Warm Southern Breeze

"… there is no such thing as nothing."

Why does gas cost $4.00/gallon? “All consumers know that when the producer names the tune, the consumer has got to dance.”

Posted by Warm Southern Breeze on Wednesday, April 4, 2012

Our modern prophet, Gil Scott Heron – a Southern man – has since gone to his reward – may he rest in peace.

His prophetic lyrics, however, remain as poignantly truthful today as ever.

The truth of his song “B Movie” remains even more point-on today than when he produced & recorded it in 1982.

“What has happened is that in the last 20 years, America has changed from a producer to a consumer. And all consumers know that when the producer names the tune, the consumer has got to dance. That’s the way it is. We used to be a producer – very inflexible at that, and now we are consumers and, finding it difficult to understand. Natural resources and minerals will change your world. The Arabs used to be in the 3rd World. They have bought the 2nd World and put a firm down payment on the 1st one. Controlling your resources we’ll control your world. This country has been surprised by the way the world looks now. They don’t know if they want to be Matt Dillon or Bob Dylan. They don’t know if they want to be diplomats or continue the same policy – of nuclear nightmare diplomacy. John Foster Dulles ain’t nothing but the name of an airport now.” -excerpt from “B Movie,” by Gil Scott Heron, 1982

11:23 AM, April 2, 2012

Saudi Crown Prince Abdullah bin Abdel Aziz inaugurates the Al-Qatif new oil production plant. BILAL QABALAN/AFP/Getty Images

OPEC – Oil & Petroleum Exporting Countries; BILAL QABALAN/AFP/Getty Images

In his latest column for the New York Times Magazine, Adam Davidson cites Gal Luft, an oil expert who dismisses political proposals from the left and the right to lower the price of gas. We asked him to elaborate in the following post.

When in December 2008, 60 Minutes correspondent Lesley Stahl asked Saudi Oil Minister Ali al-Naimi how much it cost Saudi Arabia to produce one barrel of oil, he didn’t blink: “Probably less than $2 to produce a barrel.” If it costs only $2 to produce a barrel of oil, then why do we pay over $105 a barrel?

Wall Street, Big Oil, President Obama, the Fed, environmentalists, the EPA have all been accused of pinching hardworking Americans at the pump.

But there is a much more important player that gets much less attention: OPEC.

Members of the oil cartel sit on top of nearly 80 percent of the world’s conventional crude reserves. Yet they account for only a third of global oil production.

We need oil now more than ever. In the past three decades, global oil demand grew 45 percent.During that same time, OPEC’s production increased by merely 19 percent, despite the fact that two new countries (Angola and Ecuador) joined the cartel during that time.

Clearly, OPEC could produce more oil if it wanted to. But it won’t.

The reason is that OPEC countries produce almost nothing but oil. Their population is growing by leaps and bounds, and because Saudis pay no income tax, the House of Saud will need more and more money to keep its citizens happy, and avoid the fate of toppled leaders in Libya, Egypt and elsewhere.

Since the beginning of the Arab Spring, Saudi King Abdullah almost doubled his Kingdom’s budget, committing billions in subsidies, pensions and pay raises in an effort to keep his subjects from storming the palaces.

This expensive response effectively raised the price of oil needed for the Saudis to balance their budget from under $70 a barrel before 2011 to at least $110 a barrel by 2015.

Like it or not, the bill for keeping the Persian Gulf monarchies in power is now being footed by every American. Every time we fuel our car we send an extra 35 cents per gallon, or roughly $6 per fill up, to the Save the King Foundation. Since oil goes into everything we buy from food to plastics, this adds about $1,500 annually to the expenditures of the average American family.

Paradoxically, we are forced to fund social programs for other nations at the very same time we are engaged in a heated debate about cutting social services and entitlement programs at home. It is a sad state of affairs that in the 21st century the world’s most strategic commodity is still being controlled by a cartel.

Cartels, by definition, exist to maximize the profits of their members. OPEC members, which last year raked in $1 trillion in oil revenues, are doing that masterfully.

No amount of U.S. drilling or efficiency measures will change that. The cartel’s financial needs will drive it to respond to counter moves by its clients: When we drill more oil at home, OPEC can drill less to return to a tight supply-demand relationship. When we use less, OPEC can drill less.

To change this vexing dynamic, consumers must be able to substitute for petroleum by purchasing competing fuels, like alcohol fuels, biodiesel, natural gas or electricity, if they are less costly on a per mile basis. But as long as our vehicles are able to run on nothing but oil, keeping oil monarchs on their throne will remain our national side job.

###

http://www.npr.org/blogs/money/2012/04/02/149684373/the-real-reason-gas-costs-4-a-gallon

B MOVIE
ASCAP Work ID: 320263354
ISWC: T0700159176
Writers:
HERON GIL SCOTT

Performers:
HERON GIL-SCOTT
SCOTT HERON GIL

Variations:
‘B’ MOVIES
MOVIE

Publishers/Administrators:
BROUHAHA MUSIC
% RUMAL RACKLEY
190 NEW OAK RIDGBE TRAIL
FAYETTEVILLE, GA, 30214
Tel. (917) 507-0078

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2 Responses to “Why does gas cost $4.00/gallon? “All consumers know that when the producer names the tune, the consumer has got to dance.””

  1. [...] Why does gas cost $4.00/gallon? “All consumers know that when the producer names the tune, the… (warmsouthernbreeze.wordpress.com) [...]

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