Sunday, May 18, 2008

Is There A Gas Bubble?

Saudi Arabia raised it's oil production following an appeal from President Bush. Of course, as Saudi Oil Minister Ali al-Naimi told U.S. officials that increased output would not reduce costs at the pump for U.S. motorists as soaring prices were mainly the result of a weak dollar, speculation and tensions in oil-producing countries. Increased demand by countries like India and China (two countries that have benefited from the policies of the corpocracy) have also pushed oil prices up.
It's not that there isn't enough oil, it's because the actions of the Bush administration have created high oil prices.
The weak dollar is mainly caused by deficits, both trade and budget. While the Bush administration speaks about a strong dollar, it's actions are being interpreted by currency speculators as favoring a weak dollar. (It's kind of like how the Bush administration wants to bring peace to the Israeli-Palestinian conflict, but doesn't pressure Israel to give up any of the land it has taken from Palestine, or do anything about the numerous UN resolution violations Israel has been hit with.) Corporations doing business overseas benefit from the weak dollar, as well as companies buying raw materials, but the rest of us suffer, especially since a weak dollar means low sales for manufacturers, who then are forced to cut back on hiring.
Tensions in the oil-producing countries is directly caused by the Bush administration. Iraq was a needless war, with no justification found for us to invade, and our continued harassment of Iran, for exercising their rights as co-signee to the NPT, have lead to the belief that in the future, the Bush administration will invade that country as well. When and/or if that happens, oil prices will shoot through the roof, as the world's access to the oil-rich Gulf states will be compromised.
Through the nineties, the stock market, mostly the NASDAQ, saw their value increase because of what was known as the Dot-com bubble, driven, in part, by speculators and lots of available investment capital. One of the causes behind the recent housing bubble was driven in part by speculative interest in the housing market.
Now, we have rapid increase in oil prices coupled with speculation in the oil markets , with speculation adding at least $10 to $15 per barrel. So, is there a gas bubble, an artificial rise in prices caused by outside market influences?
We can cut down consumption of gas. Decreased demand will cause prices to fall. As far as easing tensions in the Middle east, the one thing that won't help is voting for John McCain. If the Bush administration hasn't already bombed Iran before the end of their term, an elected John McCain will seize his perceived mandate to go after Iran. Barack Obama has been ridiculed for using diplomacy (i.e. actually talking with regimes the Bush administration has deemed "terrorist", forgetting the Osama Bin Laden is still loose in the world), but in the end, that is what's best for easing tensions, and aiding Americans suffering under high gas prices.


Tom Harper said...

Cutting down on gas consumption is our only way out of this. This won't happen overnight, but it has to happen. Less non-essential driving, better mileage standards, more use of mass transit, etc.

With gas prices through the roof, it's no longer profitable to live 90 miles from where you work just because housing is cheaper out in the boonies. This will be a slow process, but urban sprawl might ultimately go the way of paying 32 cents for a gallon of gas.

Frederick said...

We are already at the lowest level of consumption since 1979. Horse and wagon time.

Kvatch said...

Well said. McCain has already said that he'd commit us to another 3/4 of a trillion dollars of deficit spending. We can't have that.

As for the consumption issue...Fred, is that really true? Lowest level since 1979? I know that when Enron et. al. (with FERC's able assistance) where screwing Californians to the wall, we cut our electrical consumption by 11%, so major cuts can happen. I just don't see how we've reached that low a level.

Kathy said...

The weak dollar was planned by the Bush administration according to this article:

“The financial crisis that we now face was created by design. It is intended to destroy the labor movement, crush the middle class, quash Medicare, Medicaid and Social Security, reduce our foreign debt by 50 or 60%, force a restructuring of America’s debt, privatize all public assets and resources, and create a new regime of austerity measures which will divert more wealth to the banking and corporate establishment.”

Check it out, it's a good read.