Bad Headlines & The Price of Gasoline

As usual, the Tulsa newspaper got it wrong.

The headline said "Oklahoma loses 8 drilling rigs over last year"

The truth: Oklahoma lost 8 drilling rigs LAST WEEK!

What has gone down -- way, way down -- in the last year is drilling activity everywhere in the United States. By 50 percent.

According to Baker Hughes.

According to Forbes.

According to CNN.

The wholesale price of oil creeps steadily upward, while the price of natural gas continues to slump, due to overwhelming supply and lackluster demand.

There is an argument to be made that the price of oil has less to do with the supply and demand of gasoline or diesel than it does with the supply and demand of the U.S. dollar. Bernacke's printing presses are running round the clock. You ignore the laws of economics at your peril, so even as the demand remains listless we see the price at the pump slowly climb. This is the dollar's weakening, the intersection of another market.

A tank of gas in January that cost you less than $18 is now costing you more than $36. You're thankful it's not the $55 it cost last summer but you are uneasy that the relentless price rise will get us right back to where we were. If a weak dollar is the reason, you have every right to be woried.

If we once again have $4 gasoline without economic activity, including oil and gas drilling domestically, we will face the worst of both worlds.

Every one of those lost drilling rigs represents 20 to 25 jobs on the crews and service personnel required to make the rigs work. That's 200 people who are friends and neighbors. Nationwide there are 22,500 fewer roughnecks and related personnel with jobs today than one year ago. They won't get the headlines, and the "progressive" who now rule (and I use that term in its traditional sense) won't give them a second thought. We are going to "conserve" our way to energy independence, they proclaim. Higher prices and government mileage mandates are the key; lost jobs in the oil fields, refineries and oil equipment firms are but the price to be paid.

Besides, they'll have no trouble finding top-flight jobs in the food service or housekeeping industries.

Depending upon your fondness for the trucking industry, there is one aspect of today's pump prices that could provide a small ray of sunshine.

A year ago diesel was selling for $1 or more above the pump price of regular unleaded. This, it was said, was because of federal mandates to eliminate sulfur content at the refinery, the added cost placed onto the per gallon diesel cost.

Check the posted prices today. Diesel is selling for less than regular unleaded. The oil companies have slowly adjusted the pricing so that truckers are not bearing the brunt of the economic hit.

That's probably a good thing, and it may be the singular reason that price inflation has not shown up on the grocery shelves. Yet. Individual motorists have much greater latitude in how we use our vehicles, so we making the adjustments, or we will soon.

I do not know if this switch is voluntary, on the part of the oil companies, or if it is being dictated to them from Washington. Either scenario is feasible. I can understand how the oil companies might want to protect the trucking firms from collapse, since they are major customers and, without them, we might experience more economic upheaval than any of us care to contemplate.

But I could also see how the federal government wouldn't mind seeing gasoline rates increase on citizens in order to promote their tough new mileage standards, while at the same time "buying time" for the economy to settle down, or at least delay its collapse long enough to get the rest of Mr. Obama's progressive, socialist agenda enacted.

Anyway, that's how I'm seeing it today.