Affordable Gas

As I was driving through town, I noticed something in the distance gleaming in the morning sky. It was a gas station’s digital sign proudly displaying the figure $1.999 for a single gallon of gasoline. I had read that across the United States, there were some areas already below the $2.00 mark but our local market had been holding steady above that watermark. My first inclination was to grab my phone and take a digital image for future prosperity. Yes, on this day in 2008, our local gas fell below $2 a gallon. It’s a story for the grandchildren I imagined and it needed photographic evidence because without proof, it’s just a rumor, distant memory, or plain fabrication.

After settling down and coming back to reality, I began to mentally wonder about how this newfound “affordability” is going to impact our goods and services… products whose prices were raised to account for massive transportation and manufacturing costs incurred by the exponential energy price increases. Will I see the price of food go down? Will I see the price of our trash service go down which has increased by almost 25% because of “fuel surcharges?” Will I see a direct benefit by the drop in energy costs due to the drop in oil other than cheaper prices at the pump?

Highly unlikely is my guess. I’ve already seen price estimates coming from the food sector which said that food prices will remain “sticky” even with lower oil prices. What that means is that you and I will continue to pay for the increased costs associated with previously high “energy” costs incurred by manufacturing and production. Why is that so? Shouldn’t we see a drop in costs because the sellers can effectively remove all of the recently added surcharges due to oil price increases?

If the American people altered their buying habits, yes, the prices would drop. However, everything is relative. When prices first started increasing, the public was shocked and appalled at paying more money for the many staples of life. But, there was nothing we could do about it. We either pay the price or we do without. So, as a whole, we chose to pay the price. After months of “paying the price,” we have now formed a habit and a baseline of perception as to the “new” cost of products in our lives. Food costs x amount of dollars now to survive and that’s just the way it is.

It doesn’t matter that in that x amount, there is an overcharge now for the energy costs of our recent past. That x amount is not going to change according to the industry reports. Will the American public be just as shocked and appalled at not receiving the new “discounts?” Or, will we continue paying the overly inflated prices and deal with it because we are so “happy” that our fuel costs have declined so greatly? The safe bet is that we will continue to pay the higher prices because we have been trained to do so. The price of gas, for whatever reason, hordes all of the attention when things are out of control and when they return to normal, it still hordes the attention and people have a sense of relief both in their wallet and psychologically.

What we should be clamoring for is a retreat in all goods and services which have increased because of the oil prices. We should not be satisfied with gas alone dropping and thus soothing our overextended budgets temporarily. We should alter our buying habits and buy products that allow us to reclaim our “stolen” wealth and force the manufacturers who are unwilling to lower their prices on their own accord, to lower them by our purchasing habits.

That is the way it “should” be but I know it’s not the way it’s “going” to be. We will pay more or do without while enjoying our “affordable” gasoline. However, I look at it this way (with a bit of conspiracy theory thrown in). The reasons why we will not see a price decrease in most goods and services is because the manufacturers “know” that energy will be going back up in price… either due to OPEC cutting production or by the returning growth and boom of currently sluggish global economies. They “know” that oil will be heading back up the price charts and they are banking on that being soon.

Rather than “lose” some of the profits in the middle while oil has declined in value, they are going to keep their prices frozen and make a little extra and when the oil prices do return to exorbitant amounts, they will raise their “cheap” prices and make even more in the future. If you don’t believe it, you’ll believe it when oil returns to $100+ per barrel and the manufacturers once again start tacking on “energy surcharges” to compensate them for their newly increased costs of operation.