By Bill Wilson — Congressional Democrats are once again resorting to the tired line of price manipulation by so-called speculators and oil companies to explain why Americans are paying more at the pump. Meanwhile, the Obama Administration is accounting for rising prices by market forces, saying alternatively that it’s because the economy is recovering and includes increased demand overseas, particularly China.
They need to get their stories straight, because they are entirely inconsistent. Are prices being manipulated, or are they rising as supply fails to keep up with increased demand as the economy recovers?
Meanwhile, both of these contrary explanations miss the underlying weakness of the dollar that is the real cause for price pressures in commodities, including food, oil, gasoline, and is observable in precious metals like gold. While demand did rise globally from 88.3 million barrels a day in 2010 to 89 million in 2011 according the Energy Information Agency, so too has global production increased to 90 million a day in Dec. 2011. So, market forces alone do not explain the price swing.
Of course, this happens every time the nation experiences price shocks: government officials thrash about looking for anyone to blame but themselves for a problem they helped to create with their big spending, money printing ways.
Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.