Jaco – High Gas Prices Are About Hedge Funds Not Iran

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When one thing is proposed but another thing is what actually happens scientists and engineers call it, the reality gap. Not surprisingly that's what we're seeing now from all the people who want to be president; Including the current president when it comes to gasoline prices. But facts can be such inconvenient things.

Let's start with the claim that gas prices are going up because we're being held hostage to Middle East oil. That's a good argument if this was 1990. We're importing less oil from the Middle East than ever before. In fact North America, that's the US, Canada and Mexico is getting close to being energy independent. That's because most of our oil imports now are from Canada and Mexico.

How about the argument that the Keystone X-L pipeline needs to be approved? Well, maybe. But a new study from Cornell University concludes that the Keystone Pipeline would actually cause gas prices here in the midwest to rise by twenty cents a gallon. The authors say that's because oil from Keystone would be carried by pipeline from canada to the Gulf Of Mexico, loaded onto ships and exported.

Then there's the argument that the us government could do something about high gas prices. Like what? Senator Claire McCaskill wants oil released from the strategic petroleum reserve to lower prices. That's a bad idea. The reserve is for national emergencies not because we don't want to pay more for gasoline.

Gasoline's expensive because of worries about what happens next in Iran. It's expensive because hedge fund speculators have driven up the price. It's expensive because places like India and China are bidding for the same gasoline we want. Gasoline's expensive for lots of reasons. Just not the ones politicians are talking about.

I'm Charles Jaco and that's Jacology.