12 April 2005

The real culprit behind these higher oil prices is the Bush Administration

Thanks to massive deficits, and tax give-aways to the rich and corporations, to its war spending, and to its failure to combat unpredecedented and even larger trade deficits.
Increasingly, concern is being expressed by treasury officials and economists about the negative impact soaring oil prices and related gas prices could have on the overall economy. Politicians-especially Republicans-- are also fretting, since the thousands of extra dollars consumers are now spending on electricity, home heating and gasoline have, for all but the wealthiest taxpayers, more than cancelled out any minimal benefits they saw from the president's tax cuts.

Oil is a commodity and it is priced in dollars. If dollars decline in value, then the price of oil will rise in inverse proportion.

nd this situation is likely to get only worse. Some Wall Street oil industry analysts are now predicting that oil could, before too long, hit $100 a barrel. What they are saying really is that the dollar is likely to fall in value by 50 percent.

Adjusted for inflation, gasoline prices are still a far cry from the peak price paid in 1981. Nevertheless, demand for gasoline is highly inelastic, and thus more money out of the family budget is earmarked for fillup time. And compounding the matter, worker wages are not keeping pace with prices.

For the first time in 14 years, the American workforce has in effect gotten an across-the-board pay cut.

The growth in wages in 2004 and the first two months of this year trailed inflation, compounding the squeeze from higher housing, energy and other costs.

Meanwhile, corporate profits hit record highs as companies got more productivity out of workers while keeping pay increases down.

All this means less money for eating out, hobbies, vacations, which in turn snowballs into woes for small business, retailers and any purveyors of goods and services.


"Who's Really to Blame for High Gasoline Prices?
by Brian Simpson (February 22, 2005)

Summary: Gas prices are on the rise again. While no one has begun to complain yet (at least not too loudly), gas prices are still higher than they need to be. Many think oil companies are to blame for high gas prices. In fact, in May 2004 a poll showed that 77% of Californians believed this to be true. However, this just shows the media has failed to properly inform people about who's causing high gas prices. Let's investigate the clues to find out who's really to blame."

"Although there are other causes of high gas prices, such as high gasoline taxes, the primary cause is environmental regulation. For example, environmental regulation significantly restricts drilling for oil in Alaska and on the continental shelf. More drilling could considerably increase the gasoline supply (up to 20% from greater Alaskan drilling alone) and thus lower prices.

Further, there are currently eighteen different gasoline formulations in use across the U.S., making it much more costly to produce and distribute gasoline. These blends aren't needed due to requirements of automobile engines, nor are they required by oil companies. The blends, including different ones used at different times of the year and in different states and cities, are forced on Americans by environmental regulations."

"Some might think they exist to protect consumers, but the evidence doesn't show this. For instance, MTBE was banned based on claims that it causes cancer. However, it's never been shown to be a danger to humans in the amounts to which they might be exposed. Claims that it "causes cancer" are based on experiments in which mice were fed doses almost 70,000 times larger than to what humans might be exposed. No scientist worthy of the title would make claims based on that kind of extrapolation.

Environmentalists are not actually concerned with the well-being of man. Their real motive is to sacrifice man to nature by stopping industrial activity. This is what they explicitly state. For instance, Adam Kolton of the Alaska Wilderness League states, "Drilling the wildest place in America is objectionable no matter how it's packaged."

Oil companies deserve to be praised for producing an abundance of gasoline despite the massive burden of environmental regulations foisted upon them. To increase the supply of gasoline further, we need to start by eliminating these regulations. If the government makes the choice to protect people's freedom, gasoline below a dollar-per-gallon won't be just a relic of the past."