Today’s low cost comes via a gas station I wrote about in the last post. The second photo in that post was a Hess Station. It’s now a Speedway. For the record it looks like all the Hess stations in Orlando are Speedways. As far as prices is concerned, nobody else that I can see is anywhere as low as these guys. Even though ownership has changed, this station is still aiming to be the lowest, the soonest, in Orlando. It’s going to be interesting to see which way these prices are going to head; back up or down further.

How do these price drops make me feel? Damned angry. Certainly not grateful. Understand that the high cost of gas cost me and my family dearly back in the years when it was $3 and $4 per gallon. In a society so dependent upon personal automobiles and no mass transit infrastructure to speak of, paying dearly just to commute to work or perform basic transportation chores has left lasting impressions and economic scars. When your combined family gas bill is going past $700/month like mine did back in 2008, you don’t forget. I, at least, had a decent job that at least allowed me to pay for it. That doesn’t mean I didn’t stop buying something else. Trust me, I shifted the family budget around to make sure all the necessities were properly paid for; all “impulse” buying came to a screeching halt, such as eating out at the local Olive Garden type restaurants, trips to movies, non-necessary purchases at local department stores, etc. If we didn’t need it we didn’t get it. Dropping prices like this just rubs salt into old wounds.

Right now, if I could get an electric vehicle from Toyota with decent range (between 200 and 300 miles between charges) and a way to charge it where I parked, I’d trade in my Prius for that vehicle in a cold New York minute. Even if it cost more to buy that vehicle. Anything I can do to remove all my dependency away from petroleum I will do. That also includes home solar to remove my dependency on Duke Energy. Every bill I get includes a fuel surcharge, which about doubles my overall home electric bill. During that period where my family gas bill was around $700/month, my home electric bill, during the summer, ranged in the mid $500/month, about four times higher than it was in 2000, five times higher than what it was in the 1990s. Yes, I’m all into doing and spending whatever is necessary to become fossil fuel independent, where I don’t use any fossil fuels at all.

I’m not just ready, I’m well past ready.

This is what I paid today when I filled up my wife’s Prius. It was just a block down from Seaworld Orlando. Total cost for a little over nine gallons was $16. My wife will then drive on that for about two weeks. Pretty cheap, right? I haven’t seen this low a price since the early 2000s, right before the first Charlie hit Florida in August 2004 and drove the price of gas to around $2.50/gallon. And that’s where it stayed, climbing ever higher until I paid $4.14 in August of 2008. Even after that, it hovered around $4/gallon for the next four years, as you can see below at a local Hess station near Universal Studios Orlando in April 2012 (prices of gasoline and oil in 2012).

Now I’ve watched the price collapse to levels not seen for over a decade. As of Friday a barrel of oil is sitting around $32/barrel. This is down from the hundred and change for a barrel of oil from a year ago. Why? Why did the price of oil climb so high to cause so much damage to us economically? And why is it collapsing so far, and so fast right now? I haven’t any real facts, but I do have my share of conspiracy theories.

The story everyone wants to trot out is that demand for crude has dropped while supply keeps ramping up. There’s a huge oversupply right now, and it appears that nobody is willing to cut back. Which leads me to my conspiracy theory.

We’ve been living with the peak oil threat since 2000, when it started to crop up in various economic magazines. We were supposedly running out of raw petroleum stocks, and the existing oil fields were heading for exhaustion. US oil fields, especially in Texas, which is the fact everyone was waving around in this argument. And so it appeared in hindsight that the markets began to factor in this peak oil theory into pricing; the more we used, the less was left, and that made what was left in the ground ever more valuable. And so the raw price of crude began to rise, and with it, the price of refined gasoline. Yes, I know this is simplistic, but the basic rule of economics is that if the cost of your raw materials rise, then so do your finished products, for whatever the reasons.

But this last six months have blown a big fat hole in that theorem. First, the cost of petroleum over the last fifteen or so years have driven folks to look for cheaper alternatives, both in alternate energy sources (solar and wind) as well as alternative sources of fossil fuels (fracking for natural gas, shale oils). Those two combined to drive down the consumption of oil in many markets. And let’s not leave out the increasing efficiency of all our machines, and the brute fact that the high cost of oil has hurt us economically, killing businesses and putting a lot of folks permanently out of a job. All these have combined to drive down consumption. As consumption went down, production stayed steady, and raw stocks increased. And the price of crude dropped, especially when everyone who played in the oil commodities market realized just how much an “overhang” existed.

That overhang is being driven by deliberate overproduction by all the OPEC members, especially Saudi Arabia. Add to the fact that Iran is now exporting again, and there’s no other place for this to go except into storage, increasing the overhang. Even the short spike on Friday, driven by #blizzard2016, won’t even come close to soaking up the oversupply.

So the question is, was this a deliberate conspiracy by OPEC and friends to kill us economically? Or was it just plain old greed by the producers and the commodities players? After all, there’s the old saying that you should charge what the market will bear, and there’s been plenty of that for a good decade. My money is on greed. Paraphrasing Hanlon’s razor, never attribute to malice that which is adequately explained by greed.

My concern now is that people are lazy. Will the prices drive all the alternate sources of energy out of business as well as kill all attempts at energy economy? We’ll just have to wait and see.