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High gas prices explained.April 26, 2008
As we head into the summer months, many of us are wondering how high gas prices will go. Now there seems to be no end in sight. How did we get to this point? There are two simple answers: NAFTA and Iraq. In the early 1990's NAFTA was being touted by both Republicans and Democrats as a great free trade agreement that would help American workers. A few lonely voices attempted to warn Americans of the terrible consequences of the NAFTA bill, but few listened. In fact, many who warned against NAFTA, trade Unions and political maverick Ross Perot, were marginalized by most mainstream media outlets. Even Perot, as he predicted a "giant sucking' sound of jobs going to Mexico could not have imagined the damage NAFTA would do to this nation. NAFTA did not help the American worker. NAFTA initially sent U.S. jobs south to Mexico, but when Clinton bestowed; "most favored nation status" upon China, corporate America saw a new labor market awash with cheap labor and little regulation. The fact that the Chinese government was not concerned with workers rights or the environment was another advantage to American business as this drove down cost and increased corporate profits. This cheap labor yielded cheap consumer goods. Prices dropped as incomes increased and energy costs were stable. The American consumer now had a level of disposable income not seen in many decades. Banks were quick to offer credit to consumers. Houses became ATM machines, spitting out cash with interest, from the equity put in years before. Cars, trucks, electronics, clothes, whatever you want. Buy it today and pay for it tomorrow! The good times are here to stay thanks to NAFTA! All the while, the trade deficit grew larger and larger, but who really wanted to stop the spending spree to take notice? Our dollars were leaving our country, but in return, we got great deals at Wal-Mart. Over the next decade after being given, "most favored nation status", the Chinese economy has exploded like a nuclear bomb. The Chinese have experienced 10% or greater growth in their economy for the last 4 years! Moreover, this was not the first time the Chinese economy grew by double digits. In 2007, the estimate of US growth based on GDP was 5.2%. 2008 is off to a dismal start and we are clearly in a recession. Now, with all this growth in China came wealth and with that wealth, consumption. This consumption created an unquenchable thirst for energy. Coal, natural gas, OIL; China cannot fuel their labor machine fast enough. This demand increases global oil prices. The simple equation of supply and demand is in effect. This is why OPEC has stated there has been no production/output decrease and oil companies are recording record profits. The Chinese demand is pushing prices up. Why has this surge happened so fast? The answer: Iraq. Now, if Bush's original "estimates' were true, we would have been out of Iraq by now, for a cost of a few billion dollars, and Iraq would help fund the cost of the war with their oil revenues. Alas, this was far from the case. The war has dragged on to its fifth year. How are we paying for this war? The answer is by borrowing from the Chinese. We are spending roughly 12 billion dollars per month of money we do not have in Iraq. This fact, coupled with the wasting of our "peace dividends' of the 1990's, on cheap foreign made goods and debt, and our insatiable need to borrow money to fund our government began to dilute the value of the dollar. As the economy began to buckle under the weight of the debt it has incurred, the Federal Reserve would be quick to step in and cut interest rates. Consumer confidence would shortly rebound at the cost of Chinese investors shying away from buying more Treasury Notes (i.e., debt). As the Iraq war drags on, global fears of supply side disruption remain a concern. This in turn drives the speculation market to further drive the price of oil up. It becomes a self-fulfilling prophecy. The U.S. fights a war in Iraq and rattles their sabers at Iran. This stokes the fires of fear of supply disruption, prompting speculators that oil may become scarcer, thus pushing the cost oil futures higher. The result is we pay more at the pump, while investors, oil companies and Middle Eastern nations become rich. So the question becomes, how do we stop this? How CAN we stop this? There are only hard, difficult answers that involve personal sacrifice. We must change our habits of consumption. To drive the prices of oil down, the process must be two fold. We must starve the Chinese economy of US dollars, while strengthening the value of the US Dollar on the world currency market. We will only starve the Chinese economy and thus curb their ever-expanding consumption of oil, buy NOT BUYING CHINESE MADE GOODS, PERIOD. This means sacrifice, diligence and making informed decisions as a consumer. Wal-Mart and other large box stores that do wholesale trading with the Chinese must learn that the U.S. consumer will no longer tolerate their "low prices at high cost' business model any longer. Wal-Mart is the biggest importer of Chinese made goods. They supply substandard health insurance and encourage employees to enroll on Medicaid, passing the cost on to the taxpayer. To stabilize the dollar, we must stop borrowing from the Chinese. This means ending the war in Iraq. We are in debt to a Communist country that does not allow workers' rights, destroys the environment, and violates human rights on a daily basis to fight a war for freedom in the Middle East? This is insanity! Bring the troops home and let Iraq stabilize itself with all the oil they are sitting on, but are not pumping. They are too busy fighting with U.S. forces to produce oil on any meaningful level. This is only the start in regards to what needs done to stop the free fall of the dollar, but it would stop the hemorrhaging and at least begin to stabilize it. Wake up Americans. We are too late to stop the damage; all we can do now is minimize the injury. If we continue on, we are destine for our economic ruin. We must realize that a national economy based on consumption cannot be maintained forever. We must take back our country from the corporations content to rob the middle class of the American dream and the complicit government that stands by and does nothing to stop them. Comments
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Next 10 Comments
Posted by considerthis June 23, 2008
Does anyone remember the gas shortage of the 70's? It was a scam. Then and now the environmentalists have caused this economic burden. Weather cycles like political bs.
