Monday, August 23, 2004

Rather than just calling oil a "drag on the economy," a truly proactive president would mention the need for conservation. The fact that we are wasting so much of our nation's potential on SUVs and RVs is the true drag on the economy. High prices is the way the market responds to wasted resources. The way the game works is we wontingly waste our natural resources until we are in crisis mode and, after Americans have significantly lowered the quality of life in the United States, some people start figuring out that the God-Aweful Hummer in the driveway is the reason for the decline.

To a large extent, the high prices of oil imports is the expected result of the devaluing of the dollar. As oil is usually traded in dollars, there was a hope that the US could devalue the dollar without affecting oil prices. It didn't work. Rising demand outside the US seems is determining the price.

With demand outside the US determining the price of oil, I wonder if we will see a large dip in oil prices this winter. The only long term solution that I see is for people to make better use of the oil they consume, and for Americans to structure their lifes so that they don't have to drive so far...but that won't happen without political leadership.

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