Time to nationalize oil?

Pic from fuelfix.com

Oil prices have been out of control since 2005. Every time the economy starts to tic upward, speculators increase the price, which, of course, sends everything spiraling up. There is always an excuse to send the price up. The excuses are Chinese demand, Indian demand, Libyan instability, hurricanes etc...

Back during the first Gulf War, Saddam Hussein was blowing oil wells up in Kuwait and the price of oil never budged. Now, the daily fluctuations are hard to predict. They often defy basic logic

It also has nothing to do with supply and demand.

There is no shortage of oil. China is facing inflation, the Eurozone is falling apart and the US economy is definitely nosediving. Demand is clearly dropping. The US government just released 60 million barrels of oil onto the market. And the price at the pump defies logic too. At $95 a barrel, the price of a gallon should be under $3, not halfway to $4 (See blog entry for gas price calcuations, "POTUS MIA?.", March 4, 2011).

The sad thing is that this sad state of affairs is not due to OPEC. Its our own people doing this to us.

I am not a fan of government intervention in the economy but if there was a time for it, this is it.

I believe in free market capitalism.

What we have seen since 2008 is NOT free market capitalism, this is price gouging...and it is destroying itself and the country with it.

Extreme action leads to extreme reaction.

We voted for hope and change and with gas at $3.50 and unemployment at 9.2%, it is hard to keep blaming Bush. It is hard to even tell the difference. The auto industry bailouts provide good precedents. The question is does this course of action take us down some road that leads straight to socialism or communism, two ideologies that clearly have failed.

But crony capitalism is a abject failure too. Not only does it fail, it leads to something resembling feudalism. A trip back in time is not what we or the world needs. Nor will it last.

Free markets and the rule of law is what made America great. A good dose of common sense would help--force speculators to accept deliver of what they buy and increase margin requirements.

Time to use that again or we open the door to impoverishment and destruction.