Ron Paul on Gas Prices
Ron Paul, Texas straight talk in "What Congress Can Do About Higher Gas Prices":
"Gasoline prices are soaring and the American people are angry. They want something done about it -- now!
"$100 rebate checks to American motorists won't cut it, nor will mandatory mileage requirements for new vehicles. Taxing oil profits will only force prices higher. But there are some very important things we can do immediately to help.
"First: We must reassess our foreign policy and announce some changes. One of the reasons we went into Iraq was to secure oil. Before the Iraq war, oil was less than $30 per barrel; today, it is over $70. The sooner we get out of Iraq and allow the Iraqis to solve their own problems, the better. Since 2002, oil production in Iraq has dropped 50%. Pipeline sabotage and fires are routine; we have been unable to prevent them. Soaring gasoline prices are a giant unintended consequence of our invasion, pure and simple.
"Second: We must end our obsession for a military confrontation with Iran. Iran does not have a nuclear weapon, and, according to our own CIA, is nowhere near getting one. Yet the drumbeat grows louder for attacking certain sites in Iran, either by conventional or even nuclear means. An attack on Iran, coupled with our continued presence in Iraq, could hike gas prices to $5 or $6 per gallon here at home. By contrast, a sensible approach toward Iran could quickly lower oil prices by $20 per barrel.
"Third: We must remember that prices of all things go up because of inflation. Inflation by definition is an increase in the money supply. The money supply is controlled by the Federal Reserve Bank, and responds to the deficits Congress creates. When deficits are excessive, as they are today, the Fed creates new dollars out of thin air to buy Treasury bills and keep interest rates artificially low. But when new money is created out of nothing, the money already in circulation loses value. Once this is recognized, prices rise -- some more rapidly than others. That's what we see today with the cost of energy.
"Exploding deficits, due to runaway entitlement spending and the cost of overseas engagements, create pressure for the Fed to inflate the money supply. This contributes greatly to the higher prices we're all paying at the pump.
"If we want to do something about gas prices, Congress should greatly reduce federal spending, balance the budget, and eliminate regulations that interfere with the market development of alternative fuels. All subsidies and special benefits to energy companies should be ended. And in the meantime, let's eliminate federal gas taxes at the pump.
"Oil prices are at a level where consumers reduce consumption voluntarily. The market will work if we let it. But as great as the market economy is, it cannot overcome a foreign policy that is destined to disrupt oil supplies and threaten the world with an expanded and dangerous conflict in the Middle East."
It is good to see that our one true friend in Congress understands what inflation is. Most people still do not have a clue.
I have to disagree about $20 per barrel oil, though. It seems Ron Paul is forgetting about a little thing called "Peak Oil." Demand is rising worldwide, and supplies are falling. In that scenario, oil prices are bound to rise. Yet a rise caused by normal market forces (supply/demand), as opposed to throwing money around, will not have anything to do with inflation.
As Ron Paul suggests, the market if left alone will provide a solution. It always does. When the government interferes with market forces, things happen, and they are always bad. Supposedly, our invasion of Iraq would "pay for itself" in lower gas prices. Well, not only did it not pay for itself, but we wasted close to a half trillion dollars in that sinkhole, and the flow of oil out of Iraq is only half of what it was before we invaded. We also started a civil war. Even the most optimistic administration supporter can no longer deny that truth. Many unforeseen consequences of our meddling in Iraq have not even been felt. They are coming.
Ron Paul is not the only one asking for troops to be pulled out of Iraq.
Whiskey & Gunpowder
August 4, 2006
by Mike Shedlock ~ "Mish"
Illinois, U.S.A.
