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The price of gasoline has dropped over 20 percent in the last 3 months, while some might consider this a good thing, in the long run; the only real beneficiary of this scenario is the oil company themselves.

When a gallon of gas was at $3, viable alternatives was the buzz word, from Venture Capitalists to wannabe inventors, everyone wanted a piece of the fuel pie. Technologies that are long been ignored got some well-deserved attention, not anymore though. Gas it at $2 a gallon and sounds like a bargain to those painfully paid over $50 to fill their tanks.

So how does it make the oil companies winners, for one, they made record profits this past year. And by simply dropping the price of gasoline to a point where consumer feel more comfortable filling up, they have managed to curb much needed research funding to investigate alternative fuels.

If this sounds like a note from a conspiracy theory channel, here are some facts.

1) The increase in price although unreasonable can not be considered illegal as it happened in a non-emergency situation (post-Katrina)

2) Here’s the cost profile for the past year and half:

• A barrel of crude was around $24 prior to Kartina, a gallon of gas cost around $1.60.
• A barrel of crude post-Katrina soared up to $70, and cost per gallon shot up to $3.07. Although the big oil blamed this squarely on OPEC, it does not explain the supply-demand aspects completely. The OPEC claims that China and India are burdening the demands, which in the ideal world would result in less than normal available gasoline (supply), supply being inversely proportional to demand, which is the one of two reason why gasoline could cost more. Americans consumed the same or more gasoline this year as compared to the same period last year, meaning, there was no short supply. Alternatively, the demand was met with increased production, in which case the cost of per-barrel is explained, but not point 3 below.
• Now a barrel of crude costs around $60, and gasoline costs around $2/gallon. So either the production of gasoline has gone up (in which case the cost should drop significantly, bringing the costs below pre-Katrina levels) or the demand has dropped (in spite of approaching what is to be a cold winter)

And of course,

3) Exxon Mobil recorded $340 billion with a “B� profits this past year, Chevron made $190 billion, ConocoPhillips $166 billion.

If $3 is the price we pay to pave the path for a cleaner and more sustainable energy source, we should embrace it and as you fill up realize that your money might be fattening the pockets of big oil, at the same time opening up doors for cash inflow to alternative technologies. Ah, I miss the $3 gas.

Originally posted in D.C. Watch.

Tags: News, Ethanol, Alternative Fuel, Shell, Exxon, Oil, Stocks, Money, Activism, Conserve, Sustainability, Economics, Energy, Technology