What Matters Most: Oil Prices

Whenever it even remotely looks like a hurricane might intrude into the Gulf of Mexico, the news reports predict rises in oil prices, or that such an event has already taken place. Why is this?

The reports like to indicate that this is important because the Gulf furnishes a quarter of all the oil that the U.S. pumps on its own. The reports are considerably slower to say that the U.S. currently pumps out of its own territory only about a third of the oil it uses, if that. The reason for this reluctance must be that the recital of such a fact would sound too much like a left-handed call for conservation -- not a popular cause in the world frequented by the people who control the gathering and dissemination of news, despite all the good words to the contrary.

So what does it mean, the fact that a hurricane is looking at the Gulf of Mexico? It hasn't arrived yet, and if that does happen, it may take as much as another couple of weeks, and anyway, usually the storms find ways to meander past the drilling platforms without bothering much of anything there. So why should the prices increase so far ahead of time anyway? As soon as the hurricane is mentioned, does the oil automatically become scarcer and therefore rarer, the reason why diamonds are so expensive? Or is it greed and profiteering that are actually the main factors involved here?

Put in the simplest way possible, the explanation must be that with less product to sell, the oil companies' profits will drop if they don't raise prices to make up for the shortfall. Otherwise, without the usual revenue flowing in, they would have to cut services sharply and even go out of business, and we would have no gasoline to pour into our cars, which we don't want to see happen. But even if that explanation didn't sport a hole or two, to raise prices ahead of that time, automatically, like a tripwire kind of thing?

You have to forgive me. I'm the first to admit that I'm sadly deficient in having the proper appreciation of the ways of the world. Nor have I ever made any serious effort to correct that lack. The news writers are much more savvy in these matters, which is why they have such infinitely greater access to the prestige, the power, the money, the attention, and the beautiful women. Nevertheless, I can never help thinking that it is exactly the prevalence of this "worldly wisdom" that explains why human affairs are seldom more than a step away from disasters worse than those brought by the weather's storms.

So sometimes those reporters don't bother to mention the other likelihoods that are usually connected with hurricanes, such as floods, mudslides, windstorms, evacuations, and hurricane parties. Instead, it is all they can do to announce first that a storm is coming, along with its name, before they cut straight to the circumstance that matters most, and that shows that all remains right with the world, regardless of what the hurricanes may or may not do. Already, as in the case of the materials that will be needed later to recover from the demolitions of a storm, oil prices have risen.