If you look through Newsweeks of the 70's you will see we had the same concerns; health care crises; the uninsured, costs and fraud. We had energy woes they tried scare tactics (we will be in the dark in 30 years, Newsweek February, 28, 1977). They mentioned our 300 year supply of coal. But, then as now environmentalists are driving up our costs to redistribute wealth. Do you know what carbon credits are? Do you know about Kyoto and Enron's connection? Nothin has been done to help us, but politicians and special interests flourished. Can you say, Cha Ching? We have two candidates who are Congressmen. THe very people who have given us the laws (for special interests) they now say they want to act on. There is more money wasted on Corporate welfare than the war. These perks have driven up our costs and lowered our take home pay. Voting for the lesser evil is still an evil. Check out Bob Barr. Like he says no matter what the candidates tell you Congress is bought and paid for and nothing will change. Again, look back 30 years. There are over 7 million registered voters in OHio alone, we are our own lobby. We all need to act now, contact the candidates and both parties and tell them you can't vote for anyone who tells you we are responsible for the weather and wants to tax the air we breathe all for an infintesimal increase (warming, cooling, warming) that took 100 years. Tell them you know it's both sides, not one side. Because when you allow them to point the finger, neither side has to be accountable. It's time we messed with them for a change. If you just tell them you have reasonable doubt and want to see an honest debate that actually shows both sides you will see some back peddling like you've never seen. And we can sit back and watch them struggle like they've made us do. True science needs both sides to make an informed decision. Not one side again and again. Alston Chase said, "When the search for truth is confused with politcal advocacy, the pursuit of knowledge is reduced to the quest for power." Hilter said, "How fortunate for rulers that man does not think. Don't you think it strange that I should peddle a bike to volunteer at the school when celebrities and politicians can fly in private jets, cart their entourages around in a fleet of cars? All they have to do is write a check (carbon credits). If we were all truly going to die a horrible death then there should'nt be any more movies made. Each movie made creates a huge carbon footprint. Huge. They've admitted it. Things will change when it hits the fan in their direction and celebrities start realizing that we really don't need them. They should realize that when we have to pay more for everything we won't be going to the movies, buying CD's & DVD's, magazines, etc. I love watching them on TV because then I know what movies to avoid. Georgie Clooney won't be making a dime off of me. Europe, 1488, they executed people for changing the weather. During this warming trend Europe flourished, big churches were built, the wine industy zoomed. Enough people had to whisper to each other, "I don't think cousin Emily had anything to do with the weather." And until enough of their whispers became a roar, people died. More money has been (and will be) wasted on gw b.s. than on the war. And incase you have forgotten on December 16, 1998 Clinton on TV said Saddam is a threat, has WMD and should be dealt with. So did Gore, Kennedy, Pelosi, Biden, and many, many other Democrats that allowed Saddam to gain more power through Oil for Food. I am going to repeat this again: it's both parties and until you make both sides accountable, neither side has to be. Now go to your phone and make em dance.
Posted by Dowhatsright May 17, 2008
Come on now. The price of gasoline is so high because big oil wants to make the obscene profits. Big Oil has been telling us that gasoline cost so much more in Europe. Now by eliminating all the small oil companies and mom and pop stations, they control the market.
Big Oil spun off a part of their company and made it the retail part. Now big oil drills and gets a supply of oil. They contact their retail division and tell them they have a million barrels of oil on hand. They tell the retail division to bid the oil up to $120.00 a barrel. At that time we will sell you our oil. The CEO of the exploratory company gets a big bonus for increasing the bottom line. The CEO of the retail department gets to raise the price of gasoline because the world price is $120.00 a barrel. The gasoline is already in the ground that was made from cheaper oil, yet the sell it based on the higher price oil. The results they have a huge profit and the CEO get his bonus for making a big profit. That is how big Oil make these huge profits. A business can not make big profits when the cost of the raw material rise so quickly. It is fixed. Watch you will see more CEO's retire with huge pensions, because like the housing problem, this bubble will burst, and the CEO s will be gone with their money. When will this be? It will happen when the government stops the oil companies from raising the price of gasoline already made . They have to base the price of gasoline on the actual price of the raw material used to make that gas. It will also end when the first big lost on the commodity market, because people will not buy the gasoline. I would like to see everyone park their car and not drive anywhere. It would only take a couple of days and the whole thing will crumble before your eyes. You might loose a couple days of pay, but that would be cheaper than allowing the gouging to continue. By the way, this is true with natural gas that you use to heat with. The price is tied to oil.
