Many people correctly see where the gas dollars go to, which is the big oil corporations.
People then plea to their government to do something, to get back some money from these corporations, through programs like new windfall profit taxes.
What many don't see, but really should try to understand, is not where the dollars go, but where the dollars come from. From is the key.
If you ask your congressman to get money back from the sellers who make you pay ridiculous prices for gas, you might as well also ask your politician to do something to get some money back from me and my mother and law, and your neighbors too.
How much is your house worth on the market lately? If you sell the house at such a high price as you can get, are you also confessing to gouging your buyer?
Many things have gone up in price, and it seems to be all kinds of things, doesn't it? It's not really limited to gas, is it.
However, disparate as all the high priced things seem, they actually have a commonality. From is the key. What is "from"?
Consider gas prices, house prices, gold prices, copper prices, and milk prices. And check out that high flying stock market --- it's at all-time highs now, rivaling the year 2000 boom. ... shall I continue?
These are on the surface, independent, disparate things. Yet, something seems to be driving them all upward, together, almost violently. Violently? Yes. Go on the web and check a chart for an industrial metal such as aluminum for the last 5 years. Then check the chart for gold, silver, platinum, and oil. Consider the market price of your own house.
Go buy some ice cream and notice how much it costs. A bit of a surprise, no? I expressed suprise today to the clerk at how much my ice cream rang up. At first I thought she mis-scanned it. The clerk at WaWa responded that she's glad she doesn't work at the ice cream factory, as she wouldn't want to be the bad guy. She actually said this to me today. Look at the price of the S&P 500.
What is this hidden force pushing them all up? The clerk thinks it's the ice cream factory that's the bad guy. The guys-on-the-street interviewed on the TV news every day this week all seem to think it's Big Oil gouging us. The congressman on CSPAN suggests the gold and oil prices are being bid up unfairly by nasty market speculators. Now the market forces of capitalism are coming into target. Uh oh, what's next, stop the markets, let's control the prices, to hell with capitalism? What do you think?
If you think it's all just random facts, you can stop here. Now you might be getting the idea that a third party might really be involved. Which third party would that be? Start here: Realize that trade is not simply between two parties: the buyers and sellers. Sure, I will say that there are going to be some crooked sellers. Just as well, I will also expect to find some crooked buyers, no doubt. There are a limited number of oil companies, even more limited than before the industry consolidations, so monopoly might be forming in the oil markets, says the congressman. The congressman says he will do something about it. And the people applaud. Will you also control the housing market Mr. Congressman? And the ice-cream and gold and stock prices and aluminum too? Ok hold the applause. You are starting to look like a communist. Remember communism? You really should stop and think hard about authoritarianism now, about controlled markets, about big government, while you are still somewhat free to do so. A friend once told me, be careful for what you ask for, because you might just get it.
There is one crook whose influence rivals that of any single buyer or seller, or even that of any trade group of sellers or buyers; and this crook participates in every trade you make, whether you perceive him or not. He prefers you do not see him. He hides his M3 very well now, which is a recent tactic. M3 is not a car, it is data about how much dollar money the big and small players around the globe currently hold. M3 is the smoking gun which is wielded by the largest crook the world has ever seen. M3 has been discontinued just last month, not that they don't count it any more, rather, it's that they don't want anyone else to see it. How strange, a democracy that the government withholds information from, record levels of so-called classified documents, the same government which has paradoxically come to collect more information on you than ever before, wiretapping laws be damned. How to manage your franchise, democrat, with a lowercase 'd', if you cannot measure it? Not well, I tell you. The tail now begins to wag the dog (which is you, democrat). This crook is like your own family. Like your family, you tend to trust him, inappropriately I might add. Check and balance is there for a reason, and trust is misplaced. He is your government.
Justice is not served, and freedom is lost, when the innocent (or let me say the unproven guilty) are hung, and the killer goes free. It gets even worse when the people call for the killer to protect them, like a fox in the hen house.
