Time to Point a Finger
While I try to not mix business and politics sometimes you just can’t help it. This is a case of both and it is not a pretty picture.
Not surprisingly, the media in this country has tried to blame the war in Ukraine as one of the main causes of inflation. They say that shutting off Russian oil supplies has created a spiraling effect on the price of energy Worldwide and that is one of the main underpinnings of the inflationary spiral we are in now. The war has also increased the cost of food Worldwide since Russia and Ukraine are major exporters of wheat.
Even though it pains me to say this I do still read the NYTimes online and it’s pretty clear that the agenda of the left is still intact. Thank God for consistency of BS because without it, we would be lost. The BS I am talking about is the Times belief that inflation is caused by a situation, while horrible, that actually has little to do with our inflation in the US. The Times wants you to believe that cutting Russian oil and wheat from World supply has forced prices higher.
The facts are a little different however. Russia produces around 10% of the Worlds exportable oil. Sanctions have cut that back but not to zero. They still export oil to China amongst other places. So, supply is disjointed but not disrupted all that much. Another interesting fact that the Times never mentions is that oil was rising way before the conflict ever started. That rise was more OPEC+ than anything else. Russia is still pumping oil. As for wheat, yes, it will disrupt supplies to Africa and the Middle East for a short period of time. Russia is still selling and delivering wheat to our friends in Saudi Arabia and Iran
Lets be clear once again, inflation is caused by too much money chasing too few goods. Period.
With that being said, let’s go back in time and see that the Federal Government (led and driven by Democrats) injected trillions of dollars into the economy when goods were in tight supply. What did they think was going to happen?
The oil shock we are still feeling now stems from policies in Washington at the start of this administration that have turned America from a net exporter (during the Trump Administration) to a net importer (again during a Democrat led White House) of oil. This policy change has had such a negative effect on this country that the Times or the Washington Post refuse to write anything about it.
The administration is directly responsible for what we are going through now. There is no way to sugar coat it. The administration and the Fed have completely screwed a recovering economy up. Blame is a funny thing. The more you blame others, the more you look responsible and unfortunately, the administration has blamed this inflationary period on everyone from Vladimir Putin to Donald Trump. Yet, the facts are pretty simple to understand.
In deference to loud mouthed left wing (Socialists) and well meaning but clueless New Deal Green people, the administration has declared war on the oil industry. The idea was to wean America off fossil fuels and go to a clean energy future. Nice idea and I am not against it but until we can install fusion energy in every neighborhood we will need fossil fuels. Amazingly, America is blessed with abundant supplies and amazingly we have the technology to extract those supplies at a relatively modest cost. The administration doesn’t want to hear it. What they would rather do is make us dependent (again) on supplies from less than reliable people and potentially fund bad actor states (Iran, Venezuela for example) while crippling an industry that employs hundreds of thousands of people and can strategically protect our long term growth.
Back to the media representation of this mess. One thing I keep hearing is that oil companies don’t want to start up drilling operations again in certain areas and that it takes time to ramp up those operations. They don’t want to feel the boom/bust cycle again. Let’s dissect this for a second. One, fracking and regular drilling in this country usually require a 65 dollar a barrel price to make them worth doing. Check. Two, the explanation that it takes time to ramp up drilling is nonsense as well. Oil has been over 65 dollars a barrel since April of last year. Check. Thirdly, is the oil industries reticence to that boom or bust cycle which is dumb. The industry has been going through boom or bust cycles for over a hundred years and they keep coming back. Lastly, they blame labor shortages and maybe that’s part of the reason but remember there is a whole subculture in this country of oil rig workers that travel the country working on rigs. Did these guys retire? Is 50 dollars an hour with plenty of overtime not good enough. I call BS on that excuse too.
What I think, and I might be wrong, is that a lot of the drilling and fracking is done on US government lands and the Federal government is not writing leases like they should. It may take five or six months to get one of these sites up and running at full capacity but we have had that time and it hasn’t happened. Or is happening at a much slower pace than this country needs.
Like supply chain issues, the oil supply issue has been with us for over a year and it should have been rectified by now. That lies squarely in the lap of this administration and its policies pandering to a very vocal minority.
What the administration is missing, and it will have a huge impact, is that Americans are realizing more and more that while inflation is eating away at their earnings, this administration should take the blame for a lot of what is happening and it won’t. Moderate Democrats are seeing that Administration missteps, some seen, some unseen, are making life harder for the average American and the party that was supposed to protect those average American is failing. While inflation impacts everyone, those impacted most are the Democratic base that the Administration depended on to get into office. Those very people are the ones that will change the course of this administration in November.