Sunday, May 13, 2007

A word on those rising gas prices....

By now, most of you have noticed that domestic prices on gasoline are advancing towards the $4.00 per gallon mark..and in some areas, have already passed it.

While some of this can be traced back to a lack of refinery capability (thanks to opposition primarily originating from self-described `liberals', we haven't built a refinery, or a nuclear power plant for decades) it occurs to me that part of it may be deliberate, and perhaps even strategic in nature.

For starters, it's important to realize two, that oil is fungible,and easily transported and sold to the highest bidder, and two, that the US, surprisingly is one of the top top oil producing countries in the world. What's more, the US is the number one energy producing country overall in the world.

The US, however, is a net oil importer, and the second largest non-OPEC producer..which means that part of our domestic production can be sold overseas at higher prices than it commands in the US, but at prices that still undercut OPEC.

Another factor top look at is the huge chunk in taxes that the Feds, State and local governments take out of the retail price of a gallon of gas. While the stock market is up and unemployment is down, the robust economy has been impacted by huge trade deficits, the Bush Administration's orgy of spending, the high cost of our involvement in Iraq and the huge cost to local government of social services to an estimated 12 million illegal aliens.

Most local governments typically depend on the taxation of retail sales, property and businesses to fund their social programs....and as you'll note, all three have been rising as more and more money is needed to pay the tab. In a state like California,with mandated fixed property taxes due to Propositon 13, the state was rescued from bankruptcy by sharply rising home prices (and the concurrent reassessments on new sales) increased sales taxes and the increases on the retail price of commodities like gasoline.

So, from a strategic point of view, the increase does several things, in my view. First, by allowing the retail price to rise, it gives US oil companies an incentive to produce more oil for domestic consumption and political and economic impetus to exploit existing resources we haven't even touched yet, like ANWAR and Colorado's shale oil, thus replacing the oil we import and reaping huge profits to the oil industry. And it also provides a nice bonus to those agribusiness companies involved in ethanol. Secondly, it fuels ( sorry!) the idea of energy self sufficiency by allowing the market to force American consumers to conserve. And lastly helps to fund local government so the Feds don't have to.

It's also inflationary and a major drag on the economy that promotes increases for goods and services across the board, but that doesn't seem to be part of the equation.

I'd also like to provide some food for thought by mentioning that it might be interesting to look at those `liberal, environmentally conscious' members of congress and local pols who routinely vote against things like ANWAR, refineries and nuclear power that would increase domestic energy creation and investigate whether they received contributions from places like Venezuela, Mexico, The Persian Gulf Emirates, the Saudis or other oil producing nations....


Laer said...

Let's add the libs like Kennedy who fight wind farms because they don't like having the Hyannis view messed up with energy independence.

Anonymous said...

I'd like to see that investigatin to. This is something useful the Republicans could have done with their majority. Unfortunately we cannot expect the main stream media to do this investigation. This investigation will be up to the new media. If Venezuela or Mexico manipulated American policy in this way, the Congressional critters who took the bribes should be prosecuted for treason.