Gas prices are not yet at gouge-levels at three dollars a gallon. Are you kidding? you say. How can I say that three dollars a gallon is not price-gouging?
Well, three-dollar gas prices are very much in line, rather they are startlingly in line, with house prices, and oh, I do mean startlingly. I discovered a mathematical congruity, a "coincidence" here if you would like to call it that for the moment, that is just too close to believe, unless I show you the numbers. Maybe even then, you will want to run the calculations yourself, again. I hardly believed them. Good, I encourage you to monitor this for the rest of your life, as if your life depended on it, because it just might. I am not really kidding. Endless debt is the enabler of endless war, and uncontrolled governments have killed more people in history than any other dangerous animal you can find. Go read some of George Washington's quotes, and some Jefferson. A cornered animal is a dangerous thing. There can be no more dangerous beast than a cornered, panicky major government. 9 trillion dollars of debt, endless multiple wars feeding the debt, insufficient taxation to even keep up, massive trade imbalances, and a dollar just starting to fall now due to global rejection of the dollar and the petrodollar, is quite a corner indeed.
What is this essay about anyway? Isn't this about gasoline? Yes, it all ties together.
Enough rhetoric: Let's get to the facts straight away.
Just how aligned are the prices of houses and gasoline? Let me share with you something about which I have first hand knowledge.
Check this fact out. My mother in law's house was actually purchased in 1969 for $25K. Today she can sell it for $205K, give or take $5K. Doing the math, that's a price inflation of 5.9% per year, for 37 years.
Check this other fact out. Gasoline, one gallon, was purchased in 1969 for $0.35. (I don't know this first hand, but I heard it on a TV show. Correct me if I'm wrong, please.) Today my gas station sells it for $2.85. Doing the math, that's a price inflation of 5.8%.
After all those years, after everything that has happened, that house and the gas meet at the same exact average inflation rate of 5.8% after 37 years, for large values of 5.8%. (The "large values" thing is math-guy humor.)
From the evidence of prices alone, there is no support for claims that sellers have priced gas at gouge-levels, unless you are claiming also that my mother in law is attempting to gouge and in fact succeeding in manipulating the housing market prices in collusion with all the other house sellers. Would you say that my mother in law and the Big Oil guys have either coincidentally or knowingly manipulated prices in collusion to achieve exactly the same levels in the intervening 37 years? If so, you give my mother in law far too much credit. She does not even know how to manipulate the prices of the housing industry alone, much less in close coordination with the Big Oil gang. Something else is at work here. I respect my mother in law dearly but she is no player in the Big Boy club of military industrial elites controlling both houses of Congress not to mention the top three spots in the Executive Branch of the USA with her name emblazoned on some huge ExxonMobil oil tanker next to Condi's name.
I would suggest to you that the government policy for decades is the culprit, and the culprit is not simply "all companies" or even necessarily "some companies". Bad policy here includes making moves which have resulted in drastically reduced oil production in Iraq. Bad policy includes creating $800B of freshly minted dollars at last count in 2005 (and there will be no more counts, thank you). You must start to recognize that inflation is really just the tax man in disguise. The startlingly consistent rise in prices of a cross section of many disparate goods from houses to gasoline can only be the mark of a government policy of reckless warring, debting, and spending bad inflated fiat money for many decades, exacerbated by exceedingly bad recent examples of policy but not without historical precedent.
This is not a party thing entirely, although the original Democratic foundation is one of PayGo (credit to the Blue Dog group of Democrats in our Congress) which really means applying the financial discipline to force the use of current tax to pay for stuff, and none of this nonsense of borrowing of other people's money or future money or uncontrolled inflation to pay for expensive things like foreign wars. PayGo would be a key component to controlling government tendencies to inflate and borrow money in order to fund unnecessary wars, and is a much more honest way of taking money from citizens. Borrowing money and printing money are key enablers of a pre-emptive and endless foreign war and global power projection imperial strategy, and as such must be brought under control, the sooner the better as Congressman Ron Paul would say.
