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Libya, Gas Prices, and the Big Payday at Your Expense


By Michael Collins - Posted on 07 March 2011

Another Triumph for The Money Party Michael Collins

The gas price shock and awe is not evenly distributed. The Western states, New York, Illinois, and Nebraska are taking the biggest hits. There's some explanation for this but not a very good one. All that matters is taking as much in extra profits as possible while the extraordinary events in Libya and the rest of the region allow a plausible storyline. This time, democracy is the villain.

Michael Collins

The average price for a gallon of gas rose 30% from $2.69 in July 2010 to $3.49 as of March 6. Most of that 30% has come in just the last few days.

We're about to embark on another period of let the markets take care of it. The Money Party manipulators are again jerking citizens around in the old bottom-up wealth redistribution program. Their imagineers are writing the storyline right now.

The conflict in Libya is causing the spike in oil prices over the past ten days or so according to the media script. Take a look at the chart to the right. Can you find Libya among the top fifteen nations supplying the United States with crude oil?

Why the Current Panic Over Gas Prices?

The general explanation points to the crisis in Libya as the proximate cause. The anti Gaddafi regime revolution began in earnest on February 17. But if the Libyan revolution were the cause, we'd have to attribute a 50% drop in a 2% share of the world's oil supply as the cause of the panic. We would also have to attribute the increase in US gas prices to a nation that doesn't impact the US crude oil supply and, as a result, should not impact the price of gas here..

The speculators have an answer. The Libyan situation entails fears of broader unrest in oil and non-oil producing nations in North Africa and the Middle East. There is unrest, without any doubt. Citizens are insisting that their kleptocratic rulers cease and desist from looting their nation's treasuries and resources. The demonstrations across the region, revolution in Egypt, and war in Libya are all being fought under the banner of broader participation in government, greater access to essentials like food, jobs, and hope for future improvements. Notably lacking is anti-US rhetoric or religious fanaticism. (Image)

Somehow, the opportunity for secular, democratic regimes equals a crisis for US energy prices. The embedded assumption is that the conflicts leading to new regimes will cause a disruption in the flow of oil. With the exception of Libya, none of these countries have reduced their oil production, including oil producing Egypt. In fact, Saudi Arabia and the United Arab Emirates increased oil production to compensate for the short fall due to the military conflict in Libya.

If we don't believe that Libya is the cause, then we get the excuse of emerging democracies. If emerging democracies fail to catch on as the scapegoat, there will be other excuses.

The Money Party bottom line is apparent. It's time to take some more money from citizens. Any plausible reason will do. When you own the media, you have no worries. Who's going to bust you?

The Big Payday at Your Expense

The gas price shock and awe is not evenly distributed. The Western states, New York, Illinois, and Nebraska are taking the biggest hits. There's some explanation for this but not a very good one. All that matters is taking as much in extra profits as possible while the extraordinary events in Libya and the rest of the region allow a plausible storyline. This time, democracy is the villain.

These gas prices will have a direct impact on those least able to afford it. It will cost more to go to work or look for jobs. Commodities will go up even more than they are now. Transportation for the distribution of all products will have an impact on prices. Tourism will fall off. The feeble increases in hiring may be at risk and there will be more gloomy news about how this all impacts the prospects for any sort of economic recovery.

What's Really Driving Gas Prices?

In a recent Business Insider column, David Moenning noted:

"At least part of the reason behind crude’s rude rise is the price action itself. Hedge funds and other fast-money types have begun to pile into what appears to be a burgeoning uptrend in the oil charts (take a peek at a weekly chart of USO and you’ll see what we mean). Then when you couple the price action with the news backdrop, this appears to be the new place to be for the ‘hot money.’" David Moenning, Business Insider Mar 6

We have the usual suspects looking for hot money. The fast-money types, as Moenning calls them, smell another victory in the air. Their market activity is driving prices in a self-reinforcing cycle of increases that are highly profitable when you get in and out at the right time (and if you pull the strings for the market, that's easy). (Image: Fuel Gauge Report)

Who is looking out for our interests?

