There is a growing movement in the west to get gas prices down. With a gallon of unleaded now costing just over $4, in America people are beginning to feel the pinch. Over in Great Britain motorists can only dream of such low prices, groaning as they are under the weight of an eye watering $8.8 per gallonfor unleaded. That's right, 8.8 dollars per gallon! Most of this is fuel duty with purchase tax (VAT) on top. So the Brits are paying a tax on the tax they pay. Think about that.
With the powerful environmental lobby gloating and telling us all to walk or cycle and governments everywhere raking in the tax, the hard pressed motorist is just beginning to organise. With global demand for the black stuff growing ever higher the market fundamentals don't look like changing. In fact, because of the dramatic slide in share prices and the re-introduction of inflation, there aren't many places where you can get a better return for your money than from a barrel of oil. Which means that if you already own a barrel or two you'd be hard pushed to think of a reason to sell them right now and if you did, what would you do with the cash? Well, buy another barrel of course.
This is why oil states don't want to pump more than they absolutely have to. It's simply worth more to them in the ground than in a bank account that pays diddly-squat interest because of the credit crunch. This is restraining supply and adding to the upward price pressure. Anyway why should they sell more than they want to just so that western governments can add a tax to it?
If the oil producers can see that motorists will pay $8.8 per gallon, then if they had any sense they would stick their prices up even further and take what the market will bear for themselves, rather than letting western governments cream off their potential profit.
So is there any point in protesting? Just because a million or so customers don't buy gas on a given day, or boycott a particular chain of gas stations, will that change things? Well perhaps. In a democracy the government should in theory at least, represent the people. If by protesting effectively the message can be conveyed in such a way as to get legislators to reduce their tax take, then yes, the price can be lowered.
The problem here is that if that works, the government will then have to find the lost revenue from another source, such as increased income tax. What you gain on the swings, you will eventually lose on the roundabouts.
The only really effective fuel protest in modern times was in October 2000 in Britain, when tanker drivers went on strike and blockaded the oil refineries. Great Britain ran clean out of gas in less than a week. By friday lunchtime the country came to a grinding halt and the government was on the verge of collapse. The protesters realised they were far more successful than they'd ever dreamed and gave away the advantage. They called off the strike before ambulances and fire engines ran dry and people began to die wholesale.
That kind of action, if it could be replicated on a large scale and ruthlessly pursued regardless of the consequences, would make a real difference to government policy. Fuel companies might also cut us some slack as such tactics would scare everyone involved to the point where the consumer and the voter would be listened to.
Unfortunately for us, oil is what economists refer to as a "price inelastic commodity", meaning that because we have to have it, they can basically charge what they like and we will still have to have it. It's why they keep putting up tax on cigarettes and alcohol -because they know that a higher price won't kill demand by any significant degree. They do it because they can. Let's face it, British motorists pay more than double their U.S. counterparts and Great Britain still functions as a first world society and a major economy. The inference being drawn from that fact is that gas prices can still go up a lot lot further before the pips really start to squeak.
In the meantime we are left with awareness raising measures that will only be listened to at election time and then probably ignored afterwards.
The only sure way to cut the price is to reduce demand by enough so that we are no longer dependent upon imported oil. That way it becomes a national problem with a national solution and the voters and consumers would gain the whip hand. But first there is that thorny problem of how to voluntarily reduce demand without curtailing our freedoms and lifestyles by an unacceptable amount. If we don't find a way on our own, the price mechanism of the free market will do it for us -and it won't be pretty!
I believe this can be done relatively painlessly and in my next article on this subject I will look at the serious options for achieving this.
