Expert Claims Rising Gas Prices Dispute Feds' Inflation-Free Oil Fallacy
by Ed Thomas
September 6, 2005
(AgapePress) - The co-author of a new book examining oil control and consumption says the combination of increasing oil prices, the devaluing of the U.S. dollar, and consumer debt could cause an economic "perfect storm" in the United States. Economic and investment analyst Craig Smith, co-author of the forthcoming Black Gold Stranglehold (WND Books, 2005), says it is time for the government to stop denying the inflation prevalent in every area of Americans' living expenses. "We're paying 40 to 50 percent more, depending upon the part of the country you're in, for gasoline today than we did a year ago," he says. "We're paying 20 percent more for health care; 22 percent more for college educations; 12 percent more for housing."
Smith expects those numbers will manifest themselves as crude oil and gasoline prices go higher and as the business sector experiences the consumers' pocketbook crunch. "I suspect we're going to see it in the retail sales numbers in September and October as people go back to school," he speculates, "and they just don't have the disposable income to buy the new backpacks and clothing and shoes for the children, because a lot of it went into the gas pumps."
The "perfect storm" scenario the economic expert sees looming could take gas prices to five dollars a gallon to match the cost in ten of the most expensive cities in the world in nations that do not use as much gas as the U.S. does. Meanwhile, he warns, the threat of terrorism is an additional factor driving up crude prices, which could spell economic disaster for Americans if they do not take personal measures to begin conserving fuel.
"There are very deep concerns in the oil complex that the terrorists will now reset their targets on the oil complex, thus disrupting the flow of oil to the free world," Smith notes. "That has probably cost oil a $15 premium right there."
What is happening is not difficult to understand, according to Smith. "Oil is a commodity," he explains, "and therefore it works off 'Economics 101' -- supply and demand. If you have an ever-increasing demand and a limited supply, then it's only a matter of time before prices go up. If you have a ton of supply and no demand, like we had back in 1998 after the Asian currency crisis, and we stopped using a whole lot of fuel in America during that time period, then you see prices drop."
But at present, the analyst points out, the U.S. uses 25 percent of the world's crude oil in an increasingly developed global community. "Right now with China increasing their consumption, India increasing its consumption, and the world, quite frankly, using more energy as a whole as we develop these new economies," he says, "it's put a tremendous strain on the current system."
That strain, Smith adds, debunks the U.S. government's continuing assertion of no inflation effect on oil and federal experts' claims that the price would have to be $94 a barrel to compare to the inflation of the 1970s crisis years. The truth, he contends, is that a 400 percent increase has occurred in the price of crude oil, raising it from $17 a barrel in 2001 to $60+ now.
Fuel costs right along with housing, health care, and tuition expenses in the U.S. are on the rise, the co-author of Black Gold Stranglehold says. And at a time when many major world cities are already paying $5 a gallon for gasoline at the pump, he predicts paying that much per gallon could be in Americans' future, as well as an equivalent $80 per barrel crude price.
In the soon to be released book, Smith proposes that steep enough jump in crude and gas pump prices, initiated by developments in the war on terror, could lead to an eventual U.S. recession, and perhaps even a depression. He and co-author Jerome Corsi explore the manipulation of world economies by oil-producing nations and rogue terrorist regimes and consider America's vulnerability due to the nation's perceived dependency on foreign oil.
Ed Thomas, a regular contributor to AgapePress, is a reporter for American Family Radio News, which can be heard online.
