My opinion article in the local paper...
This was written in respone to a gentlemen calling for everyone to boycott gas stations by purchasing nothing (no food, beer, etc.) but gas.
To the Editor:
Re: Past the gas pump.
There appears to be mass confusion regarding pricing by gasoline and oil companies.
The oil companies themselves do not dictate the price of oil; supply (somewhat controlled by the Organization of Petroleum Exporting Countries) and demand cause oil to rise and fall.
For example, crude-oil prices more than likely will rise, as oil production has fallen 92 percent and gas output has been cut by 83 percent in the Gulf of Mexico due to Hurricane Katrina.
Some of the other major pressures on gasoline include Chinese demand and the lack of supply.
Most do not realize that oil costs about the same everywhere in the United States, but the differences in per-gallon prices are created by fuel regulations.
Federal and state regulations on components put into gas increase production costs from these base prices (of which crude oil is half of these costs).
Chicago's rules are some of the most strict in the country. So, why protest the oil companies and not those including a 20 percent tax on your gasoline? That comes to nearly 60 cents for the now $3 a gallon prices.
Because Chicago's refining capacity is limited, any little disturbance such as the hurricane can cause prices to soar.
The oil companies and gas stations do not simply decide to hike prices to take advantage of drivers; they follow the supply and demand of the products they sell.
If one's costs for making watches went from $5 a watch to $40 a watch due to an increase in the components, I would think the maker would increase the sales price to match or better the costs.
Placing all of the blame on the oil companies is misguided.