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The Pain of a Lame Duck and Oil Prices

May 18, 2008

President Bush has told the press that the Saudis’ modest increase in oil production “doesn’t solve our problem,” and that the United States must act itself to help bring down soaring gas prices. “We’ve got to do more at home.”

President Bush must be in great pain. He is unable and unwilling to speak any truth about the U.S. oil crisis. He is unwilling to admit that fighting two war fronts and the mortgage banking debacle along with his policies have contributed to an overheated global economy and thoroughly devalued the dollar. As a result of his administrative policy actions, the nation is suffering a great loss of buying power and a higher cost of goods all around.

Economists and politicians love to expand the grand myth of “the law of supply and demand” as the reason for oil prices. This law has been largely short-circuited by subsidies, speculation and manipulations of all kinds. As a result, U.S. government interests and corporate welfare has more to do with high prices than any other factor. A weak dollar, oil companies that are interested only in the bottom line and speculators are major causes of the national oil price crisis.

Speculation on Wall Street through hedge funds and investment banks are exploiting unregulated trading markets to push prices far above what can be explained by supply and demand fundamentals.

Take a moment and humor yourself with this recent chart from the DOE. Canada is our top oil importer. Will a few more barrels from the Arab sheiks on the world market help anyone but speculators to further inflate the price?

“One of the interesting things about American politics is, those who are screaming the loudest for increased production from Saudi Arabia are the very same people who are the fighting the fiercest against domestic exploration, against the development of nuclear power and against expanding refining capacity,” President Bush stated flatly. Unfortunately, this straw dog reasoning blames everyone but the politicians that are galvanized by deliberate inaction. President Bush accepts no blame and has no resolve for change. He just works with the system in place. He is a victim of politics: his own.

The Middle East economic engine is doing its’ share of suffering from hyperinflation resulting from an overabundance of low value greenbacks. In the past, the sheikdoms have been largely immune from inflationary pressures. As they have adopted western ways including central bankers, the Middle East has lost control of their economy. One of their largest customers is helping them bring in the flames of hyperinflation. The sheiks can do very little about the economic weakness that reckless U.S. spending and the devaluation of the dollar has wrought. The sheiks are already sacrificing for their U.S. friends by accepting cheap dollars for payment in a flooded market. President Bush remains silent on the matter as he sword dances with his friends.

Blaming high world oil demand by China and India for all of the nation’s oil problems is hardly the half-of-truth. Politicians have only themselves to blame. It’s all about money and the appearance of political power. Americans aren’t really on the chart.

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