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April 30, 2008


Frank, you really nailed it with this column. You do ask a really good question - how long will Mr. Demand be chasing Mr. Supply before someone figures out what you have -- which is that if we don't make Mr. Supply an easier target, Demand may never catch up, and prices will continue to balloon.

The growing demand in asia and other larger countries is apparently already sufficient to absorb any and all surpluses whether from reduced utilization or increased production. Refining capacity has been the same for 30+ years in the US.
Nuclear energy (or "Nuucuuular" as W is apt to call it) is a real alternative (the French use a lot of it) but faces the same "green" barriers as oil exploration.
The political solution from the majority on the left will of course be to artificially set lower prices on oil and gasoline by government fiat (I believe Kucinich is already leading that charge), further decimating the production side of the equation and making scarcity even worse.
Then we'll raise taxes on the "rich", to allow the "poor" to continue to buy cheap gas> This will drive down future tax receipts and produce a collapse in economic productivity along with the attendant loss of jobs and our quality of life.
Medicare and social security are already going upside down independent of the oil crisis.
The boomer generation, now retired and net recipients of government largess, will demand their children make good on the government's IOUs and pay the taxes necessary to keep them happy.
Of course our children can't possibly afford to pay these kinds of bills, so a lot of people will suffer terribly.
You'll know the whooshing sound is next when the first liberal proposes that taxation be asset based like property taxes, since incomes taxes aren't sufficient to cover the bills. And, of course we can just print more money, maybe the world economy won't notice we're doing it.
The most appropriate phrase that comes to mind for all this is "STUPID is FOREVER!"

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