Why gas prices rise
With headlines like "Obama knows political fortunes tied to gas prices" it's clear we're going to hear a lot of nasty things about oil speculators this political season.
Politicians (known for their honesty and good character) blame speculators for the rise in gas prices.
This cringe-inducing lie is wrong for two reasons:
1. Speculators alleviate gas crises.
2. It's the effin politicians who are responsible for rising gas problems, and ensuing gas shortages.
Speculators
Here's a chart of gas prices, to explain how speculators help us out at the pump:
When prices are low, speculators buy, when prices rise, speculators sell. This is how money is made on the stock market. The overall effect is to even out turbulence in prices. Selling when prices are high floods the market with oil, causing the price to fall. If prices dip down, speculators buy up oil shares, limiting supply, which causes oil prices to rise. It's kind of like a rainy-day savings that you don't have to put away yourself. This benefit that speculators bestow on society causes oil prices both to rise, and to fall.
Major disturbances (as the chart details) are usually caused by aggressive foreign wars waged by our imperialist government. The market, uninterrupted by war, trends to an overall downward slope in prices.
When gas prices rise, oil companies have an incentive to produce more oil. The production of more oil will increase supply, causing prices to fall again. On a free market, high prices will naturally come down. If they don't come down, it is often due to government intervention.
But what if some rich jerk, like Donald Trump, bought up a huge amount of oil, and then refused to sell? Other speculators would sell their stores before the prices dropped again, which they inevitably would, as oil companies would quickly flood the market with more oil to meet the demand. Trumps gamble would likely ruin him financially.
Our government, which dropped over 1,000 nuclear bombs on American soil, sprayed millions of gallons of birth-defect inducing Agent Orange in Vietnam, and which is currently poisoning Libya and Iraq with birth-defect and cancer causing depleted uranium, pretends that it wants to keep America pristine by limiting how much oil can be drilled.
Jared Diamond (in a book on how civilizations collapse
) wrote about the Kutubu oil field that Chevron had built as a wilderness preserve. An oil company, actively extracting oil, at the same time created an environment more pristine and full of wildlife than the wilderness around it.It is possible to drill oil without making a mess. This rig/preserve was in New Guinea. It was not built that way because of government regulations. Chevron built a wilderness preserve out of greed.
Oil companies have more to lose financially than anyone from environmental disasters. They immediately experience a PR disaster, which costs them millions at the pump. They lose millions of dollars in oil, and have to spend more millions cleaning it up, and paying government fines. Exxon Valdez, Piper Alpha, Bhopal, and the BP Gulf spill, cost those companies billions. The only reason American wells would not be drilled responsibly is if politicians made it impossible to do so, like they did in the BP fiasco.
Environmental disasters are not good for business. Oil companies should be free to produce here. If you disagree, read the links above before commenting.
Politicians
Politicians likely limit American oil production because American oil lobbyists bribe them to do so. Limiting supply would keep prices high. And forbidding new drilling would help established companies to avoid competition from pesky upstart entrepreneurs, which try to respond to high prices by producing more oil. The extra profits from this restriction would go to the oil companies, and through their lobbyists back to Congress. It's a tidy little racket.
Politicians cause gas crises in more ways. For example, politicians will rail against "price gougers," and then set a price ceiling on oil production. Because the prices can't rise, there is no market signal telling anyone to produce more oil, so a shortage inevitably ensues.
This is not "wicked" greed. This is common sense. Let's say you sell sandwiches, and politicians pass a law making it illegal to sell sandwiches for more than a dollar. If the bread and fillings cost more than a dollar, you will no longer be able to profitably sell sandwiches, so you will do something else with your time. It's the same with oil sellers.
The most insidious way of raising gas prices is through the Federal Reserve. Politicians and well-connected businesses have their buddies at the Fed
print money for them to spend. This money comes out of thin-air, unearned. An "magical" increase in the supply of dollars lowers the value of all dollars. All prices tend to go up. This increase in dollar supply is called inflation.
Oil prices are hit especially hard. Oil prices on foreign markets are fixed in dollars. Even if China or India buys oil from Saudi Arabia, they have to do so in dollars. So when the Fed causes the value of the dollar to go down, oil prices rise more quickly than other prices, because there is not a competing currency to absorb the impact of inflation.
The most obvious way politicians raise gas prices is by taxing it. We pay an average 40 cent per gallon tax on gasoline. This means those jerks could instantly lower our gas prices by simply dropping the tax. Unfortunately, they'll probably keep blaming speculators and greedy businessmen.
