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Sunday, August 03, 2008

TDL: OIL 101 A TWO PART SPECIAL REPORT

CAUTION- THIS IS A SERIOUS ARTICLE. IF YOU WANT TO LAUGH TODAY, VISIT THE PEOPLE'S CUBE OR CAPTION THIS!

A lot has been said these days about our high gasoline prices as well as the 'record profits' of 'big oil' corporations.

The implication of these hand-wringing gloom and doom stories by the mainstream media is quite obvious: GAS IS HIGH BECAUSE CORPORATIONS ARE RIPPING YOU OFF.

The cynical, blatantly deceptive 'logic' flows as such: Gas is much more expensive and big oil is making record profits. Gas must be high because oil corporations are making record profits. The way to stop gas from being high is to tax the oil companies, because it will discourage them from making record profits.

The above is a pure-bred socialist understanding of the way the world works. Not surprisingly, its the logic that our very own president-elect, Hussein Obama, has adopted.

Its also (as Penn and Teller would say)..... BULLSHIT!

Gas is more expensive for two main reasons. The first is the weak U.S. dollar. The second is increased demand. Increasing demand and flat supply, combined with a weak dollar lead to the ancillary effect of a speculative bubble in oil (much like the tech bubble of the late 90s or the real estate bubble of this decade), which is only now beginning to crack.

THE WEAK DOLLAR

In the summer of 2002, the Euro achieved a rough parity with the US dollar. That is, the Dollar and Euro exchanged at roughly 1:1 ratio. As of July of 2008, the Euro reached $1.60. The dollar has also declined sharply against the Japanese Yen and the British Pound during that period. Recently, 1 Pound was worth 2 dollars American.

Why the decline? The two major reasons are pretty simple. It certainly isn't because Europe has a better economy than the USA, though moonbats would have you believe just that. The reality is that the dollar declined because of historically low U.S. interest rates and a massive, ballooning U.S. debt which is still out of control. Yes, folks, the dollar weakened in large part due to the very spending policies that Hussain intends to foist upon us as soon as he sets his narcissistic feet in the Oval Office.

To explain, the U.S. has maintained low interest rates from the Federal Reserve Bank in order to facilitate and spur economic growth. Low interest rates from the Fed mean that its cheaper for institutions to borrow money from the government. This has two effects- it is generally beneficial to the economy because it means that more money is available for businesses to borrow so that they can do a bunch of good things like build a bigger office, or buy new machinery, or hire new employees. It also has the side effect of making the dollar more plentiful. Everyone who took Econ I in college (you know, the one for brain dead freshmen) will know that an increased supply with a flat demand will cause something to lose its value. Thus, more dollars = less valuable dollars. This simple rule of supply and demand is constantly lost on leftists, who were probably taking Lesbian and Transgender Basket Weaving instead of Economics while in college.

In any case, while the Fed maintained low interest rates, the U.S. government continued to spend like drunken sailors. This is the fault of all the criminals in Washington, Democrat and Republican alike. The massive U.S. debt has two major effects (among many others)- the first is that in order to pay its bills and interest, the government creates more money. As we said above, more money = less valuable money. Secondly, the debt causes the government's creditors (those who lend us the money to spend like Linsey Lohan on a coke binge) to gradually lose confidence in our ability to pay it back. Loss of confidence in the government = loss of confidence in our currency.

The hordes of moonbattery would have you believe that the cause of our massive debt is Bush's wars in Iraq and Afghanistan. THIS IS A LIE. They will also tell you that Bush's tax cuts caused the debt. THIS IS A BIGGER LIE.

As of 2008, U.S. Government spends around 24.9% of our budget on defense. In 2000, (before the wars) the U.S. spent 20% on defense. In 1960, during the height of the Cold War, the U.S. spent 54% (and there was little or no debt). So, U.S. defense spending rose about 4.9% in the last 8 years which is still a decline of more than 50% since the Cold War. The question thus begs to be asked- where does all our money go?

The facts don't lie. The U.S. government currently spends around 55% of its budget on Medicare, Medicaid, Social Security, and Welfare. The scary thing is that as the country ages and the baby boomers retire and become sick, the proportion diverted to Medicare, Medicaid, and Social Security has nowhere to go but up.... exponentially. By 2013, without added Democrat spending that an Obama victory would surely entail, the U.S.A. is projected to spend 61% of our budget on Welfare, Medicare, Medicaid, and Social Security.

In other words, social programs- the Democrats pet causes- are responsible for the vast majority of our expenses, and Hussain's plan to nationalize medicine will vastly expand the amount of money plowed in to health care.

STAY TUNED FOR PART II- INCREASING DEMAND FOR OIL