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Practically Speaking

Kyle and her husband moved to Brookfield in 1986. She became active in local politics and started blogging in 2004. Her focus is primarily on local issues but often includes state and national topics, too. Kyle looks at things from the taxpayers' perspective in a creative, yet down to earth way, addressing them from a practical point of view.

Why wouldn't oil prices go up?

Elections, Energy, Obama 2008, TAXES, THE ECONOMY

The Democrats present the Trojan Drilling Bill, the stock market is in major jitters, investors look for safe places to put their money. Hence oil, gold/silver/precious metals go up. Pretty simple.

With the Democrat's no-drill oil bill, prohibiting drilling in most areas, there will be little change in our domestic oil supply. If we don't get a real Drill Here bill, we will be dependent on foreign oil for years and paying higher prices. It is supply and demand...the price will go up.

Anyone wondering if the Democrats are trying to create such an oil price crisis that the government must come in and take that industry over too? I am hard pressed to explain the Democrat's stance any other way.

The other factor involved in precious metal and oil price increases is the fall of the dollar. It had been improving since about July. But the Freddie and Fannie / financials bail outs cause the United States to expand the money supply. That is inflationary, resulting in the value of the individual dollar to fall. Again, it is supply and demand.

From the Financial Times: The Short View: Oil and the Dollar

By late morning in New York on Monday, the price of oil had climbed by 20 per cent in barely five days and scarcely anyone had noticed. Then it went into overdrive, hitting $130 at one point before settling at $120.92. Last Tuesday, it traded at $90.51 – a swing of 44 per cent from bottom to top.

This had little to do with the supply of and demand for oil and everything to do with the fallout from the “Paulson plan” – the proposal to risk $700bn of US public money in a bail-out of toxic securities held by banks.

Oil rose as doubts surfaced about the plan.

When people are nervous, they look for tangible products to invest in. 

A key variable is the dollar. So far, it has fallen in response to the possible huge rise in the US deficit. The markets seem to have gone a step further and assumed that this step will be be inflationary and cause financial assets to lose value.

In that situation, the thing to do was to head for real assets, led by oil, although other commodities, led by silver, also had a strong day. Unfortunately for the Paulson plan, the inverse relationship between oil and the dollar is one of the few financial constants to have survived the past few days.

I heard this morning that oil settled down to about $108/barrel in Asia. People are nervous worldwide. The US money supply is expanded beyond thin.

The last thing we need is another check writing spree by the government in the form of a Democrat 2nd $50billion stimulus package or a $1,000 energy rebate based on a windfall profit tax to oil companies as Obama is touting. (That tax would be passed onto consumers, making oil prices higher.)

Even the Federal Government can only print so much money if it is to be worth more than the paper it is printed on! 

 

Brookfield District 7 Info meeting, Wed., Sept. 24, 2-3pm or 6:30-7:30pm City Clerk Kris Schmidt will be in attendance to answer questions or concerns regarding recent news about the Van Hollen lawsuit against the state elections authority.

Please, comment content should relate to the subject of the post. Although I try to respond to many, do not interpret my lack of a response as agreement.

Links: 

 

counter hit xanga

Brookfield7, Fairly Conservative, Betterbrookfield, Mark Levin,  Vicki Mckenna

 

 

 

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