June 9th, 2008
Gas prices are now averaging over $4.00 a gallon and they are going to go higher. Who knows, the prices are probably heading to $5.00 per gallon. I hope I am wrong about that but it seems that they may. If you ask the average American what the reason for the high prices are you will get a number of answers from greedy oil companies, greedy Arabs, greedy speculators, shortages and a few other hypothesis. There is one thing for sure and that is there is no good or justifiable reason for the spike in prices. This is not to say that there aren’t any good reason for higher prices because there are. But the good reasons do not justify the amount of the higher prices. Problem is there isn’t much we can do about it as citizens.
Good Reason Why Gas Prices Are Higher Number One:
Basically the dollar is worthless. As our dollar has lost value the cost of oil goes up. This is because oil is traded in dollars. To put it simply the dollar only buys about half as much as it use to.
Good Reason Number Two:
Up until 1983 the selling of crude oil futures did not exist but now it is used as a financial tool. Because of the current economy and market it is a good alternative to buying stocks. Problem is it is kind of a viscous cycle too. Institutional investors start buying oil as a safe place to put their money, right now it is safer than the dollar or the stock market. Problem is that is pushes the price of oil up.
Good Reason Number Three:
OPEC! (The Organization of the Petroleum Exporting Countries) is probably getting use to the prices and the cash rolling into their coffers. So even if the prices do begin to come down don’t ever think you are going to see the prices of 3 years ago. OPEC has too much power to allow that to happen.
One thing I haven’t talked about is the supply and demand part of the price. I haven’t because it has no bearing on the prices today. The United States has ample supplies right now and the price is still going up. This is why I said earlier that “there is no good or justifiable reason for the spike in prices”. It is understandable that the prices should have gone up some considering the value of the dollar, the crude oil futures and OPEC, but no this high.
So what is the solution? There is a simple solution but it is one that will require congress to have some guts. We need to send a message out that our country will do whatever it needs to ensure that our energy needs will be met and will always be met. We need to start allowing our oil Companies to start drilling in ANWR, We need to start drilling off shore, we basically need to start drilling everywhere we know there is oil. Just signaling to the rest of the world that we are willing to do that and beginning to follow through will bring the prices of oil down fast. And they will do so before we even put the first drill into the ground. At the same time we can make a decision to invest in our future and fund research and development of alternative sources of energy.
It’s an easy to understand plan and one that will work but there is one problem with this. We have created laws that prohibit us from being self sufficient. This is why we need a Congress that has the guts to tell the environmental extremists to go for a walk. We have basically done this to ourselves. We have put our economy, our jobs, our happiness and our security at stake by listening to enviroidiots with their false data.
Personally I like the standard of living that we have enjoyed here in the US and I am hoping that we get some real leaders down to Washington fast to tackle this problem. I am a bit worried though. The prospects for president don’t do not inspire in me the faith I wish I could have.
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