Shake Shake Shake

Well, I’m pretty danged good, if I do say so myself, and in February of last year, yes, 15 months ago, I predicted in this very column that an oil price shock was on the way. And it’s here. Hooray, let me shake my booty in the end-zone and do the Economic Victory Dance. Then I’ll sell a pint of blood for some money so I can afford some gas for my Ford.

Said I, in the February 14, 2003 issue of the Saipan Tribune: “The supply side of the oil market…is looking mighty tight.” Bingo! Score one for Ed on the supply side.

Said I, also: “Remember China?…Their industrial muscle is now reaching legendary proportions, and industry is always thirsty for fuel.” Hey, this is what the world’s Johnny-come-lately’s are saying right now, but I said it long, long ago. Indeed, a demand side victory. Score two for Ed. Shake that booty.

And, concluded I, back then: “All things considered, then, I don’t think $2.059 a gallon (for gasoline) is such a bad deal now.” Wowzer–a market victory, where supply meets demand. Score three for Ed. High fives, baby.

Indeed, gas has gone up, hasn’t it? The Saipan score for go-juice is about $2.329 now. Hey, it’s about $2.20 to $2.25 in the nation’s largest gas market, California, and they have refineries and oil fields there. So I’d say that Saipan is getting a comparatively sweet deal when you consider the fact it’s (a) remote, (b) doesn’t have oil fields, (c) doesn’t have refineries, and (d) Saipan’s suppliers, like all businesses, have to face the risks of doing business in the Commonwealth, which has grown hostile to anything that isn’t a government check.

Brace yourself for our usual clown-show of self-aggrandizing bureaucrats who will explain their conspiratorial reasons behind the higher costs of gas. Hey, I’ve got a reason for you: Higher oil prices are causing higher gas prices. Is that hard to understand? No? Ok, so, please, go ahead and “solve” high oil prices. Mail me a postcard from Riyadh, and send some kisses from Caracas. Lecture us on commodity markets, oligopoly pricing theory, and gas prices, I could use a good laugh.

Oil has hit $40 a barrel, sirs and madames, and has only avoided higher prices because the U.S. dollar has enjoyed some kind of bizarre dead cat bounce. We may see $30 a barrel again in the short term (though I doubt it), but never in the long term. By contrast, $50 is likely. I don’t know the timing, since I don’t know (a) when the international markets will sober up and dump their dollars, and (b) what weirdness is around the next bend on the global military front.And, how about (c), if that crazy Euro becomes the currency basis for oil, which will be one of those things that makes the history books.

Not that I’ve ever read a history book, mind you, but I did read “Zippy the Pinhead From Outer Space,” which isn’t exactly history, but I had read it before, back in college after I broke up with my girlfriend because she gained weight, so I had nothing to do that weekend but eat pizza and read Zippy comics. I don’t know if that qualifies as history or not, strictly speaking, but I’m burned out on semantics for the week so you’ll have to suffer through it.

And speaking of suffering, gas prices may never, ever, get back to the $2.059 level of 15 months ago. Hey, I warned you, right? Right.

Now if you’ll excuse me, I’ve got to do another dance of victory in the end-zone, shaking this booty of mine, while adoring fans buy me cold Coronas, and while I spike my IBM Thinkpad into the turf with an air of triumph. Economics is all about prediction, baby. That’s all it’s good for.