Wednesday, April 18, 2012

America: Being Conditioned to Pay More – and Get Less.

Patrick Henningsen
April 18, 2012
It’s official: Americans have now been safely conditioned to accept $4 per gallon of gasoline.
It worked. While fuel prices skyrocket and stabilize at new highs, a powerful and highly organized cartel of corporations are now reclining in their boardroom chairs and patting each other on the backs for finally conquering the will of the formerly ferrell American consumer.
For an economy begging for recovery, these new price highs cannot mean good news. Why are gas prices so important? Gas prices directly influence inflation. They affect almost every other domestic service and essential commodity we use on a day to day basis – deliveries, labor, materials, food, postage and list goes on.
There’s only one problem with this fuel price picture: it is going against the universal laws of free market economics. The law of supply and demand dictates that demand should drop if there is a glut in market supply, and we should then expect a drop in price. Unfortunately for American consumers, just the opposite has happened.
Hidden within a recent Washington Post article about ‘cutting our fuel consumption’ is proof by their own admission:
The response to $4 gasoline is reinforcing a trend toward lower fuel consumption. This will be the third year in the past five with historically high oil prices. Even before the latest price spike, gasoline consumption had dropped 6 percent from 2007 through 2011, the EIA said.
The Federal Highway Administration adds that the number of vehicle miles driven over a 12-month period ending January was lower than in any year since 2004.
In the case of gas, there are three major factors which have actually lowered demand in the last year.
The first is that due to an increase in fuel efficient and hybrid cars, contributing to a drop in overall gas consumption in the US to its lowest levels in a decade.

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