Food For Thought - Soaring Oil Prices Article:
Most Americans (well, all of us really) see this as a major issue. Here is a well-written article published by the Ayn Rand Institute on the reason for soaring fuel costs.
Investigate Big Congress, Not Big Oil
By Alex Epstein
With gasoline prices exceeding $4 a gallon in some states, politicians
are responding as usual: Blame Big Oil First. Several prominent
senators have once again summoned industry leaders to Capitol Hill,
subjecting them to yet another barrage of rhetorical questions,
interruptions, accusations, and sermons. The lawmakers' goal, claims
Sen. Patrick Leahy, is to identify "causes of the rising price of oil
on which Congress can act." But the foregone conclusion is that "price
gouging," "collusion," and "market manipulation" by Big Oil, or
speculation by financiers, is responsible.
The simple fact that such Congressional investigations are designed to
obscure is that the prices of oil and gasoline are determined by
supply and demand--which neither private oil companies nor speculators
have any power to dictate in their favor. If they had such market
mastery, then why didn't they use it in the 1990s, when gasoline was
selling at a barely profitable $1 a gallon? To be sure, speculators
can bid up prices--but they only do so when they believe that oil will
become even more expensive in the future, and only make money when
they are right.
The question Congress should really be asking, then, is: What
nonmarket factors are distorting supply and demand? If they sought an
honest answer, they would discover that much of the blame lies with
Congress itself.
No one disputes that environmentalist laws passed by Congress have cut off some of our most promising and plentiful sources of oil. In the
name of safeguarding a tiny portion of caribou habitat in the Alaskan
wilderness, drilling is prohibited in the Alaska National Wildlife
Refuge--a potential source of 1 million barrels a day, 5 percent of
America's daily oil consumption. Also off-limits is 85 percent of
America's coastline, which Shell estimates contains some 100 billion
recoverable barrels--13 times America's annual oil consumption--and
the vast majority of oil shale in Colorado, which Shell estimates at
1.5 trillion barrels.
Congress should publicize these facts, prepare an inventory of how
many oil-rich areas they have blocked off, and bring in economists to
estimate how much all of this raises gas prices.
And how about the effects of Congress's open hostility toward the
future of oil? Our politicians damn oil as an "addiction" to be
eliminated, and seek to cut--by up to 90 percent--the use of oil and
other vital fossil fuels that make our standard of living possible.
Congress should ask oil executives how this possible forced cut in
demand affects their industry. It should ask whether they feel safe to
make the billion dollar investments and decades-long plans that oil
production requires when Barack Obama, a leading presidential
candidate, can uncontroversially proclaim that "the country that faced
down the tyranny of fascism and communism is now called to challenge
the tyranny of oil." Is it a coincidence that the much-maligned
speculators think oil will become even scarcer in the future, and are
acting accordingly?
In addition to investigating its own impact on gasoline prices,
Congress should investigate how its economic policy partner, the
Federal Reserve, has raised our gas prices by lowering the value of
the dollars we buy gasoline with. The Fed, along with the Treasury
Department, has for years had an inflationary policy that has caused
the value of the dollar to plummet relative to other currencies. Were
it not for this devaluation of the dollar, oil prices would likely be
40 percent lower--as they are for those on the Euro. Why not call a
free-market economist to the stand and ask how much more expensive
Alan Greenspan, Ben Bernanke, and Henry Paulson have made our
gasoline?
Americans deserve to know the story--in all its gory detail--of what
their government has done and is doing to cause high prices at the
pump, and to make gasoline--indeed, all energy--more scarce and more
expensive in the future. A congressional investigation of Congress
would be a great public service.
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On a side note: If you look at the price of oil in terms of gold instead of in terms of federal reserve notes, it's stayed roughly flat over the last ten years.
:Smokin: 
