Wednesday, 02 November 2011 23:44

Diesel Pricing Hikes and Social Engineering

The prime excuse covering any price hike of Diesel fuel, or gasoline for that matter, is the "huge demand." Now let us think thoroughly: those complex oil companies, haven't they vast office floors of analysts predicting years ahead how "huge" the demand would be at one point or another? Can we actually imagine that drilling and trading and shipping, and then the refineries, and the fuel retail distribution network, all of these, are managed on a whim?, from yesterday to tomorrow, like a hectic patchwork family? It is quite unlikely that big oil, along with states, governments and international cartels, are randomly taken by surprise, every now and then, when a "huge demand" pops up across the horizon, like dark cracking alien ships in a Roland Emmerich movie.
 

Then you may have heard about the "inelastic demand" for Diesel. 

"In the long run, the best estimate of the price elasticity of demand for auto fuel seems to be -0.7. That is, a 10 percent rise in prices will reduce gas consumption by 7 percent. Of this, 4 points come from shifting to cars with better mileage, 3 points from driving less." (Source: Prices and Gasoline Demand)

To be more accurate about what's expected from the price effects, let us indulge in more scientific data: 

"If the real price of fuel rises by 10% and stays at that level, the result is a dynamic process of adjustment such that the following occur:" 

  • (a) "Volume of traffic will fall by roundly 1% within about a year, building up to a reduction of about 3% in the longer run (about 5 years or so)."
  • (b) "Volume of fuel consumed will fall by about 2.5% within a year, building up to a reduction of over 6% in the longer run."

"The reason why fuel consumed falls by more than the volume of traffic is probably because price increases trigger a more efficient use of fuel (by a combination of technical improvements to vehicles, more fuel-conserving driving styles and driving in easier traffic conditions)."

(...)

"Therefore, further consequences of the same price increase are as follows:"

  • (c) "Efficiency of the use of fuel rises by about 1.5% within a year, and around 4% in the longer run."
  • (d) "Total number of vehicles owned falls by less than 1% in the short run, and by 2.5% in the longer run."

Elasticities of Road Traffic and Fuel Consumption with Respect to Price and Income: A Review

After so much (and so very entertaining) scientific analysis, one may figure out the following facts of daily life: 

  1. In the good ole days, a spike in demand for a commodity would drive the price lower. 
  2. Practically unlimited supplies of crude are capped especially by government regulations and trading tunneling. Coming from two different points, the government seeks to limit our individual freedoms and to weaken the economy into more and more inflation, while the trading companies have an interest in overvaluing the product they trade, for mere profit. 
  3. Diesel fuel pricing hikes prove to be yet another social engineering tool -- for restricting your God-given rights. And obviously a veiled marketing tool as well -- for further piercing your pockets. 

By maintaining artificially high fuel prices, overtaxing governments can limit their population's freedom of movement. Then the economic food chain effect (from heavy duty trucks to public transportation and agriculture, most of everything runs on Diesel) degringolade in inflation (a convenient cover up for the debt-centered financial system, where more money equals more debt, or more debt makes more money). 

Pricing Commodities as Luxuries, a Syndrome 

The automotive industry clears the field of older vehicles (some of which were too good and too resilient to last for too many years without you needing to junk and replace them). So it may push new products on an otherwise apathetic and satisfied consumer motorist market. 

And finally the so-called "big oil" (under the typical umbrella of blames and excuses on every excessive regulation, from global warming to road taxes) will continue to pack further profits by selling you, the people, a commodity priced as luxury. 

Think where are the lab rats in this social experiment? You are called, incited, determined, scared, to consume and comply. Is this, consuming, your right or yet another obligation? 

Share on Myspace