Wednesday, May 28, 2008

Unbelievably High Gas Prices

Whenever I think about high gas prices I think of how much lower the price of oil was before George W. Bush decided to invade Iraq. I don’t think the rise in the cost of oil since then is a coincidence, but I’m no expert.

From I'm no expert, but ... by Don Kuehn:

The media and the public appear to be slow in grasping the reason behind today's unbelievably high gas prices. Now, I'm no expert but, it seems fairly simple: Oil is priced on world markets in U.S. dollars, and there hasn't been a weaker dollar in recent history.

The Bush administration's monetary policies, the seeming incompetence of Secretary Henry Paulson at the Treasury Department and the tinkering of the Federal Reserve have combined to wrench most of the buying power out of the greenback. There has even been speculation that commodity traders could consider dumping the dollar and switching to the euro as the basis for pricing crude oil. What a blow that would be to American economic supremacy and prestige around the world.

Oil cost around $3 a barrel in 1970, and the dollar was strong. Then OPEC began manipulating oil prices by controlling supply. Sure, there were spikes in prices—a peak at about $38 in the early 1980s dropped to under $10 in 1997. Oil "soared" to $30 before dropping sharply after the Sept. 11, 2001, attacks ($18 a barrel), according to the Energy Information Administration.

But since then, throughout the Bush administration, oil has climbed steadily until recently going through the roof, surpassing $113 a barrel. And the dollar has slumped.
Read the rest here.

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