Thanks sincerely, for honoring and including me in that most distinguished list of addressees for your question.

I offer you, below, my rationale, or explanation, for increase of U.S. domestic oil and gas prices.

There are two fundamental drivers or causes for increased oil/gas prices:

1. Deliberate growth or inflation of U.S. National Money Supply in excess of the natural, plus immigration, growth rate of the Total U.S. National Population headcount.

From January 1994 to January 1999:

Total U.S. National Money Supply (M3 Component of Money Supply) increased 40.7% - from $4,282.9 Billion in January 1994, to $6,028.8 Billion in January 1999. (The U.S. Money Supply number was at $6,516.5 Billion in January 2000.)

Oil and gas prices, just like stock market prices, and the price of every 'product' in the global and domestic retail markets, are driven higher, solely by the incessant and uncontrolled rate of growth of total U.S. National Money Supply (totally independent of rate of growth of total national population headcount).

Allowing a one-year to six-month lag from the increase of Money Supply, the price of a barrel of oil will follow the leading increase of Money Supply.

On Jan 4,'95, the 'futures' price of a barrel of oil was $17.50. That price dropped to a low of $11.28 on Nov 30,'98, then rose again to to a U.S. 'futures' price at $32.70 as of June 15, 2000. That represents an increase of 87%, roughly twice the inflationary increase of U.S. Money Supply over the same period of time (with a 1-yr to 6-month lag).

More explanation for that increase is as follows:

a. As U.S. Money Supply increases in excess of the total national population headcount, the exchange rate of the U.S. dollar for 'product' diminishes. That's been happening for the last 50 years. This deliberate inflation of money supply decreases the purchasing power of the U.S $dollar faster than a wage-earner or business structure can earn it.

b. The same effect as a. above is felt by the oil-producing nations - they have no choice but to increase the price of oil to compensate for the decrease in the purchase or exchange value of the U.S. dollar for 'product' in the global market place for 'product'.

However, during the 5-year period of numbers, inflation of money supply was 40%. Why should the price of a barrel of oil be increased 80% ? Answer lies in the second fundamental driver or cause for increased oil/gas prices, as follows:

2. Since the industrial engineering and manufacturing complexes and factories of the U.S. have been destroyed over the last 50 years (because of the deliberate inflation of U.S. money supply), the U.S. no longer has any useful or functional 'products' to sell to the oil-producing nations, in exchange for the oil the U.S. buys from them.

The oil-producing nations don't have any 'demand' by their national populations for the chemical and pharmaceutical products produced in the U.S. (FROM THE OIL THE U.S. PURCHASES FROM THEM.)

Other than chemical and pharmaceutical products produced in the U.S., all other 'products' that populations of the oil-producing nations need (the 'demand' side of the natural law of demand and supply), must be purchased from Euroland and/or the Nations in Asia that produce them - shoes, clothing, automobiles, telephones, computers, etc., etc.)

The only 'products' the oil-producing nations can purchase from the U.S., other than chemical and pharmaceutical products produced in the U.S., is financial paper, like U.S. Treasury Certificates, or U.S. $dollars - not backed by any material 'product'.

The Arabs are not dumb or stupid. Doubling the price of a barrel of oil by the oil-producing nations is their hedge against deliberate inflation of U.S. Money Supply, so they may purchase 'products' they need from 'product' producing nations in Euroland or Asia.

It's interesting to me, and an opportunity to note and express, that neither the NAFTA or the GATT, international trade agreements for the 'global economy' - division of earth into separate trading blocs or trading zones - do not even to begin to address these fundamental drivers or causes of increased oil and gas prices in the United States.

I know how to fix this global and (more seriously) our domestic problem. Most unfortunately, I'm the only one who knows that. Would like to be, but, unfortunately, am not in position of any power or authority in 'government' to do anything about your concern and our domestic problem of high oil/gas prices.

Thanks again, most sincerely, for the opportunity and privelege to answer your most valid and important question. Would be pleased to know if I have not answered your question to your satisfaction.

Respectfully,

Bernard Palicki (Bernie) Presidential Candidate (Ind-AL) Not soliciting or accepting contributions (See Re-visit)

Bernard Palicki
Huntsville, AL
June 17, 2000

Return to Home Page