Little over three years ago I wrote a blog post about critical thinking and the lack thereof in our culture. It’s right here —–> link if you wish to read it. Well, three years later, it seems the problems have gotten worse not better. Let’s start with what I said about oil back in 2012.
Back in April of 2012 gas prices were sky high and everyone was going bats*** crazy and screaming at the oil companies about unfair profits. As I said back then, the oil companies have little to do with the price of oil. The price is determined by supply and demand, and the perceived or real threat to that equation.This is not unique to oil, it applies to everything in an economy in one way or another.
Noticed how much the price of eggs have risen lately? Ever wondered why, of course you did. A bird flu epedemic struck most of our chicken flocks and millions and millions of chickens had to be destroyed to protect the rest. Millions fewer chickens laying eggs during a period of sustained demand for eggs , equals higher egg prices.
Back to oil, at the time demand was at or just above supply levels thus prices were very inflated. Record profits by oil companies wasn’t a conspiracy to gouge us, it was simple math. It doesn’t matter what the price of oil is because the same technology is used to extract it. That technology costs X amount of money to operate per barrel of oil extracted, this includes cost of labor etc. So, if oil has to be at say 30 dollars a barrel in order for it to see a profit. Then how is it unfair if that company’s profits increase if the market value of oil increases beyond that level? It’s costs remain the same.
Many people here in the states quickly realized this and an oil boom hit here in the U.S. At those higher prices, it was finally profitable to use new (more expensive) technologies to extract oil. This led to an increase in supply, enough begin to get ahead of demand. At the same time, economies around the world began to slow, China chief among them. This led to decreasing demand for oil around the world, prices began to fall. This began to seriously cut into OPEC’s profits.
They saw our increasing oil production as an economic threat to them. ( rightfully so ) So they decided to play hardball. Instead of reducing output they left production levels the same. Combined with what our drillers were doing, an oil glut is now upon us, thus prices have dropped. This has led to many U.S. companies closing, that’s how the market works. That’s just how it works. No conspiracies, no inherent unfairness or nefarious actions. Just simple math and free market forces working properly..just like I said back in 2012.
This is what critical thinking is all about. Taking what you are told and then taking into account all factors involved and reaching a well thought out and reasoned conclusion. This is not taught , or if it is, it’s brushed over and not emphasized. As a result we have people falling for all forms of B.S. being spewed by both sides on any given “news item” Oil companies are greedy, Republicans hate -insert latest “transgression” – , whiny college kids represent the majority of college kids, the scourge of Political Correctness, etc etc. Listening to media spin will prevent you from gaining all the needed facts to draw a proper conclusion. Learn critical thinking skills, question everything, even claims by your own side. If you don’t, you’re just another sheep to be led around by your nose towards the goals of someone else.