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Once again, the lone voice of reason in Washington gets it exactly right:

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Government and Gasoline
By Ron Paul


As we head into the summer driving season and gasoline prices are again creeping up, the administration has announced plans to explore opening up more off-shore areas for exploration and drilling. On the one hand this can be lauded as a positive step. On the other hand, it is too little, much too late to have any meaningful or long-term effect on what Americans pay at the pump any time soon, if at all.

Indeed, if increasing domestic energy production was really a priority, the administration would direct the EPA to remove its many roadblocks and barriers to energy production. In fact, abolishing the EPA altogether would do much to improve our country's economy. Instead of protecting the environment as they are supposed to do, most of what they do simply chills the economy. Polluters should be directly liable in court to any and all parties they harm, rather than bureaucrats at the EPA.

Of course, last week's announcement was couched in terms of removing barriers and red tape. However, the fact that we had these barriers in the first place is yet another reminder of how the energy market is hampered and controlled by bureaucrats and central planners in Washington, rather than the demands of the people and the decisions of private investors.

Consider how extremely negative our government's reaction has been to other governments around the world that have nationalized their oil and energy industries, such as Venezuela and Iran. We deposed a democratically elected leader in Iran in 1953 for this very reason. Yet the level of involvement of our government and bureaucrats in energy is nearly absolute. Of course, the only thing worse than our government dictating energy decisions to its own citizens is our government dictating energy decisions to the citizens of other countries.

Along with the waste of prohibitions that leave our own natural resources untapped is the waste our government perpetrates with subsidies to alternative fuel sources. There is certainly profit to be made in perfecting cheaper, cleaner fuel sources, but government subsidy programs interfere with finding realistic long-term solutions. Subsidies divert resources towards certain politically-favored fuel types while ignoring others. If the market were left alone, private investors would put their own capital into the most promising alternative fuels. Instead, due to government incentives, resources are concentrated into politically chosen endeavors that could very well end up being dead ends. Meanwhile, precious time and money is wasted.

The government has the opposite of the Midas touch. This has been observed over and over by the reduced quality and rising prices in every private industry in which it entangles itself. Yet somehow people still seem willing, even eager, to relinquish to government control the most important and sensitive portions of our economy and society. Education, healthcare, and energy are all unfortunate examples of industries that are in my opinion, far too important to be left to government control when it is the market that has the golden touch.
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The Constitution. Every Issue, Every time. No Exceptions, No Excuses.

 

"When the people fear the government, there is tyranny. When the government fears the people, there is liberty."---Thomas Jefferson

 

"That's what governments are for... get in a man's way."---Mal Reynolds Capt. of Serenity, "Firefly-Class" spaceship

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Here's something to think about as ones pension fund invests in oil futures.

quote:
Adam Sieminski, chief energy economist for Deutsche Bank, said last week that he's worried that triple-digit oil would push the global recovery back into recession.

If China continues growing while oil supplies come down, "presumably you might be able to get $100 per barrel," Sieminski said.
http://www.dispatch.com/live/c...ecovery.html?sid=101
before the summer is over, I think we will see 7 to 8 dollar a gallon oil. Inflation will begin to bite us in the butt soon, couple that with limited oil supplies it is possible.
Oil is the new gold. The difference is you don't have to actually hold oil like gold. You can buy oil futures and have a buyer before you have to take delivery.

Oil and gold are both now measures of inflation, oil will be as long as supply is limited, just like gold.
The recent increase in gas prices was due to speculation from investment firms. That includes the ones that manage your insurance, retirement funds and 401(k)s. The present and near future price increases are because the oil companies are closing or mothballing refineries in the US due to decline in demand. Also, refineries are retooling for Spring/Summer blends that cost more and don't deliver the same mileage as the Winter blend. If, the oil prices increase as this post predicts, the mothballed refineries would be opened quickly.

Bet on some oil future increase, but don't bet the retirement and farm on it. A trip to Tunica might yield the same results.
quote:
before the summer is over, I think we will see 7 to 8 dollar a gallon oil.


I really doubt it.

quote:
Inflation will begin to bite us in the butt soon


This is true, but I doubt it will manifest itself as abruptly as some fear-mongers proclaim.

quote:
Oil is the new gold.


If anything is the "new gold," it's silver. Oil prices are way too easy to manipulate.

quote:
The difference is you don't have to actually hold oil like gold. You can buy oil futures and have a buyer before you have to take delivery.


Feel free to gamble on the energy futures market, but taking delivery on precious metals is the surest way to protect yourself from inflation. Oil speculation will continue to remain risky even in an inflationary environment.
quote:
Feel free to gamble on the energy futures market, but taking delivery on precious metals is the surest way to protect yourself from inflation. Oil speculation will continue to remain risky even in an inflationary environment.


I agree with you on this but, for wall street paper assets is what they want. It's too hard to take possession of millions in gold, hold it, wait and see what the market does, and then sell it. oil futures are much easier to hold and turn.

quote:
If anything is the "new gold," it's silver. Oil prices are way too easy to manipulate.


Again. I agree, except that silver is still way below market value if you factor in inflation and the price of gold. If the economy does tank, silver will have the most upside. But again, wall street likes paper assets that can be turned quickly. When they rush to the precious metals, it's all over. They will probably run to some foreign papaer first.
quote:
Originally posted by Jugflier:
quote:
Feel free to gamble on the energy futures market, but taking delivery on precious metals is the surest way to protect yourself from inflation. Oil speculation will continue to remain risky even in an inflationary environment.


I agree with you on this but, for wall street paper assets is what they want. It's too hard to take possession of millions in gold, hold it, wait and see what the market does, and then sell it. oil futures are much easier to hold and turn.

quote:
If anything is the "new gold," it's silver. Oil prices are way too easy to manipulate.


Again. I agree, except that silver is still way below market value if you factor in inflation and the price of gold. If the economy does tank, silver will have the most upside. But again, wall street likes paper assets that can be turned quickly. When they rush to the precious metals, it's all over. They will probably run to some foreign papaer first.


As far as foreign paper, there isn't any of any large amount.
Again, there aren't any in large amounts. German bonds are the best of the lot. However, they are redeemable and pay coupons in euros -- a currency decreasing against the dollar. Japanese bonds pay one percent, or less.

Perhaps a basket of Venezuelan, Argentine,Greek, Spanish and Zimbabwean bonds!

Brazilian or Canadian might be a deal, but there aren't that many. I'm hoping for a Tory government so my UK gilts will increase in value.

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