National Energy Policy - Gas and Alternative Energy
Written by Jeremiah Heaton
The Great 'High Gas Price' Magic Show
During the Presidential race, you witnessed a political smoke-and-mirrors show from both John McCain and Barrack Obama whenever they discussed reducing the United States’ dependence on foreign oil. When asked about high gas prices and foreign oil dependency, both candidates quickly shifted gears to solar power, wind power and occasionally geothermal as a way to reduce foreign oil prices.
What the candidates failed to make clear is that America’s electric grid, the primary aim of alternative energy sources, uses very little liquefied petroleum. Less than 1% of the total power generated in the U.S. relies on petroleum.
There are far more relevant reasons why gas prices have been so high and volatile during these past few years.
The Real Issue: Wall Street
The primary cause of high fuel prices in the recent past was speculation on Wall Street.
What you witness, and paid for at the pump, was an artificial spike in price created by Wall Street middlemen.
In June 2006, the United States Senate issued a report detailing market manipulation. An excerpt is given below and the full document can be found here .
"The traditional forces of supply and demand cannot fully account for these increases. While global demand for oil has been increasing—led by the rapid industrialization of China, growth in India, and a continued increase in appetite for refined petroleum products, particularly gasoline, in the United States—global oil supplies have increased by an even greater amount. As a result, global inventories have increased as well. ""….over the past few years, large financial institutions, hedge funds, pension funds, and other investment funds have been pouring billions of dollars into the energy commodities markets—perhaps as much as $60 billion in the regulated U.S. oil futures market alone—to try to take advantage of price changes or to hedge against them."
"Although it is difficult to quantify the effect of speculation on prices, there is substantial evidence that the large amount of speculation in the current market has significantly increased prices."
Unfortunately, very few mainstream media outlets understood, or cared to investigate price manipulation. As a result, the average American was convinced to blame minor market factors….. China, India, hurricanes, supply disruptions, overconsumption by large SUV's, etc.
The bottom line: American families suffered while robber baron Wall Street managers raked-in cash hand over fist.
(1) http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html
