The O'Reilly Fiction

I have a friend who is fond of the saying, “Analogy is the lowest form of reason.”

Perhaps — but conspiracy theory is not far behind. There is something really emotionally satisfying about the idea that bad things are all part of a plot and you know who the plotters are. To start with it’s simple. There’s no need to study macroeconomics or history or anything else with a lot of math or footnotes involved. Your answer is as understandable as the last episode of “Survivor.”

And like “Survivor,” it’s excellent theater. Every good story has a bad guy, and fighting bad guys is what defines a good guy. That’s why Hollywood churns out conspiracy theory driven adventures by the dozen. There are, of course, some real conspiracies in our world. But nothing like the number that people believe.

The most popular conspiracy theories all involve a confluence of politics and money: the trilateral commission, the Jews, the freemasons, corporate evildoers. These are the motive forces of history to simple minds — or to those wanting to manipulate such simple minds.

I’ll let you decide which category Bill O’Reilly falls into, but as his latest column demonstrates he is a big proponent of the idea that high gas prices — which are a violation of your inalienable right to be insulated from market forces — are the result of a “cabal” of “Big Oil” “fat cats.” I believe Hugo Chavez holds a similar belief.

Mr. O’Reilly rejects the notion that high gasoline prices are related to simple supply and demand, stating: “Gasoline supplies are at an eight year high, according to OPEC. There is plenty of gas selling on the open market, more than enough to meet the worldwide demand. So rising gas prices are not a supply and demand issue.”

That would be fabulous proof of a cabal, if only gasoline were a raw material — as Mr. O’Reilly pretends to believe. But gasoline is not pumped from the ground or drained from maple trees. It is a manufactured product made out of crude oil and I believe that crude oil is somewhat more expensive than it used to be.

To understand 90% of everything one needs to know about gasoline prices, all one has to do is examine the following chart. Drawn from data secretly compiled by the Energy Information Administration, which I found on the Internet, it shows the price of the four major factors (not O’Reilly Factors, mind you) that actually determine the cost of gasoline: 1) crude oil, 2) taxes, 3) refining, and 4) distribution and marketing.

Let’s see if we can figure out which one of these factors has somehow changed recently.

Is it taxes? Nooooooo. Although they remain a huge part of the cost of gasoline, they have crept up only slowly in the last three years. Taxes cost you about $0.42 per gallon on average. So the next time you hear Sen. Chuck Schumer (D.-N.Y.) worrying about the price of gas having an impact on “working families,” such as those who I imagine work for him, just remember that the Federal government could lower the price of gas $0.184 per gallon overnight, if it simply suspended the excise tax it impacts upon those poor working families. State governments could reduce the cost by more than $0.22, if they really wished to.

Is it marketing and distribution making prices rise? Nooooooo. Although advertising on “The O’Reilly Factor” undoubtedly is expensive and delivering gas to every street corner in North America is quite a feat, these items are only a small part of gas costs: just $0.11 per gallon this last March. That’s pretty amazing when you consider the post office can’t get a lightweight and non-flammable letter to your neighborhood for less than $0.39.

Well then, maybe it is refining costs that have made gas so expensive. You’re getting warmer. Refining costs shot up noticeably after Hurricane Katrina, since several refineries were knocked out by the damage to the Gulf Coast. Most of our refineries are concentrated there because people on the East and West Coasts are too good to have to look at them. To ease the Katrina price crisis, the government suspended all sorts of very important and wise rules telling the petrochemical engineers that run the refineries how to best make gasoline. The price then dropped suddenly, proving that regulation does not affect cost much.

But now the rules are back in place. And the government added some new ones. Most fuel in the U.S. must now contain ethanol, which is expensive, cannot be transported in pipelines and is a pain in the barrel to work with. So costs have gone back up, and then up some more.

