Am I getting this Oil thing right?

[renterclint]

Okay-

Apparently this issue is much more complex than I originally gave it credit. Thanks to everyone who responded!

As I began to research the subject a little more, I discovered a couple web/newspaper sources claiming that the so-called “Enron Loophole” was effectively closed late in 2007.

What got me really thinking about the issue were several recent televised stories on oil speculation. The last of these recent segments layed out an elaborate time-line of how a certain Texas senator & a member of the CFTC conspired w/ Enron executives to create this loophole. I do not recall any of these stories explaining that the Enron Loophole had been closed. Funny…

[underdose]

I am surprised that nowhere in this discussion has anyone addressed one of the recurring themes on this blogsite: the decline of the dollar! Yes, speculators can cause short term volatility, some of the spikes and pullbacks. But the long term trend is strictly up (as with all commodities), largely in response to the dollar’s declining purchase power. The best way to halt the climb of inflation in commodities is to reign in our government’s deficit spending and loose monetary policy, not to restrict the activities of speculators. The speculators will stop betting on future price climbs if the government stops debasing the currency and giving them reasons to make that bet!

Of course, the dollar decline isn’t the only factor. Americans bought an awful lot of gas guzzlers in the past few years, Hummers, Navigators, Escalades, and not just SUV’s but big cars with poor mileage too. Surely, many of these vehicles (and the gas for them) were purchased with the “equity ATM” during the bubble. Want oil to be cheaper? Stop using it! If in aggregate we, the human race, raised our fuel efficiency and made a serious push towards replacing oil with alternative energies, we could keep oil affordable in the time before it ultimately runs out.

As an aside, I think more drilling is like the “moral hazard” in banking. In lending we need better lending standards, not a bail out for recklessness. For energy we need better solutions than something that is dirty, affects the climate, causes political tensions and bloodshed, and will ultimately be used up. We don’t need to facilitate future dependence on either easy credit or oil.

[underdose]

I am surprised that nowhere in this discussion has anyone addressed one of the recurring themes on this blogsite: the decline of the dollar! Yes, speculators can cause short term volatility, some of the spikes and pullbacks. But the long term trend is strictly up (as with all commodities), largely in response to the dollar’s declining purchase power. The best way to halt the climb of inflation in commodities is to reign in our government’s deficit spending and loose monetary policy, not to restrict the activities of speculators. The speculators will stop betting on future price climbs if the government stops debasing the currency and giving them reasons to make that bet!

Of course, the dollar decline isn’t the only factor. Americans bought an awful lot of gas guzzlers in the past few years, Hummers, Navigators, Escalades, and not just SUV’s but big cars with poor mileage too. Surely, many of these vehicles (and the gas for them) were purchased with the “equity ATM” during the bubble. Want oil to be cheaper? Stop using it! If in aggregate we, the human race, raised our fuel efficiency and made a serious push towards replacing oil with alternative energies, we could keep oil affordable in the time before it ultimately runs out.

As an aside, I think more drilling is like the “moral hazard” in banking. In lending we need better lending standards, not a bail out for recklessness. For energy we need better solutions than something that is dirty, affects the climate, causes political tensions and bloodshed, and will ultimately be used up. We don’t need to facilitate future dependence on either easy credit or oil.

[underdose]

I am surprised that nowhere in this discussion has anyone addressed one of the recurring themes on this blogsite: the decline of the dollar! Yes, speculators can cause short term volatility, some of the spikes and pullbacks. But the long term trend is strictly up (as with all commodities), largely in response to the dollar’s declining purchase power. The best way to halt the climb of inflation in commodities is to reign in our government’s deficit spending and loose monetary policy, not to restrict the activities of speculators. The speculators will stop betting on future price climbs if the government stops debasing the currency and giving them reasons to make that bet!

Of course, the dollar decline isn’t the only factor. Americans bought an awful lot of gas guzzlers in the past few years, Hummers, Navigators, Escalades, and not just SUV’s but big cars with poor mileage too. Surely, many of these vehicles (and the gas for them) were purchased with the “equity ATM” during the bubble. Want oil to be cheaper? Stop using it! If in aggregate we, the human race, raised our fuel efficiency and made a serious push towards replacing oil with alternative energies, we could keep oil affordable in the time before it ultimately runs out.

As an aside, I think more drilling is like the “moral hazard” in banking. In lending we need better lending standards, not a bail out for recklessness. For energy we need better solutions than something that is dirty, affects the climate, causes political tensions and bloodshed, and will ultimately be used up. We don’t need to facilitate future dependence on either easy credit or oil.

