Obama avoids the topic of invading EU over rising gas prices

Obama avoids the topic of invading EU over why gas prices are rising

 
Gas prices in late May 2008.

Gas prices in late May 2008. (Photo credit: Wikipedia)


Imagine that you owned a home which you are trying to sell and you got three bids of offers to buy it: for $300,000, for $400,000, and for $1,000,000. Maybe you listed it for $400,000 because that is about what you paid for it. So, before you choose which offer is most appealing to you, consider this additional factor: it was a foreigner that offered $1,000,000 and someone from California offered $400,000. So, would where the buyer is located make any difference to you at all?


Before I reveal why I mentioned all of that, let’s talk about the topic that Obama (and all the other presidential candidates as well as the mainstream media) are totally avoiding, instead focusing on confusing controversies and generally inciting hysteria, which may be their essential function. Let’s talk about gas prices and what to do about them. Ready? Let’s begin with a simple example.
Consider that if you had a gallon of gasoline and you could sell it for $3, $4, or $10. Before you choose which offer to accept, consider this: it is a European offering $10 and a Californian offering $4. Again, does the location of the buyer make any difference at all to you?
Of course, the price paid by the buyer is not going to all go to the seller. For instance, in a real estate transaction, there could be a commission for the realtor(s) and taxes and legal record fees and title company fees, right? So, accepting the $1,000,000 offer instead of the $300,000 offer might not produce exactly $700,000 of additional “net” (profit after expenses) for the seller, but it would make a big difference, right?
Likewise, in selling a gallon of gasoline to people in different parts of the world (or different parts of the US), there will be different expenses for the seller, right? I’m not saying that a gasoline refinery in Oklahoma does not have additional costs to ship gasoline to California to sell it there or to Europe to sell it there. However, I am saying that Europeans paying $8 or $10 per gallon are partly responsible for rising gas prices in the US.
That is why the US may eventually invade the EU (or expand the existing US military presence). We want lower fuel prices in the US, right? The Europeans are the ones paying so much for it that it drives up our prices.
Again, why are fuel prices so high in California? Could it be because Europeans are paying $8 to $10 per gallon of gasoline?
In Oklahoma and South Carolina, fuel prices recently passed $3 per gallon. Why? Is it because Californians are paying over $4 per gallon?
March 2009, Dunellen, New Jersey

March 2009, Dunellen, New Jersey (Photo credit: Wikipedia)

I know that South Carolina hypothetically could invade California, (not that they would dare) but there would still be Europeans paying $11 per gallon, right? Better for South Carolina might be to form an alliance with California and together invade the EU.
The EU is in serious trouble economically, which is resulting in serious political instability. They produce very little oil or gasoline and are extremely dependent on imports from other regions.
The US previously blocked Iraq from importing various things. Why not at least block the EU from importing oil? How much could that drive down prices of gasoline in the US?
In 2004, I published “The Real U.S. Deficit: OIL.” I emphasized my expectation that gasoline prices in the US would rise enough to lower consumption and slow the US economy, bringing down prices of real estate and stocks (and, eventually, fuel). That article did not emphasize that Europe (and Japan) had the same issues, but with far more severe  instability.
It was in 2005 that I focused more on the global dynamic of energy markets in “Worth It’s Weight in… OIL!” I also made fun of the hysteria regarding gold and silver (and hyperinflation). The US Dollar is the dominant currency in the world by far and has some of the lowest inflation rates ever (now in 2012). Nevertheless, there are huge numbers of folks who (in 2005 and even still today) are talking about the US dollar the same as they did in 1980, which made much more sense then given that interest rates (and inflation) were nearing 10% (or even 15% in some markets). However, the same logic about a pending devaluation of the US Dollar (which was false in 1980) is still popular among some groups today. One might wonder if certain economic interests would attempt to influence or even mislead the perceptions of investors to enter extremely volatile markets like gold or silver, such as dealers in gold and silver and owners of large quantities of those substances, such as mining companies.
Obviously, there are many alternatives to invading the EU. The US could simply keep paying $3 or $4 or even $5 per gallon. The US government could even attempt to “nationalize” (confiscate) the oil industry in the US, similar to the recent involuntary buy-outs and bail-outs of the auto industry and the banking industry. Or, the US government could go in to open competition with oil companies and start a government oil company like is present in Venezuela and Mexico- similar to how government in the US rose to dominate public schools and, to a lesser extent, colleges of higher education.
However, none of those alternatives would reduce global demand for gasoline, which I assert to be the obvious primary issue. Since 1999, global demand for crude oil has been rising faster than global supply (extraction) of crude oil, which actually peaked in 2006, as predicted to eventually happen by geologists since at least the 1950s.
As I have been saying publicly since 2004, with rocketing demand for oil (not just from Europe, but also Indo-China) and declining supply of oil, it has not taken a very clever forecast to predict that fuel prices might rise dramatically. If not for Europeans paying prices of well over $10 per gallon, gas prices would probably not have exceeded $2 in the US.
However, the fact is that Europeans did drive up global fuel prices by consuming far more fuel than they produced, just as the US has since the early 1970s. Still, what is happening in Europe now is far worse than what happened in the US in the 1970s.
English: Gas prices in Gometz-la-Ville in Fran...