Unlike politicians, greedy businessmen have to earn our money. Politicians can just take it, either through taxes, or through manipulating markets through regulation and other backdoor shenanigans.
Next time you hear a politician blaming someone else for gas prices, and promising to punish them, remember the real cause of the crisis (Though many of these guys are so economically backward that they might actually believe their own angry rants).
Politicians (known for their honesty and good character) blame speculators for the rise in gas prices.
This cringe-inducing lie is wrong for two reasons:
1. Speculators alleviate gas crises.
2. It's the effin politicians who are responsible for rising gas problems, and ensuing gas shortages.
Speculators
Here's a chart of gas prices, to explain how speculators help us out at the pump:
 |
| Chart (modified) from this excellent article. |
Major disturbances (as the chart details) are usually caused by aggressive foreign wars waged by our imperialist government. The market, uninterrupted by war, trends to an overall downward slope in prices.
When gas prices rise, oil companies have an incentive to produce more oil. The production of more oil will increase supply, causing prices to fall again. On a free market, high prices will naturally come down. If they don't come down, it is often due to government intervention.
 |
| You're welcome, America. (Edited by Double Birds) |
Our government, which dropped over 1,000 nuclear bombs on American soil, sprayed millions of gallons of birth-defect inducing Agent Orange in Vietnam, and which is currently poisoning Libya and Iraq with birth-defect and cancer causing depleted uranium, pretends that it wants to keep America pristine by limiting how much oil can be drilled.
Jared Diamond (in a book on how civilizations collapse
) wrote about the Kutubu oil field that Chevron had built as a wilderness preserve. An oil company, actively extracting oil, at the same time created an environment more pristine and full of wildlife than the wilderness around it.It is possible to drill oil without making a mess. This rig/preserve was in New Guinea. It was not built that way because of government regulations. Chevron built a wilderness preserve out of greed. |
| Look at what those effin Chevron jerks did. |
Environmental disasters are not good for business. Oil companies should be free to produce here. If you disagree, read the links above before commenting.
Politicians
Politicians likely limit American oil production because American oil lobbyists bribe them to do so. Limiting supply would keep prices high. And forbidding new drilling would help established companies to avoid competition from pesky upstart entrepreneurs, which try to respond to high prices by producing more oil. The extra profits from this restriction would go to the oil companies, and through their lobbyists back to Congress. It's a tidy little racket.
Politicians cause gas crises in more ways. For example, politicians will rail against "price gougers," and then set a price ceiling on oil production. Because the prices can't rise, there is no market signal telling anyone to produce more oil, so a shortage inevitably ensues.
This is not "wicked" greed. This is common sense. Let's say you sell sandwiches, and politicians pass a law making it illegal to sell sandwiches for more than a dollar. If the bread and fillings cost more than a dollar, you will no longer be able to profitably sell sandwiches, so you will do something else with your time. It's the same with oil sellers.
The most insidious way of raising gas prices is through the Federal Reserve. Politicians and well-connected businesses have their buddies at the Fed
print money for them to spend. This money comes out of thin-air, unearned. An "magical" increase in the supply of dollars lowers the value of all dollars. All prices tend to go up. This increase in dollar supply is called inflation.Oil prices are hit especially hard. Oil prices on foreign markets are fixed in dollars. Even if China or India buys oil from Saudi Arabia, they have to do so in dollars. So when the Fed causes the value of the dollar to go down, oil prices rise more quickly than other prices, because there is not a competing currency to absorb the impact of inflation.
The most obvious way politicians raise gas prices is by taxing it. We pay an average 40 cent per gallon tax on gasoline. This means those jerks could instantly lower our gas prices by simply dropping the tax. Unfortunately, they'll probably keep blaming speculators and greedy businessmen.
Unlike politicians, greedy businessmen have to earn our money. Politicians can just take it, either through taxes, or through manipulating markets through regulation and other backdoor shenanigans.
The irony is that those businessmen that are blamed, are the very people that bring gasoline to your car. Politicians don't pump oil out of the ground, they don't haul it across oceans and deserts, store it, or build the pumps that bring it to your car. You can't produce oil with legislation. Without the so-called "bad-guys" in the oil business, we'd have to use flintstone cars.
Next time you hear a politician blaming someone else for gas prices, and promising to punish them, remember the real cause of the crisis (Though many of these guys are so economically backward that they might actually believe their own angry rants).
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