I am as far away from being an authority on economic issues as any average North American. So, I guess that places me amongst the 99.9% of the general population who know as much, or as little of high economic theories and practices as do the “experts”.
That is NOT to say I am not aware of BASIC economics. For example: If my monthly expenses are $1, and after taxes I only earn $0.75, I have a problem. See, I know something about economics.
As a business person, I also know; if I have a product that costs me $1 to bring to market, and I sell it for $2, I have just made a 100% profit, or $1. Right?
Let’s assume that I have a competitor who produces the exact same product as I do, at the exact same cost. And let’s assume that this competitor decides to sell his/her product for substantially more, or substantially less than I do. This is called free enterprise. And that’s what commerce is, or should be all about.
Now let’s assume that I have only a FEW COMPETITORS who are selling the exact same product which I have, and I want to make certain that we accomplish three things.
1) We make certain that we collude to price our product virtually the same across the board.
2) We conspire to make certain that we keep out all new comers from competing with our oligopoly.
3) We conspire to artificially keep the supply low.
By doing these three things, we would have broken very specific laws. It is against the law to collude to fix prices. The other laws we would have broken would be restrictive trade. It is against the law to use your position, especially in concert with others to abrogate competition and create artificial inventory shortages.
All of this applies to monopolies and oligopolies. And there are watch dog and government agencies which are empowered to protect the public from these specific abuses.
This brings me to the petroleum industry. It isn’t by some wild coincidence that EVERY energy supplier has virtually the EXACT same price at the pumps. It is also impossible that each gasoline retailer raises his/her price to the same amount, give or take a penny or two at the exact same time. This does not happen by accident.
But here in Canada, it is even more outrageous.
In the USA, the oil industry imports a great deal of its crude oil and gas from Canada, the Middle East and South America. In Canada, we are net EXPORTERS of crude oil and gas. So, how come, every time the OIL CARTEL, OPEC, raises its barrel price, Canadian suppliers raise their price proportionately at the pumps?
Where’s the correlation?
Canada is NOT a member of OPEC. Canada even has its own national oil company, PETROCAN, which was established during the 1970’s Arab oil boycott to protect us from the oil cartel. But PETROCAN is just as complicit as are the others.
The cost to take the oil out of the ground in Canada, costs NO MORE and NO LESS than it does, regardless of what OPEC charges for a barrel of its oil. So, why are our energy prices going through the roof, because of what the Arabs and their OPEC buddies are doing to their pricing? It should be of no consequence to us.
Not being an economist, I don’t understand why something that costs us $1 today, all of a sudden costs us $2 tomorrow, when there is absolutely no increase in the cost of production, delivery and marketing.
Especially when that product is produced by an oligopoly. INCLUDING a government owned participant. I watched John Manley, Canada’s Finance Minister and Prime Minister wannabe, explain on television yesterday that he does not see any irregularity in Canada’s energy costs, but, he will keep his eye on it.
I am not be an economic genius, but I am certainly smart enough to know when I am getting ripped off.
Why should Canada’s cost to produce energy rise even one penny if that horrid club we call OPEC, raises their price to $100 per barrel? None of that has any effect whatsoever on how much it costs our Canadian oil companies to do business.
And that said; any rise in oil prices anywhere does enormous harm to the economy. It adds to inflation and decreases growth by limiting spending. AND IN THE USA, higher energy prices become even more critical for the entire world.
If the inflated cost of energy damages the American economy, the world will suffer. And so will Canada.
The answer to why we Canadians are getting hosed is simple. EVERYONE at the top of the energy food chain makes money by screwing the Canadian public. ALL levels of government make out like bandits through additional taxes which are pegged to the Canadian well-head and retail prices.
While the oil companies and governments make out like miscreants by pretending that there is nothing they can do because of OPEC, we are left standing like stunned deer looking into the headlights of an oncoming freight train.
I wonder what would happen if the Arabs and their OPEC darlings ever decide to drop their price of crude to $10 per barrel. Do you think our Canadian stalwarts would give us a break and drop their prices in kind? THINK AGAIN.
There are lies. And then there are damned lies.
The first lie has to do with the worry of a war with Iraq. What does a war with Iraq have to do with oil supplies, since Iraq produces only a shadow of what is generally produced by all the other oil countries?
Will Iraq somehow destroy the flow of oil to the world if and when they are attacked? NOT A CHANCE IN HELL!
So why the “through the roof” oil prices? Simple: WAR WITH IRAQ IS A FANTASTIC DODGE. The Arabs and the rest of the oil producing world contrive a reason to pump up prices because of the impending war with Iraq, and everyone but the consumers have a field day. There is collusion everywhere.
We are led to believe that OPEC controls the price of oil. That’s another lie. The consumers control the price of oil. Imagine this scenario:
The USA goes to Saudi Arabia and says like this: We will pay you $10 for a barrel of oil. TAKE IT OR LEAVE IT!
Within less time than it would take the greedy Saudi princes to devour their caviar, we would be paying $10 per barrel of oil. Iraq or no Iraq. War or no war. GUARANTEED.
There has been much talk over the past few years vis a vis oil boycotts. Perhaps its time to stop talking and start acting. Don’t buy the gas guzzlers. Pick one oil company NOT TO BUY FROM. Make it Exxon. They’re big enough to really hurt.
And don’t buy anything made in France. Not buying from France won’t do anything to hurt the oil cartels and their benefactors. But not buying anything from France just feels good. I thought I would throw that in as a bonus.