Gas prices: An alternate scenarioJune 9, 2008: 12:36 PM ET
I'm going to invoke my standing as a bloviating faux pundit, along with the rest of the gang, and offer a vision of what might happen going forward on the price of gas.
In so doing, I am probably contradicting not only myself but also every other wheezebag who is now opining on a situation nobody but a few sheiks and corporate oil executives really understands. But what the hell. I can't afford to do much but sit here and think, anyway. So here's what I come up with.
First of all, it's clear to me that the price of oil is irrational and opportunistic, based on what the producing countries and their running dog global distributors think they can get away with. As evidence of this, I will offer the fact that gas is now significantly more expensive in neighborhoods where the companies think they can get away with it; affluent towns and portions of cities where people have more money. In poorer places, prices are lower.
I don't care what the rationale is, or what lies we are offered. This indicates to me that somebody with an eye on demographics and property values is calling the tune.
On a more cosmic scale, the price is also going up because there are semi-logical "reasons" that the bad guys can invoke via the analysts, media, and other clueless mouthpieces, to "explain" and "justify" the ongoing, heedless gouging.
After Katrina, a Chevron station I used to go to went from $1.89 a gallon to more than six bucks a gallon in one day, two dollars more than the then-prevailing price. Because they could, I think. After that crisis eased, they brought it down to $4 or so, and it's never been less than $3 since. In this way, a specific incident was used to jack up the deal and make the most of it in perpetuity. That's how they roll.
That is actually a microcosm of the entire situation. Katrina taught them they can get away with just about anything, at least for a while. It was a lesson they have not ignored since. This has nothing to do with supply and demand. Has supply diminished by 300 percent? Has demand increased exponentially?
No. They're doing it because they have seen they can. And they'll keep on doing it until a very powerful whistle blows, one, perhaps, that only they can hear.
And that, my friends, is what I believe is going to happen, possibly as early as right after Labor Day.
Todays paper says that rural America is feeling the pain of $4 gas now. The cities have been there even longer. Red and Blue will merge. The American people will do what they do, and begin hitting the people who will truly feel the hurt: politicians, corporations.
Business deals with producing nations will dry up. The ability of American companies to share in the windfall will be looked at. Arms deals will be scrutinized. Whatever can be done in the invisible corridors of intercourse between big oil and international affairs will be effected. The inaudible dog whistle will sound.
And suddenly - like magic! - prices will ease. My guess is that we will settle at around $3.25 a gallon for a while. There will, of course, be a lot of reasons given why this was rational, a product of market forces and blah blah blooey.
But we'll know why it happened. Because they had to.
Then next summer will come and the whole thing will mysteriously begin again.
Whatever they can get away with, they will. Unless, of course, somebody's got a better idea.