J.C. Moore Online

Current Events from a Science Perspective

” There’s a tendency for politicians to assign blame or credit to the President for gas prices – when actually the President has very little to do with the price of gas.”

The Republican strategy for the 2024 election is to try to pin the economic problems and inflation we have been facing on President Biden. The price of gasoline is something we are reminded of every time we fill up our car, so we have heard a lot about the price of gasoline during this presidential campaign.  The implication is that Pesident Biden is responsible for high gas prices, and thus for inflation. However, that is not the whole story. Oil prices respond mostly to international events and it appears that inflation is mainly caused by corporate greed. Gas prices are now dropping, so will President Biden get the credit?

Historical Gas Prices: The International Energy Agency (EIA) graph shows that historically fuel prices tend to follow international events. Average US gas prices hit a high of $4.12 per gallon in July of 2008,  while  George Bush was still president. The spike was attributed to increased demand at a time when production was stagnating. Gas prices hit a new high of almost $5.10 in 2022, mostly in response to inflation, unrest in the Middle East, and the war in Ukraine. The high prices have cut the demand for petroleum, and gas prices now average $3.28 per gallon and are dropping rapidly. Gas prices recently dropped locally to $2.62 a gallon and are likely going to drop more.

Oil Prices: If you’re looking for someone to blame for high gas prices, you might consider looking at the large oil companies. Oil companies blame high fuel prices on inflation and environmental regulations which reduce production. They wish to complete the XL pipeline and to drill on public land, in National parks, in wildlife refuges, and in environmentally sensitive areas. Those policies would be okay for the oil companies, but they would increase air pollution, increase greenhouse gas concentrations, and put a large number of environmentally fragile areas at a risk of being damaged. It is interesting that the largest oil companies made $174 billion in profits in 2021, as gas prices were going up. The United States consumed 124 billion gallons of gasoline, and the oil companies made $1.40 in profits for every gallon sold, and they also received about $0.13 per gallon in federal and state subsidies. Currently, oil costs $85 a barrel. That is $25 less than a barrel cost 10 years ago, yet the price of fuel had almost doubled by 2022.

It seems that domestic oil production has  little effect on the price of gasoline. Last year our largest export was fuel, so it is likely that if we produce more fuel, we will just export more while gas prices continue to rise in the U.S. It also appears that gasoline prices do not follow the law of supply and demand, both things that Exxon/Mobil and the other oil companies should have to explain. They receive large subsidies; their products do not bear the cost of dumping large amounts of CO2 into the environment; and they have been quite profitable while many small US companies are struggling to stay afloat, in part because of the high fuel prices.

Inflation: The Cares Act injected a large amount of money into the economy because of Covid, causing some inflation. However, it appears that the continuing inflation is mainly the result of corporate greed. The main drivers of inflation are record shattering profits for oil companies and other megacorporations. Basic commodities like groceries are more expensive, partly becaused of increased transportation costs, but also because giant conglomerates, like Kroger, Cargill, Tyson, and JBS are raising prices because they see it as an opportunity to make record-setting money for their executives and shareholders. According to Bloomberg, US corporate profits are now soaring, with profit margins the highest since 1950.

Rather than blaming the President for inflation, perhaps we should blame corporate greed.

(C) 2023 – J.C. Moore

“I can understand why they want to be free of regulations and scrutiny, but I cannot understand why we should let them.” That is a famous quote from Drew Edmondson, the former Atty. Gen. of Oklahoma who sued Tyson for polluting the scenic rivers of eastern Oklahoma. Tyson responded by helping to elect an attorney general and a governor who were less concerned about regulations and pollution. Tyson now wants to expand their business into Kansas, and the Kansas Legislators seems amenable to “letting them”.

 

The Kansas Legislature recently passed HB 405, which changes the animal conversion rate ( i.e., the number of chickens whose manure weight equals that from one cow) from 0.008, the previous value, to 0.003. That small change has big consequences. The result is that now a chicken farm may house 330,000 chickens, and it may be placed within 1/4 of a mile of neighboring houses and within 100 feet of neighboring property lines.

 

Some Legislators were unconcerned about the effect on property rights. Representative John Whitmer, who voted for the bill, justified his vote by saying, “local councils and county governments will still have to change current zoning and planning maps.” That may not be the case. The September KC Business Journal suggested that some Tonganoxie residents think Tyson “may have reason to believe they can declare their operation an agricultural rather than an industrial use to avoid rezoning.”

Also, 51 counties have no zoning laws. SB 405 needed an amendment for home rule, where county residents could have the right to file petitions against industrial-agricultural chicken barns and have a county-wide vote. That amendment failed. Apparently, our Legislators are for local rule and property rights when they ask for our vote, but not when they pass legislation.

This was published in the Kansas Times Sentinel on April 5, 2018.

 

(C) 2018 – JC Moore