English: Gas prices in Gometz-la-Ville in France Français : Prix de l’essence à Gometz-la-Ville en France (Photo credit: Wikipedia)

Forecasters like myself have been suggesting for around 10 years that a predictable emerging economic reality (which we have begun to witness in the last 5 years) would result in a destabilizing of the EU and a discontinuing of at least some of the alliance, such as Greece and Ireland seceding from the Union. Maybe the EU will attempt to maintain the Union through violence, as when the Union army of the US “invaded” the Confederacy.
If the EU were to invade Greece, would the US side with Greece or with the rest of the EU? We may recall that in the US Civil war, much of Europe supported the Confederacy.
While it may seem shocking or even hilarious to reference an invasion of the EU by the US, note that the US maintains active duty military bases in many dozen foreign countries throughout the world, including in Europe. The US has been “occupying” some of the wealthiest parts of Germany for the last 7 decades. Why? Same for Japan and dozens of other “satellites,” such as Afghanistan and Iraq and of course throughout Central America (See USMC Major General Smedley Butler’s “War is a Racket”) as well as cases like the US involvement in the rise of the Shah of Iran.
English: Smedley Buter at his retirement cerem...

English: Smedley Buter at his retirement ceremony. Received from the Marine Corps Archives. Freely distributable Removed from the following pages: Smedley Butler –OrphanBot 05:49, 20 October 2007 (UTC) (Photo credit: Wikipedia)

Consider that “national interests” is a code word for economic interest. The US currently operates the most extensive global empire in human history. Some of us in the US may like to argue against a “new world order,” but the “new world” (the US) has been the dominant superpower in world affairs for most of the time since oil was discovered in the US in the 19th century. By 1913, with the establishment of the Federal Reserve and their motto “New World Order” (in Latin: Novus Ordo Seclorum), the US Dollar went from being a parallel private currency in 1913 to being the only circulating currency in the US by 1933, and then to being the most successful currency in the world to this day.

Pyramid with the all-seeing eye on the back si...

Pyramid with the all-seeing eye on the back side of the US 1-Dollar bill (Photo credit: Wikipedia)

Has the empire of the US brought a new order to global economics and global politics since the early 20th century? Yes. After all, the US has maintained a constant military presence throughout it’s many colonies since the 1940s, with consistent huge increases in the number of official and unofficial colonial territories, as well as the new states of Alaska (1959) and later that same year Hawaii (1959).
Note that when the Japanese bombed Hawaii, Hawaii was just a territory of the US, like the Philippines or American Samoa today, which are official territories of the US. If the EU were to attack the Philippines or Iraq or even just an ally of the US, would the US respond militarily as it in the 1940s did by bombing Japan?
Remember that in the 1940s, three of the biggest economic competitors to the US, who were also big importers of oil already, were Germany and Japan and Italy. Germany and Japan were on their way to passing France, the UK, and the USSR to become the #2 and #3 economies in the world (throughout recent decades).