[underdose]

I am surprised that nowhere in this discussion has anyone addressed one of the recurring themes on this blogsite: the decline of the dollar! Yes, speculators can cause short term volatility, some of the spikes and pullbacks. But the long term trend is strictly up (as with all commodities), largely in response to the dollar’s declining purchase power. The best way to halt the climb of inflation in commodities is to reign in our government’s deficit spending and loose monetary policy, not to restrict the activities of speculators. The speculators will stop betting on future price climbs if the government stops debasing the currency and giving them reasons to make that bet!

Of course, the dollar decline isn’t the only factor. Americans bought an awful lot of gas guzzlers in the past few years, Hummers, Navigators, Escalades, and not just SUV’s but big cars with poor mileage too. Surely, many of these vehicles (and the gas for them) were purchased with the “equity ATM” during the bubble. Want oil to be cheaper? Stop using it! If in aggregate we, the human race, raised our fuel efficiency and made a serious push towards replacing oil with alternative energies, we could keep oil affordable in the time before it ultimately runs out.

As an aside, I think more drilling is like the “moral hazard” in banking. In lending we need better lending standards, not a bail out for recklessness. For energy we need better solutions than something that is dirty, affects the climate, causes political tensions and bloodshed, and will ultimately be used up. We don’t need to facilitate future dependence on either easy credit or oil.

[underdose]

I am surprised that nowhere in this discussion has anyone addressed one of the recurring themes on this blogsite: the decline of the dollar! Yes, speculators can cause short term volatility, some of the spikes and pullbacks. But the long term trend is strictly up (as with all commodities), largely in response to the dollar’s declining purchase power. The best way to halt the climb of inflation in commodities is to reign in our government’s deficit spending and loose monetary policy, not to restrict the activities of speculators. The speculators will stop betting on future price climbs if the government stops debasing the currency and giving them reasons to make that bet!

Of course, the dollar decline isn’t the only factor. Americans bought an awful lot of gas guzzlers in the past few years, Hummers, Navigators, Escalades, and not just SUV’s but big cars with poor mileage too. Surely, many of these vehicles (and the gas for them) were purchased with the “equity ATM” during the bubble. Want oil to be cheaper? Stop using it! If in aggregate we, the human race, raised our fuel efficiency and made a serious push towards replacing oil with alternative energies, we could keep oil affordable in the time before it ultimately runs out.

As an aside, I think more drilling is like the “moral hazard” in banking. In lending we need better lending standards, not a bail out for recklessness. For energy we need better solutions than something that is dirty, affects the climate, causes political tensions and bloodshed, and will ultimately be used up. We don’t need to facilitate future dependence on either easy credit or oil.

[underdose]

Arguably, we are already paying a “massive tax”, just not directly at the pump. The government has borrowed trillions of dollars to conduct military activities in places where “we have a vital economic interest”. Even beyond the Iraq war, in times of relative peace we operate bases throughout the Middle East and patrol the waters with warships. You do pay for that in your income tax (or at least you will someday when the bill comes due). I would guess that oil would be a LOT more expensive if the US military didn’t intervene so agressively to ensure its accessibility.

In addition there is the matter of inflation. It has been shown by many people (so I won’t go through the exercise) that monetary devaluation is an insidious kind of tax. The government takes purchase power from your wages and savings and spends it. Yes, we have explosive dia…, er, um, I mean a massive tax.

[underdose]

Arguably, we are already paying a “massive tax”, just not directly at the pump. The government has borrowed trillions of dollars to conduct military activities in places where “we have a vital economic interest”. Even beyond the Iraq war, in times of relative peace we operate bases throughout the Middle East and patrol the waters with warships. You do pay for that in your income tax (or at least you will someday when the bill comes due). I would guess that oil would be a LOT more expensive if the US military didn’t intervene so agressively to ensure its accessibility.

In addition there is the matter of inflation. It has been shown by many people (so I won’t go through the exercise) that monetary devaluation is an insidious kind of tax. The government takes purchase power from your wages and savings and spends it. Yes, we have explosive dia…, er, um, I mean a massive tax.

[underdose]

Arguably, we are already paying a “massive tax”, just not directly at the pump. The government has borrowed trillions of dollars to conduct military activities in places where “we have a vital economic interest”. Even beyond the Iraq war, in times of relative peace we operate bases throughout the Middle East and patrol the waters with warships. You do pay for that in your income tax (or at least you will someday when the bill comes due). I would guess that oil would be a LOT more expensive if the US military didn’t intervene so agressively to ensure its accessibility.

In addition there is the matter of inflation. It has been shown by many people (so I won’t go through the exercise) that monetary devaluation is an insidious kind of tax. The government takes purchase power from your wages and savings and spends it. Yes, we have explosive dia…, er, um, I mean a massive tax.

