Oilbama

As I was flipping through some midday news, I saw a report that the average gas price is expected to reach $4.50/gal before finally coming down in October.  Sadly, this price has nothing to do with supply and demand.  Environmentalists will use it as a call-to-arms that everyone should buy fuel efficient cars with money they don’t have while conservatives will say that it’s time to drill off shore as quickly as possible.  However, both these calls assume that the price of gas is so high because we’re running out or because of the current turmoil in the Middle East.

But that’s simply not the case.  It’s oil speculation now and it was oil speculation in 2008.  As Matt Taibbi explains in his must-read (albeit wholly depressing) book Griftopia, the price of oil is being driven up by greedy speculators (e.g. Goldman Sachs, Barack Obama’s single largest campaign contributor in 2008).  How does this work?  By screwing with the commodities market.  Here’s a helpful analogy of how it’s gone horribly wrong:

To use an example frequently offered by [Mike Masters of Masters Capital Management], imagine if someone continually showed up at car dealerships and asked to buy $500,000 worth of cars.  This mystery person doesn’t care how many cars, mind you, he just wants a half million bucks’ worth.  Eventually, someone is going to sell that guy one car for $500,000. Put enough of those people out there visiting car dealerships, your car market is going to get very weird very quickly.  Soon enough, the people who are coming into the dealership looking to buy cars they actually plan on driving are going to find they’ve been priced out of the market. [p. 143]

Also keep in mind that the price of oil drives up the price of food.  If companies have to pay more to put fuel in their trucks, they’re going to pass the loss onto the consumer.

So what does our fearful leader do in the face of obvious and well-documented fraud?  He pulls a classic Obama and hedges with the appearance of doing something without actually doing anything.  The website Transport Topics reports:

The U.S. Justice Department is “putting together a team whose job it is to root out any cases of fraud or manipulation in the oil markets that might affect gas prices, and that includes the role of traders and speculators,” President Barack Obama said Thursday in Reno, Nevada.

Oh good.  Another commission to look into something that we already know.  Obama’s defenders will argue that this is the same “prudence” he’s always exercised, but it’s really a stalling tactic.  Obama didn’t say “We’re going to prosecute speculators” or anything that would give the hint that he’s an active rather than a re-active president.  Instead, they’ll “root out any cases of fraud or manipulation”, whatever the hell that means.  And while the Justice Department continues its stellar record of not prosecuting serious corporate criminals in any meaningful way, the administration will hope that the price of oil will decline and our collective amnesia will take over.

I write all this so that every time you go to fill up your car, you’ll look at the price and know that it’s not real.  That it has nothing to do with our lack of energy alternatives or worldwide demand or that we’re not drilling enough in our own backyard.  It’s a scam and it’s a scam we may as well get to used to because Obama has shown he has no real interest in holding anyone responsible for anything.

On a related note, we just passed the one-year anniversary of the BP oil spill that destroyed the Gulf of Mexico.  Here’s a visual reminder of that enduring catastrophe.  We have passed ZERO new laws to handle such a spill in the future (although deepwater drilling permits have been issued despite “not fabulous” safety standards).  Sad fact: Reuters reports that “During his time in the Senate and while running for president, Obama received a total of $77,051 from the oil giant and is the top recipient of BP PAC and individual money over the past 20 years, according to financial disclosure records.”

Friday, April 22nd, 2011 politics, stupid

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