Musings: Obama and Gas Prices. Soon — The Supreme Court and Alien Tort cases; and More Dodd Frank Overreach

February 24, 2012 by

President Obama is irate, pointing fingers and fixing blame for gas prices. He told a Miami audience to blame former President Bush and the oil companies. Let’s look at his thinking.
He promised to fix things with new taxes on oil companies, and by keeping them from drilling within US borders or US waters. He shouted what is no longer true, that we cannot drill our way to greater supply sufficiency and security. And he said he will solve these problems by continuing to throw money (loans, grants, tax subsidies and sweetheart contracts to favorite companies) to have “green” energy rapidly displace the oil and gas (that have driven our nation’s economy for 100 years and will continue to do so no matter what he says, for the next 40 or 50 years).
Waxing professorial, he explained that oil is sold on a world market (true), and said that more U.S. production would add to world oil supply but would not bring down prices (nutty)?!
It was breathtaking. There are two major things mightily wrong with his thinking and pedantry. First, if world oil supply grows relative to world oil demand, prices will come down.
Second — worse — he ignores the fact that the U.S. may be the only nation suffering from rapidly rising gasoline prices — thanks largely to the Blamefixer in Chief and the Federal Reserve. They are responsible for the weak-dollar policy of the past three years; it explains higher gasoline prices. How?
He’s right; oil is sold on a world market. But he didn’t mention that it is priced in U.S. dollars. So if the value of the U.S. dollar goes down relative to other currencies, the price of oil goes up — in the U.S., but not elsewhere. That is precisely what has been happening; the relative value of the dollar has been driven down and kept down by the President and by the Federal Reserve System. We have higher gasoline prices (and bread prices, and meat prices, and candy bar prices, and prices for every commodity you can think of). But who has been devaluing the dollar and printing money as fast as possible for the past three years? The Blamefixer in charge and his cronies at the Fed. And what does he promise for the rest of his time in office? More of the same.
What a leader.

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