No one. Have you heard of any congressional investigation? The oversight committees for the Departments of Energy and Commerce are two likely starting points. Nothing. President Obama is threatening to tap the US strategic oil reserve to use market forces to push crude oil and gas prices down. Fed Chairman Ben Bernanke sees commodity price increases, including crude oil, as a temporary phenomenon. They may create a problem, however.

"Rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability, particularly if they were to cause inflation expectations to become less well anchored," Bernanke said before Congress last week. Ben Bernanke, March 1

Doing nothing, like Congress, and trying to manipulate market forces, as the president says he might, are not the heavy-hitters needed to stop this latest rip off. They both buy into the belief that there is some sort of occult mystery to why prices are going up. Everyone who benefits will raise prices because they can. They have no concept of enough and there is nobody standing in their way.

What would JFK do?

There was a time when the president of the United States stood up to big business. President John F. Kennedy put his prestige and word on the line when he helped the steel industry and labor unions negotiate a contract that the president thought was fair to all, a deal he hailed as "non inflationary." Just days after the settlement, US Steel turned around and issued a major price increase. This would have hurt the economy due to the central role of steel at the time.

Kennedy felt betrayed by US Steel and the others that raised prices. He wasted no time in his response. The Department of defense said it would buy steel from the lowest bidder. This would have excluded US Steel and their fellow price gougers. The Justice Department began investigations and issued antitrust indictments by the big steel producers. Kennedy also went to the public to gain support for his efforts.

Big steel backed down. The broader business community complained. The Kennedy administration and others reminded everyone that the government acts in the public interest when business threatens the interests of the people. What a novel concept.
END
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These gas prices will have a direct impact on those least able to afford it. It will cost more to go to work or look for jobs. Commodities will go up even more than they are now. Transportation for the distribution of all products will have an impact on prices. Tourism will fall off. The feeble increases in hiring may be at risk and there will be more gloomy news about how this all impacts the prospects for any sort of economic recovery.

It'll cost more for commuting to work and seeking jobs, but the Brits, low income ones anyway, will most likely be resolving this problem, by staying home. I didn't say it's a good solution, but it'll reduce the costs of commuting to work and seeking employment alright. These "savings" may not be enough for buying much food though, depending on how much food prices rise. And pretty soon, we'll have a jobless and starving Britain.

The money elites think this is a good strategy, for themselves, that is.

Petrol is presently priced at £1.40 per liter in the UK and that's $2.32 USD, according to the RBC Royal Bank currency converter, while oanda.com says it's $2.28 US when using today's date, March 7th.

www.rbcroyalbank.com/RBC:TXTvjo71A8cACEGgl0Y/cgi-bin/travel/fxconvert.pl

www.onlineconversion.com (clicking on Currency leads to oanda.com)

A US quart has 32oz. while a liter has 33.8oz, so a US gallon is 4L minus 7.2oz, or, as onlineconversion shows, 1 US gallon (liquid) is 3.785L. 3.785 x ($) 2.30 = $8.70 (USD) per US-sized liquid gallon.

And some UK minister is making an "alarmist forecast" about the price of petrol in the UK potentially rising to £4 per liter. ($6.51 USD, and 6.51 x 3.785 = very expensive fuel, $24.64 per US liquid gallon!) He has to be dreaming.

So Americans have something real to rejoice about; paying under $4 per US gal., vs $8+ for the same amount of fuel and which is the amount now being paid in the UK.

"Petrol hits £1.40 a litre as minister makes alarmist forecast it could reach £4

Government desperate to avoid repeat of fuel blockades as senior Lib Dem claims that those on low incomes cannot afford expense of getting to work"

by Matt Chorley, Kunal Dutta, and Susie Mesure, March 6, 2011

www.independent.co.uk/news/uk/politics/petrol-hits-140-a-litre-as-minist...

Drivers began paying £1.40 per litre of unleaded petrol for the first time yesterday as motorists started to feel the pinch of rising oil prices. The news came as several experts warned of the damaging impact across the economy of such an increase.