Here are the WW2 era rankings in order of GDP (Gross Domestic Productivity)
           1938                                         1941                          1945
USA           800                               USA      1094              USA    1474
USSR         359                              Germany 412               USSR    343
Germany     351                              USSR     359               UK         331
UK              284                               UK        344               Germany 310
France        186                               Japan    196                Japan     144
Japan         169                                Italy       144               France    101
Italy           141                                France   130               Italy          92
*Based on Table 1 found in Mark Harrison, The USSR and Total War: Why Didn’t the Soviet Economy Collapse in 1942? from Mark Harrison, “The Economics of World War II: an Overview,” in Mark Harrison, ed., The Economics of World War II: Six Great Powers in International Comparison, Cambridge University Press (1998), 10.
So, by winning the war, the Allies as a group went from a 2:1 GDP ratio over the Axis countries (in 1941) to a 5:1 ratio (in 1945). However, who REALLY won world war 2?
Well, which nation had ZERO civilian casualties and had the ratio of their GDP to that of the next 6 biggest nations go from 800:1490 to 1474:1321 (from 1939 to 1945)? It was the US.
In other words, before WW2, the USA had a bigger economy than the next 2 countries combined. After WW2, the USA had a bigger economy than the next 6 countries combined.
The much-hyped “cold war” rivalry between the US and USSR (who were allies in WW2) was never really a close contest. While the USSR did pass the USA in oil production in the 1970s, the wealth accumulated by the US in the prior century of being the #1 producer of oil was immense.
Regarding casualties, 11 countries had more military casualties than the US, which had 295,000 casualties. 8 countries had more civilian casualties than the US had military casualties. Of the total military and civilian casualties in WW2 (which have been calculated between 50 million and 78 million depending on various counting methods of war-related famine, disease, and injuries), US casualties totaled between .4% and .6% of the total deaths.
Now, most US citizens may not know much about the immense economic benefit to the US of WW2 and the immense cost to much of the world in terms of millions of deaths. We in the US do not need to know either. We just reap the benefits of being born in the nest of a globalist empire. We are indoctrinated by public education and mainstream media to be distracted from the otherwise obvious reality about WW2 and the current reality as well. However, for the rest of the world, it may be very relevant to fear our immense military capacity.
Addicts are known for denial, blame, rage, and a variety of other reactions prior to acceptance and adaption. The US is addicted to gasoline and oil. So is Europe and Japan.
However, unlike the desperate folks in other parts of the world, the US can reasonably claim to have the uncontested dominant military force in the world. Further, many of us in the US are eager to belligerently blame someone for gasoline prices exceeding $3 or $4.
Are we seriously going to blame the people who supply us with those resources? While that may have been a factor in the US expanding it’s colonies to include Afghanistan and Iraq, there is a reason that WW2 was not fought where the most valuable resources were, but in the places that were most dependent on those resources.
Wars are fought by the competitors for the most valued resources, if possible, without endangering the actual resources. This does not require any special cleverness to recognize, though it may require an unusual amount of boldness to actually admit the simple and obvious reality.

  World War II Casualties

Source: Phil’s World War II Pages

Country Military Civilian Total
Soviet Union* 8,668,000 16,900,000 25,568,000
China 1,324,000 10,000,000 11,324,000
Germany 3,250,000 3,810,000 7,060,000
Poland 850,000 6,000,000 6,850,000
Japan 1,506,000 300,000 1,806,000
Yugoslavia 300,000 1,400,000 1,700,000
Rumania* 520,000 465,000 985,000
France* 340,000 470,000 810,000
Hungary* 750,000
Austria 380,000 145,000 525,000
Greece* 520,000
Italy 330,000 80,000 410,000
Czechoslovakia 400,000
Great Britain 326,000 62,000 388,000
USA 295,000 295,000

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13 Responses to “Obama avoids the topic of invading EU over rising gas prices”

  1. aletho Says:

    “Could it be that gas is expensive in the US because it is in Europe?”

    Of course not!

    Global supply is constantly adequate (when is the last time you heard about a gas line?). As demand fluctuates, production is scaled up or down.

    Europeans pay higher prices at the pump because the price includes mostly taxes. Those taxes were put in place to discourage the use of imported energy, a rather obsolete paradigm given Europe’s reliance on global trade in all sectors.

