Gas Cheap Now, But Not for Long

Filling up at the pump is less painful than in the recent past.

I saw gasoline for $1.69 per gallon for Regular (cash) yesterday on Route 1 in New Jersey. It has been a long time since we have seen gasoline that low and the relief to the consumer's wallet is a welcome one indeed. It is tantamount to a tax cut on the citizens or even a pay raise. The bottom line is that it gives people more money to spend on other important things and can even increase household savings rates and encourage on-the-road travel vacationing. The low price of oil and the resultant low price on gasoline and diesel fuel are boons to the economy in many ways.

So why are prices as low as they are? It's because of the extra oil on the market from U.S. oil production which has seen a boom in recent years, due in part to hydraulic fracturing and increased oil drilling on private lands.

But my point with this post is not to talk about why there is so much oil, or the benefits of fracking. There are many articles and blog posts addressing these issues. The point of this particular post is to throw a wet blanket on this low-price enthusiasm.

The price won't be low for long. And the past would be the indicator of future performance.

In 2009, the price of gasoline dropped below $2.00 a gallon for a brief time and then continuously rose back up to $3.50 to $4.00 a gallon for Regular in New Jersey. The chart below shows the price per barrel which the price per gallon of gasoline follows in its movements.

From Infomine.com

The message? Get it while it's hot, because very soon it's going to shoot back up to $3.50 per gallon and probably higher.

What are the causes of oil price movement? Supply, demand, political unrest and government regulation. Right now supply is greater than demand, so the price is lower. But there are so many political hotspots in the world today that any one of these tipping points that tips could cause oil futures to shoot back up to $120 per barrel.

As examples, Russia's designs on Ukraine and its trouble-making around the world have the potential for causing oil prices to rise, and this is a country that wants oil prices to rise back up because so much of their economy and budgetary income is based on the sale of oil and natural gas. So for Russia, instability on the world stage which causes higher fuel prices is exactly what they want and need.

Daesh or ISIS, is militant Islam rampaging through the Middle East and threatening terror everywhere else. They are currently in control of half of Syria and much of Iraq. It won't take much for that particular march of evil to cause an oil price spike. If they were to succeed in taking over Syria or Iraq, or cause mayhem in Saudi Arabia, Jordan or Israel, these are just some scenarios that would be catalysts for crisis leading to an oil price rise.

Al Qaeda, the original Islamic terrorist group is still a very real threat and actively trying to bring terror killings to the next horrific level. There is no restraint as to the kind of murder and destruction that they would like to perform and if they had a weapon of mass destruction they would have no hesitation in using it, as we have seen on 9/11 and in other events. Hamas and Hezbollah are the more localized but just as dangerous militant Islamists of the Middle East. Any of these groups could and would bring economic chaos that could result in sky-high oil prices.

Iran is a country that wants to see Israel and America (the great Satan) destroyed. It is progressing in its efforts to become a nuclear power with Russia's and North Korea's help. It could very soon succeed in its efforts to make a nuclear weapon. If that happens Israel may bomb Iran's nuclear facilities causing a regional war. This would spike oil prices.

The Taliban is still killing people in Afghanistan and Pakistan and seems intent on continuing to cause death and destabilization, also through the spread of terror.

The Communist-led, police-state of China always takes the side of the bad actors on the world stage as shown by its support of Iran, Venezuela, Cuba, North Korea, and Russia. And it is intent on destabilizing Taiwan, threatening the U.S. and Japan, and throwing its weight around the region and the world. And China never seems to lend its growing military might to world security threats that other civilized countries fight against. Their belligerent actions could be the cause of any number of scenarios that could cause an oil price spike.

Even if it isn't a national political action that causes the problem, it could be a crucial break in the supply chain, perhaps a few oil refineries going down, a natural disaster or a massive oil spill like the one in the Gulf of Mexico a few years ago. The anti-hydraulic fracturing movement could also put a political chokehold on oil derived from this process especially if countries regulate against the process as many individual states in the U.S. have done.

So, sorry to be a stick-in-the-mud, but enjoy the lower cost of gas for your car and fill up your fuel oil tank now because inevitably the low price we see now will soon disappear to be replaced again by the signs we are so used to.

President Obama's State of the Union Address - The Egg McMuffin of Speeches

The political stump is where you can hear the real, unadulterated words of President Obama. You hear sound bites of them every day in the news. In the speeches that he gives when traveling the country while fundraising or pushing a particular issue, the president uses Republican bashing, wealth bashing, petulant, blame-everyone-but-himself, fudge-the-numbers, fudge-the-reality language and comes across as little more than a left-wing ideologue.

