Hop, Skip, Jump

Four-fifty a gallon for fuel. Ladies and gentlemen, we are reaching deadly heights with these prices. What are America's workers to do with such high prices and sharp demand?

Personally, this gas thing is not a problem for me and my family just yet. I commute with my mother in the mornings to get to class, and she only lives a few miles away from work,which is nice for both of us. I fear for my friend's job though--he drives one of those trucks with advertising on them, and the high prices coupled with the long driving is bound to get to him somewhere along the way.

What of the workers whom must commute to get to work? I live near New York City, so you can bet that a good number of adults have to drive to get to their jobs up north. If prices keep going up the way they do, they will have to decide between their jobs and their need for gas. That could be bad for companies with out-of-city workers, but good for local businesses; suddenly, they might find a more willing supply of workers than they ever had. Then again, if people value their jobs and like what they do, they might just have to grin and bear it.

But who is really driving these prices up by leaps and bounds? The "greedy" oil companies? The people who wouldn't listen to the scientists and try to curb our usage of oil? The terrorists abroad who want to see America squirm? It could be any of those things, though I'll opt for the first two. The oil companies and the consumers are just acting in line with supply and demand. For those that don't know economics, demand is on the consumer side and supply is on the producer side. If the price of a good increases, the quantity consumers are willing to buy decreases, but the amount producers are willing to supply increases. Usually, the two sides work well enough to keep the price at a reasonable equilibrium, but certain factors, such as speculation about the future supply of the good, can throw the equilibrium for a loop.

Looking at the rise in fuel prices, it seems clear that the change in supply and demand fell to the speculation of lower oil reserves than expected. Consumers wish to buy more fuel now, so the quantity demanded at the same price increases. At the same time, the producers, who see that oil reserves are likely to be lower, shift the supply of fuel in such a way that the quantity supplied at the same price decreases. The supply and demand combined drive up the price at which the equilibrium will once again be established. So, in light of these prices, it seems both producers and consumer played a part in these price hikes. If the speculation continues uninhibited, it is likely that prices will jump even more.

So these jumps hold some rationality in the face of economics. Economics alone, however, has never been enough to solve a problem like a fuel shortage. It remains to be seen if economic theory will continue to hold in the coming weeks and months.

A Sceptical Eye

With my introduction established, it is time to blog. I will start with a reaction to a reaction; namely, the surprised reaction to the dollar rise in oil prices in good old America. As predicted, people are probably pissed ready to throw blame around for a problem they should have seen coming. With such a reaction, one would think Americans never learn from their mistakes, that we were just as blind to our past as we are to our future. Unfortunately, the majority of people choose to ignore such signs and focus on the immediate future, never realizing what lies around the bend. I'm not saying we can know everything about the future, but we can get some idea about how our actions make things better or worse down the road.

The scientists have been trying to point us towards this for a long time coming, and not enough people have taken what they say to heart. Religion and evolution be damned; these guys are talking about a world that everybody shares in equally (or unequally, depending on how you view the rich). In our drive to meet the growing demands of our population, we have sped up production of pesticide-treated and genetically engineered foods. If we keep going without our precious petroleum-based herbicides, we might not have enough food to feed everybody adequately. On top of our already staggering numbers of malnutrition, this would be chaos. If we ought to reduce our use of pesticides and all that unhealthy crap and grow more organic food, then why aren't we advocating that instead of genetic engineering? That's a subject for another post entirely.

My point is that we should look at how we have reacted to such crises in the past. We got pissed, prices dropped, life went on. The problem of limited reserves still remained, albeit in the background. The government and the big companies (bane of my existence, but that's another post) pledged to support cleaner fuels without oil, but they have died down as well, back to pushing their SUVs and the ego boost they bring. The longer these prices stay like this, the better; maybe people and companies and the government will actually follow through with their promises and threats this time around. Until then, I am forced to continue my scepticism in our new old reactions to the impending crisis.