[The American Years]

Thursday, June 19, 2008

Fix this thing with Oil

Pictures of kids. Can't start a blog without them.


Watch during the upcoming election. People vote with their wallets, of course. Why wouldn't you? But watch out for the people who ask those running for office, any office, "What are you going to do about high oil prices?"

Yesterday Bush had a speech blaming oil and gas prices on congress. If only they could have such an effect on anything, good or bad. Democrats do the same, saying what the price was when the Iraq war started and what the price is now. "Failed Oilman President", etc.

Since there isn't one cause of the high prices (high demand, speculation, war, rumors of war) there isn't one solution.

But nobody should ask a politician how he or she is going to fix it. In a market economy, even a sluggish and embarrassing one like ours, the market is supposed to rule. Beware of the gas tax holiday (no economist, not one, reccommends it), the strategic reserve lapse, the increased drilling, all those things. Beware all promises.

There is no quick fix. Promise. And no one entity to blame. Okay, maybe China. We can always blame China, I think.

Part of the problem, which goes basically unreported, is the dollar's weakness. I heard (and have not confirmed -- I'm a blogger for petesake, not a journalist) that if you were to take oil prices from 2 years ago, and peg them to the Canadian Dollar or the Euro, that the $135 barrel of oil would be more like a $110 barrel of oil.

So when you hear "Oil is expensive, it's _____ dollars per barrel," remember that when you compare two things which both fluctuate, you have to create a baseline.

Gold prices have gone up a bunch as well. Is that because the dollar has sunk?

You should see my Canadian friends when they come down here. It's like the whole nation is Walmart, with smily faces on everything.

"65 cents for a candy bar? It's $1.25 at home (eh)." What a world it is, now that the Canadian dollar is at "par" with the greenback.

Why doesn't anyone in the media mention the weak dollar's contribution to the problem?

And we still have, as a nation, the 103rd most expensive gas in the world, and the rest of the world is getting to work somehow.

High gas prices just means that we have to think about it. We have to give something up. We have to weigh the cost vs the benefit for every trip to the store. The rest of the world has been doing it for some time now.

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