Why Gas Prices are High

Okay… I’m not an economist, but here’s what I think is happening, and yep… idiot politicians are to blame.

Here’s why…

Gas prices are determined by the old fashioned laws of supply and demand, right? Here’s the problem. Demand is rising about 6 percent worldwide per year. But if my calculations are correct, the price of gas has increased much more than 6 percent. What? 100 percent in a year or two?

The rise in gas prices have far outpaced the realities of the growing world economy. Experts guess that the price should really be about $60 a barrel, not $140 a barrel. Why aren’t we still paying $2 a gallon? Basic economics (minus political hot air) gives the clear picture. Here’s how it works…

Oil is a free market commodity. The beauty of oil is that this international commodity transcends the many kinds of governments in the world. No single government (or world government, for that matter) can truly regulate oil. Oil is going to do what oil is going to do. And the freer oil is to do what it’s going to do, the better.

The truth is, everyone is trying to point a finger at greedy oil companies for some kind of pricing conspiracy, but in a free market, that doesn’t happen. Why? Because when prices get too high, things naturally correct. It’s beautiful really. $4 a gallon gas promotes changes in driving habits and invention that GUARANTEES that gas prices will eventually fall back in line. $135 a barrel oil gives incentives for oil companies to explore in places they could never have afforded to when they were getting $35 a barrel. Oil, when left alone, can never destroy our economy. In a free market, it’s impossible for oil to get so highly prices that everything comes to a halt (which is the kind of doom and gloom some like to predict). Why, after all, would oil producers allow oil to sit unsold because they demand some ridiculous price? They want to sell oil! So when we stop driving… we start inventing… they LOWER the price. And eventually, the market produces a sweet spot we can all live with.

Since this isn’t happening, it must the fault of speculators, right? Well, if you chalk out the crime scene, the speculators have their fingerprints closest to the gun. They are the final actor in the oil commodities drama. But what are speculators doing, really? Are they hiding in a room somewhere conspiring to drive up prices just for fun? When people say this, they are forgetting that speculators are the ones paying $135 a barrel. Why? Not because it’s a “fair” price, or because that price falls in line with supply and demand. Nope. They pay that amount because, IN THE FUTURE, someone will pay them MORE for that barrel than they paid for it now. That’s why they call it the FUTURES market. It’s like a stock. You don’t necessarily buy a stock based upon the strength of a company, but because of what you think you’ll get at a later date.

So… let’s be a speculator for a moment. As a speculator, we are speculating about the future. We’re asking, “What will someone pay in the future for my barrel of oil?” You’re not asking what’s fair or what makes sense, only what you can get for it in the future. In a TRULY FREE MARKET, a speculator would run from $135 a barrel oil when it really should be priced at $60 a barrel according to current market realities. After all, at $135 a barrel, one would expect that oil production to rise, demand to decrease, and the barrel of oil to fall in value. Who wants to be holding on to a $135 barrel of oil when people will only pay $100 or less?

But, counter to basic free market rules, speculators only see the value rising. Why?

Because we don’t have a TRULY FREE MARKET. There are people who get in the way. And they are called politicians. When a politician says, “You can’t drill here.” “You can’t drill there.” “We want to take your profits.” “We won’t approve new nuclear plants.” “We want to get rid of speculators.” These idiots… these politicians… have stepped in the middle of the Indianapolis Speedway in the middle of a race and wondered why there are wrecked cars piling up all around them. So they turn and blame drivers and crew chief members and fans and announcers and officials for the reason the race has stalled, when THEY ARE THE ONES STANDING IN THE WAY. If they just got off the track, the race would resume with great precision!

If oil companies could drill… If power companies could build nuclear plants… If politicians just let things happen, everything would correct itself. That’s what a free market does. But as the Huffingtons of the world say in mocking fashion, “Those are just the ridiculous words of you free market crazies.”  And politicians are famous for saying, “But if we start drilling now, we won’t see the effects at the gas pump for ten years.”  Absolutely WRONG!  The second drilling commences in ANWR and the gulf and other places, speculators will drop their barrels of oil like hot potatoes and prices will fall with them.  Why?  Because once drilling begins, no speculator worth her salt will believe in a future of $200 a barrel oil.  There would be no future for high oil prices.  There wasn’t in 1980’s and there won’t be in the 2010’s.  Things will correct themselves.

But the good news is, even politicians get corrected once in a while. $4 a gallon gas doesn’t just drive people to alternative fuels or electric cars. It eventually drives them into voting booths to move out the human speed bumps and put in some “green flag” legislators.

