Diane Sori
by on April 11, 2019
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By: Diane Sori / The Patriot Factor / Right Side Patriots on American Political Radio
President Trump is on a “roll”...his approval rating as I write this is up to 53% as even some Democrats are finally accepting the reality of the good our president has done for both America's economy and for their personal pocketbooks. And some mainstream Democrats...those who have not yet totally bought into the socialist agenda of the Democrat hierarchy...have even come to understand the truth as to why a southern border wall is so desperately needed. But there is one thing that can negatively affect President Trump's “roll”...even if it's just in the short term...and that is the fact that as gasoline prices continue to rise Trump's approval rating could start to fall.
And while the Democrats ever growing list of presidential hopefuls starts to implode from within, even they could make up some ground if gas prices maintain their current upward spiral. And upward they do go with regular gasoline costing yet another five cents this week alone, to reach a national average of $2.74, translating into being eight cents higher than the corresponding time last year. And to make matters worse, when you add in that the $2.74 price per gallon is in and of itself 28 cents higher than just one month ago, a serious and cannot be be ignored trend is emerging while demand for gasoline is holding steady even as inventories continue to “tighten up,” and it's doing so while the peak summer driving months are fast approaching.
Translation: President Trump needs to do something... anything...to help reverse this trend or it will not bode well if it continues into 2020.
So what is fueling this current trend...most seem to think it's the never ending demand for both oil and gas what with the world's energy needs ever increasing, which in turn sees coming into play the old adage that when demand increases for something a price hike is sure to follow. However, others seem to think that it's oil and gas speculators who trade oil futures for profit that are causing the prices to rise, while those in the know say there simply are not enough speculators or combined investment dollars to control the world's crude oil market or its pricing neither in the long run or in the short-term. And why...because what most forget is that oil speculators are actually securities traders not securities holders, and while they obviously do greatly profit when crude oil prices increase they still are not the cause of the current gas price increase nor have they ever been the cause in the past.
So why then are gas prices currently increasing when the price per barrel of oil itself has not risen by any significant amount? The final answer lies within the sum of its parts with the first all-important part being that unfortunately our U.S. dollar is simply not worth what it used to be. Remember, whenever the value of the dollar goes up, the price of oil and gasoline goes down but when the dollar declines...as in its value is lower compared to other currencies in the foreign exchange market...the price of oil and gasoline goes up.
And that dollar decline in value is sadly where we are right now.
And with the oil markets continuing to be priced in dollars coupled with the buying and selling of oil also continuing to be done in dollars...the fact is that with more actual dollars needed for purchasing crude oil that increase in cost is passed on to the consumer at the pump.
Also something not to be forgotten is that the valued price of the U.S. dollar...the world's main global business trading currency and the world's most stable reserve currency...was but half of what it was in 1990 as the Reagan presidency was coming to an end...now having fallen a full 14% by the end of 2018. And as I write this article on Wednesday, April 10th, the dollar has decreased even more, this time by 0.07% to 96.9389 down from 97.0060 in the previous trading session. Sad isn't it as during the Reagan years our dollar reached an all time high of 164.72 in February 1985, then dropping to a record low of 71.32 in April 2008 as we headed into the Obama/McCain election cycle.
So, why exactly is the dollar continuing to decline and why are gas prices rising? First, while the two are forever tied together something that must not to be overlooked is that during the Obama years way too much currency was being printed without any “treasure” to back it, thus sending us into an inflationary mode with some ill effects still lingering to this day no matter Trump's current robust economy. And second, a large part of the dollar's decline in value is due to the value of most G10 currencies* rising as the figurative growth differentials between global economies start to converge...as in equal out a bit...with the Japanese yen being the biggest gainer value wise and us being the biggest loser even while the dollar remains the a fore mentioned world's most stable reserve currency.
Simply, if the dollar is not strengthened we could see gas prices going even even higher, especially with it being highly unlikely that we will anytime soon cut the cord tying us to Arab oil. And while we might want to be independent of said Arab oil, at this point in time that's not feasible what with both our current and projected future rates of gasoline consumption also continuing to rise.
And then to add into the simmering pot of gasoline prices rising there's Venezuela, home to some of the biggest petroleum reserves in the world.
