Thoughts on Oil

I’m going to join the crowd and comment on the rising price of oil and gasoline. Here are some random thoughts in no particular order:

• I’d rather pay low prices than high.


• I hear lots of complaints about the high prices. At the same time, I still see lots of low MPG vehicles on the road. The high prices have not significantly cut into demand yet.


• From what I’ve seen, most of our elected officials want to make prices lower. Some seem to believe this can be done by legislative fiat. The PRC (other folks unelected officials) have tried this. While it makes buyers happy, it has the effect of keep demand high and creating supply problems. What has happened is that while the price for consumers has been held artificially low, someone still has to pay the asking price.


• There are two ways to bring about lower prices: raise the supply or lower the demand. In our country the Republicans tend to favor the former, the Democrats the latter. Middle of the Roaders tend to say we need to do both.


• Reducing dependence on the other countries for our oil supplies looks like a good thing from the point of view of national security. Several major Middle East producers - and nations beyond the Middle East like Nigeria and Venezuela - are politically unstable. As long as Mexico can’t (or won’t) get it’s economic act together and provide for its own population, it will face political instability also. On the other hand, it is good that poor countries have something of value to sell. As Christians, we should rejoice that they have something to jumpstart their economic growth. As Christians we should also lament that their wealth is all too often being sucked up by corrupt leaders and oligarchs.


• Oil will only last so long. The current understanding of petrochemistry and the formation of oil tells us that oil is not a renewable resource. Once we burn it, it’s gone. (I’m not talking about biomass diesel, which is renewable). At some point in the future the currently available supply with be small enough relative to demand that we won’t be able to pay for it.


• Burning hydrocarbons has bad side effects. If we reduce the burning, we’ll reduce our addition to the side effects.


• Some point to mass transit as the solution to rising travel costs. I like mass transit when it goes where I want when I want at an affordable price. We Americans are strongly habituated against it, however. We’re also too spread out to make it feasible as a universal solution.


• Exxon et al. sure are making some large profits. What are the mechanisms behind their profit margins? If they have control over profit margins (and I assume they have at least some control), then would I be wrong to say that either people are buying more from them than ever, or, that their profit margin is too high? What do they do with their profits (other than give truckloads of cash to Lee Raymond)? Are their shareholders profiting from this? If so, how does one become a shareholder?


• When talking about money, John Wesley advised to “Save all you can.” He was speaking not merely of having a large and ever growing bank account, but of not spending. As those who learn from Wesley, we can apply this maxim by minimizing our driving, combining trips, and filling our cars with more than one person. While it isn’t always possible to do these things, I believe it’s possible more often than we do it now.