Big oil companies take advantage of high gas price

I watched a video yesterday on youtube, created by American Solutions, about high gas prices. At first, I thought this was another video complaining about high gas prices. After I finished watching, I realized this is just another propaganda war the energy industry is waging, to convince people that the solution to solving high gas prices is more drilling! I have a hunch, the American Solutions organization (www.americansolutions.com), is backed by the energy industry.

Let's take a look at the root causes of the current energy crisis, if we can call it a crisis. High gas prices are caused by high crude oil prices. Why have crude oil prices gone up some much since Bush took over the White House? "Experts" would tell you that it is caused by increasing demand for oil and decreasing supply of oil. But if you take a look at the demand, demand grew less than 3% per year during this period. Yes, supply has seen some disruption, due to Iraq war. And some oil fields are seeing the production of oil declining. But the true cause of high oil prices does not lie here. We should put the blame squarely on US central bank (the Fed) monetary policy. The Fed has been engaged in currency manipulation since 2001. It was the Fed's deliberate policy to devalue US dollar, by printing excessive amount of fresh paper money, thus lowering interest rates, at one time to an absurdly low level (1%), to fund expanding government spending to support two wars. Since 2001, the Fed has stopped reporting a very important indicator of monetary supply, M3. Because they were afraid that M3 would reveal the massive increase of money supply.

But the market is efficient. You cannot cheat the market. Since 2001, the value of US dollar has been in a free fall against major foreign currencies. Crude oil is priced in US dollar, as are all other traded commodities. When the value of US dollar goes down, naturally the prices of commodities go up.

On top of that, you have gotten the parasite Wall Street bankers, who used the easy money offered by the Fed to speculate on the commodities market. Not only oil prices have gone through the roof, so have the prices for gold, silver, corn, cotton, and any commodity that you can name. The argument that the rise of oil price was only caused by demand/supply imbalance is completely false. Instead of using US dollar to price oil, if you have used gold to price the crude oil, the prices have not gone up much at all!

So what's the solution to high oil prices?
First, stop the Fed! The Fed's monetary policy destroyed the savings of US middle-class. Those who are on fixed incomes, such as retirees, are hit the hardest. Prices everywhere have gone up. Some people start to have problem to even pay for food and utilities! If the Fed is allowed to continue the devaluing of the dollar, middle-class will be destroyed. The US will descended into a third-world country in a few years!

Second, we have to have a long-term energy policy that has substance more than politics. Energy conservation should be the central piece of the new policy! Per capita energy consumption in the US is ten times higher than in India and China. We Americans cannot go on like this. I do not blame the US consumers. The Blame lies on the government, whose policy is NOT driven by public interest, BUT BY THE INTEREST of the energy companies, the automobile industry.

Public transportation is almost non-existent in the US, because the government does not support it. Highways and roads were built for individual automobiles, not for buses loading and off-loading passengers. Railways are limited. Building were built with the mandate to offer ample parking for individual cars.Every government policy here, including the highway bill, is to encourage individual driving and discourage mass transportation! Automobile industry and the energy industry were the primary beneficiaries of the policy. (Even with the support the government, the US auto industry is still failing. I predict in not so distant future, the US auto industry will be completely gone, ceding to the Asians and Europeans, just like the textile and electronic industries).