Last night on a warm Virginia evening, Alexa, Brice, Timmy, Rob, and I went to go get some fried chicken to eat on the fields at Clearview Elementary School. It was going to be perfect: we were going to get a twelve-piece meal of both spicy and original chicken along with some biscuits and coleslaw and mashed taters. It would cost about five dollars a person.
While driving in Alexa's minivan, we were driving on Elden Street past the Jiffy Lube and Church, and then I saw it. It was 4.04. Four dollars and four cents. This was the readout of the section in the glowing Exxon station's price sign for regular-grade gasoline. I pointed in shock and awe after seeing this.
I screamed "Hey, guys, look! It's over four! Thank goodness I didn't drive my car! Thanks, Alexa."
This is not good. It is already June and prices are going just as planned, over four dollars per gallon. And listen here, kiddies, I don't think it's going down any time soon.
If it were to ever go down to a significantly lower price, it would damage our economy because the only way it would is by fixing prices. Sure this sounds like a plan, right? Only if it is a plan made to decimate American commodities. When you fix your prices, you create an artificial price ceiling which in turn does not accurately portray the true cost of the good or service.
So for example, if the bread producers are running low on supply and prices being to go to extorted levels, I decide to fix prices at $1.99 for every package of white bread purchased at the grocery store. Fantastic; people are now able to buy more of the good and can feed their family. This is where most politicians leave off. They forget that after millions of previously non-bread buying families start purchasing loaf upon loaf, you drain an already drained supply. In addition to this, you end up giving people who have little utility for bread greater access than those who have a larger utility.
In order to understand this a little more, you have to know about the invisible hand. This hand is what naturally controls and adjusts the marketplace as time goes on. It is the most efficient distributor of wealth, not the government.
Here is a link to the "Ten Principles of Economics" that I know everyone should read and understand, because they are true.
http://www.slembeck.ch/principles.html
Also, here is a rap version:
http://gregmankiw.blogspot.com/2007/12/principles-of-economics
-rap-version.html
But now we come to the idea that we may have reached our "peak of production" of oil or as others say "peak oil." In other words, we are just draining an already drained resource; we produce less and less of it every day at a cost higher than the oil is actually worth no matter what we do because the supply is shrinking and the remaining oil is harder to extract and locate.
Here is a link discussing peak of production theories:
http://www.energybulletin.net/primer.php
And here's a video about peak oil:
http://video.google.com/
videoplay?docid=5934722682850294854&q=peak+
oil&ei=fdJCSLeGJoS4rgLKwvWcCQ
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7 comments:
Ben, why do you have to try and sound smart all the time? Honestly now, who do you think your impressing? Jk, but you wrote a thesis to say that gas prices are ridiculous and out of our control. But its word because you were on your way to get fried chicken and go hang out at an elementary school as a high school senior. Its all good though buddy, cause I know where your at with these gas prices, people have no idea about bad gas mileage do they...
hahahaa
Good thing I¨m not driving in the next month! I don´t even know what gas costs here in Austria...I swear, everyone drives a smartcar or some small european car. Though, there are a lot more really nice cars here than at home (lamborguini....porches...etc etc). Oh yeah, and gas is obviously by the liter...
like I said, glad I¨m not driving
Ben you are going to make an excellent politician/economist/public speaker/english teacher someday. I won't deny that kids in your classes listening to your lectures will be very bored by your verbose style, but the ones that listen will learn something. You are already teaching me! I am a senior in high school and don't know enough about these principles of economics. I think it is a severely undetaught subject and I can not even begin to touch upon how much it scares me that in four short years I am entering the "real" world with no knowledge of how the real world actually works! Let's pump up the real world education in public schools. How am I supposed to work with the system when I don't know what the system is. This is a tangent off of your original post but I thought you should know I appreciated your explanations. Also I agree, gas sucks. Not as much for me as for you and your jeep, but it still sucks.
Ben. You are so smart.
Ben, I completely agree with you on price controls, they suck. However, I learned from watching a video on CATO that prices for oil should drop a little bit. Memorial Day is usually when we hit the peak in price. It takes a while for the oil companies to switch from winter time gasoline to summer time blends, but once all the blends are going the price drops significantly. I think nuclear energy is the best practical, alternative energy source.
so ya, gas prices suck, we all know this. Im going to attempt to drive less. But really, we should all feel incredibly lucky for our gas prices. In almost every other nation gas prices are soooo much higher. so we got realitivly
'cheap' gas.
buts its still &*%#%@ expensive
Hey Ben, I see what youre saying with the gas prices and caps, but I think before people start rethinking their economic strategies they would be smart to look into what kinds of cars they're driving. It's a lot easier to switch to a more fuel-efficient car than to recreate the American economy.
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