Tuesday, August 23, 2011
Our Domestic Economy Is A Hostage of Imported Oil
I am old enough to remember the 1973 oil embargo pretty well. At that time, the Congress and President Nixon could have sat down together and worked out a plan whereby the United States would reduce its dependency on foreign oil by a small percent each year, with the final objective to be free totally of importing oil, or, for imports to be of such a small percent of the oil used in the United States that oil could never again be used as a weapon against our domestic economy. Unfortunately, President Nixon had other matters more pressing to deal with, such as the Watergate investigation, the Vietnam war and fighting all of his enemies imagined and real in the press. Nixon resigns the presidency in August 1974, and President Ford pardons former President Nixon and seals his fate of any chances of wining in 1976. President Carter came to office just as the inflation of the 1970s was just heating up and the American consumer was caught in a period of falling stock prices and rising costs. While President Carter was prepared to work on the issue of oil imports, the majority of the people were not. And so it has gone on like this for the last 38 years!
Oil is so dominate to the running of our economy that any movement in the price of a barrel of oil directly effects our domestic economy. Everything and everyone is transported by oil and the fuels that are derived from its production. There is not a segment of our society that is not dependent on oil. And, because the money we all spend on gasoline and diesel wind up leaving the country because the majority of the oil we use is imported, the amount of money in circulation is reduced more efficiently than any tax imposed on the American consumer. Money leaving our domestic economy removes purchasing power that otherwise would have been available for the purchase of goods and services. Add to this fact that many goods are produced overseas and are imported, only takes more money out of our economy.
Our domestic economy is tied to the price of a barrel of oil, and until that connection can be broken, our domestic economy will remain a hostage of imported oil.