[underdose]

Arguably, we are already paying a “massive tax”, just not directly at the pump. The government has borrowed trillions of dollars to conduct military activities in places where “we have a vital economic interest”. Even beyond the Iraq war, in times of relative peace we operate bases throughout the Middle East and patrol the waters with warships. You do pay for that in your income tax (or at least you will someday when the bill comes due). I would guess that oil would be a LOT more expensive if the US military didn’t intervene so agressively to ensure its accessibility.

In addition there is the matter of inflation. It has been shown by many people (so I won’t go through the exercise) that monetary devaluation is an insidious kind of tax. The government takes purchase power from your wages and savings and spends it. Yes, we have explosive dia…, er, um, I mean a massive tax.

[underdose]

Arguably, we are already paying a “massive tax”, just not directly at the pump. The government has borrowed trillions of dollars to conduct military activities in places where “we have a vital economic interest”. Even beyond the Iraq war, in times of relative peace we operate bases throughout the Middle East and patrol the waters with warships. You do pay for that in your income tax (or at least you will someday when the bill comes due). I would guess that oil would be a LOT more expensive if the US military didn’t intervene so agressively to ensure its accessibility.

In addition there is the matter of inflation. It has been shown by many people (so I won’t go through the exercise) that monetary devaluation is an insidious kind of tax. The government takes purchase power from your wages and savings and spends it. Yes, we have explosive dia…, er, um, I mean a massive tax.

[renterclint]

underdose,

That is a good point about the inflation factor. It sounds like oil typically runs adversely to the dollar & other commodities for many reasons.

The Fed has their hands full with trying to prop up our troubled credit system, so I think they do not dare raise interest rates any time soon. Inflation seems like the furthest issue from their minds.

As for government spending… it really doesn’t matter whether we’re dumping $$ in military actions, into saving Medicare & Social Security, into stimulus checks, or whatever… we need to wake up & start demanding our leaders push for fiscal responsibility. Currently, it seems like none of us consituents are willing to give anything up. Some have suggested that increased oil prices is good in that it forces us to stop using so much & seek alternatives. So maybe we will eventually stop defacing our currency via increased national debt when our foreign investors finally start demanding a higher return on our government securities. Although I suppose they already are demanding higher returns which is why our dollar is sucking sand.

[renterclint]

underdose,

That is a good point about the inflation factor. It sounds like oil typically runs adversely to the dollar & other commodities for many reasons.

The Fed has their hands full with trying to prop up our troubled credit system, so I think they do not dare raise interest rates any time soon. Inflation seems like the furthest issue from their minds.

As for government spending… it really doesn’t matter whether we’re dumping $$ in military actions, into saving Medicare & Social Security, into stimulus checks, or whatever… we need to wake up & start demanding our leaders push for fiscal responsibility. Currently, it seems like none of us consituents are willing to give anything up. Some have suggested that increased oil prices is good in that it forces us to stop using so much & seek alternatives. So maybe we will eventually stop defacing our currency via increased national debt when our foreign investors finally start demanding a higher return on our government securities. Although I suppose they already are demanding higher returns which is why our dollar is sucking sand.

[renterclint]

underdose,

That is a good point about the inflation factor. It sounds like oil typically runs adversely to the dollar & other commodities for many reasons.

The Fed has their hands full with trying to prop up our troubled credit system, so I think they do not dare raise interest rates any time soon. Inflation seems like the furthest issue from their minds.

As for government spending… it really doesn’t matter whether we’re dumping $$ in military actions, into saving Medicare & Social Security, into stimulus checks, or whatever… we need to wake up & start demanding our leaders push for fiscal responsibility. Currently, it seems like none of us consituents are willing to give anything up. Some have suggested that increased oil prices is good in that it forces us to stop using so much & seek alternatives. So maybe we will eventually stop defacing our currency via increased national debt when our foreign investors finally start demanding a higher return on our government securities. Although I suppose they already are demanding higher returns which is why our dollar is sucking sand.

[renterclint]

underdose,

That is a good point about the inflation factor. It sounds like oil typically runs adversely to the dollar & other commodities for many reasons.

The Fed has their hands full with trying to prop up our troubled credit system, so I think they do not dare raise interest rates any time soon. Inflation seems like the furthest issue from their minds.

As for government spending… it really doesn’t matter whether we’re dumping $$ in military actions, into saving Medicare & Social Security, into stimulus checks, or whatever… we need to wake up & start demanding our leaders push for fiscal responsibility. Currently, it seems like none of us consituents are willing to give anything up. Some have suggested that increased oil prices is good in that it forces us to stop using so much & seek alternatives. So maybe we will eventually stop defacing our currency via increased national debt when our foreign investors finally start demanding a higher return on our government securities. Although I suppose they already are demanding higher returns which is why our dollar is sucking sand.

[Author]

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