Monday, February 20, 2012

You lose with big gas prices.

Gas prices being high.  Who benefits? Why?  How?

Obama and his administration benefit.

Obama campaigned for "green" energy and still gets support for this unrealized campaign idea.  What's the reality?

Big gas prices benefit him and his administration.  How do they? 

Well, ultra liberals will support him despite high energy costs because not unlike ANY  "ultra" stance, they do not want to be confused with facts or reality because their minds are already made up.  Their persistence is respectable, but the inability to accept true reality makes them unreliable sources of facts.  Also, if they are crazy (like PETA crazy) they would not care about spending their inheritance on gasoline because they are under the illusion that it needs to be expensive to do "the right thing" or what they might think "the right thing" is.  So, ultra liberals will love Obama despite whatever energy costs are because they are sure they are correct.

More moderate liberals will tolerate these inflated fuel prices because gas might not be nearly as big or a topic to them in their world as say abortion, gay marriage or naturalization of illegal immigrants.  These people realize that if they fail financially due to excess government taxes, fees, spending, and fuel costs, that the Obama administration has created multiple safety nets for them to live anyway funded by the tax dollars of others.  They are under the impression that this is America and they have a "right" to money and a "right" to a good living.

Obama has also deficit spent more money than all other presidents through Bush combined.  A high gas price brings in billions of additional monies in gas taxes and this may help ease the drought of federal money that states have available to them.  A representative of the state of New York was on record a couple years back praising high gas prices for helping them balance their budget as a state.   Most states have a gas tax of some sort and many of these states use a tax based on the dollar, not on the gallon.  So, higher gas prices equals more money for state government.  More money for state government means state government spends more money.  All in all this just means less money for consumers.

A few of Obama's biggest financial backers are Wall Street banks and oil companies.  British Petroleum is a huge contributor to the Obama cause.  So is Goldman Sachs.  Do you remember them?  They are one of the banks "too big to fail" and they received $10 billion dollars of "stimulus" money because they were in such financial peril.  Wait, do you mean Obama has helped out some of the banks that gave him campaign money?  Really?

A high gas price certainly helps out any gas company in the world.  In the days of Bush, liberals everywhere would be crying foul and burning crosses on the White House lawn if G.W. would have directly had a hand in helping out oil companies.  How does Obama directly have a hand in high gas prices?  By banning offshore drilling, his administration has created higher demand and thus higher prices.  By letting drilling permits expire without renewal, he has further increased demand and prices and also unemployed thousands of America workers.  His excuse for banning drilling and permit renewal was because of the Horizon accident in the Gulf of Mexico where millions and millions of gallons of crude oil were spilled when a rig blew up and the safety valve failed.  The idea that because of disaster, ALL oil drilling and exploration is hazardous to the environment would be same thinking that if one school bus crashes, ALL school buses are unsafe.  Or, if we have one car accident in this country, all car driving will result in an accident.  Or, if we have one case of food poisoning in this country, food should be banned because food isn't safe.  Obama was on record "punishing" BP for their negligence, but then helped gas prices soar and remain high for a prolonged period of time and that allowed BP to pay for their "punishment" money right out of excess cash flow. Convenient. 

Big banks benefit.

Yes, that's right.  Banks benefit greatly from a high gas price.  So, all this time spent by Obama and other politicians complaining about "big banking" and how the banks "rip off" consumers is a complete crock of crap.  Don't get me wrong, I am not defending the banks.  I am just stating the FACT that bank fees are based on the dollar, not on the gallon when it comes to gas.  The banks that run Visa/Mastercard/Amex can now charge me the retailer a lot more money for their services even though I am handling less gasoline.  Every gasoline retailer pays credit card fees based on the dollar, not on the gallon.  Also, if you charge your gas on a credit card and don't get the balance paid monthly, more than likely the dollar amount of gas consumed is higher than it used to be.  Then, the banks make more interest off of you, the consumer.  What better way to earn money off of the public than increase fees on something that most people cannot operate without?  As a consumer, you end up paying for it in the long run as retailers cannot continue to absorb more and more overhead when already faced with low margins.

Wall Street traders benefit.

Banks also back Wall Street traders in the gasoline and oil markets.  Even though the markets are volatile, the markets end up being manipulated by their trading.  Figure it this way:  If you are a market trader and are averaging 5% profit per trade, do you make more money in the product is worth $10, or in the product is worth $100?  If the margins remain, the traders cash in on high gas prices.  Also, in the stock market, if enough people buy up supplies and hold onto them, they price has to go up.  It's because of supply and demand.  Now, if you and a bunch of your billionaire buddies want to make a bunch of money, why wouldn't you buy up as much of the supply as possible, sit on that supply until the market goes up, and them dump it all on the market?  Then, as the market prices fall from being saturated with product, you buy it again at the bottom price, hold on to it until demand gets high again, then sell it again high.  Rinse, recycle, repeat.  This is what is happening right now every single day.  But, instead of the traders making 5% on $10 crude, they are making 5% on $100 crude.

