Our Right to Self Reliance

Here’s reason #987 to decouple yourself from the petroleum-based economy and life style and increase your self reliance.  Unless you have an oil derrick in your backyard and a small scale refinery in your garage, you as an individual are completely at the mercy of factors and factions over which you cannot possibly have any control or impact.

The movement in diesel fuel prices has had a strong impact in a variety of industries that makes use of diesel not only in running machinery, but also in transporting goods.  The use of diesel in transportation and energy production underlie a huge number of functions in everyday life.  Nearly all delivery trucks, public transport vehicles like trains, buses, boats, ships and barges, in addition to heavy equipment used in construction and most farming equipment, use engines that run on diesel fuel.  This means that as the prices of diesel fuel soar, the costs for running these vehicles and equipment also increase. This leaves the operators with a choice between narrowing profit margins and passing those costs along to the consumer.  Which of those options they usually pick is left as an exercise for the class.

Anyone who has got a stake in the way diesel prices change or move should at least attempt to understand what drives these fuel prices—and if you drive a petrol-fueled vehicle, eat commercially grown or prepared food or make use of anything made of plastic…that’d be you.  By understanding what drives these movements and how the prices are determined, one is better able to foresee and interpret the various economic indicators that usually point to a time of increases in prices.  In order to determine how fuel prices are derived, it’s important to first look at the costs associated with its production for availability in the retail market.

The first cost to take into consideration is the initial cost of purchasing crude oil.  Crude oil is the primary ingredient required in the production of a variety of petroleum products, including diesel fuel, gasoline, and distillate heating oil.  Crude oil is traded in the international market, which subjects it to the dynamics of international supply and demand. The limited supply of available crude oil from oil-producing countries, and the growing perceived need or demand for energy worldwide is perhaps the most important factor driving crude oil prices.  Global politics are another major factor; although it would seem to make sense that any given country might at least attempt to function on whatever amount of crude it can itself produce and also develop alternative energy options, that’s not usually how it goes.

Next, crude oil enters the process of refining. This is the stage where crude oil is processed into the different forms of fuel and other products it will become, including plastics and, believe it or not, fertilizers. Gasoline and diesel fuel primarily differ in the refining process that is used for it. For some time, better-refined gasoline was more expensive than diesel fuel; however, the costs of processing gasoline were overrun by the price impact of excess demand for diesel fuel. Diesel fuel and distillate heating oil, on the other hand, are processed using much the same refining process. This is the reason the increase in prices in one affects and increases the prices of the other.

Costs of bringing the refined oil to the market—including marketing and distribution—also add material costs and other overhead to diesel fuel prices. Transportation of the various refined oil products, marketing and advertising operations of the oil firms, the manpower necessary to run all these operations in addition to contracting costs all impact the bottom line of the company in order to sell the final refined oil product to the market.  Your friendly local retail gas stations also incur costs for operations, a part of which is also levied on the retail prices of refined oil.

Over and above these production costs, various levels of government levy taxes on oil products; in many places the total of the taxes are equal to or greater than the cost of the actual product. The combination of these wildly variable cost contributors determine the dynamics of diesel fuel prices in the retail market.

So what’s the answer?  Curtailing usage of petroleum products—and I don’t just mean drive less—must be a foregone conclusion.  This doesn’t necessarily mean giving up whole chunks of your lifestyle; it does mean developing an ever increasing awareness of where what you use comes from.  Options that exclude petroleum products are becoming more common—take, for instance, single-use plastic containers which are now available made from corn instead of petrol.  Ultimately, arranging your life so that you don’t use such things at all is probably the best answer; but in the mean time, things like at least window shopping for a high efficiency electric car, asking your local deli if they have or plan to switch to biodegradable containers and choosing biodiesel at every opportunity instead of petroleum diesel is at least on the path of self reliance.

On a day to day basis, how much diesel do you think your lifestyle uses?  How much crude oil in its many forms passed through or took up residence in your life just this week?