Friday, September 12, 2008

Actually, It's in That Oil Marketer's Best Interest to Tell Us That It's in the Retailers' Best Interest to Keep Oil Prices Low

With Ike barreling at Texas coast oil fields, a Tennessee Oil Marketer Association spokesperson is quoted as saying that it's in the best interest of retailers to "keep prices low" so that people buy more gas. But notice that he does not say how low. Does he mean as low as $4 per gallon? Or $3? Certainly he doesn't mean that it is in the best interest of retailers to keep it as low as $2 or heaven forbid $1! He's not talking about keeping gas prices absolutely low. That would not be in their optimal financial interest.

Disaster capitalism allows the market to hit consumers--who are already skittish about the consequences of hurricanes like Ike hitting Texas oil fields--with dramatic spikes in prices and then engineer down to new artificial "lows" which look acceptable considering the disaster. How often do you see gas prices returning to some dramatic baseline of yesteryear? It's more like once it's over 3 bucks, it's there to stay.

So, what the guy actually is saying is that it is in retailers best interests to keep price low relative to the never ending rise of gas prices caused by these spikes in demand and by consumer fears whenever a disaster hits. Sure they're only going to make you pay what they think you will bear, but they are banking that what you think you can bear will change as their profit margin slowly increases annually. It's disaster desensitization.

Don't get me wrong. I'm not necessarily arguing that lowering prices would be the best thing for us as consumers or for the federal highway trust fund or for the environment. There is a certain hard cold logic to higher prices being more beneficial for all of us. But that's the problem in disaster capitalism: it doesn't benefit all of us. The lion's share goes to oil retailers and producers, who pull the strings of the market more than they let on, and wait for the next disaster to produce the cover of consumer chaos.

1 comment:

  1. What I find so interesting about all this is people keep making the "storm is coming, had to move and oil rig" excuse for the gouging.

    Weren't there hurricanes when Bill Clinton was president? Or Bush Sr...or Reagan for that matter?

    I remember some bad storms back then. But the price of gas never went up.