For more information please learn from some of Congressman Ron Paul's writings, the collection of which are freely available on the web. Ron's one of the last Republicans or member of any party for that matter, still standing firm with the guts to say the hard things about democracy and government. You will start to get the sense that this man does not mince words. I can respect that. It's the democratic thing to do, to not mince words to the citizens who you are supposed to report to as a government servant. Paul is the foremost expert in Congress regarding the ties between inflation and democracy in my opinion. Here is a recent example.
http://www.house.gov/...
A couple more calculations and observations:
Milk has inflated in price by only 3.1% from 1969 to 2006. Milk I understand was $1.10 per gallon. Now it's $3.35 at my local convenience store. Milk inflated much less than gas and houses. Government subsidization is what I chalk up the difference to. I am willing to believe that the $8.80 per gallon milk would cost if it went up at the same rate with houses and oil is currently being half-paid for by the federal government (i.e., taxes and price inflation of non-milk goods) before the milk ever reaches the retail stores.
Hey, why don't we ask the government to do for other important goods' prices just like they are doing for milk? Why not subsidize the price of houses and oil, to start with? Surely, houses and oil are every bit as important as milk.
I would say, at what point do you ask the government to stop growing, and to stop controlling prices? Do you really think massive government control of prices is going to solve our problems? Can you show me an example in history where that kind of experiment was successful? I can show you examples where government controlled economies were quite unsuccessful: Remember the country named USSR? How are they doing today? And how free were their citizens?
Don't be too quick to give up capitalism. Governments have a rather bad track record of demonstrating what happens when they set the prices. I would suggest that even a democratic, some truly democratic government if there was one, could not even publicly control prices effectively. Shortages and inefficiencies and the fraud inherent in large organizations (large enough to control all prices, which is bigger than what the USA does today in terms of dabbling in price controls of produce and oil) would crush everything.
A 5.9% inflation rate is not a bubble. The price of my own childhood house inflated 11% between the years 1969 to 1985. Now that's a bubble. I chalk that up to paying for the Vietnam War, which like the Iraq occupation, was not paid for by honest taxes as much as by inflation of money by our government. My current house as an adult has inflated 9.7% from 1999 to 2006. Going back to the example of my mother-in-law's house, the 5.9% over 37 years probably means that the rate was higher than 5.9% from 1969 to 1985 (perhaps close to 11% just like my childhood house), then lower than 5.9% from 1986 to 1999, and then back up to a high level from 1999 to 2006 (perhaps close to my current house's 9.7% for the same period) to average out at 5.9% long term. This means that we have already begun to pay for the Iraq occupation.
Since by my calculation we stopped paying off the money that went to the Vietnam War around 1986, and Vietnam War ended around 1975, it took 11 years after that war ended to pay it off. It was an 11 year war, and it took 11 years after the war to pay it off, if you count the start of the Vietnam War as being around 1965, which I know is highly debatable. But in my defense, I will suggest that we had 11 years of intense spending for the war, and before 1965 the American effort had not yet ramped up.
So if it takes 11 extra years of inflation to take enough money from citizens to pay for an 11 year war, how long does it take to pay off an Iraq occupation which ends optimistically in 2007? It will be a 5 year war, and so 2005+7 = 2012 which is when the massive monetary inflation will slow down, optimistically. Boy, if you think prices are high today, for gold, oil, and houses, we are only at the beginning. I am sorry to say, this is very bad news for poor and middle class people and the stability of our democracy entirely. If you then add on top of this, the new problems of Peak Oil and the rise of China and Indian economies and the foreign pressure being exerted to create oil markets that do not require dollars for payment but rather Euros, recovery is even more difficult. Our next, more competent government will have its work cut out for it, no matter how smart and honest and industrious they are. I just hope the calls for more government are not heeded. There is far too much today already, and people just don't perceive it. You can hand over to your government your democratic powers but please don't expect to get it back any time soon. Power is never returned except through force of opposing power.
