If you are an investor in oil, or an oil company... you are not going to like this post. And that's perfectly fine with me because I am kind of not liking you right at this point in time. You see, you are the folks that are starting to make the lives of millions of people on fixed incomes... a life without a future, a life without hope.
Here in Alberta, we love oil. We love the fact we have it, and for the longest time it has helped us survive. The income we made from it has paid for a pretty decent place to live, for the most part. And it clearly has saved us from paying provincial taxes. We classify oil as a commodity... one of those things in life that we need, like food and water... and as such it's a "supply and demand" issue. But unlike other commodities such as oranges which can be grown until the end of time, oil is one of those non-renewing items where there is only so much available. We can't grow more. And herein, is the issue.
The rich folks, those with money... purchase stocks in oil, and the law requires investments to make money. This drives up the price of oil, and more rich people see this as a good investment so they too buy more oil stocks, which creates the vicious circle of the ever increasing price that oil sells for. And lets face it... the actual cost of the oil has not gone up, just the price that is paid for it.
The trickle down effect of this touches every part of life. Corporate costs go up because they have to pay more to deliver the services, people want more wages because their costs are going up, property taxes go up because it costs more to provide public services, oil companies say they have to charge more now because they have to pay their staff more, food prices go up ... and... and... and... If there every was a self-serving industry... oil would take the cake. And the rich folks are totally loving it because they are making huge profits from it. They could care less about the results of what happens.
Economics is not my area, but I think it's safe to say that a lot of it is based on or determined by percentages. The way gas is sold, is by a price that includes taxes. So when the selling cost is supplied to a gas station, it excludes taxes. From there, a percentage is added on for this tax, and for that tax, and for.. whatever else. And then the station adds on a percentage for profits. In the case of taxes, this is not "we need 10 cents per litre" but again a percentage. So as the price goes up, the actual value of the taxes collected on the same volume of gas, is more. Now that makes both the provincial and federal governments very happy. They get much more of your tax dollars to waste on red tape and other fun stuff that they love to squander our money on. (That discussion is way beyond a blog post so I won't even go there.)
All these costs go up, by hundreds and hundreds of dollars, per section, per area. Food, taxes, retail costs. The proverbial endless list. Oh.. wait... in the list is also a thing called income. You know, what you get paid to live? And remember, "fixed income", the type where the key word is fixed. Your increased costs to live, taken in total, are easily in the thousand dollar range. And you might see an increase in your "fixed" income by a hundred dollars. Which means you have $900 less available than last year. And what are your choices? Well, you can eat less, or turn down the heat, or find a cheaper place to live (HA! Good luck with that.) For those fortunate enough, as in some seniors... it means selling your home so you can live. For those who do not have their own place... I shudder at the choices left for them.
I know the following suggestion has issues. Especially for the rich and the rich wanna be's. We HAVE to do something to create stability. Perhaps the world leaders need to ponder on setting a fixed price on oil. I'm sure there can still be huge "profits" made for the industry if oil was set in the 70-80 dollar range. And yes, lots of investors would pull out, some probably at a loss. Some extra tax allowances can be made to assist with a small percentage of that, and maybe some other things as well. I have no issues with the rich people losing some money, when the majority of the world will reap the rewards. Rewards that are kind of important, you know... like being able to eat or stay warm.
So take the crazy idea, and tweak it. Do something with it. And if something doesn't happen soon, and I do mean very soon... the price on the quality of life for many, will not be affordable. Clearly the laws that control the investment side of 'life', needs some changing.