Gas Prices or the Prices That Control Prices

Gas prices have always been an issue since the beginning of the use of gas-operating devices. They have always been not just a political issue but also an economic, a financial and one that concerns the security of a country, that is, the most important issue for its existence.

Throughout the years gas prices have suffered a significant rise. And, while their rise in the past was generally based on the fundamental economic principle of supply and demand, nowadays things do not look that easy. There are currently so many factors that have a certain impact on gas prices that even some economists struggle in figuring out why they rise or decrease. Factors such as: the U.S. dollar’s value; the global warming; North Korea’s missile tests; the wars in Iraq, Israel, Sudan, even the temporary unrests in Nigeria – are among the contributors to the rise in gas prices, let alone speculators – people who unrealistically raise those prices.

At first sight, those so-called factors are not just illogical – it is preposterous to consider some of them even a slight contributor to the rise in gas prices. I am about to make some hypotheses why everything matters nowadays when it comes to gas prices.

Let’s pay attention to North Korea’s missile tests. What first comes to mind is that those tests can threaten the world’s security and/or can cause the world to unite and crush the Secret State. The second thought immediately goes to the trash can. Those beliefs preached by the United Nations, as much respect as I have toward them, are naïve. A famous British politician once said that Great Britain does not have eternal friends but eternal interests. I agree with this statement. Great Britain is a country and from this point of view it is not at all different from North Korea, the United States of America, Germany, France, China, Brazil, South Africa and so on. So, North Korea’s communist government launched missiles thus somehow showing the world what its interests are. In other words, they want to show how mighty and frightening they are to their enemies as a result of which they expect that the latter will give them whatever they want.

That immediately created an opportunity to raise gas prices. In this particular situation, I can only see speculation. In other words, missile tests were presented by speculators as some kind of a possible military conflict between the United States, Japan, China, Russia and the two Koreas and, since such conflict between the six countries involves gas, which then causes higher demand, speculators then take the initiative to further rise its prices. After all, wars cannot be waged without gas. Military vehicles, like every other vehicle, run on gas.

The now-and-then unrests in Nigeria, on the other hand, decrease the supply which is another factor that determines prices. When supply is low, prices rise. Unfortunately, supply is not among the most important factors in today’s value of the barrel. Saudi Arabia is about to rise its supply but people are pessimistic about a possible substantial decrease in gas prices. The booming economies of China and India are a huge obstacle not just for the environment’s beneficial condition but also for the decrease in gas prices since there is increased demand for gas in those two countries.

In this particular situation, gas prices can hardly decrease. And, with the fact that oil gayzers will one day be depleted, things get even tougher when it comes to lowering gas prices. Oil-producing countries will not miss the opportunity to get more profit from something that one day will not give them profit at all.

The issue of gas prices is so complicated that several decisions can be made in attempt to curb them and still none of them can be effective. The simplest one is boycott, that is, people stop buying gas for several days. However, it is not as simple as it looks like. Everything that we find at the supermarket and take for granted was delivered there by a truck driver from far away, and trucks run on gas. Besides, it is unreasonable to think that so many people will be boycotting since there are so many commuters and those commuters have a family to feed. Another decision is for countries to find [an] alternative producer[s] so that demand for Chinese goods will be lowered which will most likely bring its economy to at least a standstill. However, China is such a great producer of goods and it sells them so cheap that no countries can reach the supply and prices that China provides unless a new economic organization like OPEC be established. Its slight difference will be that its purpose will be production of goods that will be similar to the Chinese ones in terms of quality and prices. However, that brings the issue of building plants for the production of those goods along with cheap labor. This cheap labor, as cheap as in third-world countries, cannot be established in first-world countries like Great Britain, USA, Canada, France, Germany and so on.

In my opinion, one thing is for sure. If gas prices continue to rise, I think that the suggested measures above should be taken into consideration. Even if my proposals are not the best ones, something should be done because people all over the world are starting to get furious. Electric cars and trucks are not a solution yet, for their supply so far is very low, and if gas prices continue to rise at the same rate, things will get way worse.

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Filed under Economy, Politics

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