Well that just leaves crude oil costs. Have they gone up? Well, yes, apparently they have. In the three years in question they have gone from about $0.70 per gallon to $1.34 per gallon — a 91% increase. Perhaps the rise in crude oil prices was an underreported story, and thus missed by Mr. O’Reilly? Together with the increased costs of refining by Congressional committee, the increase in crude oil prices totally explains the price of gasoline, without the need to examine if Exxon had a second shooter on the grassy knoll.

However, Mr. O’Reilly rejects the idea that the price of crude should affect the price of gasoline, because it is just a “paper price.” I’m not sure what other sort of price he thinks there is (a “street price,” perhaps?) but Mr. O’Reilly, a graduate of Harvard, thinks that the “paper price” is some sort of new-fangled hocus pocus created by speculators: “These speculators operate in the so-called commodities markets. They gamble on where the price of oil and other tangible assets will be months from now. These Vegas-type people sit in front of their computers and bid on ‘futures’ contracts.”

What are these fancy “commodities markets” of which he speaks? Are the Zionists involved?

Of course, these newfangled “futures” contracts that Mr. O’Reilly has uncovered aren’t just bets made by “Vegas-style” people removed from reality. They are binding contracts and the buyers of these contracts agree to buy oil at the high prices that we bemoan. They lose their butts if they just bid up the paper price for no reason. I would encourage Mr. O’Reilly to enter the futures market and bet against these crazy Vegas-type speculators with his amazing insights into cabals and paper and so-called markets.

But if you must have high crude oil prices explained by conspiracies, then here is a partial list:

  1. The Chinese. This is an insidious plot of 1.3 billion people who are tired of living in huts, eating dirt and riding bicycles. They have demonically entered the world economy in a major way and earned so-called “money,” with which they have bought so-called “motor vehicles.” This has driven up the paper price of oil. The “Indians” are also involved in a similar plot.
  2. Petro-nut jobs. This conspiracy involves the leaders of major oil producing countries, like Iran and Venezuela and Saudi Arabia and Iraq, pretending to be crazy or unstable. This makes people want to foolishly stockpile oil or oil purchasing rights against future uncertainty. Thus driving up the paper price of oil.
  3. Corn farmers. This conspiracy involves large corn farming corporations, which have convinced most people that ethanol, made from corn, can replace oil from petro-nut jobs. This ignores the facts that it takes more energy to make corn ethanol than it contains, and that, if the entire corn crop of the United States were turned into ethanol, it could replace only 2.5% of the gasoline we currently use. If you still want to eat, though, corn will have to replace something less than 2.5%. Adding this wonder fuel to gasoline has driven up its so-called paper price at the pump.
  4. Environmentalists. This open conspiracy works to make sure we cannot drill for oil in America and thus increase supply and decrease price. This cabal also works to make sure that any large-scale alternative to oil is considered bad. Coal is bad. Natural gas is bad. Nuclear is bad. Hydropower is bad. Even wind is bad, if it blocks views or harms birds. Solar is good, but will become bad as soon as it is more practical. Restricting energy supplies can drive up the imaginary paper price of so-called gasoline.
  5. Congress. This is a conspiracy composed of a race of supermen who know everything. They know who you should hire, how much water a toilet should use, and where roads or yodeling museums need to be. They know how much you should earn, how much sugar belongs in ketchup and what the fuel of the future will turn out to be. They know how to make baseball better, schools smarter, bread yummier, and democracy more stable. They know what seeds to plant and cows to milk and trees to cut and businesses to smile upon. They know how much high gas prices hurt working families, how big those families should be, and how many hours they should work. They know everything — including how you should really make gasoline. Such knowledge is not cheap and thus drives up the price of gasoline, at least on so-called paper.
  6. Folks. Folks love to drive big cars, and to be warm, or cool, and to have lights and possessions. This conspiracy drastically increases demand without regard for supply. Thus increasing the so-called price on so-called paper.

There you have it. High gas prices are the result of conspiracies. I hate to break such bad news, but I’m just looking out for you, the folks. Somebody has to — you’re never going to get the truth about “Big Oil” from “Big Talk.”