    Perhaps they fear that the US navy will blockade them someday as happened to the Japanese prior to WWII.

    • jrfibonacci Says:

      Thank you for your reply.

      Okay, so it is your theory that all fluctuations in gasoline price are exclusively due to taxes? In California, a gallon that is $4.30 is $3.30 in Oklahoma, $2.30 in Mexico, $.80 in Saudi Arabia, $.20 in Venezuela, and $11 in the UK and all the variations are totally due to taxes?

      If local gasoline prices in the US rise from $2 to $4 in a short period of time (12-18 months), then each incremental rise in price is due to fluctuating tax rates? Your theory is not well supported by the data.

      As far as global supply being adequate, you may have no idea what you are talking about. In 2008, when oil prices exceeded $11 per gallon in the UK, there were trucker strikes and major interruptions to supply in many less-developed parts of the world. You may live within 5 miles of dozens of gas stations. That is simply not the case for much of the population of the world.

      Furthermore, the top 1% of the wealthiest people in the world can easily afford automobiles and lots of gasoline. That is everyone who earns more than $50,000/ year, if the data I am using is right. In the US, an income of only $250,000/yr places one in the top 1%, but the US is the wealthiest nation in the world by far, right? Most of the human population living today has never been able to afford to buy a car and probably never will. India and China alone have a LOT of people.

      I challenge you to name a single relevant fact that you question or that I omitted. If you have a better hypothesis than any one of mine since 2003-2004, show me. No one has convinced me that any of the basic ideas are wrong, though lots of geologists and researchers have offered additional depth to my analysis.

  2. aletho Says:

    “Okay, so it is your theory that all fluctuations in gasoline price are exclusively due to taxes? ”

    No.

    What I claimed is that the differential between US and European pricing is a result of the fact that most of the European price at the pump goes to taxes. That is simply fact.

    I think that the point that you are trying to get at is that gas could be priced as an elite substance freely available only to those with vastly greater purchasing power, and severely rationed by price for the balance of users.

    It seems that such a paradigm would not benefit the producers of fuel because the total dollar amount of sales would be less than what they currently obtain. Current pricing, as usual, reflects the point beyond which consumption falls off. Supply and demand dynamics never factor in to the equation.

    This pricing paradigm has been prevalent since the end of the administrative pricing common in the pre-1973 era which was not based on supply and demand either.

    • jrfibonacci Says:

      You are welcome to show a table of european gasoline tax rates by nation and average european gas prices by nation.

  3. aletho Says:

    A simpler way to express my comment is that we are chumps paying whatever the market will bear for an abundant commodity that costs a fraction of what we pay to produce.

    • jrfibonacci Says:

      I understand. You identify yourself and others as chumps for paying more than the production cost of gasoline, food, electricity, housing, diamonds, gold, computers, iPhones, and so on.

  4. aletho Says:

    “You identify yourself and others as chumps for paying more than the production cost of gasoline, food, electricity, housing, diamonds, gold, computers, iPhones, and so on.”

    No.

    I recognize the value of market economies in that they motivate the development of consumer manufactures, well designed and crafted structures etc…

    But a commodity that flows from under the earth?

    Another way to look at the issue:

    Should tap water in cities be priced at what the market will bear? Or would that be unethical?

    • jrfibonacci Says:

      I am a forecaster. As such I forecast changes in the standards of ethics. You may call it unethical now for cities to charge whatever they charge for tapwater and so on, or you may call it ethical. That is not of particular interest to me.

      However, you mentioned a few posts back that the US blockaded Japan prior to WW2. Whether you call that ethical, or the US bombing of Japan ethical, or any other massive political undertaking ethical or unethical, that is up to you. I am simply speaking in terms of forecasting the activities or behavior patterns of herds of human organisms (as in nations and armies and so on).

  5. aletho Says:

    The Atlantic Monthly reports on EU gas pricing:

    Spain has the lowest priced gasoline at $7.60 per gallon; and $3.67 of that is tax. Believe it or not, that’s actually the lowest tax burden in Europe.

    Italy’s gasoline is $8.79 per gallon and that includes $4.74 in taxes. (Of course with a nice bottle of Barolo, it’s easy to enjoy the countryside and forget about the cost of gasoline.)

