On my recent outing, listening to XM Radio, I heard a news snippet in between talk shows. The focus was a report that gasoline prices 'normally' had
a spike during springtime, and that the change to lighter summer blends would lead to a price increase this year (2008) as well, of $0.75 per
(Readers please forgive me for not having a link here. I did try to find the story online, but was unsuccessful. If anyone can find an online report,
I would appreciate it. Unfortunately, not all news broadcasts are in HTML.)
Anyway, my thoughts turned to the question of why it cost such a huge amount to change the blending of a gallon of gasoline. Obviously, it doesn't,
or we would have seen such price jumps throughout our industrialized history. So what else could be at play?
Diesel prices. You see, in 2001, diesel cost less than gasoline. That was the reasoning behind making more personal vehicles that used diesel fuel.
Recently, diesel has been far more expensive than gasoline. The simple truth, IMO, is that the oil companies have been hiking the diesel prices to
maintain relatively lower gasoline prices and still make their profits. Diesel fuel must be purchased in order to run trucks and therefore stay in
business and make money (which then goes to buy more diesel... ). In short, business is subsidizing personal purchases.
But recently a lot of noise has been made about companies laying off drivers and independent drivers forced to shut down due to the high diesel
prices. (See this thread
.) So apparently the powers that be have decided to place the
burden back onto gasoline prices. This claim of higher production costs is a ruse, an excuse used to justify the increase.
I am going to make a prediction here. Diesel prices will slowly drop over the next couple of months, maybe by 10 - 20 cents/gallon. Gasoline prices
will hit over $4 per gallon, before tapering off a few cents to around $4 a gallon in the same time frame.
Now, what will be the impact of this? I know in my area, the 9-to-5ers have to buy gas to get to work, but the wages are barely enough to allow it
now. Will people be forced to quit because the job doesn't pay enough to cover transportation casts? I seriously doubt we'll see a spike in wages.
How many more households will rely on food stamps and welfare? This simply isn't looking good from my vantage point.
Someone, please prove me wrong on this?