If you consider me alarmist, please go read some quotes from Ron Paul, as well as George Washington, Thomas Jefferson, and Andrew Jackson regarding the interrelationships between debt, war, inflation, and democracy. These guys were truly geniuses and they understood these things ever so clearly. I wish our government would read some history before it's too late. Yes I know they were not perfect people, genociding the Indians and having slaves and whatnot. But the bad stuff does not devalue the eminently valuable ideas they also expressed. Inflation was well known even to George Washington, who is on record for lamenting about the hyperinflation that paid for the Revolutionary War. Common citizens (not the Founding Fathers) lost everything to pay for that war, truly sacrificing everything for country, in blood and through massive inflation. The masses were ruined, but most polyanna history books don't talk much about that, as whitewashed and government-approved as high school textbooks generally are. The price was worth it, you will agree, because you and I are enjoying the results of that investment. But are you truly ready to sacrifice everything you own, if not your blood, for anything less than the example of the Revolutionary War, such as the current multiplicity of endless foreign (and domestic) military activities and occupations mislabeled as 'wars' and fights against terror?
As a footnote, and this is not essential to the thesis, so you may skip this whole paragraph with no loss of information, but now let me ask that you use some care to not add words to my mouth: What I said is limited to what I said. Sure, this little assertion sounds so obvious it hardly bears repeating, but people have nonetheless gotten tripped up on this kind of thing too many times before, and will surely continue to get tripped up on it, or forget it. Worse, I have seen some twisted souls with crocodile smiles apparently try to tack on their own intentionally pollyanna or offensive extensions, even further and disingenuously "expose" the new extension as the other person's, thus manipulating someone's couple of points to their own ends (Faux News comes to mind for some reason). In this vein, I will deny you the pleasure of drawing extension lines of your own accord and attributing their creation to me. Specifically, you will notice that I have not claimed to know that big oil companies are innocent of price gouging. If you selectively listen to only some of my words then you may fall off the track a bit, but just one foot off the track is more than enough for your train of thought to derail. I strive to presume innocent until proven guilty. I firmly believe in the merit of the maxim "innocent until proven guilty," and justice and freedom requires that the maxim be applied to others as well as to ourselves. Guilt requires evidence, careful evidence at that. In fact I fully do want the Senate to investigate and scrutinize big oil, in an honest fashion, for what it's worth. And I do mean honest, diligent investigation, and I specifically do not want the Senate to "find some facts in order to fit pre-made conclusions" (the President's Iraq occupation comes to mind for some reason). Finding no evidence of guilt is a perfectly acceptable result given a thorough investigation, and it is entirely necessary, far from a failure, to find nothing if indeed nothing is there! If I had not pointed these things out, some people would have, as so often happens, taken it upon themselves to extend a new line beyond the couple of points which I am owning up to, and to possibly plot some new and unsubstantiated points of their own construction which also seem to vaguely fit on a projection of my own actual, finite, line segment of argument. And then the next step they might have taken, if they are the kind to do such a thing, would be to then require me to defend their unsubstantiated points as if they were mine, which they are not, and which I will refuse to do for them. Specifically, I refuse to defend big oil unilaterally. I will however, demonstrate that the gas price alone is not useful "evidence", and I will demonstrate that the cries for government / public control of gas prices substantiated on little more than "gouging" allegations are highly premature, unjust, and even dangerous to freedom in terms of expansion of government, and I will defend big oil against arguments based on price alone, on the basis of the data points I have measured thus far. Companies are very much not alone in having criminal records showing years of manipulating prices. How convenient and ironic is it that the other, better disguised manipulator of prices, is the one that is voicing and directing all of the accusations at the other. Our world is not so simple as to be composed of simply straight lines of infinite length, in realms of logical discourse just as well as with tangible physical objects.