Back at the end of January, due to Venezuela's ongoing political instability, President Trump rightfully enacted sanctions on Petroleos de Venezuela (PdVSA), Venezuela's state-owned oil and natural gas company and the parent company of U.S. based Citgo oil company. And with our country being Venezuela's largest and most important oil customer...accounting for 39% of the OPEC nation's deliveries last year...and with Venezuela being the fourth-largest source of foreign oil flowing into our country...the truth is that imports of Venezuelan crude oil into the U.S. had already slowed down even before the sanctions were imposed, something most don't know.
And while many folks continue to think that because of our increased shale oil production that we have plenty of crude oil to offset any loss from Venezuela, what they don't realize is that the quality of crude oil varies widely, and that many U.S. refiners rely on the type of oil that Venezuela produces. For example, there are two main types of oil, heavy** and light. So while we have much in the way of light shale oil, we are in short supply of the heavier grades of crude oil needed to produce diesel and other what's called “high-margin” petroleum products. Now add in that a slowdown in operations by refiners as they scramble to try and secure other sources of the needed heavier oil grades, would itself lead to higher prices for gas and diesel fuels...and it has.
So while we are less dependent than we used to be on the once steady supply of oil from Venezuela...a supply that helped to keep our gasoline prices relatively low compared to other countries...the sanctions have to some degree still impacted U.S. fuel production causing production costs themselves to rise which in turn are now being reflected at the pump with that reflection expected to see fuel prices rising even higher as summer's high peak driving is right around the proverbial corner.
And while an increase in crude oil supply into the U.S. is a must...a must that could and most likely would see lower gas prices in the short-term...it's not the much needed long term fix we truly need. And when you add in the dollar decline coupled with the flow of Venezuelan oil basically being cut off, there are but two feasible solutions that remain...one is for OPEC to release more oil at a lower price per barrel than it is now, and the other is that we must increase oil production both from U.S. and Canadian shale and heavy oil drilling as well. And we also need to build some new refineries to cut down production costs, which in and of itself would help to lower pump prices a bit, and anyway it's hard to believe that since the 1980's no new refineries have been built in our country.
But the bottom line is this...if something is not done to bring gas prices down ASAP, California's current price of $3.80 per gallon for regular gasoline will soon seem like chump change compared to the real possibility of seeing $5.00 per gallon by the end of this summer. And if that happens and does not reverse itself as we draw nearer to the 2020 election, President Trump might see whomever garners the Democrat nomination having a bit of “political ammo” to fight back with as $5.00 per gallon of gasoline will negate any gains made by Trump's tax cuts...as in any gains in monies put back into “We the People's” pockets.
“Drill Baby Drill” becomes even more critical now than it ever was before for both President Trump's sake as well as our own.
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* The G10 currencies are the United States dollar (USD); the Euro (EUR); the Pound sterling (GBP); the Japanese yen (JPY); the Australian dollar (AUD); the New Zealand dollar (NZD); the Canadian dollar (CAD); the Swiss franc (CHF); the Norwegian krone (NOK); and the Swedish krona (SEK).
** Heavy crude oil has a gravity of less than 10° and a reservoir viscosity of no more than 10,000 centipoises and have a low solubility and a viscosity lower than, and density higher than, water. This means that heavy oil spills would quickly penetrate the full depth of water and accumulate on the waters bottom instead of floating on top.
Copyright @ 2019 Diane Sori / The Patriot Factor / All Rights Reserved.
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For more political commentary please visit my RIGHT SIDE PATRIOTS partner Craig Andresen's blog The National Patriot to read his latest article, Candice Owens – When the Black Sheep Speaks the Truth.
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RIGHT SIDE PATRIOTS...LIVE!
Friday, April 12th from 7 to 9pm EST on American Political Radio, RIGHT SIDE PATRIOTS Craig Andresen and Diane Sori discuss 'Gas Prices Are Rising...Why?'; 'Candice Owens – When the Black Sheep Speaks the Truth'; and important news of the day.
Hope you can tune in at: http://listen.samcloud.com/w/73891/American-Political-Radio#history...or on Tune-In at: https://tunein.com/radio/American-Political-Radio-s273246/
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