No question that gasoline prices are ridiculous. They seem out of control. Why is this?
Some people blame greed. “It’s those greedy oil companies,” or “It’s those greedy oil company executives.” No question that greed is a problem in today’s world. But not having a way to quantify greed, nor even to verify its existence in an individual (I’m no mind reader: how about you?) makes this a less-than-satisfying response.
Many will point to unrest in places like Nigeria which lead to supply concerns. That is certainly a short-term factor. Others point to emerging markets like India and China. But has their consumption increased so much since 2003 to constitute a five-fold increase in the price of oil, while it had mild fluctuations for over a decade previous?
An interesting article I read pointed out that gas prices now are pretty much up with inflation, plus some minor modifications due to increased demand and hampered supply, along with extra taxes.
But why was oil so cheap for so long, and now so expensive?
Knowing I am a non-interventionist, you may surmise that I will once again put the blame for this problem on the shoulders of government. And you would be correct in that assumption.
No new domestic refineries have been built since the 1970s. Exploration and discovery of new oil reservoirs has been restricted since then as well. Why? Government regulation strongly discourages refining and exploration for new oil reserves, and prohibits this in many instances. This tends to hamper supply, especially future supplies.
In 2003, however, we really noticed a huge upswing in oil and gas prices (in the above linked charts, for instance). I correlate this with the invasion of Iraq. Even if one supports the questionable moral and ethical premises for invading Iraq, there is the cold, hard fiscal truth about the matter: it is very expensive to keep our troops as a permanent Iraqi occupying force. And oil prices have risen five-fold since our invasion and associated bellicose threats to Iran and Pakistan.
If you feel the current foreign policy is the way to go for American security, then brace yourself for further increases in gas and oil prices. Such is the status quo associated with all three mainstream presidential candidates. Very few substantive foreign policy differences exist. Yes, Iraq is bandied about as a political football, but in reality, we wouldn’t see much difference.
If you want a change, Ron Paul is my strong recommendation. He’s still participating in the presidential race. And he’s still doing pretty well getting his message out. For me, I am supporting someone I can believe in, and who understands the fiscal, economic, and foreign policy realities we are faced with.