The Economics of Greed and Fear

“Last year, crude oil prices were around $140 per barrel and the gas price at the pump was $1.35 per litre. Now, a barrel of crude is $98 and the pump price is at $1.41,” says our Industry Minister. What happened to this unregulated, open market industry where in a state of perfect competition, prices would adjust based on demand and supply? I am no economist, although I try hard to balance my home budget, but there are factors in play here that even old Adam Smith did not bank on: greed and its evil twin fear.

So let’s get down to $$$ and Sense: there is obviously something going on between cracking that barrel of crude open and serving it at the pump which is causing this cost increase, right? We can’t blame it on increased demand in China or on diminishing global supplies anymore because those developments are captured in the price of crude and we know that the price of a barrel of the black stuff has not recovered from its highs of 2008. Oh yes, there are those hapless refineries that got flooded in Louisiana some time ago (funny place to locate refineries, right in the middle of hurricane alley, as if the designer was praying to have his creations hit by catastrophe and put out of commission), but this time the flooding is elsewhere —in Graceland and Winnipeg—so you can’t blame it on the floods either. How about poor Gaddafi? No, he’s too small a player and has problems of his own to deal with. How about terrorism? Negative, Osama is dead and the troops will be coming home soon (we hope). Inefficiency in distribution passed down to the consumer? Hold that thought. How about paying for the spill in New Orleans? Hmm. Perhaps, I’m getting warmer. How about “Let’s get back to gouging, where we were back in 2008 before that minor blip called a Global Recession put a damper on things?” I like that one! And what about, “Let’s Tweet and Facebook this thing to hell and scare the pants off people, sending them kilometres out of their way to get gas just to save two cents on a litre. And while we are at it, let’s shut down production and re•tool those refineries so that they can be destroyed in prime condition when hurricane season rolls around again.” Ah, now we may be getting somewhere.

The lack of transparency in pricing, the precision with which prices are adjusted by all competitors almost instantaneously, several times a day if necessary, and the lack of logic to the price increases has even got our new right wing majority government embarrassed. Will this enquiry called for by our Industry Minister really be much ado about nothing, like all the previous ones? Why should the government care if a price reduction would result in valuable tax dollars being shaved away? The only guy with skin in this game is the consumer.

Could our beleaguered consumer take a last stand, like Custer? Cut fuel consumption—easy to do for those like me who stare into a computer screen all day and talk to people only via phone—work from home a few days a week, ride a bicycle, walk? And use social media for social good by spreading consumer resistance. Perhaps the worm might turn and tickle the elephant’s toe, sending the mammoth into a fit of giggles, making him fall on his ass and break his back? Perhaps not, for when the fear is gone, we forget and return to our consumerist ways.

I try to be hopeful and banish the image of a cynical me retreating into an off•grid cabin in the woods, with a gun and a dog and a large sign saying “Crooks—keep out!” It will be a lonely existence indeed.

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