posted May 1, 2006
The price of gasoline has been lamented much in several recent letters, with the issues of the gasoline tax and oil company CEO pay being thrown in.
There are more ways to drive up gas prices besides simply the oil companies increasing their profits. The crude oil prices have been successfully driven up by our invasion of Iraq. They are being driven up further by the President's fearless saber rattling against Iran. Our government has effectively stifled refinery construction. Prices are further driven up by differing regional requirements for gasoline additives of dubious environmental value (politically connected corn farmers and ethanol companies are doing very well by it, though).
What other factors would influence gas prices? During the past three and a half years or so, the price of nickel has increased from approximately $2.50 per pound to almost $9 per pound. The price of copper has increased from approximately 90 cents per pound to over $3 per pound. The price of zinc has increased from approximately 40 cents per pound to over $1.50 per pound.
While increased demand from China accounts for a portion of the cost increase, it must be recognized that much of the cost increase comes from the fact that the dollar is worth less. Our federal reserve creates more dollars to fund, in part, both our national government's deficit spending and our trade deficit. With the dollar worth less, it costs more dollars to buy just about anything. About the only thing not going up in price are Chinese goods. Their currency has been and is still, to a certain extent, linked to the dollar in order to avoid having the costs of their goods rise and the level of their exports to the US fall, as a result. The federal reserve bankers are serving as a "legal counterfeiter."
A comment on gasoline taxes; as long as the taxes are used for road construction and maintenance, it's the fairest tax to fund such spending. If diverted to other purposes, then it is no longer "fair."
Many years ago, Congress passed a law to make life difficult for "corporate raiders." The supposed intent was to keep cruel and cold hearted "corporate raiders" from buying and destroying well run companies. Actually, the law should have been called the "incompetent and greedy CEO protection act." Prior to the law, CEO's had to run their companies well and keep their shareholders happy. Otherwise, a "corporate raider" could come in, start snapping up company stock, and push out the existing management. Sometimes the results weren't pretty, but the threat did keep down the number of incompetent CEO's receiving unbelievably huge salaries and benefit packages.
This is not intended as a universal defense of the oil companies; after all, I'm sure there were at least a few oil company CEO's salivating at the thought of cheap and easy access to the Iraqi oil fields. However, we should be aware that there are other villains as well driving up the cost of gasoline.
Rich Beecher
Chattanooga
RichBeecher@AChattanoogaWhig.com
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