The big economic news this morning was that the average price of gas is now double what it was when Obama was sworn in as POTUS. The media gleefully displays charts tracking the President’s declining poll numbers running opposite the rising price of gas.
No mention is made that the last time gas was that low (on inauguration day) was during the Clinton Administration and that gas was as high as it is today in 2008 when it looked like McCain would be President. No mention is made that the Bush policy of endless war with countries that produce oil had taken oil from 18/barrel to 140/barrel. No mention that 140 dollar oil was one of Bin Laden’s demands along with removing troops from Saudi Arabia and deposing the secular government in Iraq. All things that were accomplished by Bush.
The right blames Obama for the collapse of the economy in 2008 even though Obama had no prayer of being elected until McCain demonstrated that he had no clue what an economy was. Obama’s prospects changed when McCain who was trying to look Presidential called a meeting at the White House to deal with the crisis. He then had nothing to say at the meeting which even moved Bush to comment on McCain’s lack of intelligence while Obama came across as thoughtful, knowledgeable and engaged. Sarah Palin was still trying to remember what newspapers she had read.
The truth is that the price of gas has little to do with reality. We have the largest supply on hand in almost 20 years, gas should be selling for around a dollar to follow the historical precedent and the “law“ of supply and demand. Of course 20 years ago much of what is done in commodity trading today was then illegal.
The deregulation of commodity trading and the rolling back of the New Deal was engineered by Sen. Phil Graham R-TX on behalf of his wife Wendy who was an executive at Enron. This allowed a “new” paradigm in energy trading called appropriately the Enron loophole. Efforts by Brooksley Born, Chairman of the Commodities Futures Trading Commission to sound the alarm in 1998 were quashed by then Fed Chairman Alan Greenspan, Clinton Treasury Sec. Robert Rubin and Larry Summers. You might recall Summers advising Obama until recently.
What the Enron loophole did for electricity in California is what happened to gas prices in 2008 and the bubble only ended with the collapse of the Wall Street banks. These same banks are still at it thanks to trillions in bailouts from the Federal Reserve so we are seeing exactly the same bubble yet again.
The recent one dollar increase in gasoline price costs the average family 1000/year or about 140 billion sucked out of the economy. This money goes directly into the pockets hedge fund managers, Wall Street bankers and of course the oil companies. This increase also applies to the rest of the economy as well and drives up all prices and makes any sort of economic recovery impossible in an environment of stagnate or falling wages.
Could Obama do something? Yes, he could crack down on speculators by requiring them to actually have real money to back their bidding up of commodity prices. Would this collapse the zombie banks on Wall Street, plunge us into a major banking crisis and end western civilization? Obama seems to think so and he’s probably right. So he’ll wait for it to happen spontaneously, you can bet Michelle is planting a really big garden this year. I am. www.prairie2.com