Wednesday, November 26, 2008

Energy: The Forgotten Economic Component

The high cost of oil this summer contributed greatly to our economic turmoil we face today. Oil at its high water mark was selling at $147 a barrel. The transportation industry was in a state of disarray. The high cost of energy contributed to the decline in jobs and increase in unemployment. Many companies instituted "gas surcharge" strategies and passed the costs on to consumers. By August, the high cost of energy and the lack of a coherent plan made the democrats look weak and ill prepared.

However, by the middle of September the price of oil began to fall. The damage to the economy was irreversible. While the pundits blame the financial crisis on the greedy wall street bankers and auto executives. Obama has proposed a moratorium on foreclosures and is primarily focused on the bailout of the financial sector and auto industry. The problem is that because of the tanking economy and energy prices not seen in over two years, Obama and his advisors have taken their eye off the ball.

Energy prices will not be this low forever. In fact as soon as the US economy starts to regain its footing the oil prices will also begin to increase. Once this happens we will yet again be facing $4.00 a gallon gasoline prices. Another facet of this is that the EPA wishes to use the "Clean Air Act" to regulate green house gases. This will effectively tax all of energy usage and again we the consumer will be paying exorbitant prices for oil. This year the high prices were during the summer. Many people cut down on the use of AC and found alternate means of transportation. However, had these high prices happened in the winter the effects would have been far reaching and caused even more damage to the economy.

America has to remain conscious of the effect energy costs have on our economy. The effects on the consumer are greater than any other single component of the economy. We need to start drilling now for our short term solution. We need investments now in attaining energy independence. We can not wait until the technology of tomorrow matures. Instead of dumping another $700 billion in bailout money as proposed by the Democrats we need to place money into energy cost reduction. Focusing on the auto industry and its bankrupt policies will only prolong their inevitable demise. Neglecting energy today will cause the American economy to fail now.

Energy is the forgotten component. However, it is an integral part of the economy and America can not afford higher energy costs. The economy will not be able to recover without a plan to keep energy costs down. Any kickstart of the economy will be doomed to fail as long as energy prices climb with increased production and usage. The proponents of "Drill Here, Drill Now" must continue this pursuit.

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