Gas prices are result of world supply and demand
Tuesday October 23, 2012 | By:Robert Andres |
Just read this week’s Journal, where a writer suggests we get educated on the issues, before casting our vote. Excellent suggestion!
Unfortunately, however, the writer did not. He says that today’s high gasoline prices are set by greedy, GOP-friendly CEOs. Not true. Anyone with a basic understanding of economics knows that gas prices follow crude oil prices and crude prices are determined by world supply and demand, world events, speculators and OPEC. CEOs don’t set the price of gas; economic and political factors do.
Government policies, however, do strongly affect crude – thus gas – prices. The president sets the domestic energy policies that control U.S. crude production. More U.S. crude production means less imported from the rest of the world’s supply, which eases world demand, which eases prices.
Right now, world production matches world demand and, right now, world demand is low, because of the worldwide economic turndown. When the economy improves, demand will increase and supplies will tighten. Prices will rise because of increased demand and any civil unrest or production hiccup anywhere will shoot prices up.
Right now is the time we should be making moves to increase U.S. production, because it takes five – 10 years to bring new discoveries to market.
And what is the policy of the Obama Administration? To decrease future production by reducing drilling permits, by imposing unnecessary restrictions on production, as well as on the use of natural gas and coal, by preventing a pipeline that would bring crude from a friendly country. Obama thinks we can convert to green energy overnight. We can’t.
We will need today’s energy sources for many years to come. And if we don’t plan and act to ensure future needs now, we will find ourselves more and more at the mercy of countries that hate us.
Obama claims that domestic production now is high. True, but not because of his policies, but rather policies set five – 10 years ago. And the higher production is on private lands, which do not require federal permits. Production on federal lands is down.
So, if you, too, are unhappy about high gas prices, think about the real reason for increasing prices and ask yourself if you want another four years of energy policies that are hurting us now and will really hurt us in the future.
Think, too, about our present foreign policy of apology and inaction and how that leads to unrest and uncertainty, also contributing to higher crude prices.
And, while you are at it, check into other actions of Obama that affects your pocketbook. Like Obamacare, that was supposed to reduce healthcare costs and would allow you to keep your existing program; does neither, but creates 21 new taxes; like whether or not Medicare Advantage will be available in the future; like our anemic economy and high unemployment due to government overregulation and tax uncertainty; like his class warfare and disdain for individual success.
Then vote, using facts, not political baloney.