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.

The Things Autocratic Capitalistic Countries Are Doing Right That the United States Is Not

I understand the thinking of President Obama and the others on the political left. I understand the logic behind the Buffett Tax. It is playground bullying times a trillion. If Timmy Turner has more marbles than the other kids on the playground and a bully takes Timmy’s extra marbles to make it fairer to everyone else, that’s the Buffett tax. That’s the death tax and the millionaire tax.

The Buffett rule, or tax, is the Obama administration’s latest nomenclature for the millionaire tax, and is named after Warren Buffett, a wealthy billionaire who is in arrears with the IRS over unpaid taxes, but who thinks people like him should pay more taxes to the U.S. treasury. Makes sense, right? The Obama administration apparently thinks that if a tax is named after a rich man, (thereby giving it the Millionaire Seal of Approval) that Americans will hop on board and agree to increasing the tax burden on all those shiftless wealthy people.

The problem with millionaire taxes (and higher taxes in general) is that they may bring in a little more revenue in the short run, but at the expense of money that would have stayed in the economy generating economic growth and job creation.

Why are citizens who make more money and who already pay more taxes than I do responsible for paying a larger share of their income to support the government? They are not.

It is class envy. It is class warfare. It is playground redistribution. It is neo-Marxism.

I paid roughly $10,000 in taxes to the federal government last year. My neighbor, Bob, made a million dollars last year and paid the federal government roughly $200,000. Twenty times what I paid. Who on Earth can say that my neighbor isn’t paying his fair share? He paid what 20 people making my salary pay in income tax! Good for him!

But that’s not good enough for Progressives, and liberal Democrats like Barack Obama. You see, they want Bob to pay $396,000 on his million dollar earnings. Thirty-nine times what I am paying! Because Bob is successful, they want him to pay what 39 average tax payers pay in taxes. And, they want to take away as many deductions from him as they can so that he has a harder time lowering his tax burden than I do.

I think Bob is paying his fair share. He is paying MORE than his fair share. He is an “engine” in the economy of the community. What would be truly fair, in the spirit of American fairness, would be a flat tax, or a Fair tax that would involve everyone paying SOMETHING to the U.S. treasury, including the 47% of Americans who now pay nothing in federal income tax. Russia has a 13% flat tax that everyone pays and that has been very successful…. Russia!

No one person should have to pay a higher percentage of his or her income than another person to the federal government. Check it: In the small island nation of Singapore, everyone is capped at $2500 of their income, no matter how high their income is. And this is an autocratic government. (However, the country does have many other taxes that the U.S. does not.)

It is fundamentally unfair in a nation that is supposed to be fair, and provide a level playing field to expect Bob to pay a higher percentage of his income to the federal government than I do. That is not fair, it is punishment for being successful. The progressive income tax (where one person pays 0%, another person pays 25% and another pays 39% of their incomes) is government theft from people who have been successful, or lucky in their lives.

Why take away the incentive for Bob to spend his extra dollars on boosting the U.S. economy by buying expensive products and services, which provide jobs, or hiring extra employees for his business?

President Obama, if you want to spur consumer spending, excite the economy, and jump start job growth, you need to cut federal spending. You also need to cut the corporate income tax (which at 40% is among the highest in the world -- even the communist-capitalist-dictatorship Red China has a lower corporate income tax). You also need to make permanent the Bush tax rates, and level the tax burden playing field so that everyone has “skin in the game.”

Perhaps Congress should pass a special tax on all people who think they and others aren’t being taxed enough. I think a 90 percent rate would be fair.

Russian Spies Seek to Undermine U.S.

Well, surprise, surprise. Considering how Russia has been acting, really since KGB man Vladimir Putin has had anything to do with the Russian government, we shouldn't drop our jaws in amazement at the breaking news which greets us this week concerning Russian spies being deeply ensconced in American society. Eleven undercover agents (I wouldn't be surprised if there are many more) have been arrested for their "alleged" spying activities for the Russian intelligence service (SVR). They were living among us, and paid by the Russian government to feed it information gathered surreptitiously about U.S. government activities.

