Outrageous Gas Prices and America’s Failing Economy

Who is to blame for gas and oil prices?

Americans only need look in the mirror. 

If you tune into the news of late, what you’ll find is heavy coverage of the problem of rising gas prices, record-breaking oil costs, and of course,  record-breaking profits for big oil.   What most Americans don’t acknowledge is how responsible they are for the rise of energy costs in the world.   Anyone else notice that the media reports on the problem but never tackles the reasons for the outrageous prices?

The obvious problem begins with the voters.   In 2000, Americans decided to reward themselves with a true “values” guy, a Christian, a rich man from a rich family — one highly invested in oil.   Did Americans truly believe that an oil tycoon would work to lower oil and gas prices?  Does anyone remember the cost of a barrel of oil when President Clinton was shielding himself from Monica-gate?  The cost was $30 and George W Bush was criticizing prices at the pump, a conspiracy he blamed liberals for, no doubt.  As we’ve learned since his inauguration, Bush’s grand plan was to give oil companies a major “tax break” that would lead to lower prices at the pump.

Anyone else remember the last time such a theory was tested?

It’s the economy, stupid.  Corporatism fails.

Reaganomics — rich corporations are rewarded with subsidies and tax breaks and the expectation is that everyone benefits.  Among others, here is a list of what to expect when you infuse already-rich corporations with more cash:

1. economic expansion due to lower prices
2.  job market growth due to additional cash for investment
3. the poor and middle class (aka lazy, entitlement-seeking Americans) will be dancing in the streets

“Trickle down” economics doesn’t work and Republicans will have to come to terms with this if the party is to recover from the Bush presidency.  I don’t mean to suggest that limited government and lower taxes could never work.  Under the right circumstances, it would be an ideal and perfect solution for governing our country.  The problem is, we don’t have an ideal situation and lowering taxes and deregulating has only created additional problems for our country.   It is important to recognize our situation:  we have trillions of dollars of war debt, an indefinite commitment in the middle east, corporations that are out of control and lobbyists demanding more tax breaks.

Conflict of Interest: Corporate Welfare vs. Fiduciary Duties To Stockholders

The biggest problem with American domestic policy is that there is an inherent conflict of interest when corporations are benefited by lowered taxes and government subsidies.  A corporation’s board of directors are first and foremost bound to the interests of the corporation.  A fiduciary duty exists to stock-holders, not the United States, and therefore profits is the name of the game.

When we ask our policy makers to help put more money into the pockets of corporations, the likelihood of this benefiting society is slim to none.  The only exception occurs when a company makes so much money that it has to hire more employs to raise profits, but this is never a given.  In theory, this is all fine and good, but consider that employs for the most part can be let go or “laid off” whenever the corporation is ailing and not the other way around.

Given the cyclical nature of business, mass layoffs are bound to happen at some point for any major business.  This makes any arguments in favor of corporate welfare pretty much moot unless we believe it is in our best interests to pay corporations a premium for the potential of temporary “benefits” to society.

American Luxury and Increasingly Inactive Lifestyles

For the record, I know that I belong to this sub-group of Americans and I’m not proud of it.  I personally am a big fan of technology and have more gadgets and computers than I know what to do with.  Like many Americans, I enjoy sitting around the television with friends and enjoying a few beers as we chat about the latest sports blunders.  Just like big brother, America has grown a few sizes around the waste.  We consume more food, require more energy to power our fancy new iPods, and the lights and air conditioners are always on because the only time we leave the house is to spend big bucks on more excess waste.

In addition to consumer electronics, we gladly purchase the latest trendy vehicles.  SUVs are pretty ridiculous but a lot of Americans drive them with  pride and gladly pay the premium because “screw the government and liberals” that want to take our rights away!  Public transportation is generally a ’shameful’ act in the U.S.  Only poor people and big city commuters use public transportation and therefore we tend to let big oil stick it to us at the pump because we’d rather swallow over-priced oil than our pride.

I could go on about the waste that exists in society, but it won’t do much good.  For all of my ranting, I fully intend to continue using my energy sucking devices at home and if I have to pay $5.00 per gallon for gasoline, then so be it.  This brings me to my final point.

Media Speculation and Accepting High Gas Prices

We bitch and moan about the rise of fuel costs and gladly point out the record-breaking oil revenues, but we never hold anyone accountable.  The media continues to report the latest records, oil tops $60.00, $100.00, $120.00  .. anyone see a trend?   It won’t be long before oil hits $150.00, $175.00, $200.00 and so on.  What happens with speculation is the market is manipulated by false indicators and oil companies and governments make sure that the supply and demand model fits a certain scale that benefits the bottom line.

If you’re looking to get rich and don’t give a damn about America’s failing economy, by all means, start stocking up.  In a few years, $120.00 is going to look like a steal and neither the hope of Obama or the “straight shooter” John McCain will be able to stop the gouging because corporations and money control America now and they won’t back down without a fight.  Americans on the other hand seem complacent and ready to roll over if the world of luxuries we all enjoy is ever threatened.

Fred Soto is an Attorney and Entrepreneur from the Silicon Valley.
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