• 556 days Will The ECB Continue To Hike Rates?
  • 556 days Forbes: Aramco Remains Largest Company In The Middle East
  • 558 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 957 days Could Crypto Overtake Traditional Investment?
  • 962 days Americans Still Quitting Jobs At Record Pace
  • 964 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 967 days Is The Dollar Too Strong?
  • 968 days Big Tech Disappoints Investors on Earnings Calls
  • 968 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 970 days China Is Quietly Trying To Distance Itself From Russia
  • 970 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 974 days Crypto Investors Won Big In 2021
  • 975 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 975 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 978 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 978 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 981 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 982 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 982 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 984 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Foreign Oil Dependency and Political Lunacy

If you are like me, you are probably starting to feel some angst over the continuing rise is gas prices. My wife and I are discussing the idea of selling our cars to get more fuel efficient ones. I may even get a Vespa.

A large factor that is driving my concern is the growing realization that our government doesn't have a clue about what a real energy policy should look like. Unfortunately it appears that both parties simply want to demogogue and attempt to buy votes.

"Yesterday the House of Representatives overwhelmingly approved legislation allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices...the bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow. The measure passed in a 324-84 vote, a big enough margin to override a presidential veto." - Reuters

Notice that this news piece came from Reuters and not The Onion. This legislation is so comical as to defy all logic. Who in the world do we (America) think we are that we can dictate how other counties use their own natural resources? Notwithstanding the inevitable global economic crisis it would cause, is there anything legally stopping OPEC counties from simply refusing to sell crude oil to the United States?

Does anyone actually believe that the United States will file antitrust charges against OPEC countries? Of course not. So in reality, this legislation is nothing more than the Democratic-led Congress pandering to the American voters so that they can say that they are "doing something" even though they aren't doing a damn thing.

Of course Republicans aren't suggesting much better. Newt Gingrich's American Solutions is advocating more domestic drilling, which would just delay the inevitable for another day for our children to deal with.

Yet no one seems to want to suggest the obvious: as a country, we need to quickly reduce our dependence on ALL oil, not just foreign oil. And the only way to do that is (paradoxically to some) to raise gas prices. The law of supply and demand dictates that higher prices lead to lower consumption. Always.

Want to know what is really happening with the increasing cost of gas? The New York Times said it perfectly last week:

"No industrialized economy is as reliant on oil, or as obsessed with gasoline prices, as the United States, the world's biggest consumer of oil. But the oil market is largely immune to Washington's machinations, and prices have more than quadrupled over the last six years for reasons that are increasingly disconnected from what happens in the United States."

The reality is that oil is a globally traded commodity, and Americans must pay international prices to get their share. And those prices reflect the fact that global supplies are stretched and struggling to meet a booming demand that is being driven by growth in developing countries, notably China and India. This has left the world with a very slim cushion of extra production."

 

Back to homepage

Leave a comment

Leave a comment