Coca-Cola.
OK - so what's the difference? Purchase of the Big Gulp is discretionary
(unless you've just wandered out of the desert where you've been for three
or four days and it's the first potable substance you've seen in 24 hours -
a situation, believe it or not, I have been in).
With our current life styles, purchase of gasoline (or heating oil, or natural
gas to heat and cook with) is much less discretionary. We've gotten so
accustomed to having energy that was almost free, when you consider it
as a percentage of your total budget, (making exception for the poor and
elderly living on fixed income and not enough of it) that we've built an entire
economy and lifestyle around it (I could rant on that for hours - but Kunstler
is much better at that than I am).
So - the price of gas and oil goes up - this is alarming to us, since all of
a sudden it's taking a bigger chunk of our budget, and we don't know how
to, or as of yet are unwilling, to make the adjustments necessary to use
less of it.
And of course, we look for whose fault it is. Of course, we demonize the
oil companies (who are eminently demonizable). We demonize the Iranians
(who are headed up at this moment by someone who is at least as much
of a nutcase as our own leader). We demonize the terrorists (who really
love it when we demonize them, 'cause they know they're making an impact).
And in the back of the collective anger, it is finally beginning to sink in - that
what people have been ridiculing me about for a few years now - they are
starting to realize I was right (well, actually a big "we" - this is old news to
a lot of you reading this) - you can see the shadows of fear creeping into their
faces - they are, one by one, more and more, faster and faster, coming to
realize that we are running the f*ck out of oil, and most of what is left is in
places where the locals hate our guts.
Oh, and throw in the whole China-India-Russia thing ...
So stop bitching about the price of gas - pull back and get some perspective,
because getting mad about that will just distract you form seeing the big
picture, and if it doesn't scare the shit out of you, let me know what your
doctor is prescribing so I can get some.
Carl in PA
Thanks, Carl. I greatly appreciate it.
Cyclone