That person in Congressman Ron Paul, whom the media ignores and maligns, gets the largest crowds, more donations from our Military than ALL the other candidates combined (including Obama), gives specifics on cutting the deficit by $1 Trillion dollars the first year, will downsize the govt., eliminate the Federal Reserve, promote private enterprise, and supports freedom and prosperity for all, NOT the elites and corporatists and international banksters!
Panic is in the air as gasoline prices move above $4.00 per gallon. Politicians and pundits are rounding up the usual suspects, looking for someone or something to blame for this latest outrage to middle class family budgets. In a rare display of bipartisanship, President Obama and Speaker of the House John Boehner are both wringing their hands over the prospect of seeing their newly extended Social Security tax cut gobbled up by rising gasoline costs.
Unfortunately, the talking heads that are trying to explain the reasons for high oil prices are missing one tiny detail. Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more.
What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point.
As this is written, West Texas Intermediate crude oil (WTI) is trading at $105.88/bbl. All this means is that the market value of a barrel of WTI is 105.88 times the market value of “the dollar”. It is also true that WTI is trading at €79.95/bbl, ¥8,439.69/barrel, and £67.13/bbl. In all of these cases, the market value of WTI is the same. What is different in each case is the value of the monetary unit (euros, yen, and British pounds, respectively) being used to calculate the ratio that expresses the price.
In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.
During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl. It has been higher than that during 225 of those months and lower than that during 268 of those months. Plotted as a graph, the line representing the price of a barrel of oil in terms of gold has crossed the horizontal line representing the long-term average price (Au0.0732/bbl) 29 times.
At Au0.0602/bbl, today’s WTI price is only 82% of its average over the past 41+ years. Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold. As mentioned earlier, such an increase would drive up retail gasoline prices by somewhere between $0.65 and $0.75 per gallon.
At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot. And, because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices.
Federal Reserve Chairman Ben Bernanke uses a “core CPI index” that excludes food and energy to guide monetary policy. From Big Ben’s point of view, rising gasoline prices are not a problem. For the rest of us, they are becoming a big problem.
Over the centuries, gold has been “the golden constant”. Eventually, all prices equilibrate with gold. This is why gold represents the best available standard in terms of which to define the value of a monetary unit. Forty-one years ago, when the value of the dollar was defined in terms of gold at $35/oz, WTI was selling for $3.56/bbl.
Right now, the threat posed by rising gasoline prices is not just to family budgets. An even greater danger is that the government will use escalating oil prices as an excuse to do something stupid.
After President Nixon abrogated the Bretton Woods monetary arrangement in stages starting in September 1971, both gold prices and oil prices started to rise. The government responded by imposing wage-price controls. This made a bad situation much worse.
This time around, the stupid policies being considered to “deal with” rising gasoline prices include additional cuts in payroll taxes and higher taxes on energy producers.
During the 1970s, the toxic combination of a weak dollar, high tax rates, and onerous regulations introduced a new word into America’s economic vocabulary: stagflation. Reaganomics banished this word to the history books. Now, President Obama and Fed Chairman Bernanke are teaming up to give stagflation another try. It is not likely that Americans will like it any more this time around than they did 40 years ago
Ron Paul is the only guy for this job!
exactly - just wanted to take the opportunity to enlighten those who do not understand the real problems here...
Linda, You are right on many fronts, however I am for Ron Paul as VP, but not president. We keep politics off these boards so I won't go into the whys.
wish they would have cloned Reagan instead of dolly the sheep.....
HA! That's funny.
I took one of those online "Whose yer candidate" quizes. To my surprise it indicated that Ron Paul was my guy! So, I took it again, answered a few questions a little different, and to my surprise - it was Ron Paul, again!
To be honest, I probably will not vote for Ron Paul for the nomination. Part of me would like too, but in the end, for me, he just doesn't seem to be a viable candidate to go the distance.
However, I do like the V.P. suggestion for Ron Paul. No disrespect to Linda, but a good example of how/why V.P.'s are selected is JFK. Kennedy didn't pick Johnson because he was like-minded, he picked him because he could bring in the southern vote at that time. (To enhance the dead votes they bought in Illinois.) V.P.'s are chosen for the voting block they represent not their minds. Biden, is today's example of a mindless V.P. HA!
I'm tempted to sit out the primary to see where the chips fall, if you will. Though, in the end, I don't think I could really sit it out. It seems as though the country's choices for president are slim pickens, on both sides of the fence! That's a sad commentary, eh?
mbc - unfortunately your comments on Dr. Paul are ones I hear over an over..
If you took the quiz, and Ron Paul came up, twice, that speaks volumes. We are then, like minded people, however, I WILL vote for and support Ron Paul all the say, same as in 2008!
Your reasons for VP are certainly valid, and I believe, in some way, Dr. Paul will have the biggest influence on who the the next president will be. His supporters are growing in huge numbers, every day, regardless of how the media tries to hide the support. Educating the youth has been his goal and it is working.
I WILL vote MY principles this election, as in last, not for who the media or corrupt GOP leaders say is 'electable'. GOP has been taken over with neocons thus there is no difference between R's & D's - Republicrats all! So, if Dr. Paul supports your beliefs or you support his, please vote for him to support him.
People vote the same and expect something different, which makes NO sense to me at all.
I support him with my time, my dollars, and my principles!
I will think long and hard on the issues that the candidates stand on and, though sometimes the water's are muddied, I will do my best to wade through them.
Frankly, I wish I could get behind one of them with confidence such as yourself. I'm just not there, yet.
I admire your stance and applaud your passion!
Good - please don't ever just sit on the sideline and allow others to make decisions important to you and the rest of us working towards freedom and prosperity for all!
Here is a link you can click on and learn something every day:
I first hear Dr. Paul on the Free Capitalist radio show in 2007 and immediately donated to that campaign (never done that before in my life!), followed him, went to hear him speak, met him and his wife Carol, and supported him ever since.
No problem craig and I only took the opportunity because Dr. Paul is the ONLY one who talks about this... So, blaming the rising cost of gas has nothing to do with the 'actual cost' of the gas, it's all about the worthless paper money being printed. So, couldn't see him as a VP because his views are not in line with any candidate. They would want like-minded people. I do see, however, some real benefits of his candidacy, whether pres or not!
Ron Paul Judge Napolitano 2012
Cool! Freedom is Popular!