ANTIESTABLISHMENTARIAN

Oil rose $1.60 to just over $73.00 by mid day while gasoline rose nearly 6 cents. I must admit, even I’m surprised at how rapidly it is rising without any major news events to fuel its rise. This is looking like a repeat of the 2008 mania.

If you don’t like it, blame mom and pop, for its their retirement funds that are buying the heck out of crude. Its kind of ironic that while they piss and moan about the price of energy, they are also profiting on the backside, many without even knowing it. For them, its in one pocket and out the other. For the rest of us its just a hole in the pocket.

BP announced today in its annual report that by their math oil consumption fell by 0.6% for all of 2008 and production fell by only 0.4%. Okay, so what happened to the much ballyhooed demand destruction? With margins that slim, should anyone be surprised that the price is rising?

FACT:  All we have to do is just get close to supply/demand equilibrum (as happened last year) and buyers will start hoarding and another mania begins.

FACT: All the talk about cutting back on energy consumption is just that, talk.  People continue to buy bigger vehicles and consume more. There is only two things that can stop increasing consumption:  Price increases either by taxation or by excess demand over supply. Either way, you  had best plan for the day when energy consumes 20% of your budget, or you vastly alter your life style.

FACT:  GDP is inversely proportional to energy costs. Price goes up, productivity and revenue goes down and the US trade deficit  and the dollar both suffer as a result. The point is, it makes us doubly poor.