printFrom my latest WND column, “The Goods On Gas”:
“The Mouths on television tell you to blame gas speculators, ‘profiteers’ or foreign producers for gas prices—anyone but your government. By their post hoc illogic, the price of fuel is causing prices to rise.
Fuel is fueling, but not causing, price hikes.
The deliberate and destructive policies of deficit spending are responsible for the steady rise in the prices of all commodities, crude included. This is so because deficit spending is “accompanied by an enormous increase in the stock of money…”
The general trend, then, of price increases is a consequence of government-generated inflation and the $9.5 trillion trifle known as the national debt. Unless these are curtailed, the trend will persist.
The particular price of fuel, concomitantly, is determined by supply and demand. … Absent legislative barriers to exploration, enterprising capitalists would have defied central planners and turned from tinkering with ethanol to drilling for—and refining—oil…”
Ultimately, “The more efficient the source of energy, the less waste and pollution are involved in its conversion into energy. Think of the totality of the production process! The fewer resources expended in bringing a fuel to market, the cleaner and cheaper is the process.”
Comments are welcome.
A good article. US budget deficit and dollar flood are responsible for $140/bbl not only BRIC consumption and hedge funds.
But don’t forget that US not only are printing more and more dollars , especially this year, but “exporting” inflation abroad through trade deficit.
US are printing money like crazy and Asians,Arabs and Russians are accumulationg these bucks like crazy having many trillions of govt “reserves” in dollar-nominated bonds.
Insane policy of rising double deficit (i.e. debt) in US would be impossible without another insane policies in the Eastern hemisphere – all these govt dollar reserves surpassing any reasonable needs , low exchange rates of yuan, rouble etc.
[Please provide a valid e-mail next time.–IM]
The trouble with you, Ilana, is that you have and use a brain and understand our current semi-authoritarian mixed economy. Hence, as you wrote so eloquently, the price of goods gets determined by a combination of (a) market forces – e.g. supply and demand and (b) governmental meddling – e.g. no drilling, no new nuclear plants, printing funny money. Rest assured that you would never be selected as a running mate for Obama or McCain, even if you had been born in America.
Speaking of energy efficiency – I remember the diagrams how one car of uranium was equal to multiple freight trains of coal. Yet somehow, we can strip mine much of MT, WY, OH, WV, PA …. but cannot find 1 square mile to store some diluted warmed dirt.
I say that because the politicians blather on calling on “education for new scientists” to SOLVE our problems. From my perspective as a scientist, I would say that the politicians themselves are (mostly) the source of the problem. And FREEDOM is an essential ingredient in the solution. But as we all know, this is sacrilegious and/or “anti-American”.
In addition to all the aspects presented, there are substantially more that are at least equal in their effect on our economy. First off, half of all crude pumped is turned into plastic. This is another major “consumer”, not often noted.
When we were faced by OPEC, we produced 65% of our own oil. Only other sources brought the price of crude down and ended the fiasco. Today, we produce less than a third of our oil used, and we refine little more than that. Aside from everything else, this means the profits of oil production go in foreign nation’s accounts. At the same time, all the refining profits also go to those accounts, and the market signal which should determine what is chosen as product, is sent to foreign oil refineries, who don’t really care what our priorities are.
If we drill our own oil and refine it, as we used to, all the profits are spent in America and it is our needs that are met by American refineries, not those of other nations with different agendas.
John McClain
Vanceboro, NC
(fractional reserve) banking in a nutshell
“What do bankers do?”
Well, they take your money and lend it out
then make some more and lend it too.
“Make some more!? Surely you jest;
t’would take a printing press!”
Au contraire mon freir,
they make it from thin-air.
“They make it from thin-air!?
But that’s dishonest, absurd!”
Yes, hence the Fed Reserve. [I know this topic is close to your heart–and so it should be.–IM]
Considering the dollar is worth close to used toilet paper these days it would be sensible to pursue energy independence as we may not be able to purchase imports much longer. This includes drilling in the gulf, ANWR, and exploiting the shales in the mountain west. Additionally, more nuclear power plants need to be built yesterday.
