67 lines
3.0 KiB
Plaintext
67 lines
3.0 KiB
Plaintext
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OIL GLUTS ARE FOR GLUTTONS
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There is an oil glut. OPEC countries have lots more oil available than
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non-oil producing nations are buying. The price of crude oils is going down,
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something which helps curb inflation and the balance of trade deficits.
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Some say OPEC is falling apart at the seams; that the once powerful cartel
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can't keep its members to hug uniform prices the way they did when they caused
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the price of oil to rise about $20 per barrel in the '70s.
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Enter our first Law of Economic Gravity (with no appleologies to Newton):
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What goes up may or may not come down.
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Now, according to the National Satirist's Law of Economic Gravity, the price
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of gas at the pump, home heating oil and related products will not drop
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commensurate with the drop in the price of crude oil. No way. Consumer prices
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will hold steady or rise, just like they did with mortgage and other interest
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rates that went sky-high also in the '70s.
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That is because of the First Corollary of the Law of Economic Gravity: When
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you raise the ceiling, you also raise the floor.
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It's enough to make us really angry at the way the '70s were conducted. Just
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look at the evidence, as if the above were not sufficient:
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In the '70s...
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The Defense budget went sky-high as we wound down the Viet Nam war. Has the
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Defense budget dropped since? No,no,no.
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Consumer prices went way up. Did they come down? Nope. They just stopped
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going up, even though many wholesale prices have dropped.
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And so on.
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Our Second Corollary: It's easier to climb the tree and let the fire dept.
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rescue you than it is to climb down yourself.
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Now, according to the National Satirist's Second Corollary of the Law of
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Economic Gravity, what is keeping the cost of money, oil, defense and consumer
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goods high isn't, as we noted above, increased demand for such things. What is
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keeping the floor up is Fear of Inflation. Consumers aren't afraid of it, but
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manufacturers and lenders are. And they're the ones who hold the purse
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strings.
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All of this brings us to a fork in the road. Left fork: What can you do
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about the situation? Right fork: What's going to happen next?
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The answer to both forks is: Nothing. Not for a while.
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Then all you-know-what will break loose. We will be gobbled up in a huge tax
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increase which will absorb Fear of Inflation and all of our extra money to
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reduce the Federal budget deficit, causing a lowering of the ceiling (but not
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the floor--in other words, we'll be squeezed juiceless).
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The inflation of the '70s was fueled by oil prices which caused everything
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else to go up too. The inflation of the '90s will be fueled by deficit
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reduction.
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Which brings us back full circle to our premise: Oil Gluts are for Gluttons.
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We have learned to be sensitive to oil prices and the cost of things like we
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never were before the '70s. In a few years, we will learn to be sensitive to
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the amount of our money to which the public sector helps itself.
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But probably not before Uncle Sam gets all of it.
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