More on gas prices

I saw Rand Paul on my local news claiming that the Fed's easy money policy is responsible for higher gas prices. I thought it sounded like a bogus claim at the time. This post helps confirm my suspicions. Rand, like his father, hates the Fed and he'll work hard lie to connect any problem, any .. problem... back to the Fed.

Is the Federal Reserve Responsible for High Oil Prices? - Jordan Weissmann - Business - The Atlantic

Now, this post does allow the for the possibility that Fed actions might spur speculators but this seems small in comparison to the other things that can hit oil prices.

What I find most when looking for drivers of the recent price increases are 1. the world's economies are coming back raising world demand for energy, 2. the still looming European financial crisis and 3. what I think is the main driver for the recent increase, the feeling that the middle east could burst into flames at any minute.

Hell, look at what's going on in the Middle East. Syria's at war with itself and outside forces. Egypt is still very shaky. We've left a mess in Iraq and Afghanistan that may not be sorted out for years. Libya and Bahrain may yet see more problems. The Saudi's have to be a little worried that the Arab awakening will spill over into their people. The US and Israel are threatening Iran daily with Iran making counter threats daily. I think most of the world believes there could be a good sized, regional war in the Middle east at any minute. With all that going on in the region that supplies about 60% of the worlds oil it's no wonder oil prices are on the rise.

Rand Paul should be put on the hot seat and grilled on why he thinks the Fed has more of an affect on our oil prices that these.


A couple of related points.

The economic war sanctions that AIPAC, the US congress, and President Obama unleashed on Iran has forced some countries to begin buying oil with non-dollar currencies. This seems damned scary to me. We've heard for the last few years that the reason our level of debt is not as critical as it would be for other countries is that the dollar is the world's reserve currency. We can print dollars to pay our debt no matter who we're paying. But now it looks like we're putting our reserve currency at risk with these sanctions on Iran. The rest of the world needs Iranian oil and if our sanctions prevent them from buying it with dollars they will find some other way to buy it. When enough countries are buying oil without dollars it won't be the worlds reserve currency. These sanctions could be the beginning of the end of the dollar as a reserve currency. We're shooting ourselves in the foot

For those who think drill-baby-drill or the Keystone Pipeline is the answer. Sure we have oil and could open up the spigot but what do you think would happen to that oil. Would any self-respecting capitalist keep that oil in the US at say 100$ a barrel when he could sell it on the world market for 120$? There's no way in hell. That oil would hit the world market in a minute and with only 16% of the globes known oil reserves, I don't think we could supply enough to dramatically lower the global price. US gas prices would stay high, an oil company would get richer and complain that if they could just drill a little more our high gas prices would go away.

Personally, I'd like to treat our oil reserves like a savings account, keep it in the ground until we really need it,... like when everyone else is running out.

tnb