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Gasoline Crosses $5.00 per Gallon Threshold

June 10th, 2008

Today Costa Rica awoke to gas prices that now exceed $5.00 per US Gallon. Before I delve into this more, it is worthwhile discussing world gasoline prices.

Caution! Rant coming!

As most expats, I watch the current political battle for the Presidency of the United States. I watch as Barrack Obama and others make their stupid claims that they will “do something” about the price of gasoline in the US, now over $4.00 per gallon in 23 states. They just don’t get it. To me, it as is stupid as their claims that they will stem the outflow of jobs from the USA to other countries. I have news for them. The first will not happen without strong leadership and new ideas (which neither candidate has even remotely shown) and it is years too late the do anything about the second.

People love to blame big oil. It is so very convenient to blame those big companies rather than accept responsibility for what is the real problem. We are pigs, and this is not limited to those in the USA. The same is true here.

The USA has about only 4-5% of the world’s population yet uses 25% of the world’s oil! Oil is a commodity and nothing more. All countries use oil and therefore all countries must buy oil on the world markets. Demand affects this price as does supply. The new big kid on the block is China, a country that is now flexing its economic and manufacturing muscle and their needs are huge. Demand! They buy a LOT of oil and that is not going to stop. In fact, it will be just the opposite. The oil companies in the US, as the government of Costa Rica buy oil on the world markets and they pay whatever is needed to meet their demand. There is no real negotiation as someone else WILL pay the asking price.

Great LeadersipSo who is to blame? George Bush? YES! Bush and every single President of the United States for the past 25 years of so. Also, every member of congress, Republican or Democrat. Not ONE of these clowns has evidenced a modicum of guts and taken a leadership position to wean us off oil, and that CAN be done. Look at Brazil, a great example. Any action we start today will take years to bear fruit, so our leaders bicker, blame each other, blame the other party, blame the oil companies… whatever! Can you imagine a politician standing up and saying that he or she accepts responsibility for the lack of leadership? Many members of congress have been there for years, decades even… and they do nothing! It is time to throw the rascals out!

So what is needed and needs to be done? To answer that, we need to look at both supply and demand. To drop oil prices, either supply must go up, demand go down, or (preferably) both.

Supply

Drill new wells. Simple huh? It is not. Why? We now run afoul of the environmentalists. Everyone wants to do something about the environment. Hell, it is our earth, but oil is in places we want to protect and the oil companies cannot drill there. Much easier to drill in someone else’s country right?

The result? We become subservient to that bonehead in Iran, the Saudis, Hugo Chavez. An entire cadre of world creeps. In fact, is there one major oil producing country that even likes the USA? Between them, they exert enormous control on the USA and its economy. This can not continue. We are at peril.

So the big decision needs to be made. If we are not going to use self control and use less gasoline and oil products (reduce demand), we need to increase supply, but only from our own country (USA). That means drilling new wells in places that will give the environmentalists heart failure.

Even here in Costa Rica, that decision may need be made as there is evidence of offshore oil deposits on the Pacific coast. So far, Costa Rica has not even permitted exploration. I wonder how they will think when gasoline hits $9.00 per gallon. I cannot see how we can have it both ways.

Then there is nuclear power! Oops, here come those pesky environmentalists again. Coal? There is enough coal to produce electric power for the entire USA for 90 years! It is also VERY cheap and there have been new techniques to clean up burning coal. Not as clean as nuclear, but much better than years before. Do you think that 90 years will be long enough to find some real leaders who will wean us, forcibly if necessary, from suckling the breast of big oil? Well certainly not in this election year if McCain and Obama don’t stop stroking us with platitudes and start addressing the real issues.

Besides, silly me! The environmentalists will never permit us to use coal. Heaven forbid!

It also probably does not help that there has not been a new oil refinery built in the USA in 30 years. Why?

Demand

Everyone complains about the high gas prices but that seems to be it. Of course some folks have switched to using public transportation, riding a bike to work, etc. Do you know a lot of them? I do not. I keep in touch with people in the US and no one has really made a lot of changes. Couple of canceled drive vacations.

