If you read the May 22nd Washington Post, you were treated to the following headline, “Skyrocketing Oil Prices Stump Experts” and led to believe that oil executives and other experts on oil prices somehow have no clue what is actually going on:
“Confused about oil prices? So are the experts.
“Executives from the giant oil companies say it’s partly the fault of ‘speculators’ or financial players. Key financial players say it’s really a question of limited supply and expanding global demand. Some members of Congress accuse the Organization of the Petroleum Exporting Countries for bottling up some of its production capacity. And OPEC blames speculators, wasteful U.S. consumers and feckless U.S. policy.
“Almost everyone points at China’s growing appetite for fuel.
“Whatever the causes, one of the most dizzying runs in the history of oil prices picked up pace yesterday — again — as crude oil prices jumped to settle at more than $133 a barrel, up $4.19 in one day, 18 percent so far this month and more than one-third so far this year. Prices climbed even higher in late electronic trading.”
This is highly misleading, however. There isn’t that much confusion at all about the high prices at the gas pump that are hurting average Americans as they drive to and from work, go shopping for their families, and get ready to hit the road this summer for vacation. The suffering is real, and Americans curious about why supplies are being restricted need look no further than their elected representatives.
As ALG News has been reporting, the problems include increased demand globally not being met with increased supply and production – which is the government’s fault. The weak dollar is another factor – which, again, is the government’s fault – that is helping pump up the prices not just of energy, but of food. These facts are a matter of common knowledge, and are reported every day in hundreds of media outlets.
The ones who appear to actually be confused are not oil experts, but members of Congress. Every day, there are news stories about how government policies are restricting global energy supplies, leading to a big price problem. Meanwhile, Congress is pretending to be in the dark, and wastes its time implying that oil companies are simply price-gouging the American consumer.
Take Senator Herb Kohl (D-WI), who was demanding to know why prices keep going up as if he doesn’t know:
“People don’t get it… Demand is not crazy. Why are prices going crazy?”
Here’s a hint, Senator. Look in the mirror. Listen to those experts. They’re not stupid. Certainly, members of Congress got an earful from the very executives they sought to grill on oil prices, as noted in yesterday’s Wall Street Journal:
“‘The problem of access can be solved in this country by the same government that has prohibited it,’ said Shell’s head of U.S. operations, John Hofmeister. ‘Congress could provide national policy to reverse the persistent decline of domestically secure natural resource development,’ and should set a goal of producing an additional two million to three million barrels a day with additional access, he said.
“‘If we did this, it would be unnecessary for our national leaders to ask the rulers of other sovereign nations to produce more oil for U.S. consumers and risk the discomfort of an unresponsive reply,’ Mr. Hofmeister told the committee.
“If Congress did act to increase access — particularly in the Outer Continental Shelf and in Alaska’s Arctic National Wildlife Refuge — the executives said, that could help reverse the upward trend for long-dated futures contracts.”
In other words, while Congress pretends to be completely clueless about high commodity prices, it refuses to do anything that might increase energy supplies. When that’s suggested they complain that it will take “too long” to extract the oil, as if there were some “quicker” solution to increasing supply other than increasing oil exploration, increasing the nation’s refining capacity, etc.
And, Congress also refuses to do anything about monetary policy and inflation, which this study from Harvard proves directly impacts upon higher commodity prices. Steve Forbes also recently noted how inflation is significantly increasing the commodity prices:
“Amazingly the roles of the Fed and other global central banks in all this are almost entirely ignored. John Maynard Keynes’ 1919 observation still holds true: When inflationary forces are unleashed and the destruction is felt, not one person in a million will understand the inflationary process in play.
“Inflation accounts for at least half of the price of oil today. We are not running out of the stuff. Recently an oilfield was discovered off the coast of Brazil that could hold as much as 33 billion barrels of oil. There are tens of billions of barrels of oil–not to mention gobs of natural gas–off our own coasts, yet Congress has declared 85% of the U.S. Outer Continental Shelf off-limits to exploration and drilling.
“The dollar is the global currency (at least for now). When it falls in value the nominal price of commodities zooms up, with the poor being hurt disproportionately.”
See a pattern here, Senator Kohl? The factors causing spikes in oil prices are controlled by the government! Monetary policy? Constitutionally, that belongs to Congress. Sealing off the Outer Continental Shelf? Again, it’s Congress’ fault that we’re not drilling there. You could fix it, Mr. Kohl! Instead of playing stupid, do your job. The experts know what they’re talking about.
ALG Perspective: The Washington Post’s article on this issue is nothing short of a whitewash, covering up the tracks of the real culprit of higher energy prices: Big Government. Instead of carrying water for politicians who know exactly how to increase energy prices through market meddling, it is up to citizens and journalists alike to take those pandering politicians to task for not proposing real solutions to the nation’s price problems. The American people are really hurting from these sky-high prices, and they expect their representatives to do something about it.
