You might feel there's an air of inevitability about the upward climb of the price of a gallon of gasoline. That's probably because you feel powerless to stop it.  Whether or not you are, your Representative in Congress does have some power to make things better.  It's a little round-about but here's how.

 

It turns out the worldwide consumption of Crude Oil has been stable for the last several years.  It's true that rates of consumption have increased in China and India but it's also true that they've decreased here in the States, mostly because of more efficient use in better, newer machinery.  In the end, consumers of the world have purchased and used very nearly the same number of barrels of Crude Oil per year for a number of years now.  Meanwhile the producers of the world have been able to keep up with that demand, both then and now, without any remarkable increases in their costs of goods sold.

 

Dick Morris, the well known author and Fox News Commentator, has studied the underlying economics of oil production and concluded that by traditional Supply & Demand arithmetic the price of the commodity should be $60 - $70 per barrel.  So why is it more than twice that?

 

For many years the US Securities and Exchange Commission (SEC) designated oil as a strategic commodity and restricted trade in futures contracts for it to Commercial Users, such as refiners and a few big users.  There was pressure from US Investment Banks to open up trading in Oil Futures to their brokers and, through them, to individuals.  The SEC resisted so in a sure sign of Globalization the big investment banks turned to their off-shore subsidiaries and let them begin trading on an international exchange they set up in London.

 

The result?  Dick Morris has said that in 2004 roughly $10 Billion changed hands in Crude Oil Futures trading, while in 2007 that figure topped $200 Billion.  If his numbers are even close they indicate that a hugely increasing pool of money has been chasing a fixed amount of product.  Any economics student will tell you what that means:  Rising Prices.  It gets even stickier than that, though.  Always on the lookout for new products, the investment banks have all established Oil Futures Mutual Funds.  These, essentially, are securities backed by a bet on the upcoming price of oil.  And it's been a good bet over the last 24 months.  Share prices in these funds have shot up along with oil prices and a number of Pension Funds and other so-called Conservative Institutional Investors have snapped them up.  If What Goes Up Must Come Down then the price of oil will be subject to painful dips as well as the very profitable spikes that spawned this sub-market.  Does all this sound to you like the run-up to the Sub-Prime Mortgage debacle?  It does to me.

 

So what can your incumbent Congressman do about it?  The answer is Something, rather than Nothing.  The Genie may be out of the bottle when it comes to off-shore trading but there are things our government can do.

Who says Oil Prices are going to crash?  Actually, You do. America is already seeing a sharp down turn in gasoline consumption.  Other countries are doing the same.  Perhaps you've seen news footage of French and Spanish truckers and Portuguese fisherman staging slowdowns in protest of prices.  At over $4.00 per Gallon, I've certainly changed my driving habits.  Have You?

 

So prices will come down.  The real questions are When? and With what kind of Fallout?  As one who seeks to represent you in government I can tell you I would be very interested in getting those prices back down in time for This Heating Season, and doing so with a minimum of drama and no government bailouts for the financial markets.  Could it be done in 30 days?  That's pretty aggressive but one thing is for sure - The Futures Traders will scramble for the exits as soon as they smell price decreases in the air.  I say, Let's start using some of that perfume.

 

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

The 2nd Amendment is one of the two Keys to the entire Bill of Rights in the US Constitution. Without the inalienable right to Arms and the equally important 1st Amendment Right to Speech, no other Rights are safe. Indeed our Country and our way of life is in mortal jeopardy unless the government clearly understands the supremacy of our first two Amendments.  These foundations of American Government give ordinary citizens the tools they need to keep government in its role of Servant of the People.

This week, the US Supreme Court handed down the first decision on the 2nd Amendment in more than 232 years. The Court overturned as unconstitutional the Washington, DC ban against owning a gun to protect oneself.  The Court went on to declare that ALL Americans have the Right to own a gun, unless they give up that right by Felony or Mental Instability.

Sadly, our incumbent Congressman allies himself with those who want to limit or ban a citizen's Constitutional Right to bear arms.  It should go without saying that if guns are outlawed, only criminals will own guns.  Then who will protect you?  James Langevin?

It's very important to understand that the government cannot ban guns and it cannot hound guns out of existence with red tape. There is always going to be a role for government to play in regulating firearms.  We're not going to see background checks go away and we're not going to see felon possession laws go away. But when the government sets out to regulate guns, it's going to have to remember that US Citizens have individual rights, especially the Right to Bear Arms, and they are going to have to respect that. 

 

In upholding this right, the Supreme Court is also reminding us of the tremendous responsibility we bear as individuals if we arm ourselves.  It's true that a mistake with a kitchen knife can infringe on someone else's rights and land you in a position of great liability.  A gun can do it faster, though, and at a greater range.  We need to be mindful of that weight of accountability as well as proud of the accomplishment when we manage it responsibly.

 

By the way, we should do that when we get behind the wheel of a car, as well.

 

- Mark Zaccaria