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Capitalism and Big Oil: Effects on the Price of Gas

America in its naive state, lives vicariously through national media.  Much of what is fresh off the press is either misleading and is not fair, in respect, to either party.  However, propaganda during this political season has sparked controversy in this beloved country.  Most of the political bashing is either misleading, and at times, completely false.

Big oil, as it has been deemed, is a multi-billion dollar industry.  Oil is traded in the free market, bet on by investors, and is not a well-understood commodity in our everyday lives.  Yes, it is very understandable to feel it in your pocket-book every time at the gas pump.  This, however is in no way the fault of President Bush, nor President Obama.

Unfortunately, most people actually believe that the price of gas at the pump is in fact the current presidents fault.  The fact is, the president of the United States has literally no control over the price of this commodity.  People who claim that this is the fault of the president of the United States, aim at energy policies, foreign policies, etc.  What is lacking is a direct correlation between prices at the pump and policy.

For starters, congratulations to the Obama administration for increasing our oil production to be over 50% American-made (see below). Bringing our oil dependency down from the Bush administration era. However, investor speculation is still at play and when tensions in the middle east rise, particularly in oil-producing countries, so do gas prices.  This makes sense due to the fact that if an oil-producing country were to cut off exports to the US it would have a direct effect on a critical energy source, and a direct impact to the flow of our current infrastructure.

Source: WhiteHouse.gov

It’s easy to run a political campaign on bringing down oil prices by increasing US field production, however, this is not how the free-market works.  Key to success in bringing down oil prices is foreign policy.  Now, let’s take the most recent cases in the Middle East and look at Lybia in particular.

We immediately saw an increase in the price of gas at the pump when the Lybian government sought to suppress the voice of their people.  Relating this to our own independence from Great Britain, we did not receive aid from France in our own revolution until we had accomplished a significant victory.  In those times, and this still rings true today, the Lybian people did not want their revolution won for them by America, they wanted to earn their freedom, they didn’t want “their thunder stolen” as one would say.  The few months that this went on is signficantly less of an impact on our economy in reference to gas prices.

The foreign policy stance the US took made the Lybian people feel liberated, was minimal in our own tactical uses, limited to air strikes, aid, and sanctions against the regime.  The Lybian people still have a long way to go, but it will be on their terms, and that’s the way their story, and the rest of the world’s countries’ stories need to go, as minimally intrusive as possible.

March 26, 2012 Posted by | Energy | , , , , , , , | Leave a comment