re: US Oil/Gas Crisis-Could it Work?
Reply to: comm-657730241@craigslist.org
Date: 2008-04-26, 11:03PM EDT
No it would not work for a variety of reason but they all boil down to one thing: impracticality.
You seem to have bought into the idea that oil is the cause of all of our problems. We are not in an oil crises. Prices seem high, but they are not much higher (if at all) than what one would expect to see after taking into consideration inflation and supply and demand. You suggest that supply and demand does not apply to oil, but this just isn't true. China and India have created a much greater demand for oil recently while one of the main functions of OPEC is to restrict supply in order to influence prices. The speculators (in New York and London) set the actual price of a barrel of oil based on the anticipated supply and demand in future months. Oil companies are not the evil greedy organizations people make them out to be. On average they have a profit margin of 9.5%... way lower than most other businesses. If you have the time, read this article for a concise overview on gas prices.
The Federal government does have some liability when it comes to the price we pay at the pump, first and foremost are taxes, either directly on the pump price or at the wholesale level that gets passed down to the customer. Additionally, government regulations severely restrict growth in the sector. Oil companies can not build new refineries (the last one built was in 1979). Furthermore, companies are prevented from tapping into known domestic reserves.(one of the main reasons your public oil company would have a hard time getting off the ground). Most state governments ban the construction of new nuclear power plants (the 4th and 5th generation technology plants are much safer and produce little to no radioactive waste) which also pushes up the demand for oil (and coal). It is the government's instance on regulating and controlling oil companies that needs to be addressed.
We are not in an economic crisis yet, although we are headed there. This is really the issue that needs to be addressed. One of the main reasons is inflation - the increase in the money supply (not higher prices as inflation is often misdefined), and not outsourcing to other countries. Our fractional reserve system creates money out of thin air which lowers the value of the dollar every time the prining press is fired up. The solution is to go back to a system like the gold standard where the paper money is backed by physical commodities and not debt. I don't think gold alone would do though. Combining your idea with that of the gold standard, I believe our currency should be backed by a basket of commodities which would include gold and oil, among other commodities. Money would have real value again.
As a final note, you can always buy an electric car and not have to deal with pump prices at all. Contrary to popular misconception there are many electric car manufacturers out there and there is not a government conspiracy to prevent these vehicles from getting to market.
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PostingID: 657730241