Why are fuel prices so high? Too Much Government - Ron Paul

Ron Paul on high fuel prices:

In the past few months, American workers, consumers, and businesses have experienced a sudden and dramatic rise in gasoline prices. In some parts of the country, gasoline costs as much as $4 per gallon. Some politicians claim that the way to reduce gas prices is by expanding the government’s power to regulate prices and control the supply of gasoline. For example, the House of Representatives has even passed legislation subjecting gas stations owners to criminal penalties if they charge more than a federal bureaucrat deems appropriate. Proponents of these measures must have forgotten the 1970s, when government controls on the oil industry resulted in gas lines and shortages. It was only after President Reagan lifted federal price controls that the gas lines disappeared.

Instead of imposing further restraints on the market, Congress should consider reforming the federal policies that raise gas prices. For example, federal and state taxes can account for as much as a third of what consumers’ pay at the pump. The Federal Government’s boom-and-bust monetary policy also makes consumers vulnerable to inflation and to constant fluctuations in the prices of essential goods such as oil. It is no coincidence that oil prices first became an issue shortly after President Nixon unilaterally severed the dollar’s last link to gold.

Basic economics says that when government restricts the supply of a good, the price will increase. Yet Congress continues to reject simple measures that could increase the supply of oil. For example, Congress refuses to allow reasonable, environmentally sensitive, offshore drilling. Congress also refuses to remove the numerous regulatory hurdles that add to the prohibitively expensive task of constructing new refineries. Building a new refinery requires billions of dollars in capital investment. It can take several years just to obtain the necessary federal permits. Even after the permits are obtained, construction of a refinery may still be delayed or even halted by frivolous lawsuits. It is no wonder that there has not been a new refinery constructed in the United States since 1976.

Oil at $180 = Gas at $5.50 ?

Why oil could hit $180 a barrel - MSN Money via kwout

In the “more dire predictions” category, Jim Juback from MSN (moneycentral.msn.com) thinks oil will continue its price rise. He sites geology and geopolitics. I often read his columns and they are quite good on the whole.

He omitted what I believe to be the major cause of this, and other, inflation. Government central banks producing huge quantities of fiat currency.

Japan, the World’s Richest Country, is Running Out of Food ?!?

From theage.com

“While soaring food prices have triggered rioting among the starving millions of the third world, in wealthy Japan they have forced a pampered population to contemplate the shocking possibility of a long-term — perhaps permanent — reduction in the quality and quantity of its food.”

Hard to believe that the rich are worried about their food supply. Why? Because they rely on imports. We all know the folly of depending on imports for oil. Food appears to be another vulnerability.

Perhaps we will realize that globalization of trade is going to pauperize all of us, except the 2 or 3% at the top of the economic pyramid. I don’t hear our Presidential wannabes proposing solutions, do you?

Ron Paul on the current economic problem and more …

In this Forbes article, Ron Paul discussed the current economic situation, monetary policy, taxes, etc. Worth reading, not too long.

Good News: Ron Paul defeated his opponent in the primary for his congressional district. Since no Democrat is running, Dr. Paul will serve 2 more years in Congress.

Ops, our central planners made an error re: global warming

Global Warming and the Minefield of Unintended Consequences - Freakonomics - Opinion - New York Times Blog via kwout

Our all knowing rulers and central planners, who know what is good for us and who are bound and determined to impose their will upon us, made an error. Ops! Turns out that biofuels - or turning the last 1/2 inch of topsoil in the mid west into corn derived ethanol, causes more environmental problems than it fixes.

What a great example of why socialism failed! Only the marketplace, that is the result of free people making self interested decisions, can improve the human condition. Yes, freedom works!

By the way, the most destructive of these socialistic central planners are central banks - the US Federal Reserve, the EU central bank, et al.