Guest Opinion/Commentary*
Oil Is Not Decayed Fossils
By Paul Streitz (05/17/08)
Oil is not decayed fossils. Oil prices are the same as eight years ago, measured in gold.
Oil is made by a biological process of converting helium that comes from the nuclear reaction at the earth's center. The helium is a result of the atomic reaction at the earth's core and is thrown toward the surface by the rotation of the earth. Some evidence for that would be: 1) oil exists at 30,000 feet, far below the 18,000 feet at which organic matter disappears; 3) dry wells are later opened; 3) the amount of oil pumped out of the earth to date can not be accounted for by organic matter.
So, stop worrying about running out of oil, or thinking that it is a cause of rising prices. The supply is so long lasting that it is not a shortage of oil, and perhaps never will be. Neither is the rise in oil prices in terms of dollars is not caused by OPEC, greedy oil companies, or the lack of reserves.
Instead, think about ending the pipeline of products from Chinese factories to Wal-Mart.
What has caused the rise in the price of oil is the increasing unwillingness of foreigners to accept American dollars. The world is awash in increasingly worthless dollars, and the price of oil has gone up accordingly. (See the accompanying chart.)
Given a few lags and leaps the price of gas in dollars neatly parallels the price of gold in dollars. Oil sheiks and Latin American governments want gold for oil, or the dollar equivalent. As the dollar, sinks the price of gas goes up.
In 2003, when I first ran for elective office, I said that gas was going to $5.00 a gallon. Gas was then at $1.40 and most people thought this was a rather wild-eyed prediction. Now that gas in Connecticut is at $4.03, my critics are not so vocal anymore.
I also said that few people understood Free Trade. It sounds good. It is taught in colleges and university economics as a wonderful theory, where everyone comes out ahead. Poor nations get rich and rich nations get richer. Arguing against free trade was like arguing against, God, motherhood and the Yankees, although not necessarily in that order.
Manufacturing, I said was eroding away. But was answered with a chorus of "Yes, but we get cheap cars and television sets." The macro understanding of the dangers of Free Trade are not understood by Washington politicians, or if they do understand, they have sold out to global corporations.
I said that the American public would start to understand the foolishness of our trade policy when gas went to $5.00. At $4.00, the public is awakening to the problem. It should also be noted that it is not only at the pump that consumers are paying a higher price. Food has skyrocketed and other goods will follow. After all, it takes energy to drive those trucks and tractors that plant the corn and bring it to market.
U.S. Citizens must accustom themselves to the fact that the United States is no longer a wealthy country. It is a formerly wealthy country that is deeply in debt. Russia has a current account of a $465 billion dollar surplus and China's is $365 billion. In contrast, the U.S. account is a deficit of $987 billion. (We should reach a trillion soon.) This does not count the $3-5 trillion dollars the war in Iraq and Afghanistan is going to cost.
In brief, the USA is a gigantic debtor nation on the verge of collapse.
The U.S. only survives because the dollar is the world's reserve currency. If the world's currency immediately collapses, the United States collapses, but all the holders of dollars would collapse also. Therefore, what is happening is not a sudden shift, but a movement out of the dollar. The Arabs and other countries now want their payments in gold, Euros, or the dollar equivalent. The dollar is only about half the world's reserve currency.
Thus, it might be better not to predict a collapse of the dollar, (although that could happen), but rather an increasing steep decline, as is shown in the chart.
Americans must realize that they are going to have to tighten their belts. First, end free trade by placing high tariffs on all manufactured goods. Second, bring the troops back home. We cannot afford (why are they still there) 45,000 soldiers in Korea and thousands in other places in the world. Third, find a graceful way out of Iraq. It will bankrupt the USA. And finally, rein in domestic spending.
Universal health care? Who is going to pay for it? The Chinese?
The problems that America faces are all problems that we have created, or more specifically, the elites in Washington have created. They can be solved. Nevertheless, time is running out. But they can be reversed, that is the good news.
Paul Streitz
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*Ed: Views are those of individual authors and not necessarily those of American Daily.
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