( I couldn't pick a single cliché for my title.)
The world price of gas.
Let's just think about that for a moment. Wherever you are in the world, there is a price for gas. It's the world price. It's the price you must pay to buy gas.
(Yes, I know there are contracts and futures and spot prices and blah blah blah... but behind all that complication is the simple fact that it doesn't matter who you are or where you are, the price is the price is the price.)
And yet, the price of anything is only known when there is a sale. Until that point, all we have are bids and offers. Everyone knows this.
That house isn't 'worth' £1m because it's for sale and that's what the advertisement says. That's simply an indication of what the seller is hoping to get for the house. Similarly, if the buyer offers £900k, that doesn't mean the house is worth £100k less than the seller thought. When it sells at £925k, that doesn't mean the correct price was £925k and thank goodness we discovered it, phew, etc. It just means that the seller and buyer reached an agreement that they could accept that monetary value for that house between them on that day.
So what's the world price of gas? And why is it currently so high?
It's only high because buyers are buying it at a high price. If they weren't, that wouldn't be the price, no matter what the sellers might want, any more than the price of that house was £1m when no one was buying it for that.
So why aren't the buyers offering less?
Free markets
As touched on previously on this blog, free market ideology has a tendency to favour the freedom of rich people to get richer. By doing things like accepting very high prices when buying gas.
How about the freedom of the buyers to get together and agree that they won't bid each other up to crazy rates? Are they not free to do that? Why not?
The sellers are all operating through the 'world price of gas' which serves to inflate the price. How would it be wrong for the buyers to operate through the 'world buyers of gas' (which sadly doesn't exist) which considers the costs of exploration, extraction, transportation and dividends to shareholders and then offers a fair price?
The fossil fuel companies are smaller than the world
As ridiculous a heading as that clearly was, it seems that some people don't realise it.
The fossil fuel companies consist of a tiny number of people who are very good at obtaining a substance and selling it. But if their mechanism for selling it will lead to their amassing vast wealth while impoverishing huge number of others, it might be worth considering that they are dependent on the rest of the planet's people. And that they should be happy with lots of wealth rather than aiming for vast wealth.
Because, let's face it, the fossil fuel companies weren't exactly destitute last year (or the year before for that matter). Last year's profits were pretty good.
And this year's are going to be stratospheric -- but only because we are paying their crazy rates.
All it needs is for enough of the gas buyers in the world to say the prices are ridiculous and to offer less. And to stop bidding against each other. And to deal with any shortage themselves rather than letting the market decide by selling everything at such a high rate that demand drops to meet supply.
There's another way for demand to drop to meet supply -- international agreements. And that route doesn't lead to economic collapse. Sure, a few countries will break ranks and offer more money and get more gas. But so what? As long as enough big customers can stand firm, the price will drop.
And the fossil fuel companies will still do very nicely. And economies won't collapse. And everything will certainly be a lot better than keeping the current arrangement.
Alternatively...
Carry on. But what happens next year when the price is even higher? After all, they know we'll roll over and pay this year's crazy prices.
So why not try for even more next year? Why wouldn't they?
Face down the bullies now. It'll only get harder the longer you leave it.
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