Way back during the day, the day in this instance being the late 80’s, at which time I was attending the University of Kentucky, I noticed something at the job I then held which allowed me to go to school. I was the assistant manager at Convenient Food Store No. 126, a corporate entity that, alas, is now no more, when I observed that the prices of our tobacco products were raised twice a year at predictable intervals. Each time the price would go up a nickel or a dime, and yet at no time did these price increases affect the quantity of these products that we sold.
Well, of course such paltry increases wouldn’t deter the consumers of tobacco. As long as they were done in dribs and drabs, the tobacco companies could get by with their price increases, even if there was no apparent reason for them.
It wasn’t like they had yet agreed to pay the billions of dollars required to settle the lawsuits brought by states for treating all the illnesses their products cause. Nor was there much of a state tobacco tax, just like there is still not much of a state tobacco tax. Nope, the truth is that these companies could get what they wanted for their product for one good reason, and that is, their consumers were and continue to be hopelessly addicted to their product.
What other producers of consumer products can take their customers for granted like that? Well, there are the purveyors of illegal drugs. They can charge what they like for their products, and the consumer must suck it up, or do without, because there is that problem with addiction. Luckily, none of the products these two groups produce are necessary to everyday life, and even more luckily, if you are smart enough to live without them, you can live so much better.
And then there is the petroleum industry, without whose products our society would grind to a screeching halt. We are truly beholden to this group for gasoline, motor oil, diesel fuel, home heating fuel, etc., and don’t think that they don’t know it. Several times during our recent history, we have seen the prices of their products reach what we felt were exorbitant levels, yet each time, like the above mentioned consumers, we felt as though we had no choice but to pay.
Well, on most of those occasions there were real reasons for the price increases. There were, in the 70’s, the Arab oil embargos, and the resultant drying up of refined-oil products. And the price, which went higher than we were happy with, did not go beyond that which we could actually pay. In fact, it seems kind of funny now, to think how we reacted when the price of gas went from 39 to over 60 cents a gallon. I suspect it was more the shortage that ensued than the actual increase that got to us.
When the price of gas again started to rise in the early 80’s, it really did then what it is beginning to do now; it approached a level where there was real physical pain whenever you had to fill up. After all, the price was above $1.50 a gallon in 1982, when I took one big mama of a road trip from Pike County to Ft. Devens, Mass. That would be the equivalent of well over $3.00 a gallon now, and if the memory of these high prices don’t bring painful memories, then you have only to reflect on the prices that these products fetched last year.
Well, again, there were reasons for these huge price increases last year. Katrina was as close to the perfect storm as I suspect we’ll ever want to see, and they exposed certain weaknesses in the supply system that is in place for petroleum products. First is the concentration of refineries in the gulf area, which is prone to hits by the hurricanes that have of late been intensifying, some say, ironically enough, by our overuse of such carbon fuels. And there are the offshore petroleum deposits, where production is subject to disruption by these same storms. So after Katrina, and then Rita, that, thank God, was not the storm it was predicted to be, we all sort of understood why the price of petroleum products went so high. And we had hopes that such increases would be temporary.
Well, maybe not so temporary, for now we are seeing the price of petroleum products again going up, and the price of our favorite non-addictive substance approaching, and in many areas of the country, even surpassing $3.00 a gallon. Only this time we have to ask why. The hurricane season has yet to start, so it can’t be that another category five storm has blown much of the industry’s infrastructure to the moon. And yeah, we remember that ours is not the only country seeking to buy from the pushers in the Middle East, and that they have found other junkies in the meantime.
But the supply from our connections is still steady, isn’t it? So, what could be the reason for these price increases when there is no apparent reason for them? After all, didn’t we just last year help the petroleum industry post, in the words of Spongebob Squarepants, the largest profit margins “in the entire history of forever”? So why would they treat us in such a rude manner? After all, it isn’t as though we’re addicted to their products, is it?
Tuesday, March 30, 2010
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