Mr. President, Give Us a Break
Now it has risen to the level of the Presidency. President Obama is now perpetuating the dangerous myth that oil speculators are conspiring to drive oil prices higher. Nothing could be further from the truth. There is indeed a conspiracy to drive prices higher, but that conspiracy is within the Federal Reserve and by happenstance, the policies of Obama's administration. Never in recent memory has a President had policies that have been so anti-oil and because of that, the President and his policies are one of the major reasons why oil prices are where they are today.
Take for example the president's crowning achievement: His health care legislation. By driving through this unfunded legislation during a major recession that cost, according to an estimate by the Wall Street Journal, has added $950 billion to our nations trillion dollar plus budget deficit. Our deficit is so large that Standard and Poor's lowered our credit rating outlook to negative from stable on the President's watch that now has driven the value of the dollar lower thereby making oil more expensive.
The Federal Reserve of course has been rooting for inflation and that is another reason why speculators are not to blame for reflecting what is a real market fundamental. What is more is the fundamental value of the dollar that we exchange for that precious barrel of oil. What about the confidence behind the government that is issuing that printed piece of paper. Especially when that government keeps telling us they are going to print more dollars, more pieces of paper. Because Obama can't get spending under control the Fed has to do the heavy lifting to keep the economy afloat.
The Federal Reserve has a desire to increase oil prices to avoid the look of deflation. The government could help by reducing spending. That would increase the value of the dollar and make it less imperative that the Fed print more money to keep our debt looking attractive. The Fed and their policies have made being short commodities a dangerous proposition indeed. Quantitative easing is as stimulative to the economy as an interest rate cut. It sends a flood of money to the emerging markets thereby stimulating more oil demand and inflation. The oil prices are reflecting this devaluing of the dollar and confidence in the full faith and credit in the United States of America which is slipping dramatically.
At the same time, the President's war in Libya and the general uprisings across North Africa and the Middle-East known as the 'Arab spring" caused in part by the dissatisfaction with rising food and energy costs, are also partly the responsibility of the President. The inflationary policies that have stirred these nations have happened under the President's watch. The risk premium that has been added to oil because of risks to the region, not only in Libya but in Iran, Bahrain, Saudi Arabia, Yemen, Nigeria, Egypt, Jordan, Syria. Even in China there is unrest and now they have crackdowns on the "Jasmine Revolution" that threatens to spread unrest in China as well.