Our president has joined the political bandwagon in blaming “gougers and speculators” for the run-up in gasoline prices. Obama has demanded that the justice department form a task force to investigate why prices are now $4 a gallon. Bush the second pulled the same political stunt and of course no one was prosecuted.
It’s a waste of resources, taxpayers’ money, and represents a lie to the public: Obama knows exactly why the price of gasoline is higher – not as high as in Europe. It’s because our $14 trillion budget hole has devalued the dollar and oil is sold using dollars as the currency. Add to that political instability in the Middle East and higher usage in Asia and you have 95 percent of the answer. No investigation needed here folks – all economists that have valid degrees will agree.
Now speculators have driven up the price, but speculation is a normal part of the market. There are speculators who are betting that oil will go up and others that oil will go down. Nothing wrong with it as long as there is no collusion. It provides liquidity. Your pension money may be used for this purpose.
If Obama wants gasoline prices to go down, he and Congress can: cut the deficit, raise federal gasoline taxes, demand better gasoline mileage from the auto industry, mandate use of natural gas for trucks, mandate energy conservation measures for the federal government.
If he and Congress do these things, the price the gasoline will come down as speculators will bet that we will be awash in oil.
But don’t hold your breath, its politics folks and until we demand that politicians stop this nonsense of blaming “death panels” and “speculators” for our problems, and start listening to people who are willing to tell us the truth – that we are to blame for our problems and only we can solve them – all we will get is more of the same. And you might want to demand that the media have some sophistication and label this kind of rhetoric as pandering, not leadership.
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People say they invest in fear of middle east instability. I say they invest in hope of middle east instability. You invest at 110$ per barrel, obviously you hope it rises to 240$ per barrel. The Saudis want oil at 80$ per barrel because its currently overpriced and hurts oil demand/sales revenue for them. The undersupply is of ‘paper barrels’ of oil by traders sitting at desks pressing buy/sell buttons. I am not sure Obama can do anything about this because his major campaign contributors are investment banks and unions (pension funds). The current spike may be funding Obamas 2014 presidential campaign bid. I believe this is an anti-trust issue pure and simple with the investment community ‘cornering the oil market’ and leaving the everyday consumer, the small businessman, and the unemployed worker who is hoping for a revived economy out in the cold.
They say that oil trading evens out prices and stops price spikes, however it seems to me cause a slow drip to economic ruin/demand destruction and doesn’t even reflect true demand. They should maybe reconsider the wisdom of allowing trading oil as a commodity.
Big business can’t speak against it because they need investment banks for future funding. Small business don’t have the power individually. The only resolution is political.
Why stop at just criticizing Obama. Blumenthal used to pull this same stunt when he was AG. He liked to make a lot of smoke and noise but contrary to the old adage there was never any “fire”. You should send a copy of your editorial to the state’s US Senators and Representatives. They all need some education about the real world.
Actually I did take Blumenthal to task for the same thing. You can read it here:
http://ctwatchdog.com/2011/03/22/blumenthal-should-focus-on-conservation-instead-of-blaming-high-gas-prices-on-speculators
No George,
The problem is the devaluation of the dollar by this Administration and the Federal Reserve. It was long predicted that their policies of borrowing by printing more money would come back to bite us in the rear end. Well we are feeling the teeth closing in right about now. Not only gas, but food, gold, silver, and other commodities.
Speculators are merely betting that this country, with the current imbecile leadership, will continue to strangle itself by not drilling for oil and making every permit almost impossible to get. Look at the Shell fiasco in Alaska as reported yesterday.
As soon as this President would publicly announce drilling permits, the price of oil would drop $10.00 per barrel on that day alone. Thespeculators would abandon betting on oil to increase.
So cut the conservation baloney. There is no shortage of oil. Never has been. That site in Alaska has 28 BILLION BARRELS OF OIL ALONE! Its’ all a sham for one purpose or another, but it has nothing to do with the abundance of oil or the freakin environment. Grow up.
Something that is worth quoting is:
Politics and Economics are mutually exclusive…. What is usually ‘good’ politically is not good economically; what is usually great economically is not good politically.
Economics is the behavior of people and the manner in which they make decisions in the use of their own monies, more importantly for their own selfish benefit. It can not be legislated, it can be modified with exterior forces, such as higher gas prices results in your use of less gasoline. However we also get unintended results from the desired behavior to the actual results of that behavior.
Look at the ‘mortgage crisis” or the “cash for clunker” are just two cases with unintended consequences.
While I agree that the “investigation” is a joke and that all of your suggested steps should be taken to reduce our dependence on oil, the devaluation of the dollar isn’t the primary cause of increase.
One need look no farther than the trading floor of the commodities exchange to find the real cause of the increase. These guys are making billions by driving the cost of oil up. They have no incentive to see the price of oil go down, so they use any excuse they can find to further drive the price up.
One might also look at the oil companies themselves. They’re posting massive, record profits at a time when the cost of their raw material is rising astronomically. How do they do that? Any other company faced with a similar situation usually finds itself in bankruptcy court before too long, yet they’re posting the largest profits ever recorded by an American company. That says to me they’re also part of the scam.
You right wingers can’t resist twisting the presidents words. The suggested investigation is not aimed at the commodites market. But rather what happens to the price before it gets to the pump. Most of you conversatives suffer from selective memory. Remember the summer of 2008, when pump prices were at about the same level as today? The price per barrel in the summer of 2008 was $147.00. Yesterday it closed at $112.00. You do the math. Unless of course you own stock in Exxon. Profit while creating hardship.
Well this “right winger” actually supports many of the things Obama stands for. But I don’t buy everything he sells.
. The suggested investigation is not aimed at the commodites market. But rather what happens to the price before it gets to the pump. Remember the summer of 2008, when pump prices were at about the same level as today? The price per barrel in the summer of 2008 was $147.00. Yesterday it closed at $112.00. You do the math. Unless of course you own stock in Exxon. Profit while creating hardship.
What nonsense! We need to severely restrict the commodities market, at least so that whomever buys the oil will have to take the delivery before being able to do anything with it. Price controls like we have with electricity wouldn’t be bad either. To say that speculation on essential goods is normal is just utterly ridiculous. There is a collusion between the oil companies, refiners and traders. All benefit from higher oil prices while America get screwed. Regulate them and cut out 90% of the middlemen, and the prices will return to normal.