California Gets Gassed

Cruising The Pacific Coast Highway

We here in California have a love hate relationship with gasoline.

We’re probably the state most associated with the automobile (sorry Michigan, but it’s true). The California Dream involves in no small part a convertible sports car, the wind breezing through your hair, and the sun shining brightly and glinting off the gentle waves of the ocean as you motor down the Pacific Coast Highway.

Or it involves a Honda Civic in bumper to bumper traffic on the 101 during rush hour and you’re stuck behind a Google Bus.

Either one applies to us.

And either way that fantasy/reality now also involves $6 per gallon gas.

Yeah, we blew past $5 per gallon weeks ago so any of you complaining about that price point get no sympathy from us.

Governor Gavin Newsom, in an effort to alleviate the price gouge’s effect, has proposed an $11B plan that will cut taxes on gasoline purchases, make public transportation free for three months, and most headline worthy, send every registered driver in California a $400 debit card to help offset the higher cost of fuel. With Democrats holding a supermajority in the legislature and even Repugnicants loathe to want to appear dismissive of a program that no one could be against, it’s extremely likely this plan will pass.

But I’d like to go back to a word I used in the above paragraph. Gouge. Because that’s what this price hike is all about. It is nothing less than oil companies taking advantage of Putin’s War to gouge the public with higher prices. There is no reason prices should be going up like this save for a coordinated, highly thought out plan by the oil producers to get as much money as they can from the public.

Wait, I hear you say, isn’t that capitalism? They have a product, the demand for that product is high, thus the price for that product goes up to “whatever the market will bear”, that’s the way capitalism works.

Eh, not so much. Not when it comes to the price of fuel, the one product that impacts the price of every other product.

The cost of fuel bears directly into the rise of inflation. Every item bought and sold in the world, every service rendered, every desire licit and illicit, has as part of it’s cost the price of the fuel needed to bring it to market. You can make the best ball bearings in the world and want to sell them at a ridiculously low price, but the price you sell it for has to account in one way or another for what it will cost to get them to the customer. If the price of gas goes up, the cost of those ball bearings are going to go up. Simple as that.

Let me clue you in to something. When a company has to account for a higher cost of bringing it’s goods to market, they don’t just add in that higher cost and let it go. They look at it as having made an investment and they are looking for a certain percentage return on that investment/product. So if it costs $1 to make a bag of ball bearings, including the cost of the fuel to get them to the retailer, and the manufacturer needs to make a 50% markup on each bag, then the price to the retailer will be $1.50. If the price of gas goes up so now it costs $1.25 to make the bag, in order just to maintain their current profit margin the price to the retailer is now going to be about $1.90.

No other product has that effect on the cost of doing business for every business.

I have always felt it was disingenuous of the oil companies to spout how the price of gasoline is just keeping up with inflation when THEY ARE THE ROOT CAUSE OF INFLATION! And not only are they the root cause of inflation, they manipulate the market to make sure they can raise their prices to whatever price they want.

Before the Putin War gas prices rose and (sometimes) fell every time the price of oil rose or (sometimes) fell. But the oil companies are the ones setting the production schedule for oil, increasing and decreasing the flow of the black gold in the past by simply taking refineries offline or putting them back on. They could produce enough oil to easily compensate for the loss of Russian oil, but they have chosen not to. Instead they have made oil into Cabbage Patch Kids, producing just enough to wet the appetite of the market, but not enough to totally satisfy the market.

Clearly the oil companies are the ones to blame for the high price of gas. So why are people protesting about the cost of gas to their elected officials? Shouldn’t they be protesting outside the corporate headquarters of Shell, Exxon, Union 76, et al? Demanding that the government do something about the high cost of gas when the government doesn’t set the price of gas is like demanding your spouse do something about the garbage not being picked up on time. Your spouse can listen and commiserate but you would be better served to make your demands to the garbage company.

Yet in this case the government of California is doing something. Who will benefit? Yes the public, at first. Ultimately though the benefit is going to the oil companies. They don’t care who they get their pound of flesh from, they are just as happy to get if from the government as from the individual. What this plan should include, and we all know  it won’t, is to tax the shit out of oil companies to recover the $11B. They caused the problem, they need to pay to fix it. We, the people of California, want our money back. And with interest.

Unfortunately, I don’t see that happening.

How else can we end this but by calling on the Beatles.

Shapiro Out