(snip)

Earlier in the day, the International Aid Minister, Alan Duncan, a former oil trader, suggested that it was not inconceivable that motorists would end up shelling out £4 a litre. "When I said oil would go through $100, people thought I was bonkers. Now we are not far off $130," he said.

(snip)

The biggest fear of those watching the price movements is a "rocket and feather" effect, whereby retail fuel prices rise sharply after an increase in the price of crude oil but drift down only slowly if it falls.

(snip)

Tim Farron, the Lib Dem party president, said soaring fuel costs were forcing people on low incomes to consider giving up work to avoid travelcosts. "This is not just an issue for white van man or Jeremy Clarkson fans. It is an issue of social inclusion and social justice," he said.

Significantly, the Lib Dems have withdrawn their opposition to financial assistance for motorists, insisting those still driving have no alternative. "Nobody is choosing not to use their car any more because of petrol prices," Mr Farron said. "If you were able to take that decision, you did that five or six years ago. Now people are making decisions about not working because of the cost of driving."

David Cameron has promised that the Treasury is still examining proposals for a fuel stabiliser, which would level out prices by reducing duty when oil prices were high and increasing duty when the cost of oil fell.

In a speech yesterday, Ed Balls, the Shadow Chancellor, told Mr Osborne to "get his head out of the sand". "He should be helping hard-pressed families now by immediately reversing the Tory VAT rise on fuel."

(snip)

That's followed by a short list of "Britain's oil barons: Profits from the pumps - the industry's winners".

VAT, I believe to recall reading a few weeks ago in some British news article about the economic crisis and related austerity measures in the UK, means Value Added Tax. It's a tax imposed by the government anyway.

"The Collapse of the Old Oil Order
How the Petroleum Age Will End
"
by Michael T. Klare, March 3, 2011

www.tomdispatch.com/archive/175362

(Obtained at www.globalresearh.ca this morning,)

How the petrol age will end? When enough people find a better way of generating energy and enough people live using this technology or replacement for oil that, hypothetically speaking, might not involve new technology. When this happens and brings the petrol. age to an end, then we may still need to determine the real cause, for people doing as suggested evidently will be acting in consequence; something would've irked them enough to change or to want to change. The cause, in the present outlook, is elites pricing oil too highly, as well as their wars for controlling and exploiting other people's natural resources; energy, mineral, agri. land, water, and other resources, fisheries being one. And they're basically traitors, corrupt the government, as well as being guilty of other very serious crimes. We can perceive them as real enemies of ourselves, our families, society in general; or, rather, societies, since these elites affect most countries.

So there's more than enough cause for most people to be able to oppose, however we can, the high corruption of Washington, et cetera, and et al. We've had enough of these causes for many years now and got overall little anti-war activism, besides one or two hours one, two or three times a year; like on Saturday afternoons, once in a while. The last official population numbers that I read some years ago said that the US has around 300,000,000 population, while Canada had around 33,000,000. That may also be where I read that the UK was around 65,000,000. Wikipedia says roughly 62,446,000 for the UK with around 51,400,000 in England.

Michael T. Klare:

Whatever the outcome of the protests, uprisings, and rebellions now sweeping the Middle East, one thing is guaranteed: the world of oil will be permanently transformed. Consider everything that’s now happening as just the first tremor of an oilquake that will shake our world to its core.

For a century stretching back to the discovery of oil in southwestern Persia before World War I, Western powers have repeatedly intervened in the Middle East to ensure the survival of authoritarian governments devoted to producing petroleum. Without such interventions, the expansion of Western economies after World War II and the current affluence of industrialized societies would be inconceivable.

Here, however, is the news that should be on the front pages of newspapers everywhere: That old oil order is dying, and with its demise we will see the end of cheap and readily accessible petroleum -- forever.

(snip)

To put the matter baldly: The world economy requires an increasing supply of affordable petroleum. The Middle East alone can provide that supply. ... Don’t count on any new order (or disorder) to deliver enough cheap oil to preserve the Petroleum Age.

(snip)

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