Recently I have gotten two emails asking me to contact my Congressmen.
The first is from the SETI@home project. SETI@home uses the spare processing power of your computer to analyze data gathered from the Arecibo Radio Telescope to find anything that might be a signal from intelligent life in outer space. I have donated the spare power of various computers I have owned over the years to the project. I help in fits and starts. I will run the program for a few months, take a year off, and then run it again some more. It may not be the best way to find extraterrestrial life, but it is better than anything else I can come up with.
So, why are they contacting me? Because apparently Congress is looking to drastically cut the funding to the telescope. There are two bills before the two chambers to continue financially supporting the the telescope. SETI@home sent me the link to a letter I can print out and send to my Congressmen.
The second email I received was from an airline. Apparently they feel that the price of oil is being driven up by speculators in the oil market. So, they want me to go to this website and contact my Congressperson asking them to regulate the commodity markets more. I am going to paste the website below so I can address a few points in it:
Tell Congress to Act Now to Lower Energy Costs
The oil price bubble is unfairly taxing American families and restricting our nation’s economic potential. While everyone is aware that supply and demand constraints contribute to price increases, there’s another force at work that, like gravity, is invisible yet powerful. This force is rampant speculation.
Okay, let us dissect this thing paragraph by paragraph. First up, they call the oil bubble a tax. Taxes are bad, so therefore the oil bubble must be bad because they called it a tax, right? As for it hindering our economic potential, the price of oil is directly aiding the oil companies. Exxon could never have posted their highest profit ever if it were not for the oil bubble. It is also helping out hedge and pension funds. So, the oil bubble is not universally bad. Oh, and by calling it an invisible and powerful force, they are trying to evoke some kind of low-level dread.
Every time you buy products such as food or gas, you are impacted by unregulated, secretive and often foreign commodities futures markets. Speculators in these markets are increasingly buying and selling commodities such as oil even though they have no intention of using the product. As unregulated speculators pocket billions of dollars at your expense, the price of commodities has increased out of proportion to marketplace demands.
Hmm, the Republicans have been telling us that deregulation leads to things like lower prices and better service. Is this necessarily a bad thing? As for secretive, yeah, that is probably a bad thing in a market of any kind. Transparency is important to be able to determine the health of a market. Now, for my favorite adjective here, foreign. Who cares if the markets are foreign or not? Are all commodities supposed to only be sold in a US market? Would that not make those markets foreign to everyone else in the world? They are just trying to play on a fear of the unknown.
It is not a bad thing if someone buys and sells something they have no intention of using. Store owners do it all the time, and stock traders do it all the time. Just because someone makes a profit, even a large one, from buying and selling things they are not going to use does not mean they are doing anything wrong.
Please take a moment and tell Congress to act now. By adopting common-sense solutions, Congress dramatically reduce the price of oil and gas, providing immediate relief for businesses and hard working Americans.
Calling something common-sense does not make it common-sense, especially when you are calling for the immediate and dramatic reduction of the price of something in a market. Most people call that a “crash.” Besides, the change in price of oil is not felt by buisnesses and “hard working Americans” (Yo, Joe!) until months afterwards. It has to filter down through the supply chain to finally affect the consumer.
With that all said, I do think greater regulation is probably needed. However, the last thing we need is another bubble bursting. We need to deflate it slowly. So, we need to hit the problem from three different sides:
- Reduce demand. If you are not putting anything in the back of your SUV, minivan, or pick-up truck that could not fit in the trunk of a car at least twice a month, get a smaller car. It would actually be cheaper to rent a pick-up truck when you needed it than to make the payments on a higher-priced vehicle and pay for the lower gas milage. Moving from an SUV to a compact car saves a lot more in gas than moving from a compact car to a hybrid, so that is why I am focusing on the big vehicle owners.
- Raise interest rates. It strengthens the dollar, reducing the price of oil. It also makes money more expensive to borrow increasing the price of the leveraged buying hedge funds like to do. Finally, it pushes people towards smaller cars since it costs more to buy a car.
- Finally, increase regulation, but do it slowly. Give people time to gracefully exit the market.
One great benefit of the high oil prices is that alternative fuels are finally getting a fair shot. It is only when prices get this high that alternative fuel research and adoption becomes economical. Hopefully we will get enough progress made on them by the time oil comes back down that they will still be viable, economically speaking.
