I thought I was “beating the system” when I filled up my car last night at a buck ninety-nine; however, this morning I just saw a gas station with gas for a buck eighty-nine. Needless to say, I haven’t seen gas this cheap since Taco Bell reintroduced a value meal (forgive me, I can’t resist good flatulence jokes!). They (whoever “they” are) say that the price of oil is dropping because of the worldwide economic problems; if this indeed be the case, they I would have to make the oxymoronic observation that the economic problems are actually good for our economy in some respects. Think about that for a minute.
Anyway, as joyous as I am, I would have to say that there are forces at play that threaten to put the damper on our feeling of laissez les bon temps roulet.
First, our miserly friends at OPEC, wants to cut production so that member countries can continue receiving top dollar for each barrel of oil they produce. As the price falls, OPEC members are considering cutting production by about two million barrels a day, or the equivalent facial oil production of six standard teenagers working at McDonalds. Apparently, the low price of crude is hurting their ability to light cigars with hundred dollar bills.
Secondly, some people (here) plan to enact a “windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate [as a] down payment [on a] long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief” Now, taxation is going to raise the cost of doing business for oil companies, so who might we imagine will be made to absorb that extra cost? We’ve got two choices to this question: 1) the oil companies will eat the tax or 2) they will pass the costs of the tax along to their customers…the public. My vote is for the latter. And, I can guarantee that after such a tax is enacted, annual gas prices will rise for each middle-class family by more than the $1,000 that they receive from the government.
So, my prediction is that gas prices will rise again back to their record levels and perhaps beyond. The best thing to do is enjoy the low prices now and hope that we are still addressing the problem of alternative fuels. It seems like every time that gas prices fall, we tend to forget about the need to be energy independent and we settle back into our old ways. So, until then, laissez les bon Hummers roulet.