    France is looking at $9.24 with $5.40 of that being taxes.
    Germany is at 9.07 with $4.88 in taxes. In Portugal you’ll pay $9.13 per gallon; $5.13 is tax and the government there has included $1.70 per gallon as a ‘value added’ tax.

    In the Czech Republic, motorists pay $8.21 per gallon ($4.39 of which is tax0 which also includes a road tax. Greece and Sweden are both over $9 per gallon and more than $5 of that is tax.
    Denmark is at $9.69 for gasoline with $5.41 going to taxes.
    But, the highest tax burden in Western Europe is found in the Netherlands, where gas according to last year’s report, was $9.58 per gallon and nearly $6 per gallon goes to taxes.

    • jrfibonacci Says:

      Ok. How about the difference between the states SC, OK, CA, HI, and AK? Is that all taxes, too?

      When prices in 2008 were up, then fell, was that fall from taxes dropping? When prices returned toward or near the prior highs recently, was that from taxes, too?

      I don’t know what the US spends on the occupation of Iraq. It could be $75 million per day or much more. I really do not know.

      In Europe, the cost of maintaining roadways and so on may be covered at the pump. In the US, other tax revenues may be used.

      I don’t really care about the tax proportion in the EU or how the EU is using those funds. I don’t even really think that the EU alone has the kind of influence that I might imply in the above article, but the point is to get people to think beyond their national borders.

      Realistically, I could also argue that the reason that the EU is paying so much is that the Chinese have increased consumption of gasoline by hundreds of percent recently. I’m not arguing against “Blame Obama” or “Blame Bush,” but I am asserting that blaming local politicians in the US won’t do the US any more good than blaming local politicians in Japan did for the Japanese in the 1990s.

      Incidentally, I did not plan to write about WW2 or GDP or casualties at all. My general interest was to harness the popular hysteria a bit and provide some thought-provoking claims. I am interrupting one sensationalist spin with another. My goal is not to present an airtight model, but to provoke thinking and conversation.

      The reality is that I am more interested in examining with you what you mean by ethical- if you dare to explore that topic. However, I have no interest in pushing anyone in to subjects that they find terrifying or horrifying. However, I will note that I reserve the right to make fun of any reference to politics as ethical or unethical.

      That to me is like talking about how much something weighs and insisting on using the unit of hours to discuss weight. The blog is called the “power of language” because language (and the language of power) ultimately is the subject of interest to me.

      Talking about invading the EU was just my latest bait. I am just a humble propangandist presenting ideas like this one:

      > Consider that “national interests” is a code word for economic interest.

      If you can ignore any logical or factual stretches in my piece, then you will find a lot of extremely obvious principles and facts, such as that the US was by far the most victorious nation in WW2. Sometimes a bit of exaggeration is useful to introduce an idea that you then recognize as perhaps not as extreme as the author presents it, but perhaps something that you would have never recognized otherwise and somehow intriguing or relevant.

      Intelligence may be quite rare in some parts of the world. If it frightens you, there are many other websites that might be less disturbing to any false presumptions that you might have, including about language.

      Cheers!

      J.R.

  6. aletho Says:

    Yes, taxes on fuel vary significantly from state to state. Look it up.

    Also, what the market will bear in L.A. may be different from what the market will bear in Baton Rouge.

    The operative mechanism is constant though. Price indicates the point beyond which consumption falls noticeably. This also varies with the general state of the economy.

    • jrfibonacci Says:

      Did the variations of price (in the same region of the US) from $2 to $4 then back to $2 reflect a change in taxes? No.

      You can argue elsewhere if that is your commitment. If you are not interested in what moves prices besides taxes, then you can focus on those subjects. Yes, price will fall when it rises enough to reduce demand, but why did it rise in the first place. I answered that in 2004, before the issue came to widespread attention. I answer it again in the article above. You may prefer to argue. That is fine if that is what you value most.

      Cheers!

    • jrfibonacci Says:

      Besides taxes and declining demand from high prices, what else influences price variations at various times and places? What is another obvious factor in price that would explain why a diamond in New York City would be so much more expensive than the same one in South Africa?

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