The Devil In The Details

To the Editor:

Last week’s letter by Peter Sandler [“Choose Information Over Ignorance — And Vote!” Letter Hive, 3/23/12] was amusing but factually inaccurate. Might I augment his assertions?

First, the public has not been whipped into a frenzy by Fox News (correct spelling is Fox not FIXed). Fox News has nowhere near the viewers of the “Big 3” Networks. It’s laughable that a TV channel can influence the public anyway. Your neighbors are smarter than that, give them a little more credit.

Second, the current administration (President) can and should do a lot to try to ease the “pain at the pump” but they are unwilling to act. It has approved significantly few permits for exploration and drilling on federal lands which leads to long position speculation because fewer permits today means fewer barrels extracted in 6–8 years. It has subsidized, with real (borrowed) dollars, alternative energy companies (with no constitutional authority to do so) while demonizing oil companies. This indicates preference and provides the oil industry with uncertainty. Alternative energy, if it were viable, would attract private investment just like any other industry with promise. Demonizing oil companies only makes for good political rhetoric. It could give the American public a gasoline “tax holiday” and reduce or eliminate the federal gasoline tax. It could announce the release of the strategic reserves, which has previously worked to reduce world oil prices. Interestingly, the reserves don’t need to be released to experience lower prices in the spot oil market. The current administration could “mandate” higher margin requirements for oil and gasoline futures (the POTUS does like his mandates) which will help to retard speculation and reduce quantities of undelivered contracts. The list is endless of what the current administration can do… the question is, what are they doing? Answer = nothing.

Third, the markets aren’t entirely in control of oil futures. Oil and gasoline are traded in the open market and options are bought and sold on speculation. What if traders were shorting the oil market and artificially pushing down prices, who’d cry? The price of oil is up for the same reason the price of gold is ... inflation. Mr Sandler knows inflation is a direct result of the current administration’s monetary policy. “Quantitative easing” is just the latest term to describe the Central Bank’s ongoing policy of increasing the money supply. Because oil is traded in $US and the $US has been continuously devalued, the price of oil isn’t likely to move down significantly. The previous administration had a similar “weak dollar” policy but to a lesser depth. Further, this administration has piled up a lot of public debt (as did Bush’s) with no intention to pay it back because we are the owners of most of it. This ensures a long-term debased currency. Imagine the lunacy of borrowing money from yourself because that’s what’s happening.

The lack of sound monetary policy is the true devil in the details. Until an administration tackles the problem of undisciplined fiscal behavior, we the “ruled” will suffer.

Joe Duffy

5 Thomas Circle, Sandy Hook                                      March 27, 2012