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EDITOR’SNOTE The opinions, beliefs and viewpoints expressed by the various authors and forum participants in this paper do not necessarily reflect those of Texas A&M University, The Battalion or its staff.
MAILCALL GUESTCOLUMNS Make your opinion known by submitting Mail Call or guest columns to The Battalion. Mail
call must be fewer than 200 words and include the author’s name, classification, major and phone number. Staff and faculty must include title. Guest columns must be fewer than 700 words. All submissions should focus on issues not personalities, become property of The Battalion and are subject to editing for style, clarity and space concerns. Anonymous letters
will be read, but not printed. The Battalion will print only one letter per author per month. No mail call will appear in The Battalion’s print or online editions before it is verified. Direct all correspondence to: Editor in chief of The Battalion (979) 845-3315 | mailcall@thebatt.com
GUESTCOLUMN
Understanding Oil Prices Alvis Wilson: Supply, demand and geopolitical uncertainty
G
o ahead and ask yourself the question. I’m sure it crossed your mind the last time you filled your gas tank at a price that made you do a double-take. I’m sure you wondered who is jacking up the cost. Last time this happened, in the summer of 2008, targets of blame ranged from the speculators on Wall Street, to conspiratorial big oil executives, to stingy Saudi Arabia who hoarded their oil. Before we go blaming the Saudis and their oil cronies, let’s understand the basics: According to Oil equals the American Petroleum energy, Institute, and API, gasoenergy line prices means are govprosperity erned by the price of a barrel (a volume of 42 gallons) of oil, refining cost and taxes. Oil is a commodity, like cotton or beer. Its price is theoretically based on an economic model of supply and demand, meaning that when supply is abundant and
demand is low, prices are cheap. But when demand is high and supplies are strained, prices increase. It gets a little more complicated when it comes to oil. It is only telling half of the story to say that oil prices are governed by supply and demand. There is another factor that plays a big role in oil prices. This factor is sometimes referred to as “Geopolitical Uncertainty” and it has everything to do with the outlook of oil supply in the future. It changes daily based on current events and helps to answer the question of how the supply of tomorrow will be affected by the events of today. For instance, since midFebruary the price for a barrel of oil has jumped $15. This is due in large part to the recent unrest in the Middle East. These events have increased concern that geopolitical vola-
tility could compromise future supply of oil. Now the question of why prices are so high can begin to be unraveled. It’s a fact that the demand for oil is growing. The US Energy Information Administration, EIA, the statistical and analytical agency of the government, reported that in 2010 the world saw the largest increase in demand for oil in 30 years — a 3 percent jump to 86.7 million barrels of oil per day. 86.7 million barrels is a large number but think of filling an imaginary tank the size of a football field and over a mile-and-a-half high. Now that’s a pool of oil! The increase in demand causes the supply side to try and keep pace. The International Energy Agency, IEA, expects this trend to continue due to developing countries (Brazil, China, India etc.) slowly emerging out of energy poverty. Their quest for mobility and energy freedom is having a major impact on the markets, and who can blame them? Oil equals energy, and energy means prosperity. Prosperity is a right to which
all individuals are entitled to pursue. Now what about this notion of geopolitical uncertainty? You need only read today’s headlines to see that geopolitical uncertainty is all around us. Revolutionary fever is sweeping through the Middle East, effecting major producers of oil. The uproar in Libya by its citizens has caused the fourth-largest oil producer in Africa to halt its production. All of these headlines create a large level of uncertainty in the global oil market and increase the geopolitical uncertainty, thus driving up the price of oil. The next time you fill up your tank make sure you’re blaming the rightful parties. Blame the young man in Libya fighting to break away from the tyranny of an evil dictator. Blame the Chinese family who just bought their first car so they don’t have to rely on mass transit. And make sure to blame yourself, too, because of your demand for cheap, reliable power that gives you prosperity that others only wish they had.
voices thebattalion 04.11.2011 page05
MAILCALL
From Justin Pulliam, senior animal science major
Three years ago, students voted on a “plan” to renovate the MSC in phases, where it would never be completely closed. The students voted in favor of the plan. However, shortly after the vote, the University administration changed the plan and completely closed the MSC for three years. How did this happen? Students were not voting on a “plan,” they were voting on a $60 per semester fee increase. After the fee was approved, the administration could spend the money how they wanted. The administration did not have to follow the plan they sold students on. Now, the Texas A&M administration is in the process of convincing you to vote for a new $60 per semester mandatory fee. On Monday, the Battalion published the first propaganda piece pushing this new fee. The administration sold it as a “plan” to renovate Kyle Field. The word “fee” was used once in the article, as a “possible student fee.” Furthermore, there were no dissenting opinions presented in the article. Such an article belongs in the opinion section. The state legislature requires students to vote on new fees. The administration needs you to vote in favor of this new fee. The administration might ask you to approve a “plan,” but they are really tricking you into voting for a new fee. The administration has it down. They know that any referendum will result in students voting for a new fee. They know they can convince students to vote for a feel good plan. It is the same tactic the administration used to pass the MSC fee increase. Do not be misled by the administration. Once this fee is approved by students, the money can be used at the administration’s discretion. You can oppose this fee by contacting State Representative Fred Brown and asking him to oppose HB 3741, the bill supporting the new mandatory athletic service fee.
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