We can only hope that McCain’s latest flip-flop… his sudden embrace of offshore drilling and the creation of nuclear power plants… is the beginning of a new free market correction. It’s time to “correct” our lopsided and outdated legislature who kisses the butts of environmentalists and 1960’s airhead liberals. It’s time for them to look at the majority of people with voting power who now are ready to rise up against ridiculous and radical environmentalists. It’s time to get this dead-heads off the track and let the green flag wave.

R.I.P. Tim Russert

Unbelievable…

Unbelievable that the the fourth branch of American politics is dead. Unbelievable that the one LAST hard edged, balanced journalist left in Washington is dead. In the past two years, my Sunday’s have been centered around two people: Jesus Christ and Tim Russert. Jesus centers me in my spiritual life and Tim Russert brings me right down to earth where the problems of life are real.

I haven’t missed a “Meet the Press” podcast since 2005. It was the absolute highlight of my political week. He was my favorite Catholic and the only person that could make me wish the Buffalo Bills had actually won one of those Super Bowls.

He was the “Everyman” of journalism. when he asked a question, you felt he was asking on behalf of the  American people.  Forget all these vapid Washington news-dudes who are shocked – yes SHOCKED – that there are people in America who carry guns and love God – guys who can’t relate to middle America. He was middle America. As one person said, “He might have moved to Washington, but he never left Buffalo.”

What will we do? Meet the Press with Keith Olbermann? Meet the Press with Chris Matthews? God forbid. We were just musing the other day who would be the next Meet the Press man. Perhaps David Gregory.

I remember last Father’s Day him talking about his father. What a sad Father’s Day this will be for his son, Luke.

Lastly, since I heard the news, I’ve been asking, “Why, God?” Perhaps this is why. Today, Tim is in heaven and he has God across the table and he’s asking, “Where were you when those four Boy Scouts died in the tornado?” And believe me, the usual mystical God-answer won’t do. The follow-up questions will be tough, and God will have to come out answering… finally! So if the mysteries of the universe become less cloudy in the days ahead, we’ll know why.

Unbelievable.

Servant Leadership

I yield the great influence of this blog to my brother, Brandon, who has penned this excellent piece…

I recently saw the movie “300″ about a band of elite Spartan forces determined to fight, to the death if necessary, to defend the City-States of Greece from the invading Persian forces led by Xerxes.
The mythical million man army of Xerxes is bottlenecked in a canyon defended by the 300. The Spartans know they cannot ultimately win but merely hope to hold off the Persians long enough so that the Greek armies can mobilize in time to defend their homeland. Day after day the Spartan forces fend off the invaders and slay thousands in the process. Xerxes reaches the point of exacerbation and calls for a meeting with Leonidas, the leader of the Spartan fighters.

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Xerxes offers Leonidas all the wealth, women and power he could ever want in exchange that he bow down before him, lay down his arms and join the Persians. Leonidas refuses. Xerxes fumes with anger as he exclaims,”I am willing to sacrifice all of my men to destroy you.

Leonidas responds calmly…”and I would willingly lay down my life for any of my men and that is why we will be victorious.” Ultimately, Leonidas and his men were overcome by the million, but he provided the time necessary for the Greek army to mobilize and push back the Persians. It would later be Greece that goes on to build a great civilization that would plant the seeds for Western culture.

The point is, servant leadership works. The 300 were motivated beyond words to defend their cause. Conversely, the unmotivated army of Xerxes knew they were simply cannon fodder for the selfish purposes and aggrandizement of Xerxes. Although this movie is part myth, part history, it clearly illustrates the power of great leadership which contrary to the perception of many, is not about charisma and power, but about humility and putting the needs of the many above yourself.

This simple but underestimated approach to leadership is missed by a great many managers and C.E.O.’s. I think servant leadership has most recently been damaged by Donald Trump and his T.V. series, The Apprentice, in which ambitious young business people are mentored by The Donald who encourages zealous competition, backstabbing and underhanded tactics to outmaneuver competitors. Only the most shrill and merciless tactitions have hope to become the next Apprentice. The uncritical observer may confuse this for leadership. However, these “apprentices” have no idea how to run an organization and I would dare say would probably destroy any organization in a matter of weeks. Donald Trump is an example himself. Although he has attained a great fortune, it has come at a cost of annihilation and destruction for anything he has touched. His only legacy is one of a “cult of personality” but he has no empire (contrary to public perception). Just ask all of his unpaid vendors and the Casino’s that have gone into bankruptcy due to his mismanagement. If you just want to simply get rich and leave a path of destruction along the way, you can always follow the path of Xerxes or Donald Trump. However, if you want to attain greatness and build an organization that will last the test of time, follow Leonitis.