Socialism – Not Big Oil – Is Cause of High Gas Prices
You’ve heard it all before. Big Oil is picking your pocket. Speculators are to blame for $4 gasoline. We need to drill less, and conserve more. We need to tax the oil companies more.
True to form, the Left can’t grasp why gas prices are so high because the refuse to acknowledge a central premise of price structure – the free market. It is the very socialism promoted by “progressives” which has been a major culprit in the high price of oil.
Recently, oil prices have dropped a bit. Why? The market is working in America and its citizens are making a deliberate effort to conserve energy in order to save money. A classic case of supply and demand – the free market at work.
Overseas, countries like China, India, Mexico and Venezuela subsidize the price of fuel. What is the effect? A gross distortion of the market.
Why conserve, when fuel is cheap? This is precisely the argument used by the Al Gore types when they previously advocated HUGE increases in the federal gas tax. If we had to pay as much for petrol as they do in Europe, we would all be stuffed into Minis.
Of course, to make such an argument now would simply guarantee Republican majorities throughout the land. Yet, why won’t the Left recognize the same logic when it applies to their socialist brethren?
That’s different.
It is, but only because they wanted a government imposed price distortion in this country that was the inverse of what we are seeing in countries like China and India today.
Oil is down $25 in two weeks, and you think that is strictly due to supply and demand. Please explain to me specifically what has happened to cause this drop. Shell had two pipelines shut down in Nigeria recently due to bombings, and oil still went down 17%. You and your Red Maryland buddies really need to get out more.
Since I’m not God, I don’t claim to have all of the knowledge required to set a price. I do know that gas inventories are up more than anticipated by traders and that this was a huge factor in the cost of oil going down. I also know that supply disruptions in Nigeria are so commonplace as to be a mere blip in international markets.
Blow up a pipeline in Saudi Arabia and then you’ll see a price disruption.
No one argues that supply and demand are the sole factors in efficient pricing (except in a perfectly competitive market, which seldom exists). I do stand by the argument that heavy subsidy by large, and growing, consumers of a product queers pricing on multiple levels.
I argue that supply and demand are no longer the “sole factors” in oil pricing, and there are commentaries every day in print and video that also argue the point.
Investment banks and mutual funds are investing in oil futures in the same way that they invest in stock index funds. Seventy percent of the NY oil futures market is now money from entities that do not have the ability to deliver or take delivery of actual oil. While speculators do provide liquidity in all markets, it is obvious that things have gotten out of hand in oil.
I hate to tell you this, but Nigeria is one of the top three oil importers from OPEC. Some months it is second to Saudi Arabia, and some months it runs third behind Venezuela. A pipeline bombing in Nigeria used to bump oil up at least two or three dollars back when supply and demand ruled.
I would also remind you that our two biggest oil importers are right next door. We import the largest amount of oil from Canada, and Mexico is second. Saudi Arabia runs third.
Who cares who’s to blame. What are we going to do about it. From my viewpoint, there are 2 or 3 options. Sell your car, buy a bike and take mass transit. Drive less or buy an electric car or a car powered by hydrogen. And option 3 is buy a pair of comfortable Nike’s and get ready for some walking. Since all of these options are out of the question for me, I decided to try and do something about it. While looking around, I stumbled across GasBankUSA, located at http://www.gasbankusa.com. The site talks about fixed price gasoline and locking in at a fixed price. An interesting concept and a little better than my magic 8 ball which continually tells me “try again later” everytime I ask it where are gas prices going OR will gas prices continue to rise. Looking through this site, it looks like a way to take control over something we had no control over in the past.