We seem to be suffering another pandemic worse than Covid. Much of the western world suffers from Peter Pan syndrome. Many refuse to grow up and act like adults. Swiming in a riptide or playing with fire are actions we attribute to children not learning to avoid. Acknowledging life’s realities and planning to navigate around known dangers is the mark of maturity. Even when warned, a child may petulantly race into the sea or light matches. The desire for instant gratification overwhelms caution. The adult realizes the high risk.
We have numerous examples of people disregarding proven policies and doing the opposite. A half a century ago, we created vast amounts of dollars at a time when supplies were constrained. This process resulted in double-digit inflation. Only severely tightening the creation of money and letting prices rise to encourage supply finally ended the “Great Inflation.” Of course, we suffered a severe recession with 10+% unemployment. Knowing the pain, why in the world would you do it again?
Energy is central to the 1970s and ’80s and our present inflation. We price oil in dollars, and with each dollar purchasing less, oil producers restricted supply, and the rising inflation went into high gear. As a major importer, the U.S. was at the mercy of the new OPEC cartel. Energy affects everything, so the prices continued up. The prices fell back to earth only when high prices brought forth a gusher of new oil.
The Biden administration threw everything away by attacking our oil and gas industry. Because it favors wind and solar, no pipelines built, leases on government areas stopped, and investment discouraged—millions of barrels of oil no longer produced. Before the pandemic, our fracking revolution made us energy independent. We had become the swing producer, keeping the lid on prices. Now we beg Russia and OPEC to increase supply. The world price of oil is heading towards $100 a barrel, raising the price of everything. Instead of understanding the realities, childlike, we wanted our Green utopia before it was possible.
Other benefits come from lower oil prices. Unfriendly nations like Russia, Iran, and Venezuela get most of their foreign exchange from oil sales. More money in their pockets supports their regimes and mischief. Presently, western Europe is paying for Russia’s Ukraine adventure.Continue reading