In 2010. Not 1975. Ze cold var is zupposed to be over! Chya! I mean Nyet!

I hope that this will wake up someone in the U.S. government to the duplicitousness of Putin, Medvedev and the Russian government. They can't be trusted as far as they can be thrown. But it's a hopeless wish. (See my article below concerning Russia and Iran.)

What is our government's attitude toward this unfriendly activity? It is a cavalier, practically light-hearted response. This very week the White House spokesman Robert Gibbs said that this would not affect relations between the two countries. Really? Here is a foreign government acting even more maliciously and underhandedly than usual and it won't affect the relationship?

No. The Obama regime excels at turning a blind eye to things that harm American interests and sovereignty.

What exactly would it take for this administration to have a relationship affected? Instead of President Obama saying that this is a troubling development if true, it was said by Baghdad Bob Gibbs that the president had NO personal opinion on the matter.

Of course not, why should the president of the United States have an opinion on foreign nationals allegedly spying on the country?

Unfortunately (using golfing terminology that Obama will be quite comfortable with), that is par for the course with this president. He is willing to allow foreign nationals free entry to the U.S., free and unlimited use of our services, displace U.S. workers by taking jobs from them, and now he wants to pardon and amnesty them.

I suspect if he had an opinion about the Russian spies, it would be similar to his stand on illegal aliens. Let them come out of the shadows, pardon them, give them healthcare, make them citizens and give them a DNC membership card.

Don't worry. It's more like they were stealing pickles from the pickle jar, than stealing state secrets. Mhmm.

That's not the point at the same time that it is. We need to worry very much about the information they may have gotten past the FBI, but we also need to worry what else Russia is doing to undermine us.

The rest of us need to worry even if the Obama regime doesn't.

With Friends Like Russia

Hey Vladimir Putin and Dmitri Medvedev! Does Russia want to be friends with the United States or make things difficult for the U.S. and the rest of the world?  Seems like you want to be difficult to me. Because your consistently cozy actions with Iran are not the actions of a friend. Especially now. (I mean come on, let's have a Super Soaker shootout and leave all the animosity in the past.)

What would you say about us if we were pals with separatists in Chechnya and supplied them with missile systems or nuclear technology?

Iran has stated that it wants to destroy Israel. And you want to continue to give them tools that will make it easier to do so? Iran also trains and supplies insurgents in Iraq and Afghanistan. Insurgents that kill civilians and troops from many countries. Do you want to enable and buttress this kind of activity? Apparently you do. Normal relations with a terrorist state is tantamount to tacit approval of their policies.

Maybe supplying long-range surface-to-air S-300 missiles to Iran, a country that is openly hostile to the U.S. and the west in general is a bad idea. Maybe helping them with their nuclear program when everyone in the world is worried about their intentions is a bad idea. Doing that and some of the other things you do leave us normal, everyday citizens of this country with the impression that you would rather help our enemies than us. It leaves us with the impression that you are indeed on the side of our enemies. Why? What's up with that? Power politics? You can be a powerful nation without propping up terrorist regimes. Why do you want to help the whack-job President Mahmoud Ahmadinejad and the Islamist Ayatollahs?

Sanctions are going to be ineffectual, of course, if you and China and Turkey and Brazil and Indonesia and others ignore the sanctions or are selective in implementing them. And the fact that you need an exception to the sanctions on Iran with a dangerous new weapons system is exactly the wrong kind of breach of sanctions the sane world would hope for. Weapons that could result in harm to Israel, U.S. and NATO soldiers, Iraqi and Afghan citizens.

How about you start acting more like a friend and less like an old enemy and maybe we'd feel less like we need to protect ourselves from you.

Happy 170th birthday to Peter IIyich Tchaikovsky.