And then there's last night's State of the Union address. In the televised address to both houses of Congress, President Obama came across as someone who might be willing to cross the aisle to work with the other political party. He and his speechwriters tried to sound more moderate, more reasonable, and more pliable. He spoke well of America and its flag, he spoke well of the military and their successes against bin Laden and in Afghanistan and Iraq. He spoke of liberty and tyranny (!) and of intolerance for Iran's nuclear ambitions. He also spoke almost conservatively when speaking of unfair trade and piracy from countries like China.


Appreciative and appreciated words.

But the president and his speechwriters are liberals and a liberal message can't help but pervade even this attempt at an aisle-crossing speech. He went on to say in the State of the Union address that our relationship with Israel is stronger. It is clearly not. His actions have distanced us from Israel and increased the threat against them from multiple enemies in the region. Egypt, Libya, the Palestinians, Hamas, Syria, Turkey, and Iran are all greater threats to Israel than ever. He said our ties with Europe and Asia are stronger. They are not. He said our ties with South and Central America are stronger. This is true, if the government is left-leaning, or socialist. It is not true of more democratic, or conservative states like Honduras or Colombia.

He said in his speech that our military will be stronger in the years to come, but 500 billion dollars in cuts, a smaller fighting force, and the smallest navy since 1947 counter this statement. All of this in the face of increasing threats around the world. Everything Barack Obama has done since entering office has been aimed at reducing the military's strength (not too mention increasing the size of the budget, and the debt).

In his State of the Union speech, the president (a Democrat) said that he believes what Republican Abraham Lincoln believed: That government should do for the people only what they cannot do better by themselves, and no more. However, his actions for the last three years show just the opposite. He wants government doing any and every thing that people could do better for themselves.

This president once again called for immigration reform so that illegal immigrants can enjoy the benefits of American citizens and not have the worry of being deported hanging over their heads. :`-( I ask again, what kind of country do we live in where our leader wants to sanction the illegal actions of millions of people? Against the will of the majority.

The 44th president also called (yet again) for a tax increase on millionaires. Nothing new there. He and his speech writers know what works with his base, I guess.

He continued on to say that he wants to develop more energy in the U.S. from all sources of energy and even suggested opening up more public lands to drilling. This would be great if it were true, but he has turned down the Keystone XL Pipeline from Canada which would have greatly helped reduce oil imports from the Middle East and has continuously been a thorn in the sides of oil companies that want to drill in the Gulf of Mexico or off the coasts. And despite his failed backing of solar energy company, Solyndra, he wants to double down on that type of investment.

My suggestion to those who listened to President Obama's 2012 State of the Union address (hopefully his last)--Forget everything you've heard, because it's the stump speeches where the truth (and more lies) comes out to play. As Rush Limbaugh likes to say, this is nothing more than a State of the Union Show.

Get a free download of State of the Union addresses. State of the Union Address (1790-2001)


Egg McMuffin is a registered trademark of McDonalds Corporation.

Wikileaks - Saboteurs of the Public Good

The chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, said the leak of the Afghanistan war documents creates a real potential threat to put American lives at risk.

This Julian Assange who runs the Wikileaks website and the people who supplied U.S. government documents that may hurt troops on the field and may also reduce operational effectiveness (ie. undermine the war against al Qaida, the Taliban, and terrorism) should be rounded up for being traitors if they live in this country and as enemy combatants if they live in another country. It’s hard enough to win a war without our own citizens undermining the efforts of the free countries of the world to win the fight against oppressive and evil regimes, and organizations.

Government secrets are secrets for a reason. While there may be damning information in any cache of documents, when citizens obtain state secrets and release them, they are practicing statecraft without a license. Sort of like if they decided to tell a surgeon what cuts to make on a patient in surgery, or backseat air traffic controlling. They are assuming that they know better than said government about the issue that the state is trying to keep secret.

In this case, it works out to be an anti-west, anti-US, anti-good, pro-bad guys theft and release of government secrets.

Again, it is my opinion that everyone involved in this "state secrets dump" in a substantial way should be tried as a traitor or an enemy combatant and taken to Guantanamo Bay. They are not a force for public good and may be putting American and NATO troops at risk. There are watchdogs and there are saboteurs. Wikileaks founder and his cohorts are saboteurs.