As I drove past a local gas station last night I thought about the stimulus and in a true moment of schadenfreude I chuckled. You see each and every year I am astounded by the hysterical nature of our nation; it is an almost immutable law that crude oil prices rise in the summer and lower in the winter. People travel in the summer and more energy is used to cool buildings and machinery making the cost to produce power rise creating a cycle that loops and feeds back into itself. We run amusement parks, we drive more, we fly more, we do almost everything imaginable that can cause a rise in oil prices.
This is of course a matter of supply and demand and yet each time Congress acts as if it is the first and only time, businesses make layoffs pretending the same, people complain and complain and then complain some more forgetting that this is a temporary spike and believing instead it is an end to Western civilization. Then, October and November comes and the problem goes away.
Because of the vast economic downturn causing a curb in demand and of course the realization from oil cartels that people just plain couldn’t pay the record setting costs of last summers crude, the price dropped to an unthinkable low. Suddenly the talk changed and economists who were complaining the cost was too high complained it was too low. I saw balance, they saw a reason to go on television and try to cause hysteria.
Now, let us gaze into our crystal balls and think real hard, what will happen to gas prices in the coming weeks as we move toward summer? Ah, of course, gas prices will rise! You know what, I don’t need a crystal ball, I just needed to look at the gas station I passed last night to be reminded of it. I also don’t need a crystal ball to see that with rising prices will come the resurrection of the freak show that is our media and Congressional driven public outrage.
This year I expect the freak show to be filled with even more attractions. Think about it, more Americans are losing their jobs, have lost their stock market and retirement wealth and are on the verge of collapse. Likewise, businesses are barely breaking even if lucky, they are facing downturns in demand, government intervention into their compensations, increased competition the world over. Soon everyone will face a rapid rise in the price of doing business and living from gas.
Another issue; remember all those infrastructure projects? Remember how infrastructure was touted as the savior of our economy? Well, here is the thing about infrastructure, building roads and bridges is a nice thing, but it also takes a lot of oil. Oil to power the trucks, oil to move people, oil to produce and run machinery, oil to produce the materials used to build that infrastructure, oil is used in massive quantities to do everything associated with building up infrastructure. So round about the same time people are heading out on their family vacations, your tax dollars will actually be used to drive up the cost of oil as “shovel read” projects begin. Shovel ready, how nice, try bulldozer and dump truck fueled with black gold.
In essence we all paid massive amounts of money we didn’t have to raise the price of something we cannot live without. For those hippy dippy types let me explain; that computer you are on, that cell phone in your pocket, the clothes on your back, the lights in your living room, the LCD television hanging on the wall, the furniture in your dorm room and so on, they all wouldn’t be there without oil. Oil to produce, oil to transport, oil to run.
Want wind mills and solar panels? Yeap, sorry, you need oil and coal and even some nuclear power to produce all those too. Do you think electricity comes from thin air? Even if you get your power from hydroelectric oil keeps machinery going, oil is in some way in a part of just about everything we have. Plastics, fibers, the stuff greasing gears, you name it we need oil.
Of course there is just one more hitch, I guarantee you a great deal of the infrastructure estimations were done with cheaper oil prices in mind. When the projects were submitted I am sure local governments, who are almost universally run by a bigger cabal of buffoons than our national government, did not account for rapidly rising oil costs. They just looked at what they had on file and said “Yeah, we can do that for a hundred million” without figuring out what it would cost having crude oil at $120 a barrel. The money we don’t have but promised is going to rapidly dissipate and if we don’t want half build bridges and roads we are going to have to pony up more cash.
All those lovely infrastructure projects are going to add up on their own, just imagine what is going to happen when crude skyrockets again or even if it just rises at a respectable pace to meet demand.
But it is OK, because the economists have told us that crude oil prices are too low. The media has all but forgotten about the issue and politicians are busy worrying about a few executives getting a couple of bucks in bonuses at AIG, bonuses they wrote were OK in the law.
Like the rise of the sun each day, so will we see a rise in oil prices this summer and the freak show of talking heads and outraged Congress people will fill our television sets and empty our wallets.
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