The price of something should reflect the cost. Right? If something costs very little, its price should be low. If something costs a lot, its price should be high.
Have you ever encountered something where the price had an inverse relationship to the cost?
What is the cost of burning oil? First, there is the extraction cost. Then there is the cost of refining the oil into products. Then there is the transport and storage cost.
But there are other, higher costs associated with oil. Oddly, as these costs rise the price of oil drops. The simplest illustration of what I mean is that at times when we pump more oil out of the ground the current supply is greater so the price drops. But what is the cost of pumping more oil out of the ground?
What is the cost of opening up the Arctic wilderness to drilling? More oil is available today, so the price drops.
What is the cost of using up more of the remaining oil? We pump more oil so the price drops, but think about the cost to a future world running out of oil.
As we burn oil we pollute the air. What is the cost? What is the cost in health consequences? What is the cost in CO2 effects like the current melting of the Greenland ice? Scientists say the strength of hurricane Katrina and the record number of hurricanes last year are the result of global warming. That is a cost that was not reflected at the gas station.
What is the political cost? When we buy oil we are financing the Right’s network of propaganda organizations. We fund Middle-Eastern dictatorships.
The COSTS of oil seem to have an inverse relationship to the PRICE we pay at the gas station.