iOS app Android app More

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors
Jim Worth

Jim Worth

Posted: February 21, 2011 10:18 AM

Our dependence on oil leaves us vulnerable to the disruptions in the Middle East!

As Egypt erupted in demonstrations against oppression, unemployment, and wealth disparity, virtually shutting down the economy, oil prices began to rise -- speculation that the Middle East could explode into chaos disrupting the flow of oil.

NYMEX passed $90 a barrel and Brent Crude crossed the $100 mark.

As the turmoil grew all eyes were on the Suez Canal, concerned about what closure would do to the transport and cost of oil. The long trips around the Cape of No Hope would be costly moving the price of oil and gasoline to untenable heights.

Speculators were poised to take advantage of the chaos hoping to line their greedy pockets with green. Where should the price of a barrel of oil and a gallon of gas be?

Fundamentally, the speculation driven price of oil is about 25% higher than what it should be in the U.S. In California gas prices are ridiculous for this time of year. The average price of regular is $3.30 per gallon, cutting deeply into California families' budgets.

Someone must explain why, when demand is the same or lower than last year, the wholesale price of gasoline has increased by more than 20%. Retail is up over fifty cents a gallon for regular grade year on year. Speculation is derailing any possibility of recovery.

Why are American consumers paying inflated prices at the pump when inventories are higher than last year and demand has slowed? We are constantly bombarded with excuses: demand in China and India, problems in Nigeria and Columbia, disruptions in Alaska, increasing demand in an improving U.S. economy. The reality of imports and output do not reflect the argument of increasing demand. In fact, demand in the U.S. is decreasing -- returning to the low levels of last year.

Despite this decrease in demand major oil companies like Exxon Mobil, Chevron, and Conoco Phillips are reaping record quarterly profits and still receiving billions in government subsidies while hard-working, tax-paying Americans struggle to pay higher prices at the pump.

Why is the government subsidizing an industry that is making record profits?

Based on the numbers from the Energy Information Administration's (EIA) weekly report, an increase of twenty to thirty cents per gallon could be seen at the pumps over the next few weeks. Though the price of regular gasoline decreased last week, by .009¢ it was preceded by nine straight weeks of increases. Inventories are higher than this time last year when regular gasoline prices were $2.66 a gallon compared to $3.10 last week.

Anyone that wonders why we aren't recovering on Main Street is not paying attention. It's clear when we see rising inventories and falling demand that speculation -- gambling -- is driving the price of oil and gasoline higher stifling any hope of a fair recovery.

How long can hard-working Americans tolerate the manipulation of the commodities their survival is reliant on?

If we had followed President Carter's lead and listened to his message 30 years ago, we would not be dependent on Middle Eastern crude and at the mercy of uncaring and greedy speculators.

America's near-sighted, tunnel-visioned approach to exceptionalism has left us behind many other progressive countries. China and Japan are way ahead of us on high-speed trains and alternative energy vehicles. Green energy components are being manufactured outside the U.S. and sold to us to meet our increasing demand for renewables. We should be manufacturing these components.

Unrest in the Middle East has calmed slightly and the price of oil is falling with it. But, it doesn't change our vulnerability.

It's past time to move to a proactive visionary approach to our energy needs and quit listening to the drilling cacophony of failed supporters like Newt Gingrich and Dick Armey. We should stop driving and change the dynamics of the endless speculation in the energy market.

Their policies have failed in the past, their voices are distracting us from finding 'real' solutions to our energy needs.

It's time we smartened up as a nation, learn from our past, and move in a more productive direction.

 
 
 

Follow Jim Worth on Twitter: www.twitter.com/authorofmystery