First of all, you can’t blame the Saudis (or Arabs, in general). We only get 25% of our imported oil from the Middle East. The rest comes from South America, Africa, Canada, Asia, and domestic suppliers.
The first problem is that oil is traded in US dollars throughout the world. The dollar is declining in value, so it takes more of them to buy a barrel of oil, loaf of bread, or any other commodity. This is the primary cause for the rise in oil prices.
The dollar has declined in value because we are supporting ‘deficit spending’. In other words, the gov’t spends more than it takes in. For you and I, that would be personal debt, like credit cards. The difference is, though, that you and I can’t print money; the gov’t can, and does.
How many dollars we have in circulation affects how much each of them is worth. If there were only five US bills in the world, each dollar would buy a dozen aircraft carriers, a million Mercedes, or all of the California coast.
If a dollar will buy a pack of gum today, and we print millions more of them, tomorrow it will take two of them to buy that same pack of gum. That raises the price of oil, gum, bread, and everything else. Get it?
Another factor that affects the price of oil is that the US borrows money (the same money that we paid for the oil) in the form of bonds. Oil-rich countries invest their profits in US bonds, expecting a return. A five-year bond has to withstand inhflation, and now, the declining value of the dollar because more bonds are being sold and more money is being printed. Bondholders are losing money, so they raise the price of oil to compensate for their losses in bonds.
Still, a third factor, is that the aversion of US refiners to pay higher prices and the declining value of dollars, is motivating oil producers to keep their dollars in the ground in the form of oil, rather than converting it to dollars, leading to a supply deficit, which raises the value of oil.
So, who is to blame for the cost of gas? It is the present Administration (notice I did not say Bush). The entire Administration has embraced a short-sighted economic stance that is unsustainable and is now showing itself.
Lax regulations on extending credit (housing loans), expenditures without recovery (war in Iraq), tax rebates/cuts, free trade without reciprocation, etc, etc, etc.
This country has never before, in its history, engaged in a war without raising taxes to pay for it, until now. If someone believes in the present cause, they should also be willing to pay for it.
Our current economic policy is a recipe for disaster, oil prices being the tip of the iceberg. How will we offset these unfunded expenditures? By demanding CHEAPER products from China? Trust me, they are as cheap as they are ever going to get, and they are costing us dearly as it is.
Americans need to wake up and pay up. You can’t have war, free trade, and low taxes. Something has to give.
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