Alternative energy sources benefit.

Obama was on record a couple years ago saying that to make solar or wind power a viable energy option, fossil fuels would have to go up drastically in price.  This is and has happened.  The Al Gores of the world are celebrating I'm sure as he has made billions and billions of dollars preaching his unproven climate claims.

Our government has justified spending in companies like Solyndra for this very reason.  The premise is that before when fossil fuels were cheap, we didn't NEED to look for other choices.  Now that fossil fuels aren't cheap, we NEED to.  The problem with this theory is that the government fails to acknowledge that they are the ones causing the inflated fuel prices in the first place.  Doesn't really seem like much of a crisis if they are in control of it, does it?

Who doesn't benefit?  Everyone else.

Without a choice in the matter you get to pay more for everything.

Taxes.  Sales tax will increase on each and every item you buy.  Why?  Because each and every item that is sold in this country will have to cost more to offset additional overhead due to additional fuel costs in trucking and production of these items.  The government wins again because anytime that goods cost more, they collect more tax.  This is just simple math.  If you are paying 10% sales tax on an item that costs $2.00, you pay $.20.  Increase the cost of that item to $3.00 and now you pay $.30.  This applies to any taxed item.  Government wins.  You lose.

Crops are grown and harvested using diesel fuel.  Corn is used in 75-95% of products in the grocery store (depending on where I sourced).  So, soda will be more expensive because of the high fructose corn syrup.  Ketchup will go up.  Also Oreo cookies, Wonderbread, Corn Flakes, Eggo Waffles and about a million other products.  When the cost of production of corn goes up, the cost of the finished goods almost has to go up.  A high petroleum market also means drastic increases in fertilizer costs, too. This increased cost of production will have an effect on every product that is farmed in this country.  What's the solution?  Import more crops?  I mean, we have government mandated ethanol blended into our gasoline in this country, but we aren't buying the ethanol here.  We are importing it from South America because it's cheaper.  Should we do this with all of our food, too?

Chickens, cows and pigs all eat crops or by-products of crops, so the price of meat goes up.  This increase comes from a few other different ways here, too.  Inflated fuel cost adds to increased feed input costs for animals, increased waste handling costs, and also increased costs for trucking and shipping the animals.  As a consumer, you lose again.

Everything you can buy in this country is trucked, trained, or boated to you.  Many of the things you buy are handled all three of those ways.  With higher fuel costs, the added costs of fuel gets passed down to the consumer.  Every shirt, computer, candy bar, cell phone pair of socks, anything and everything is shipped, trucked or trained to you.  As a consumer again, you lose.

Tires for your car have already seen a huge price increase from a high crude oil market.  Not only are they manufactured from oil, but they are also shipped and freighted many times before they get to you.  Again, you are paying more as a consumer.

The government in Minnesota is talking about reducing the gas tax and adding a mileage tax.  Although the government wants you to drive a very fuel efficient car, they aren't making enough money off of you if you do since you buy less gas.  Their solution is to tax you additionally for your mileage.  So, even though the government has manipulated gas pricing so you have to pay dearly, they are still unhappy with how much money you give them and they still want more of your money.

I could site dozens and dozens of examples here, but I hope you get the idea.  Don't get me wrong.  I am not opposed to green, renewable energy.  But, if the government destroys our economy and keeps us broke, how will we be able to afford to try new things that could lead to breakthroughs in energy?  Do you think the government should be telling us how to solve these problems?   Truly there is no innovation in government.  All innovation, creativity and problem solving comes from sources outside of government each and every time.  I don't know about you, but I frankly don't think government is the most qualified for the job of creating new ways to be environmentally friendly coupled with financial responsibility.  They can't even deliver our mail without going broke.  Do you think they can handle this?

Is your life better now than it was?


  1. Well written and provocative. I like your insight and respect your views. Thanks for taking time to write this and keep it coming my friend.
    I have some thoughts and some questions. I'll have to digest this and write down my Q's.

  2. I find it hilarious that oil is sitting in and around what it was for a barrel when gas was in the low 2 dollar range. Fucking crooks!

    I sadly do not think it is going to get any better. They know the fix but it's too easy to stay in the same ways of life. Well done Brad. I don't entirely agree, I'm sure you know that. But we can agree a problem was taken, gasoline(no pun intended) was added and matches by the boat load were thrown in. It's a shame the public doesn't see that Ron Paul needs to get in. Let him have a crack at this mess.