What is Driving the Price of Oil Up?

In 1973 there was, apparently, an imbalance between the price of gasoline in America and the price of gasoline in Europe.

Europe was paying $1.00 a gallon and downsizing their automobiles. America was paying $0.35 a gallon and buying “gas guzzlers”.

Somebody must have thought that the Europe/America gasoline price differential was too much. No, they did not intend to bring Europe’s price down – but to take America’s price up. News sources reminded America that gasoline sold for $1.00 a gallon in Europe.

Since “supply and demand” controls the oil market – it must have kicked in BIG TIME. All of a sudden the SUPPLY of $.35 a gallon gasoline became inadequate. Motorist filled long lines at the gas pumps for the $.35 a gallon gasoline.

So the solution to the long lines at America’s gas pumps was to raise the price of the $.35 a gallon gasoline. And that fixed the problem! A higher price for gasoline fixed the problem! THERE WAS NO LONGER A GASOLINE SHORTAGE!

As the price of gasoline approached $1.00 a gallon, Americans could buy all the gasoline they could afford. There were no more long lines at the gas pumps. And there haven’t been long lines since then. Even today, no more long lines at the gas pumps. Even if you have a gas guzzler – no problem. You may need $100.00 to fill your gas guzzler’s tank but if you’ve got the $100.00 pump away! The gasoline is there – no problem

Is oil now supplying two different kinds of markets? Are speculators now a big part of the price of oil? Is oil better for speculators than anything else. Oil is critical to America. Get the “corner” on oil – and you got ‘em. Oil is not something America can “take or leave”. And “we are addicted to oil” does not help the situation at all. As priorities go, many Americans might opt for managing oil resources before trying to “manage” world wide terrorism.

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