How’s that $3.80/gallon working out for you? Over the past several days gas has been going up ten to twenty cents per day right in front of our eyes. The station located at the corner of Tippecanoe Road and Rt. 224 has been going up sometimes twice each day.
The amazing thing is that the news media seems to be ignoring the story. They mention it, but almost in a ho hum sort of way. Remember 2008, during the Bush years? It was the headline night after night after night after night…and all due to Bush’s chummy connection to the oil companies. Of course, President Obama has absolutely nothing to do with the problem now. So why make a major issue out of it and cause him trouble? Never mind that higher energy prices are exactly what he wants to force the evil Americans to conserve energy and stop that horrible global warming.
So where are these high prices coming from? First, you need to know there is no oil shortage in the world today. It is awash in oil…everywhere!!! Prices are being driven by a number of different factors.
1) Trouble in Mideast: Do you think? Trouble in Egypt is one thing. Trouble in Libya, Bahrain, and Yemen is another. Throw Saudi Arabia into the mix, and you got a major problem.
2) A Weak Dollar: A weaker dollar causes commodity prices priced in dollars to go up as other currencies are used to purchase commodities also.
3) Quantitative Easing by the Federal Reserve: Hand in hand with a weak dollar has been the infusion of hundreds of millions of dollars into the economy by the Federal Reserve. All of that money has to land someplace. That someplace is commodities as investors look to purchase hard assets in anticipation of the coming inflation that is already here but that the Fed says doesn’t exist.
4) Speculators: Those rising oil prices reported on television are actually future prices. Speculators actually buy barrels of oil to be delivered to them sometime in the future betting the cost of oil will continue to go up. Sounds easy except unless they sell it prior to the futures date, these folks actually have to take possession of the oil! The problem is many of them don’t have the capacity to accept any oil shipments, and those that do are all filled up. Much of the oil is sitting around in tankers waiting to be delivered somewhere…anywhere.
That, of course, means nothing to us who are paying through the nose. The problem is that the recovery in the economy, such as it is, is fragile. We cannot sustain $4.00/gallon gasoline, and it is most likely headed higher than that. Our economy is fragile at best. It may have been derivative securities that blew up the economy in September of 2008, but it was $4.00 gas that lit the fuse and is ultimately the root of all of the economic problems in the United States today…period…end of discussion. This is the ultimate tax on Americans, and we all pay it regardless of our economic status or income.
Here are the solutions to the high gas prices…and to our economic woes:
1) Quit looking weak and timid in the Mideast. Stand up to these bastards and tell them what for. Quit bowing and apologizing to these thieves and misogynists.
2) Begin to raise interest rates. It may be shocking at first, but ultimately it will strengthen the dollar and lower oil prices.
3) Quit printing money and begin to tighten the money supply. Money will leave the commodity markets and bring oil prices back down to normal prices quicker than you think
4) Regulate speculators. If you buy a barrel of oil, you must have the capacity to accept delivery.
And finally…President Obama….don’t go to Brazil and tell them to drill for oil there. DRILL FOR OIL HERE. DRILL HERE. DRILL NOW…as well as push the development of liquefied natural gas for cars and trucks…clean coal…nuclear….solar….wind. Get the ideology out of our energy policy…such as it.
If we don’t do these things, look for a double dip recession by fall, and it will make the last one look like a walk in the park.
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