“[I know this topic is close to your heart–and so it should be.–IM]”
I’m not sure that’s praise
still, here is my raise.
This is my hot topic
You’ll have to stop it!
banksters
To counterfeit,
what a silly thing to do!
It’s a crime;
you could do time;
you’d certainly be blue.
No, become a banker
if you hanker
to make money that is new.
You’ll be respected
and not rejected
by the people that you screw.
It’s theft the same
but you won’t be blamed
by those that you undo.
(And you’ll do no time for your crime sublime.)
But at the end, can your money bend
the rules that condemn you?
Thank you. No one has address the high oil and falling dollar until this article. Yes, congress is spending tax dollars and the Feds are printing money like there is no tomorrow.
Congress blames the oil companies while not allowing any new oil exploration, drilling, building of refineries, and building of nuclear power plants.
In the meantime, Congress hasn’t said one word about giving taxpayers back any of the gas taxes.
I do not know if the US really needs to pursue energy independence as much as
Americans just producing MORE energy and improving efficiency (which reduces demand) would provide a healthy free market counter to the (unstable) oil exporting countries. But burning corn for even more money than the world oil price and making more inefficiency is no answer.
But the US gets coffee and bananas overseas – that is, after all, what TRADE is about. So I am not necessarily sold on being “independent”.
Of course, the Federal-Reserve counterfeiting is raising the prices of everything overall as well.
[Sure; good points; but prohibiting exploration has nothing to do with trade.–IM]
The subject of this article brings a myriad of views on why gas is going up,and how to stop it. I believe that the Saudi Arabians are controlling everything along with other folks helping them. When the Saudi’s want a war, they get it (member Desert Storm)?
They knew Sadaam Hussein was going going to go through Kuwait like a hot knife through butter. Then, as he publicly stated several times, he was going to take Saudi. He would have done that exactly like he said, if Bush SR. didn’t step in. Just a couple of months ago, Dick Cheney took a trip to see King Abdullah. Not much media coverage at all??? No talk about his trip?? I also believe that despite the requests from many to exit Iraq, I don’t believe we will see that happening. First, the Saudis do not want the U.S. to leave, because if we do, then Iran will soak Iraq up like a sponge without firing a shot. The Saudi’s are afraid of Iran like they were of Sadaam, even more so now. The Saudi’s call the shots and control the world. If any politicans want to drill in Montana or Alaska or off California or Florida or wherever, it must go through the Saudi’s first.Don’t hold your breath on that drilling. Instead, just enjoy the useless Photos from Mars wasting billions of dollars. Martin Berrow
This was brilliant. The crash course you provided in free market economics is worth more than a thousand “investigations of price-fixing”.
I support coastal exploration and drilling in the Arctic National Wildlife Refuge, but we also need to get rid of corporate subsides to the Oil companies. Subsidies intentionally distort the market and inevitably result in misallocation of resources. Raising taxes on companies we are giving subsidies to makes no sense.
US oil industry is still be relatively free market (by actual world standards).
Taxes are much lower than in Europe.
In Russia oil companies are subject to such high taxes that the production began to fall this years due to lack of investment. Every dollar above 50/bbl is going to budget. Licenses are distributed on the basis of corruption and clan wars.
But Russian Big Oil is composed of 5 key companies , 3 of them are still private.
In most countries oil is a total govt monopoly – from Arab countries to Norway.
Plus 40% of world oil market is one open cartel seller. [Supply and demand is still in operation.–IM]
Thanks for your concise and lucid explanation, which probably most people understand but cannot articulate so well. One question though: how low do we have to sink before sense returns? Please be clairvoyant.
Ilana, This is a heavy duty article. Thanks and congratulations. I just have one quibble. Deficit spending IS a huge problem. But central banking preceded and caused the need for huge social programs. Some people think that fractional reserve banking has social benefits that outweigh its dishonesty. In other words, it is OK to steal from the poor since they will invest the money intelligently and the poor will reap the benefits too. The current liquidation of malinvestments should lay that theory to rest. Plus, there are food riots in other countries. What good is an ipod, if one is starving?
God knew what He was doing when He gave us the 10 Commandments. I doubt fractional reserve banking is a sophisticated exception.