The why and what to do about fast-rising gas prices
While much of the world’s attention has been placed on the political and humanitarian concerns caused by the growing unrest in Libya, not much has been discussed about the economic worldwide upheavals that have ensued because of the rapid increase in those tensions and the prices of oil.
With the status of that unrest now building to a full scale civil war, Libya – which is a major supplier of oil to Europe and the concerns that its civil war may have on supplies of oil – the price of a barrel of oil on the world markets has risen to well over $100 per barrel, while the price of a gallon of gasoline in many parts of the U. S. is now selling at just over $4 a gallon.
In any war, one needs to better understand who the enemy is. Today, most of the Islamic extremist leaders who are our enemies have degrees in engineering, the computer sciences, economics, etc. and, as such, are quite well-versed in the ways and mores’ of the “conventional world.” Many have also been educated in U.S. universities and, while in the U.S., they became quite well acquainted with our American lack of patience, our boredom with things that don’t happen quickly enough, and our penchant for not seeing things through to their conclusion if things don’t go fast enough for us. They are now using that knowledge of us against us as they develop their strategies.
Clearly, when looking at the economics of the Mediterranean, North Africa, and the Middle Eastern crescent states, we’re seeing the strong possibilities of the following consequences:
n The price of oil and the price of a gallon of gasoline rising to barely sustainable levels and then continuing to rise well into the future;
n Libya, which was producing almost 1.7 million barrels per day of oil and liquefied natural gas, mostly for Europe, will see further production losses with those losses being felt by Europe’s already quite fragile economies;
n Economists then expect that increasing prices for gasoline will begin to be seen in
substantially higher food and production costs, etc., that, in turn, will hurt lower-paid income-earners the most;
n Sustained higher oil prices will threaten European economies, most of which are net importers of oil and gas, and where Spain and Italy, for example, have gas at their pumps already priced now at well above $8 a gallon;
n The higher prices of oil and gasoline will also push up inflation to higher world levels; and
n European interest rates will then have to rise to cool inflation, followed by the world’s economies raising their interest rates to cool their inflation, as well, which would further slow growth in Latin America and Asia. Can you spell WORLD recession?
n These are all very real economic possibilities unless the U.S. and the world’s governments make their decisions now to dramatically cut their unsustainable spending sprees; begin to substantially scale back their bonded debt; and our elected officials in Washington, DC make those cuts now so that we all share equally in the pain and then share in the longer term economic gains that should ensue.
While it is certainly a laudable idea to, ultimately, power our machines of progress and better living with non-fossil fuels, most “experts” are suggesting that the commercial uses of such “green” energy sources is at least 5 years away. Consequently, while those that are contacting our elected officials, we would also urge them to petition those same officials to open up the proven reserves in America that are already known to contain more oil than those of the Middle East. In doing so, we get ourselves completely out of the grip of dependence on foreign oil, while also maintaining our own robust, non-inflationary growing economy.
We don’t need to go through the already-known financial meltdowns in Greece, Spain, Portugal and Ireland, topped off with the recent rioting in London in the UK. Nor do we need to keep putting the U.S. at the mercy of those who don’t like us. The stakes are too high for us not to address making REAL spending cuts NOW, while also regaining our energy independence.
Paul Rendine is a former business columnist for the Beach Observer and a financial advisor with more than 33 years experience. He can be contacted at his
e-mail address at quoteman3@aol.com‘>quoteman3@aol.com with any comments or questions.