Here in Costa Rica, they interviewed a bunch of people and asked about the gas prices and how it is affecting them. The poorer folks already use buses as they never had a car in the first place, but the others? They are buying fewer clothes! No kidding! Rather than cut back on driving, they are using discretionary spending to buy maybe one less pair of shoes. Go figure. And Costa Rica has a huge and extensive public transportation network. Get the impression that folks are resistant to the process? Someone needs to do a similar poll or survey in the USA.

But some places in the USA, Los Angeles comes to mind, were never designed around a public transportation system. So how do they cut back? CAN they cut back? If they could, would they? People love their cars and love their freedom to hop in and get away.

Alternatives

So all this us with the alternatives. Hybrid cars are cool, but it takes about two years for the increased cost of those cars to be offset by the decrease in fuel cost. Down here it takes 3-4 years to offet the higher price.

Work from Home. Telecommute?

Alternative fuels? Brazil uses a fuel made from sugar cane I think. Far cheaper. Efficient. Clean. They are far less dependent on oil than most any other developed country. Odd then that our US congress has placed HUGE tariffs on the import of alternative fuels. Yup! Cross my heart!

I can go on, but I am tiring of my own rant. We need leadership. Someone who will maybe place a tax of 100% on any vehicle that uses less then 35 miles per gallon. Imagine a world sans SUVs, gas guzzlers, etc.

Back to Costa Rica. Today’s increase is the sixth this year with another most assuredly coming in July. Gas prices here are government controlled and prices at all gas stations are fixed.

Gasoline today is $5.10 per gallon for super, $4.97 for regular and $4.82 for diesel.

In July, you can pretty much be assured of an $.11 per gallon increase across the board.

When I arrived in Costa Rica, I bought the car that I currently own. Still runs great. To fill up cost me about 7,000 colones (about 8,000 colones in today’s valuation or $15.23).

Today, it costs 30,000 colones or $57.47.

I was gonna go out and buy a new pair of shoes for my wife’s birthday this week.

Changed my mind.


2 Responses to “Gasoline Crosses $5.00 per Gallon Threshold”

  1. Tamar on June 11, 2008 9:10 am

    Dear Tim,

    Very nice article where you hit some serious points.

    I live in Costa Rica myself and see the prices rising too. Not only for gasoline, but also for almost everything else. I completely agree with your point of view that the government(s) need to take responsability in this matter.

    Still for me the fuel here is very cheap. I come from the Netherlands where the precies rise almost every two weeks. Just like here the governments blames it on the high oil prices and even tries to make us happy with the words that the prices don’t rise SO hard because of the strong Euro. Currently a gallon of gasoline costs $8,70 (and on the highways even more). Besides the gasoline prices it’s exremely expensive to even OWN a car. Yearly taxes, maintenance, or even the buying itself, everything is taxed by the government.

    And does it work? In my opinion not. There are more cars then ever there. The roads are full… Still a lot of people prefer their car over the public transport, for various reasons.

    I think that no matter what, no matter how high the prices get, people wil keep paying for their own transportation. Like you said, people are prepared to give up other things first.

    Let’s see what the future brings us :).

    So far my reaction on your blog. Keep posting! Although this is my first reaction I always read your blog with pleasure :).

  2. John on June 11, 2008 5:14 pm

    Good article, One thing that most people do not realize is the amount of money the government taxes for gas in relation to what the oil companies make from a gallon of gas. Oil companies are pulling only two to three percent while the govt is raking in about 18 percent with additional taxes charged by local and state governments in the US. So the politicians bicker about a company actually making a profit for exploration, refining, transport ect to bring the product to market while the govt taxes and does nothing to provide the product to the public. It is time for people to hold the govt accountable for their actions and inaction in solving this problem. The US is sinking very fast. Estados Undidos is very accurate. The govt has done nothing but sabotage the currency, run up uncontrollable deficits, and taken away the rights of the people. It certainly is on the fast road to irreversible financial collapse. 2/3 of the GDP in the US is consumer goods. Manufacturing and Industry has moved overseas. What happens when the next bubble bursts (Credit) and people are no longer able to borrow to purchase things? Most people in the US do not realize what a critical situation they are in and what the future holds. Their arrogance has caused them to be dumbed down to believe that this could never happen. Gas prices will be the least of concerns when people cant put food on the table.

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