The price of gas is a touchy subject these days and everyone has their own theories about it. There is one perspective we aren’t hearing very much about:
World supply and demand is a factor in gas prices, but the U.S. consumption of fuel (which is roughly 25% of world consumption or more) has dropped by millions of gallons since last year and yet prices continued to rise significantly. Some people are trying to lay the blame directly on environmentalists or “big oil” for high gas prices. While these are possible factors (especially the latter) other key factors in high gas prices are the weak dollar/inflation (aka the Federal Reserve), the current wars we are in, and the likelihood of the U.S. starting more wars in the near future. The wars cost our country over 400 million dollars a day. To cover the massive war spending costs money is printed out of thin air by the Fed. This increases the money supply and devalues the dollar, causing inflation. Next time you are filling up your tank remember you are also paying the War Inflation Tax.
One other point: I’ve heard various news outlets (actually Fox is the one I know of for sure) say things like “high gas and food prices are causing inflation”. Silly Fox, inflation is when an increased volume of money results in the loss of the value of that money. Inflation causes high gas and food prices, not the other way around — get it right!
OPEC: Dollar Decline Could Lead To $170 Oil
June 28 (Bloomberg) — OPEC President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year, citing the dollar’s decline and political conflicts…
Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.
OPEC ministers generally say that oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. “The market is completely supplied,” Venezuelan Oil Minister Rafael Ramirez said yesterday. Libya announced possible production cuts, calling the market oversupplied.
The rising cost of crude is not linked to supply, Khelil said today. “There is more than enough oil in the market to meet the international demand,” added the OPEC president…
“The decisions made by the U.S. Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices,” Khelil said.
Oil may extend gains if the ECB boosts rates on July 3, further weakening the U.S. currency. The dollar has declined 15 percent against the euro in 12 months.
GASOLINE IS NOT GOING UP!
By Paul Proctor
May 17, 2006
For the first time in my life, I put $70 worth of gas in my car. It wasn’t premium and my tank wasn’t empty. Many around the country are experiencing the same kind of shock at the pump and really don’t know why. As a result, everything else we purchase and/or consume on a daily basis is rising accordingly because it is made and moved with oil – the lifeblood of today’s economy. Consequently, whenever the cost of doing business increases, for whatever reason, a chain reaction begins and spreads across the financial world like an economic tsunami, leaving the consumer to suffer in its wake.
Economists call it “inflation” while the government calls $75 a barrel oil a “shortage,” blaming higher prices on terrorism, the war effort, “peak oil,” not enough new drilling and not enough new refineries to turn it all into gasoline.
Some say that skyrocketing fuel prices are simply the work of greedy oil company executives, while others claim it is OPEC’s greed. Still others tell us it is all those environmental regulations that liberals imposed on refineries over the last several decades that ran up the cost of producing gasoline and discouraged the building of new and more eco-friendly refineries to meet the growing global demand.
Then there are those who say it is largely because of the high taxes we pay at the pump that petrol has become so expensive, while politicians declare that the perfect response to it all is to raise taxes on oil companies, as if they wouldn’t in turn pass that increase on to the rest of us. Some answer, huh?
Society’s problems don’t worry me near as much as government solutions.
What almost no one in Washington and the American media will admit, (and I don’t believe for a minute that they aren’t privy to it) is the dirty little secret behind $3 a gallon gasoline, which is nearing or above $4 in some areas of the country. That is to say, they refuse to address the REAL REASON for our so-called “inflation.”
Although many of the aforementioned theories given, play, in varying degrees, a role in those “rising prices,” they are not at all the cause, but only the effect; and as many of us already know, treating symptoms does not constitute a cure.
The dirty little secret is this: Gasoline is not going up. It is the dollar you buy it with that is going down; and it has been going down in value for a very long time because it is just government issued paper with numbers printed on it and nothing physical in storage anywhere to back it up. What’s more, the dollar is now going down faster than ever.
Filed under: Economy—US Dollar | Tagged: bloomberg.com, commodities, Federal Reserve, gas prices, gold standard, inflation, oil prices, oil reserves, paul craig roberts, peak oil, record gas prices, speculating | 8 Comments »