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I wrote a post about a week or two ago regarding the ever-escalating price of gas that, in retrospect, was a bit unfounded based on things that I’ve read and come to understand recently. Being who I am and in trying to keep up with my own sense of social responsibility, I feel it is necessary to make my own retort. I will leave the original post online and untouched in the name of demonstrating intellectual growth and progress.

I’m frustrated. Like everyone else, I see a four dollar price figure on the display at the pump and it is almost enough to make me want to vomit. As with all things, there are market forces in effect and each and every one of us has to be responsible and informed when making judgments and passing along word of mouth information.

I hear rumblings everywhere of how horrible the gas companies are and how they are reaping the benefits of this market trend towards escalated gas prices. And there can certainly be a case made for that argument, given that their profit margins are based on a percentage of the overall price we pay at the pump. However, if you break it down, our first and PRIMARY culprit in all of this is OPEC and the Oil Producing companies in the Middle East. These prices are set and regulated by the per gallon prices that have been dictated by the OPEC market for oil. When the overall cost of a barrel of oil increases, so too does the overall price for a gallon of gas that comes from our domestic refineries. A side effect of that is an equilateral increase in profit margins for our gas companies here, however, that overall profit margin is significantly overshadowed by the profits our own government generates in taxation on this alleged “luxury good”.

By the percentages, to my understanding, 81 percent of the overall price of a gallon of gas goes to the oil producers in the Middle East. Obviously, this being the root source of the basic elements, in market terms, this would make sense. Another four percent of that overall price goes to the gas company (Exxon, Mobil, et al). Keep in mind, this is not their pure profit margin……operating costs have to be taken into account. That leaves 15 percent of the overall cost of a gallon of gas. Where does that fifteen percent go? The US Government. In taxation dollars. So if the current rate is a flat four dollars per gallon of gasoline, that means the US Government is taking in 60 cents for every gallon of gasoline that we put into our cars, as opposed to the 30 cents per gallon they were taking in just a year or two ago (and even less, previous to the start of this trend).

So while we can maintain our criticisms of the gas companies for their role in all of this, we also need to look at EVERYONE who is accountable. This leads me to MY biggest question (being a firm believer in minimalistic government): where is that significant increase in revenue that our own government is taking in going? While that money is being sucked out of our economy like water from a cactus, it would be nice to know what grand endeavors our care-taking government is planning…..it really would.

But there’s more. We have solutions to this problem. Why can we not drill our own deposits in the Gulf of Mexico and Alaska? Oh, that’s right…..because it would thoroughly destroy our environment. Wait, Cuba is already drilling the Gulf of Mexico just 75 miles off the coast of Miami. In effect, what we have done, in economic terms, by being idealistic and (as I like to call it) PseudoGovernmentEMO, is taken ourselves out of a strong revenue generating market and put this into the hands of third-world countries that we have had a less than stellar history with- many of which tend to employ political systems that center around fascism and tyranny.

Don’t get me wrong, I am not in support of just arbitrarily destroying the very ground we walk on. Nothing could be farther from the truth. However, in times of economic crisis, it’s important to seek out, through standard market initiatives and practices, solutions to a greater overall problem that is having a more immediate impact. This is most certainly one of those times. Already, with talk of opening drilling operations here, Saudi Arabia has announced plans to increase production in response. The last thing OPEC wants to see is a new market for oil open up here, in a place where we tend to do things more methodically and efficiently.

I’m a firm believer in allowing the market to function as an independent entity. What we tend to do when we force the hand of a market is put a band-aid on a short-term problem while creating bigger, more wide-spread problems in the long term. One could make an argument that I am sitting here supporting grand government action in the name of fixing a short-term problem. What I’m actually seeking is for our government to reverse an action it had taken prior and allow a new and lucrative economic market to open up on our own soil and share some of the wealth that we have basically spoon-fed to the Middle East through years of inactivity.

This is one bright shiny possibility in what, to some, seems like the most grim times we have ever faced (commentary on the doomsday culture we currently live in withheld). The other bright and shiny spot (for all those nature lovers out there) is that this untimely and temporarily straining wrinkle in the market has opened our eyes to the fact that we have the power at our fingertips to seek out alternative energy resources. Already, some of the major manufacturers of Sport-Utility Vehicles have announced plans to pull some of their most gas-hungry products off of the market in direct response. Consumers are seeking out alternatives in the way of hybrid vehicles and alternative methods of transportation. Just the other day I spoke with a co-worker who has taken to riding his bicycle to work. The amount of money he is saving himself, when you think about (and, let me tell you, I have) is unreal.

To put the cost in perspective……driving to and from work five days a week, in addition to my own personal travel, generally takes up about three tanks of gas every two weeks (granted, this is the evil SUV-driver in me talking). My tank can hold 17 gallons of gas at four dollars a tank, which equates to 68 dollars per tank. Multiply this by the three tanks that I fill up with in  a given two week period and that sum total comes to 204 dollars. For those of us in that middle class demographic, this equates to anywhere between 10 and 20 percent of our total take home. It’s a drain to be sure.

But my overall point is, while it sucks right now, there are lights at the end of this long and winding tunnel and a stabilizing wind might just be blowing us in a direction of future progress.