Back in 2008 as we were sliding into a depression prices of oil were skyrocketing as we were building up inventory. Today, the crisis in Libya is being used as an excuse to raise prices of oil inasmuch as inventories are high and Saudi Arabia has enough to backfill and stated it would make up the difference. Speculators claim the possibility of the instability spreading is the culprit. This is hogwash as the damage to economies caused by high prices will likely reduce demand much more than these instabilities would create shortages. Again, these price hikes are just another instance where the middle class teacher, engineer, secretary, and other average workers’ wealth is transferred to the wealthy speculators and oil titans.
Many politicians and journalist call this increase in gasoline prices tantamount to a tax on the American citizen. That is a false analogy. A tax would be immediately re-circulated into the economy. Moreover in a progressive tax system it would likely not affect most in the middle class. Given the marginal propensity to consume of those that would benefit from increased taxes on the wealthy, increased economic activity would occur (as seen during the marginal tax increases during Bush 1/Clinton). High gasoline prices however benefit just a few as the increase profits are likely to be invested outside of America, this creating no economic activity even as wealth is extracted from America.
Oil company policies for years have been disastrous to America. We have a large military specifically to defend the lanes of transport of oil. We have an oil industry that continues to foment fallacies of the nonexistence of climate change caused by us burning fossil fuel. We also have oil companies that lobby congress to ensure laws and regulations that promote a robust alternative fuel Manhattan type project is slowed or stymied.
The banking crisis was used to pilfer middle class tax dollars as banking recovered from taxpayer money and free money from the Federal Reserve. Oil companies use crisis to extort higher prices from Americans.
Every time they do this I think this is the time they will overstep and permanently wake up the middle class into using alternatives or demanding alternatives. However, these companies change their modal generally just in time. If they are a bit late they just have the government cronies’ help.
One can only hope that as Tunisia, Egypt, Libya, and now Wisconsin prove successful our entire middle class will demand overall changes in our entire economic structure, one that is biased to the individual with real support for Free Enterprise.
My Book: As I See It: Class Warfare The Only Resort To Right Wing Doom
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