Finally... some meat and potatoes!

Two excellent posts in a row... well done.

I just woke up, and last night my car pool partner and I stopped for a few pints after work... pardon me if I'm a bit sluggish this morning, okay?

First off, let me say that my biggest surprise was that the legislation signed was by Clinton and not Bush. I don't doubt Ryan's facts... I'm just not sure how it was that I got that wrong for so long. It does call for at least a mild apology... but culpability still remains if Bush did nothing to repeal the Clinton efforts (which he obviously did).

Ryan did an excellent job detailing the manner in which the market can be manipulated (for good or bad) to drive the price of crude higher and higher, without a measurable decrease in supply. Perhaps that sort of manipulation has its uses in our very complicated and huge national economy... I don't know. What I do know is that crude oil is such a vital factor in how smoothly that economy runs that I feel it truly is something that needs to be monitored and regulated closer than any other commodity.

Does that make sense?

Anywhere between 65% and 71% of the price of gasoline in this nation is dictated by the price of crude oil... that from the EIA... but gasoline only accounts for about 20% of every barrel of crude processed. Kerosene, diesel oil, engine oil, and other distillates account for the other 80% of the barrel, and those items are JUST as vital to our daily operating in this nation as gasoline is. Every ounce of plastics in this nation depends on petroleum products for its manufacture, as does every commercially produced ounce of fertilizer used in our agricultural industry. It took an equivalent of seventeen barrels of crude oil to manufacture my 2006 Dodge Ram pickup (plastics, rubber, lubricants, steel and engine components)... and that doesn't count the cost associated with filling its gas tank at all. 14% of the cost associated with each and every food item you buy at the supermarket for you and your family is directly related to distribution and transportation costs... and that is very nearly all tied to the cost of fuel.

Now, I fully understand that one could circumvent these costs by buying local grown or manufactured goods, and reducing that average cost association... eggs, milk, dairy products, harvested produce, etc... but becoming 100% "local" is not only difficult, it might be damn near impossible in today's economic environment.

Let me try and make an analogy (always a dangerous game here at the Bund...):

Ryan gets enraged at the thought of someone (mainly me) saying that illegal immigration is a self-perpetuated problem. I have yet to see evidence that those entering the US illegally right now (and I know they are millions in numbers over the last 12 years) are any more prone to committing criminal acts than people who have lived here for generations, discounting the fact that their very presense is an illegal act, of course. Yes, there are more "illegals" in our criminal system than any other demographic group... but because of their immigration status, everything they do is "illegal" and I think lends itself to perpetuating the problem. Ryan is of the opinion that not enough is being done to stop the problem at the border or on the job (meaning the places that employ these illegals), and thus the problem grows.

Either way, no matter the opinions on the cause or the solution... the problem remains. Anywhere between 8 million and 25 million "illegal" undocumented men, women and children living within the American economy and benefiting from Federal, State and local programs that they are not now nor have they ever contributed to. That is our "status quo" here in America on the immigration issue.

There is a parallel here with the crude oil market. The status quo is NOT WORKING. Since 2000, the market price for a barrel of crude (and thus the market price for a gallon of gasoline) has gone from a 7% per month variable price to a 35% per month variable price, with peaks in price having gone over $4 per gallon at least 3 times since 2005 (which equals at least a 65% increase from the previous year's price in each event, and as much as a 115% increase). The previous 18 years saw no greater a rise in gasoline prices than the standard rate of inflation increase of 4% each year.

With each passing month, the US is reaching and even surpassing demand estimates for crude oil, either through import contracts or domestic drilling... yet the cost of fuel is now (right now, in fact) nearly 200% greater in 2011 than it was in 2004, when Bush won his second term. Seven years, 200% increase in cost, no decrease in crude supplies... something isn't working, and whatever that something is is applying far too much pressure on an already weak and fluttery economy that can't afford the hikes.

So, please tell me again... What is the solution here?