What Can Congress Do About Gas Prices?

The KSHB Chronicles

 

On 7 September 2008, I am to speak to KSHB TV in Kansas City about several issues. 

They tell me that they want to know my energy policy, whether I believe in Global Warming, What can be done about Gasoline Prices, When I think American Troops should come home from Iraq, Where the Next Front should be in the War on Terror, Who is responsible for the mortgage crisis, and What I would do to increase jobs.

 

WHAT CAN CONGRESS DO ABOUT GAS PRICES?

 

The first thing to get straight about gas prices is that there is no lack of supply of petroleum in the market.  This means that the recent rise in prices is not a matter of supply and demand.   

FACT. On 28 August 2008 the price of a gallon of gas was $3.49 and the price of an ounce of gold $812.50.  So the price of a gallon of gasoline was 0.00429538 ounces of gold.  

FACT.  On 1 September 2001 the average price of a gallon of gas was $1.123 and an ounce of gold was $270.00.  That made the price of a gallon of gas 0.00417407 ounces of gold.  

FACT. This means that gas is selling at $1.16 in 2001 dollars  or $0.037 higher than at the same time in 2001.

So, if there is no fuel shortage, and the price of gasoline is fundamentally the same as it was 7 years ago, what gives.  

Well, simply put, the government reduced the buying power of the dollar.  Simple math makes that clear.  It now takes $3.49 to purchase what $1.16 bought in 2001.  No reduction in supply accounts for it.  No increase in demand accounts for it.

So, what can be done?  Nothing as long as the currency value can be repegged by the government arbitrarily.  When dollars were redeemable in silver the government could not play these kind of games.  This is the same game that the states played under the Articles of Confederation.  This is the very reason the constitution requires that currency be redeemable in gold or silver.  The founding fathers did not want the government to have the power to affect their wealth in this manner.

The constitution has not been changed, the government, in both Republican and Democrat administrations, has been acting illegally.  The dollar needs to be redeemable in silver once again.  Were that so, then, no matter what paper currency games the government, and its lap dog the Federal Reserve, try to play, the average consumer will be protected.  Historically, the result of currency redeemable in precious metal is price stability.

 Governments support themselves by taxation, borrowing, and the theft of their citizens buying power (savings).  The government stole your buying power, and spent it on some program you did not want.  Now your dollar buys less.  It just goes to show that Saint Augustine was right when he said the difference between governments and thieves is that thieves are honest about what they do.