Emad Barsoum writes: Inflation, Gas Prices… The way out
Every morning you wake up, there is a new increase in the prices of goods and services; hikes are at a rapid pace that hasn’t been experienced for so many years. It is very well known that the significant drive for such an increase in prices is directly contributed to the extreme surge in crude oil prices globally. But does this rise in crude oil prices reflect the actual demand and supply for the oil?
During the recession of the year 2008, the year high crude oil prices were around $140/bbl., while the average gas price at the pump was $1.27/Lt. Today, crude prices hit the highest at $125/bbl., but the gas price skyrocketed to $2.14/Lt.!
Although analysts attributed the current extremely high crude price to demand after the pandemic, still, the pump price should not be as high. It is adamant stating that around ₵55/Lt of taxes are currently included in the gas price, out of which is the infamous ₵11/Lt carbon tax which is regularly rising.
Nonetheless, the primary factor lies in two sectors; first, crude price itself, which is not reflecting the actual influence of global supply and demand, and this could be explained by stating that the average crude oil prices reached 15% higher in 2022 compared to 2008, while gas prices increased by over 45%, consequently leads us to the second factor, the refining and marketing fees, which were estimated around ₵16/Lt in 2008 versus ₵46/Lt year to date. – According to Statista and CBC.
We may realize that the main players here are the Oil producers and the Oil refining and marketing corporations, the gigantic companies that once dominated the world’s politics and economy, even though they are not on the top of the news lately, since the eruption of the High-tech, the digital and the dot com tycoons. However, they are still acting behind the stage.
Oil companies fathomed that immediately after the pandemic it is the right time to recover the decrease in profits occurred during the years of shutting down our planet, but what was not mentioned is that many industries and services have either seized business, or significantly downsized their operations, which led directly to reduction in production and further reduction in demand for goods and services due to the fall in incomes. This fall is either caused by the slowdown of business and the increase in the gas prices that led right away to the rapid and continuous jump in food and essential services prices.
The loser here is the ordinary consumer, the workers who strive to survive, those who live hand-to-mouth and represent most of the workforce and the population. Their only hope to continue the journey is governments that should interfere to ease the stress of taxes and levies, especially on gas, and to have more regulations and plans to fight the inflation before it goes beyond control for longer terms. The ways to achieve these goals are attainable and diversified, requiring only the Provincial and the Federal governments to be genuinely aware of their citizens.
Duly comes the corporations’ role and their social responsibility to achieve the balance between increasing their profits during harsh times and value and protect their most priceless assets, the workers.