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| Highest prices ever! ...and going up (NPR) |
I do not recall a worse economy in my lifetime than the one we are now experiencing. The stock market is crashing. Retirement funds (401Ks and IRAs) are shrinking. Seniors that rely on those funds are hurting. All while the President twiddles his thumbs and does nothing - while saying that it’s not his fault.
Well, it’s true that he didn’t cause the current situation. Mostly the pandemic did. But he has done nothing to try and stop it or at moderate it.
The New York Times reports the following:
Prices climbed 8.6 percent in the year through May, a re-acceleration of inflation that makes it increasingly difficult for consumers to afford everyday purchases and poses a major challenge for the Federal Reserve and White House as they try to secure a strong and stable economy.
Fed officials are watching for signs that inflation is cooling on a monthly basis as they try to guide price increases back down to their goal, but Friday’s report offered more reason for worry than comfort. The headline inflation rate was the fastest since late 1981, as a broad array of products and services including rents, gas, used cars, and food became sharply more expensive.
To those of us living in the real world, none of this comes as a surprise. It seems like every day is worse than the last. Filling up a car (with a typical 12 gallon gas tank) last year at $3.50 a gallon here in Chicago cost $42.00 Today at about $6.00 gallon it costs $72.00!
There are a lot of things driving inflation. A lot of people have not gone back to their old jobs after they left due to the pandemic lockdown. They are seeking higher paying jobs. A lot of people that used to work in many industries have decided they liked staying home That causes a slow down of production combined with an increase in salaries in the attempt to lure workers back to their jobs. production costs to increase. That too adds to the cost of their products which is passed on to the public.
The supply chain to retail establishments is backed up preventing many products from reaching their destinations. That is due to the reduced number of enough working truck drivers. Meanwhile increased demand has caused the price of the limited supplies available - to go up.
The increased price at the pump for diesel fuel used by the trucking industry has also been passed on to consumers by way of increasing the price of all goods transported by truck. Which is how most goods get to their retail destinations.
That includes everything from food, to household goods, to building materials for houses. The latter of which increases the cost of building new homes. That also increases the demand on existing homes raising those prices. As it does the cost of rent.
The same thing is true about new cars where auto parts are in short supply. New cars cannot be manufactured fast enough to keep apace with demand. That increases demand and the cost for used cars.
The higher cost of fuel for airlines has increased the cost of air travel. And the list goes on.
It seems obvious to me that the biggest single cause of inflation is the cost of oil.
One may ask, what could the President do about it anyway? The answer is a lot. The demand for oil is so high, that price increases to the public are necessary. There simply is not enough gas to go around. And now that oil companies realize that people are willing to pay more for gas regardless of the toll it takes on their budgets, they will have little incentive to lower their prices. Unless the supply increases to the point where supply exceeds demand and competition between oil companies ensues - things will not change.
This is where the President has failed and continues to fail. His priorities have been highjacked by environmentalists that see fossil fuels to be the biggest contributor to the negative consequences of climate change impacting the planet.. They therefore insist on doing whatever we can, at any cost, as soon as possible to stop it, before humanity becomes extinct.
As a believing Jew I do not believe human life will ever be extinct. We have a covenant with God that promises us a messianic era with a bright future here on earth.
That said, I do not dispute that we are undergoing climate change and are beginning to feel its devastating effects. We do need to address it. But at the same time, we have an economic crisis that could destroy us economically – throwing us into the worst economic crisis since the depression of the 30s.
I believe that the President needs to put his environmental policies on the back burner for now and pull out all the stops to expand the supply of oil. His tepid gesture of releasing fuel from the Strategic Oil Reserve did absolutely nothing to increase the supply and reduce the cost of gas.
The President needs to go hat in hand to Saudi Arabia and beg them to increase their oil production. Refusing to do that because of past human rights violations might be a just policy. But that too needs to be put on the back burner for now.
He needs to re-open off shore drilling and the environmentally protected areas he closed to oil exploration. Oil companies can explore for oil without doing harm to the environment. In the rare instances where that happens - well it’s rare and hopefully it will not happen again. Oil companies have learned from those experiences how to more safely explore those areas.
He should also provide tax incentives to oil companies to increase oil exploration.
He ought to encourage rather than discourage fracking to produce more oil.
He needs to reverse his order to halt the Trans-Atlantic Pipeline that would eventually bring oil to the US from Canada. That may not provide oil now. But it will have a positive psychological impact on the overall approach to replenishing our supply of fossil fuels.
Electric cars might someday help reduce our dependence on oil. But that is way off in the future. For now, what the world needs now is gas. Lots of it. Once we get our economy in order we can go back to dealing with environmental issues.
Increasing the supply of oil to meet or exceed demand will not solve all of our problems. But it is the best way to turn around the spiraling inflation we are now experiencing. The President has done none of these things.
Not that I ever want to see him in office again but when Trump was President, we had an oil surplus! If we had a good conservative President in office now who continued his energy policies we might still have one.
But Biden just fiddles while Rome burns. It’s just too bad the Presidential election is more than 2 years away! a lot of damage will result in the interim if things continue as they are. And as far as I can see, they probably will!
