In Part I, we looked at how empty and hypocritical Congressional complaints about oil speculators are. Through the beginning of 2012, Congress has ensured that its members are exempt from insider trading laws; and according to countless reports, that exemption has been used any number of times to line the pocket of Congressional members with handsome profits.
As long as we are reviewing matters pertaining to Congress, let me ask you an important quiz question: “Do members of Congress participate in Social Security – that is, do they pay Social Security taxes, just like the rest of us?”
Let’s see now. Wouldn’t it be a great incentive for Congress to do everything they can to ensure the sustainability of Social Security if they had a real, live, personal “stake” in its long-term financial strength and viability? Answer: Of course!
Reality: Prior to 1983, Congress was not covered by Social Security! In 1983, there were key revisions to the Social Security Act – including the requirement that Congressional members participate in Social Security by the beginning of 1984!
We have seen how slowly Congress acts on most items. They haven’t even come to an agreement (much less a bill) regarding the budget reforms they’ve agreed are absolutely necessary … and their inaction has now spanned well over 2.5 years. However, with their own money and pension benefits on the line, Congress managed to act with amazing speed back in 1984-85. By 1986, Congress created their own, healthy, vibrant, pension program… totally separate from the Social Security system with which the rest of us must cope. That new program was the “Federal Employees’ Retirement System”! Don’t you think the least they could do is allow us to choose within which system we will receive our pension benefits? Don’t hold your breath!
Separately, I have created slides showing the trend of gasoline and oil prices over the past two months, so you can gain better perspective on the trends – the real trends, rather than the hyped trends you hear and read about in the news.
No matter what you hear or read elsewhere, the actual reason for oil price movements primarily include:
1) Real or perceived threats to oil supply (currently, Iran’s threats and the possibility of war in the Middle East because of Iran’s nuclear threat are moving the markets upward);
2) Information regarding oil stockpile inventory levels (when inventory goes down, prices move up);
3) Worldwide demand for oil (as demand goes up, as it is in emerging economies, the price goes up);
4) With particular regard to gasoline, as refineries are brought online (new or repaired) or go offline (because of a fire, as happened recently), the price of gasoline is pushed up or down based on resulting supply additions or reductions.
No matter what political campaign rhetoric you hear from Congress or any presidential candidate (including the incumbent) there are two things which can almost immediately lower gasoline/oil prices for the moment:
1) Release some oil from strategic reserves;
2) Approve the Keystone Pipeline, which will bring abundant Canadian oil into the U.S. – lowering our dependence on the unstable Middle East. For your information, all political rhetoric aside, the U.S. State Department vetted and granted approval for the pipeline many months ago.
Keep these points in mind as you watch the news and the ongoing campaign rhetoric.