The price of oil and gasoline is going steadily up again, as I had expected. Earlier, I predicted that some time this summer, the price of oil would peak at about $95 a barrel and the price of gasoline at about $3.40. This is because we are somewhere near peak oil production, although it is hard to tell just how near, due to the damage by Hurricane Katrian. In general, prices are going to go up, because demand is up and supply is either going up slightly or staying steady. The only way to get them down is through lower demand.
Nevertheless, people are blaming the oil companies again. New York Senator Charles Schumer is calling for an investigation to see whether oil companies are deliberately holding back production to raise prices. He says they are running at 85% capacity, when they should be running at 90%. Apparently he does not know or does not want to admit that there is a supply problem with oil that is driving up the prices.
If the oil companies are running at 85% when they could be running at 90%, they are really doing us a favor. They are using less oil. That will delay the day that shortages and other undesirable effects come because of the dwindling supply of cheap oil. Why does Sen. Schumer want us to go full tilt with the oil production? Why does he want to gobble up the stuff faster and run out faster?
Prices are going up because supply can't meet demand or can just barely meet demand. Now that may bring in huge profits to the oil companies. If so, they should use the money to sponsor looking for new sources of energy or for conservation. Paying their executives hundreds of millions of dollars per year certainly is not going to help their reputation. But the oil companies can’t be blamed for gouging the public, regardless of what it does for their profits.
Stop blaming the oil companies and do something that will help. If prices are higher, curtail consumption, and encourage development of renewable energy.
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