I drove 1,700 miles up the East Coast last week. Gas prices are down a little from their near-record highs a month or two ago but it was still about the most expensive trip I’ve made which is a major reason Florida orange juice costs so much.
I haven’t heard a peep from any of the usual suspects about the prices and there was no ineffectual Internet gas boycott this year. The House approved stiff gas-gouging penalties in 2007 but prices are higher than ever. Even Sen. Bernard Sanders (“I”-VT) hasn’t been whining about it. I ‘spect he’s too busy running for President.
Mr. Obama is mad as heck about it. He has done nothing.
“How do you propose the president bring gas prices back down to the level on the sign?” my friend Nola “Fanny” Guay asked.
Unfortunately the Administration has done more to raise the price than lower it. Maybe if Mr. Obama stopped lying to us…
Oddly, if you were really a Liberal, you’d already know the answer to Ms. Guay’s question. Bernie Sanders says he does. Jimmy Carter thought he did.
Price controls didn’t work, of course, as the rising price going out my tailpipe shows.
The real answer? An energy policy that makes it possible to increase supply in this country and reduce our demand. Simple as that.
It’s a reasonable argument that the current economy, largely designed in the 1950s and 60s when energy was pretty much unlimited, hammers us when energy is so expensive.
Earth had three billion residents in 1960 when gas cost a quarter and water was free. Earth had four billion people on earth in 1974 when the price of oil had risen from $3 per barrel to $12 and water was nervous. Earth has 7.2 billion today. One-third of those live in China and India and every one of them wants the standard of living people have in the United States and Europe.
There is not enough energy or water in the world to do that so the world that was built on cheap energy and limitless water will soon run on very expensive energy and very precious water. I just wish we weren’t saddled with traders and traitors who want to run that price up artificially.
“It bugs me that America is producing more and using less than ever yet the prices are up pretty significantly,” Rufus said.
Supply and demand is the issue. China already consumes about 66% of what the US does and is growing like Topsy. Asia and Oceania use a combined 25BBL/day total to our 21BBL/day.
Market forces do have some impact on prices (it is, after all, what the market will bear) but speculators have more. When crude zooms because a futures trader is willing to pay (or is afraid not to pay) over $100/barrel, we all suffer.
In case you missed the arithmetic, a barrel of oil rose by a factor of “just” 4 between the day I started day dreaming about getting a drivers license and the day I bought my first new car. Now has skyrocketed by a factor of 40.
The cost per barrel has risen a couple bucks on infrastructure costs. The cost per barrel has risen a few bucks more as we squeeze the rocks harder. And inflation adds the same toll. Still, that means the $3 barrel of oil should cost $20, maybe $30 tops. Speculators get the rest.
I have the two-word solution to speculation: “Take Delivery.”
It works in oil. It works in grain. It works in real estate.
You want to buy something and speculate that the price will go up? Great. Take delivery. Own the product. If these airheads had to sit on a tanker load of oil, how fast would they need to turn their inventory?
And that, dear Fanny Guay, is a solution a President can push through.
“Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” Mr. Obama’s first Secretary of Energy Steven Chu told the Wall Street Journal in 2008.
OK, I guess we know why that ship has sailed.