Bush and His Oil Buddies Have Decided to Ease the Pressure a Bit (But Maybe Only In My Town) Part 1
by Johann Robert Riet

As I was driving a few days ago, doing some errands, I noticed that the price of gas seemed to be relatively lower. By relatively lower, I mean the price of gas had declined by about 20 cents a gallon, as compared to a few weeks earlier. Because I have a number of friends, and a far greater number of fellow citizens, who believe that the price of gas is set by a conspiracy, the most current one and most oft mentioned one being "George Bush and His Oil Buddies", I began to think about the reasons for why they would decide to take less money for gasoline at this time. As hard as I tried, I could not think of a reason. I considered that they might be easing off a bit so that those who believed in a conspiracy, might be convinced that there is no conspiracy, and after accomplishing that, they could raise the price once more without receiving complaints from the conspiracy-theorists.

No, that didn't rest comfortably on my mind. I have been around now for more decades than I would like to admit to anyone, and for as long as I have been around, gas prices have been going up, and they have been going down. When they go up, the conspiracy-theorists shout, "Conspiracy -- G. W. and his oil buddies are ripping us off!" Oddly though, when they go down, no one even mentions G.W. and his oil buddies. In fact, it seems as though they never notice decreasing prices. I suppose it is understandable that one would never notice the effects of supply and demand on price, if they only seem to notice increases in price and never decreases in price, and don't pay attention to supply and demand dynamics.

As I drove on, exiting my hometown area, I was a bit surprised to find that the price of gas in the next town (which happened to be in an adjacent state) while lower, not as low as it was in my hometown. I began to wonder why G.W. and his oil buddies liked people more in my hometown. In fact, I wondered why gasoline prices never seemed to be the same exact price as I drove along. Well of course, there are taxes, which on average are 15% of the total price of gasoline, but are different in different states. But taxes aren't always the cause of the difference, because I drive between two states adjacent to one another, and without either state adjusting taxes, there still is a differential in excess of the tax, and that differential is not constant. It varies as much as 10 to 20 cents a gallon. I thought to myself, George and his buddies not only have to decide how much we should pay for gas as a nation, but they have to decide how much each regional market should pay as compared to other markets. Where DO they find the time?

Then I thought that the prices are sure to be lower in Texas than in my regional market, because that is where George and probably most of his buddies come from. When I arrived home from this day's trip, I checked the Department of Energy's website for the prices of gasoline. Sure enough, the price of gasoline was about 10 cents cheaper in Texas than in my area. That clinched it. It must be George and his buddies! I did consider that Texas produces crude oil, and my state does not. And I wondered whether because Texas is closer to a source of crude, that might account for the difference. I thought that was possible, but in the absence of "smoking gun" proof, I decided to go with the "George and his oil buddies" explanation. As long as I am going to be angry about the price of gas being high, as compared to a few years back, even though I was noticing a current respite, I decided it made more sense to be mad at a person, or group of persons. I mean, if I decided to blame economic and structural factors, I would have to give up being angry, or I would have to check into a mental hospital. But then I thought how liberals are always angry and they rarely check into a mental hospital. I am sure some of their anger has to be caused by factors outside anyone's control in the short term. Yes, I am sure that has to be so.

Still, I was left with the problem of understanding why George and his buddies had decided to pick this particular moment to roll back the price of gas. The next day, as I was driving around, listened to my radio. I heard a report that January had not been a very cold winter month. The report spoke about the possible positive impact on our economy, because people did not have to use, and therefore, did not have to buy as much heating oil. While I am a simple layman, and not an energy expert, I thought I recalled that heating oil and gasoline are made from the same raw material; crude oil. Yes, I am sure I heard that someplace.

Now my head began to spin as I began to recall some Economics 101 from college. As I thought and I thought, I came to the conclusion that due to the warmer than expected temperatures in January, the heating oil companies probably experienced an inventory build-up. With heating oil inventories reaching higher than optimum levels, perhaps the heating oil companies switched their refining capacity to making gasoline. After all, I'm pretty sure the same companies that make heating oil also make gasoline. If they did switch their refining capacity to the manufacturing of gasoline, those inventories also began to increase compared to a few weeks ago. Gasoline prices had been stable for a time prior to this warm January. I thought I recalled from Econ 101 that given the price of any product, consumers will purchase a certain amount. So I was sure that if price had been stable for a few weeks, the driving decisions of automobile owners had also been stable. What are George and his oil buddies to do?