Thursday, April 7, 2011

Obama’s Plan on Gas Prices Is…

Following up on our previous post in which a top official with the American Petroleum Institute says we can expect gas prices to rise to $5 per gallon, John Hawkins happens to have piece up today on Barack Obama’s plan to address gas prices … well, sort of.

It’s not exactly about Obama’s plan to address gas prices, because … even with prices having risen 30% over the last year and now averaging $3.69 per gallon (up 67% since he took office) … Obama has no such plan. Only what Hawkins aptly describes as Obama’s Plan To Come Up With A Plan To Convince People He Has A Plan On Gas Prices:

Obama hates the oil industry, he’s blocking drilling in ANWR, he still has the clamps down on drilling in the Gulf — in other words, if it increases the price of oil, he’s favor. If he were honest, Obama would simply make the case to the American people for high gas prices. But of course, Obama’s not honest. He’s a diehard socialist with a moderate candy shell designed to trick people into swallowing his leftism.

So instead of the truth, we get a dog and pony show that’s designed to mislead the American people

Read more …

As John goes on to aptly note, we can expect Obama to continue to make the situation worse while doing nothing more than delivering rhetoric and spin, telling the American people about how important it is to him (while continuing to do nothing to bring prices down by drilling for more here in the U.S.) … essentially employing the same strategy of rhetoric and talking points – and nothing more, that he has used for dealing with the deficit — and look how well that’s worked out for us.

Unfortunately, Barack Obama’s ideologically-based energy agenda runs completely counter to the only solution – ‘expanded exploration and production’ – not cheap talk and taking credit for what other administrations have done. As Howard Rich points out in his Obama AWOL on Gas Prices, the administration continues to say one thing and do another on the rising price of gas — ignoring opportunities to increase our oil supply while at the same time taking credit for production gains that he is actively seeking to dismantle.

Gold, Silver And Oil Are All Skyrocketing And That Is Bad News For The U.S. Economy

The following is one statement that you should get used to seeing: “The price of gold set another record today.” Today, spot gold reached a new all-time record of $1461.91 an ounce before settling back a little bit. Silver is also skyrocketing. At one point today silver hit $39.75 an ounce. It seems inevitable that at some point we are going to be talking about $50 silver. The price of oil is also continuing to relentlessly march upwards. At last check U.S. oil was at about $108 a barrel. All of this is great news for those that are investing in gold, silver and oil, but all of this is also really bad news for the U.S. economy. Why? Well, because when these commodities go up in price it is a sign that the U.S. dollar is dying and that our country is getting closer to economic collapse.

Traditionally, there has been an inverse correlation between the price of gold and the value of the U.S. dollar. Usually when the U.S. dollar goes down, the price of gold goes up.

One of the main reasons why gold has been so strong over the past year is because the U.S. dollar has been rapidly losing value.

So why is the U.S. dollar declining?

Most economists point to all of the quantitative easing that the Federal Reserve has been doing.

So exactly what is quantitative easing?

Well, it is basically like playing Monopoly with someone that reaches under the table and pulls out a bunch of extra money when they are almost broke.

The Federal Reserve has been creating huge amounts of money out of thin air and has been pumping it into the financial system. It is essentially cheating, and it is highly inflationary. The rest of the world has not been amused.

But quantitative easing is not the only issue.

The truth is that whenever the U.S. government goes into more debt, more money is created. The U.S. has been running trillion dollar deficits for several years now, and this has created a lot of new money.

This is another reason why it is so important to get the U.S. government debt situation under control. The Obama administration is projecting that the budget deficit for this fiscal year will be about 1.6 trillion dollars. This is highly inflationary and it will continue to destroy the value of the dollar.

In addition, the rest of the world is beginning to have serious doubts about the sustainability of U.S. government debt. They are starting to lose faith in the U.S. dollar and in U.S. Treasuries.

In fact, investors are losing faith in paper currencies all over the globe. The euro is on the verge of a massive crisis. On Tuesday, Moody’s downgraded Portuguese government debt for the second time in a month. Portugal needs a bailout, but they are far from alone. A half dozen European nations are experiencing a financial meltdown and the European debt crisis could spiral out of control at any moment.

Because of all of this financial instability, investors have been seeking some place safe to put their money.

For many investors, precious metals and commodities have been the answer.

In fact, silver has been doing even better than gold lately. On Wednesday, silver set a new 31-year high for the third day in a row.

People are even starting to talk about the possibility of $50 silver. Most analysts would have considered such talk complete nonsense a year ago.

But now nobody is laughing.

The price of oil is also soaring. Some of that is due to inflation, but not all of it. The truth is that when it comes to oil there are other factors at play.

Unfortunately, a high price for oil is far more damaging to the U.S. economy than a high price for gold is.

The U.S. economy has been designed to use massive amounts of cheap oil to transport massive quantities of goods over vast distances. When the price of oil goes to $100 or $150 a barrel, it fundamentally changes the dynamics of our economic system.

Nobody has ever been able to prove that the U.S. economy can successfully handle a price for oil over $100 for an extended period of time.

Do you remember what happened back in 2008? The price of oil hit a record high in June and then the entire financial system came unglued just a few months later.

The price of oil affects the price of almost everything else. Almost all forms of economic activity use energy. Almost all goods have to be transported a significant distance.

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