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The sign out front reads $2.899 for a gallon of gasoline. Prices haven’t been this low for at least four years. What happened? Will the price stay this low?
The short answer is that a lot of things happened, some of them mysterious. And it can’t remain this low forever, but perhaps for a few months. It’s all about the market for oil and perhaps some pernicious politics that, as always, make oil prices a geopolitical game.
The latest crisis in Iraq has become a grave situation. This spillover from Syria, in the form of the Islamic State of Iraq and Syria (ISIS) has already become a regional conflict even bigger than the refugee crisis that has spilled over into all of the neighbors of Syria.
What’s less obvious is that ultimately this could become something much more profound if everyone involved manages to do the right thing for once. The odds of that happening are slim, but important steps forward have been taken by the largest group of stateless people in the world, the Kurds. How they play their hand could determine how many wrongs dating back to the fall of the Ottoman Empire nearly a century ago are finally righted.
The Keystone XL Pipeline dispute is one of the hottest political issues for the President Obama. Backers claim that it will provide jobs and detractors claim it’s an disaster waiting to happen. The dispute has torn apart the Democratic Party, with unions calling for the jobs and environmentalists working feverishly to stop the pipeline. Both of these claims are rooted in facts, but both are overblown.
Rather than make a decision on the pipeline, however the administration has delayed the pipeline yet again, probably until after the November 2014 midterm election. This upset nearly everyone. But in terms of what is actually needed, this is probably the best thing to happen. The reason for this lies deep in Canadian oil and politics, quite apart from whatever we have going on in the US.
The United States’ biggest bogeyman dictator remaining, Hugo Chávez, has died of cancer at age 58. His status as our most feared repressive ruler says something about the state of the world today because by any reasonable accounts he was neither all that repressive nor that big of a challenge to the US. Even the amount he was feared was greatly exaggerated as a badge of honor by this man of the people. Yet his passing is extremely important in that it probably marks a new phase in the continuing progress of Latin America.
Why did we fear Chávez, if we did at all? What will come next? Most of it has been show so far, but in typical South American fashion it was a pretty good show. This one may have some lasting and even positive effects.
News shown out over the highway in big glowing numbers – 3.289, a number lower than anyone had seen in a while. That was the price per gallon of gasoline the last time the little purple car was filled up and piloted back down the highway. A few months earlier it was 3.929 at the same station, about 20% higher or $7.68 over a tankful. How can that possibly be?
Many things go into the price of gasoline, but the most important is the cost for crude oil. Something around 60% of the cost at the pump is the raw material that fuels our lives, the rest being more or less fixed costs in refining, transportation, taxes, and profit. It’s the price of oil that is notoriously volatile, driving the changes at the pump. And something is about to be done about it, too.
Barataria - The work of Erik Hare 