OPEC blames supply and demand, the government blames speculators, and consumers blame the government. Around and around we go in a circle, never getting a definite answer from anyone. I blame all three, and here’s why:

India and China have risen to become oil guzzling nations. We were able to recognize this over three years ago, that they would continue to consume oil and increase demand worldwide. The China and India economies have grown year over year since then, and with the globalization of manufacturing the trend will only continue upwards in the future.

Charles Perry, president of Perry Management:

Record prices come as no surprise with worldwide depletions of low-cost oil supplies, a large migration of investment capital from equities to commodities, a drop in the value of the dollar and booming economies in places like India and China, Perry said.

The US is based on capitalism and free enterprise. It’s no wonder that oil speculators are leveraging oil futures to make a profit. As long as they’re not doing anything illegal, then they have the perfect right hedge their bets. If there was a surplus of oil, those same speculators would be on the wrong side of the bet and lose. They’re taking a caculated risk with their money. This is why I believe if we started drilling offshore or in ANWR, we would see a lot of these speculators exit their long positions and we would see oil prices drop. However, the US government is going to look more closely at what the speculators are doing to see if they are doing anything wrong. Mike Connors, Albany County’s comptroller, says:

We should be angry with the people artificially driving up the prices on the open market — speculators who he says are breaking the law.

But on the flip side, some people don’t want to blame the oil speculators because it’s all about supply and demand.

Walter Lukken, theacting chairman of the Commodity Futures Trading Commission, says:

If you want to boost the price of anything – oil, wheat or baseball trading cards – you have to keep it off the market. You can shove the trading cards under the bed, you can hold your wheat in any of countless grain elevators, you can store the oil at somebody’s tank farm. But there’s no sign of more oil going into storage; available figures on the amount held in inventory have barely budged.

The government is not doing enough for alternative energy. It would be too easy just to blame the current president that there’s not enough being done in alternative energy. We have to look at all the presidents, Congress, and the Senate since the 1970s when oil prices roughly tripled before falling back down in the 1980’s. I have to laugh when people just try to blame George W. Bush. The list of presidents to blame also include Bill Clinton, George H.W. Bush, Ronald Reagan, Jimmy Carter, Gerald Ford, and Richard Nixon. Government just has not been proactive enough for the last 40 years in providing a reliable and cheap form of alternative energy to fuel our vehicles and provide electricity for our homes. This is just another example of America’s dependence on oil.

The tipping point is just about here.

I will say it again, in today’s world it’s corporations and private companies, not government, that drive many big social changes. These corporations and private companies will be the ones to solve the energy crisis that we face today. And for that, I am thankful.

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This entry was posted on Thursday, July 3rd, 2008 at 5:50 pm and is filed under Oil. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.