Oil prices prove economics still work

Last summer the Fence Post was filled with letters complaining about high gas prices. These usually also commonly blamed the oil companies and or George Bush for this problem. Terms like: excess profits, gouging and conspiring were commonly used in describing the behavior of these companies.

However as we have all witnessed recently there has been a dramatic decline in the price of oil that has translated to much lower gasoline prices. I've been waiting in vain to find letters praising the efforts of the oil companies and the president in reducing the price of gasoline.

Of course I'm being facetious; nobody ever bestows accolades on large oil companies and certainly not on George Bush. My point however is that oil companies don't establish the price of their product any more than the farmer sets the price for his corn or wheat.

The market sets the price based on perceived supply and demand factors. Even a cartel like OPEC has discovered that, try as they might, they haven't been able to stem the slide in oil prices. I'm sure the Saudis and other oil exporting nations are anguished by this sudden drop in profits.

While its nice to have a scapegoat, the law of supply and demand still works. Commodity prices (like oil/gasoline) will continue to reflect this correlation.

James Mooney

Arlington Heights