Posted by hiltonhead11 May 15, 2008
Im still just trying to figure out why we staged 9-11, invaded two soverign nations for their oil, one of which has the second highest oil reserves in the world. Yet are spending trillions on the "war on terror" as well as 4.00/gal or more for fuel. More importantly, when are the American people going to realize it?
Posted by Jackson1 May 11, 2008
I believe you are all missing the point. The greater concern to all of us right now should not be the price of oil, the chinese or the economy, but instead: what Jenna was wearing at her wedding.
Posted by hiltonhead11 May 7, 2008
Why gasoline prices are high
Reply to: pers-670850507@craigslist.org Date: 2008-05-06, 9:28PM I used to work in the petroleum industry (retired now). Most of the commenters here are just repeating what the mass media tells them about this issue. Here's my view of it. If you have oil on your own land, and if you still own the mineral rights, if an oil company wants to drill for it you will get a royalty of one eighth of the revenue. This is because of what the company brings to the equation: geologists who find the oil, petroleum engineers who bring it to the surface, capital to pay for the drilling, and a distribution system. For owning the land you get one eighth. That used to be the deal in the Middle East where western geologists discovered the oil, western engineers brought it to the surface, western capital markets financed it, and western oil companies distributed it world wide. Then in the 1970s the arabs seized the oil wells and all the related rights and rewrote the deal. This is similar to you pulling a gun on the oil truck driver when he comes to transfer the oil in the holding tanks on your property and demanding a new deal. To compound it, the arabs and some other oil producing nations that stole the oil in similar fashion (like venezuela) decided to get together and limit production to control supply and prices. If a group of executives from different companies in the same industry met to plan to limit total production and control prices of a product produced in the US, it would be called price fixing and they would be sent to prison to be butt ****** for a couple of decades until they got AIDS and died. But someone no one cries foul when the arabs and their buddies do it. A third aspect of the problem is Iraq. Their oil wells have been poorly serviced for about 20 years, maybe longer. Worse, the fields have not been drilled up to anywhere near their capability (known reserves could be produced faster by some properly placed new wells, as well as increasing production from existing wells, two separate factors in play there). The reason is the way the war has been fought. If we had gone in with nerve gas and just wiped out the population (is there really any significant number of arabs there who dont want to kill Americans?), secured the borders, and produced that oil the way that US oil fields are run, we would probably be getting 5 to 6 million bbls a day more oil, maybe even more. That would be enough to cut our imports by more than half. Do the same thing in Iran and we would have all the oil we needed under our own control, would not have to waste thousands of American lives fighting a ridiculously restrictive ground war, and would deprive terrorists of huge amounts of money from oil revenues. You'd probably be paying between $1.50 and $2.00 a gallon at the pump. Finally, allow, even put great pressure upon, the oil companies to double their refining capacity. It would require some give on environmental issues on a very limited amount of land, but it would ensure that we can also produce the gasoline we need here. That would probably bring the price of gasoline down to $1.10 to 1.25 a gallon. You'd be surprised at how far some of your gasoline has to be shipped from the refinery where it's made to your gas pump. Would you like gasoline right around $1.00 a gallon? Then eliminate the requirement for "summer grade" gasoline. Like most environmental efforts, getting the last 10% of the pollution out costs 80% of the total cost. The main chemical they need to make the summer grade is very expensive, and is itself in short supply right now. It also necessitates that the refineries purchase a lighter, sweeter, and more expensive grade of oil to make the summer gasoline. It's as simple as that. These are answers some people dont want to hear- God forbid we ever imply the arabs dont have an absolute right to assrape us, and God forbid we blame anyone but the average driver. It's like blaming a rape victim for wearing a short skirt and thus "asking for it". it's NOT ok to contact this poster with services or other commercial interests Original URL: http://pittsburgh.cr....html
Posted by stryker May 6, 2008
I really like the article. I think the thing that irks me the most about this whole crisis is that we have all these reserves to tap into. Another thing is our gas prices are so volatile in relation to speculation. Example, terrorist actiivyt in some BFE location spikes our prices up 20 cents. What is up with that?
Posted by whydoicare May 6, 2008
Posted by whydoicare May 6, 2008
Posted by mommyinwindham May 4, 2008
i think all my money is going to yard sales
Posted by Ohio Gal May 2, 2008
OK the cut and paste from below is something along similar lines. It was in another post I was reading. Can't give credit to the author as it's unknown but don't want to be accused of it not being my own although I agree with it and the last line is actually funny. Enjoy:
The IRS rebate checks will soon be in the mail. The administration wants you to stimulate the US economy by cashing the check and spending it. Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely: If we spend that money at Wal-Mart, all the money will go to China If we spend it on gasoline it will go to the Arabs. If we purchase a computer, the money will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala. If we purchase a car, the money will go to Japan. If we purchase useless stuff it will go to Taiwan. And none of it will help the American economy. We need to keep that money here in America. The only way to keep that money here at home is to spend it at yard sales, since those are the only businesses still in the US. Next 10 Comments Login above or Register to comment. |
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