Forget jobs. Forget the debt limit. Whatís hurting this country right now is the unabated assault on consumersí wallets by the oil companies. The U.S. economy is not going to improve substantially until the price of gasoline stabilizes at a reasonable level.
The past week has been another nightmare at the pumps. After reaching a ělowî of about $3.38 a gallon in June, gas prices have jumped back up. Crude oil has increased by 18-19 cents per gallon, according to the American Petroleum Institute, and gasoline followed.
Yet we find ourselves paying 30 cents more per gallon, not 19 cents. The national retail average for gasoline is now $3.689 per gallon, according to AAA, Wright Express and Oil Price Information Service.
This is not the jobless recovery; it is the oil company recovery. World petroleum prices may be beyond the companiesí control, and speculators play a role, but itís hard to think of oil companies as victims when Exxon Mobil reports first-quarter earnings that are 69 percent higher than a year ago. Companies in other industries may have even better results ó Apple, for example, saw second-quarter profits increase 95 percent ó but they donít sell a commodity that people have to have, either directly or indirectly. You donít need an iPod to drive yourself to work. The city bus doesnít need an iPad to carry you to your doctorís appointment.
Politicians talk about energy independence and point the finger at OPEC. Thereís even been some rationalizing about all the pension funds and retirement accounts that oil company earnings boost ó as if to suggest high gasoline prices are good for us. All we know is the more we have to pay for gas, the less we have to spend for food and other necessities. Gasoline is a necessity.
Youíd think the oil companies would recognize the anger they are fomenting and back off. They believe we unsophisticated consumers donít understand the pricing dynamics. They might as well say, ěLet them eat cake.î We understand all too well. The oil company board members and executives are out of touch. They need to understand that the American public is not in a passive mood. Voters may eventually push lawmakers to step in ó not an ideal solution.
But brace yourself for more of the same. The Energy Information Administration expects higher costs for crude oil to push gasoline prices up an average of 82 cents per gallon this year, compared to last, and another 7 cents in 2012.
Thatís no way to fuel a recovery.