Low Reserves + High Demand = More $$$

Isn’t that how that works? For those of you that haven’t had the luxury of sitting through an Economics class, lemme fill you in on something called Supply vs. Demand. Here’s a fitting definition from good ol Wikipedia.

In economics, supply and demand describes market relations between prospective sellers and buyers of a good. The supply and demand model determines price and quantity sold in the market. The model is fundamental in microeconomic analysis of buyers and sellers and of their interactions in a market. It is used as a point of departure for other economic models and theories. The model predicts that in a competitive market, price will function to equalize the quantity demanded by consumers and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity. The model incorporates other factors changing such equilibrium as reflected in a shift of demand or supply.

If everything went according to supply & demand, then I could actually be able to understand why were paying high gas prices. Unfortunately, the link for this recently published article proves otherwise. The United States has gas reserves that are approaching early 1990’s levels. Granted, I was maybe 4-5 during 1990-91, but weren’t gas prices around $.95? Guess what the article cites as reasons for the ever rising at-the-pump price of gasoline:

1.) Speculation in the market

2.) The strength of the American Dollar in the Global Economy (which is weak as hell at this point)

3.) The development of Ethanol (partial reason)

In addition to that, the Federal Government taxpayers are bailing out Bear Stearns (the bank that was largely in part the cause of the housing market crash because of dumb moves on the part of executives).

When it became undeniable that poor decision-making by company executives had put a respected 85-year-old U.S. institution in financial peril, why did the Federal Reserve rush in to save investment bank Bear Stearns (BSC)? Of course, we need to restore confidence in our financial institutions, but why protect the personal assets of those who were responsible for the mess? Both the corporation’s officers and its board members should contribute their personal assets toward saving the bank they put in the ditch—the bank all of us are going to pay to bail out.

Instead, the Bush administration is protecting those responsible for creating yet another speculative bubble in oil futures, and is protecting investors in the ethanol industry—much to the detriment of food-processing companies such as Pilgrim’s Pride. And the net result of all this is that the prices of crude and gasoline rise ever higher thanks to a “shortage” that does not exist, while food costs are soaring thanks in part to the ethanol mandate.

When will the Federal Government go back to giving a damn about its citizens vs. raising the prices of goods and services so high to the point where most people will be forced to relocate to new, cheaper surroundings?

Random Thought of the Moment: “I guess it’s safe to say that we’ll be paying $5.00/gallon before the summer is over.” SMH

The Song of the Moment: “Danger” by Erykah Badu

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One Response to Low Reserves + High Demand = More $$$

  1. The gov’t sucks. Someone is getting rich of this, ans if gas hits $5…OO GWB better not be on the streets, Im robbing his ass…

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