Mike Ault's thoughts on various topics, Oracle related and not. Note: I reserve the right to delete comments that are not contributing to the overall theme of the BLOG or are insulting or demeaning to anyone. The posts on this blog are provided “as is” with no warranties and confer no rights. The opinions expressed on this site are mine and mine alone, and do not necessarily represent those of my employer.

Tuesday, May 02, 2006

Time for a Change Part 2

In my previous post I made the outlandish (to some, notably foreign based readers) suggestion that the USA should start tying the cost of goods and services provided to oil producing countries to the cost of a barrel of crude oil purchased from that country.

For example the following countries derive a great deal of benefit from selling the USA oil:

Venezuela - Leader virtually destroyed the middle class, says he wants to model country after Cuba
Nigeria - Place were genocide is an established practice
Mexico - Believes the solution to their problems is to send them to USA
Iraq - Need I say more
Libya - Need I say more
Algeria - Another fun spot

If we were to turn this dependency on their oil into a dependency on our money we would have the leverage, add to that the amount of aid we provide several of these countries (whether from loans or charities) and we should not have issues with them. Instead they threaten us with a price increase and we back down, they refuse to help their own, and we step in, they commit genocide and we look away. Ties into the same idea that you give your wallet to a robber and let the principles of civilized behavior be damned. Let's all be a victim!

Yes, we also get a great deal of our Oil (at least by 2002 numbers) from Canada however, as far as I know Canada doesn't practice genocide, ship their poor to us, chop off various arms and legs of innocent villagers, threaten our other allies, threaten us with nuclear war, or have several civil wars going at a time. Another large source are the countries Saudi Arabia and Kuwait, and while I may not agree with their style of government, for the most part their people appear well kept, well fed and peaceful, do they have problems? Yes, but not like many other countries in that region. However, OPEC is OPEC, and if they choose to run with the OPEC herd, then if such a policy as I have stated were to go into effect, they could choose which side to be on.

I am not sure what the detractors would have us do...I guess just sit back and take it like always. Of course most are from other countries so it isn't any skin off their noses if we do. Many of them have governments which tack on huge taxes on their gas prices to pay for their free medical and other dole out programs so they have had high prices for years. I guess they just feel it was our turn.

What I would really like to see is the full development of a proper mass-transit infrastructure in the USA. However, this isn't going to spring up overnight. Many places are starting to do this, many need to. The high prices will force more conservation, so in the long haul they may be a good thing, however, increases of nearly 60% in a years time, when oil company profits are at an all time high, aren't.

Do I hate the countries that are doing this to the USA? No, I do not. I may detest their leaders and their leader's policies that have driven the countries to this horrible state but I am sure many of the people there are good, decent folks just trying to survive the follies of their governments (as we all do).

Do I want to see children starve? No, however, I am not responsible for their current or future state, their government is, until their governments are "shown the light" they will continue to starve regardless of what we do or don't do. In fact, by forcing their governments to take responsibility we will be saving more in the long term. I believe there is an old saying about "Give a man a fish and he will eat for a day, teach him to fish and he will never be hungry" we need to teach their governments to fish.

As to whether my Christianity is being used a a shield, no, it is not, I was using it to show my own discomfort at the feelings I am having. Yes, by a literal interpretation of the Christian teachings we should just roll over and take whatever is handed us, however, I am not a believer in the literal word-for-word blind following of any teaching. For one, there are many errors in translation in all testaments (Christian or otherwise), add to that deliberate shall I say "shadings" and you need to be very careful when reading for meaning. If we all followed the teachings to the letter, there would be no more Christians after this generation.

Remember, everyone pays the same for a barrel of oil, if your prices are high, look to your government and oil companies, as we in the USA need to look at ours. We should all be looking at ways to cut back. We need to look at oil not as gasoline, but as medicine, plastics, chemicals, things which in many ways are much more important than gasoline.

Yes, we need to look at hydrogen, electric, hybrid vehicles (which by the way I am looking at for a replacement of my current vehicles, when it makes economic sense to do so) and other ways of saving oil. I have been accumulating technologies to use to build an "off the grid" home (solar, wind, etc) and plan to do so as soon as I can, am I going to bankrupt my family and do it right now? No.

However, as worthy as conservation is for our consideration and implementation, that doesn't forgive price gouging, and other things that point to greed, not need, as the reason for price increases.


David Aldridge said...

As ever, the devil is in the details. American companies sell oil to us at the same price as every other country (with variations in price by type of oil of course). Is "America" going to charge "America" different amounts for agricultural products based on the internal price of oil?

Why should an American company seling grain to a Mexican company be forced to raise its prices based on the price that a different American company is paying for oil from a different Mexican company? Sounds like a far-cry from capitalism, and my feeling is that there are many Mexican farmers who would be very happy with the result.

It seems to me that there is already far too much political dabbling in the free market.

Mike said...

The free market only works when there is competetion. OPEC has killed that in the oil market.

What happens internally is not the issue, they will follow the external prices.

So again, what is there to do? Sit on our hands and do nothing? That has produced such great results so far.

David Aldridge said...

Oil prices are high for two reasons -- massive borrowing without appropriate fund raising to pay it off that has lead to a weak dollar, and a de-stabilised Middle East. I don't see how either of those is the fault of Mexico, for example -- they're not even a member of OPEC.

Personally I don't believe that American agricultural products have nearly the kind of leverage on petroleum producing countries that you assume. Especially, that is, if they just refused to sell oil to America for a couple of weeks -- if that happened I'd recommend that you buy shares in a bicycle company pronto (except that they're probably not made in America anymore, so they'd become unaffordable as all these oil-rich companies dumped dollars onto the international markets and rendered it worthless).

William Robertson said...

This sounds a bit like the Saudi Gas Boycott I read about on the Snopes.com urban legends site.

I'm still not convinced that the only two possible foreign policy options open to the West are
(a) Mike's proposed punitive trade barriers and aid reduction
(b) doing nothing
and so I don't really accept that any criticism of (a) amounts to a vote for (b).

I agree with David that a regulatory system requiring US grain exporters to adjust their prices in response to international oil market fluctuations will be difficult to administer in practice, and possibly counterproductive given that some of America's international policy problems are caused by its image abroad (distorted of course) as an aggressive bully with too much power, big cars and all the rest of it. Meanwhile oil price rises are probably not entirely caused by the greed of countries hostile to the West who need teaching a lesson. I'm not an economist but I suspect that it is more complicated than that.

Noons said...

One of the current problems of US society is the constant bipolar assumption that anyone who does not open their arms in glee at the free market economic model is forcibly a "communist out to get the US".

Nothing could be more wrong...

Olen said...

Why not just peg the dollar to gallon of crude oil. A barrel of oil is 42 gallons of crude, if we use sweet crude as the basis, we could say that X number of dollars is worth a gallon of sweet crude. It worked with gold from a long time.

Of course what I think you're advocating is that if oil goes up 30% then we charge the oil producing companies 30% extra for US Goods and services, but then the French would start selling them Sql*Server at a discount, which would, while saving the oil producing countries money in the short term cause problems in the long run.