Tuesday, October 25, 2011

George Mindling Column 9-9-2005


Fill Up Now; Gas Prices Will Continue Rising


Watching the spiraling gas prices that seem to go on endlessly without a public outcry has me curious. Why aren’t you up in arms about gas prices? Because this time around you pay for it with your bank credit card. While listening to Dave Ramsey on CBS’s “60 Minutes” I realized why the doubling of gasoline prices in less than 10 months has been accepted by most of the American public with only minor grumbling. We simply don’t feel the pain! It just gets added to the nebulous world of the “minimum payment due” and life goes on.

The last major gas crisis was felt a little differently by consumers. There were few self-service gas stations in 1974, more in 1979, but most of us paid with cash. There were gas company credit cards, but in those days, stations didn’t honor competitor’s cards. Master card and Visa were not accepted at gas stations just a few short years ago. Paying out of your wallet is real time pain. Paying by credit card is just the new way of American Life: “Debt up to your eyeballs” as one television commercial puts it.

I have even heard defense of the price increases using the fuzzy logic that they pay more in Europe! If we paid what they pay in gasoline taxes, we would have a highway system to rival the Germans. Imagine a world without potholes and drainage running down your neighborhood streets. The taxes Europeans pay on their gasoline helps fund a social infrastructure we don’t have. Let’s compare apples to apples, cost versus price, or markup. Why would you pay for gasoline what the Europeans pay without the benefits they receive?

With the coming automotive explosion in China, the demand for gasoline will increase while the price continues to climb. Even the inscrutable Chinese have imposed minimum fuel economy standards for new cars sold in China. By 2008, cars there must get 43 miles per gallon. There is no “Fleet Average” the way we do it. The car must get the required mileage, period! There is a sliding scale, but it is far tighter than ours. Don’t count on many US made SUV’s being sold there. Volkswagen Germany, incidentally, now sells more VWs in China than in Germany.

Matt Savinar, who maintains the Life After The Oil Crash website at: http://www.lifeaftertheoilcrash.net/Index.html, expounds the phenomenon of “Peak Oil.” He quotes Dick Cheney, who in 1999 while CEO of Halliburton, said:

By some estimates, there will be an average of two-percent annual growth in global oil demand over the years ahead, along with, conservatively, a three-percent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional 50 million barrels a day.” 

Whoa! Give me back that credit card application I just threw in the trash. Quick, call up the banks and raise all my credit card limits. I have some serious topping off to do.

George Mindling

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