The Volatile Market of Sustainable Fuel is a Barrier to Economic Stability

Many economists have claimed that the volatility of crude oil, which has been in constant fluctuation for several decades, may very well be the fundamental barrier to a stable economy.  Not only in the United States, but abroad as well.  The need for government intervention has the come to the forefront of economic discussion.  It is not just for the United States, but other countries where the global supply and demand has for the most part worsened. 

The citizens of the U.S. are, in an awkward way, the perpetrators of their own economic instability. America is in love with the automobile.  The term “car-culture”, conjures up images of high powered fast cars, custom paint jobs and street racing.  The automobile has become as synonymous with the United States as the sport of baseball. Homegrown musicians write songs about them. Movie makers have created countless entertainment franchises extolling their mystical virtue.  The love of the automobile has become as ingrained into the American psyche as the American flag.   We, as a nation is addicted to the automobile.  Therein lays the problem.

Due to the automobile’s current need for petrol to function, the consumer is in the precarious position of being held hostage by the volatility of gas prices.  Much like other addictions, it is hard to kick and seek treatment. Also like other addictions, its volatility is undermining stable economic growth here in the United States.  The American people need an intervention, and yes; it is a government intervention.

The Results of Fear

Here in the United States, the fear of becoming a socialist country runs high and therefore any sensible government intervention is viewed with suspicion.  This is certainly true of those who speculate in the crude oil market.  As a result, law makers are stymied in addressing the policies that would impact the frequency in trading of crude oil.  In other words, the American business complex is resistant to an intervention; even one that would have long term benefits for the domestic economy.

Many economists hope that a policy shift in the focus on the use of oil derivatives is one way to ensure economic stable.  Currently, oil derivatives are traded on the market in a speculative manner, which causes volatility.  Many theorists believe the more stable practice of hedging would solve market volatility.  Even though volatility may benefit some who gain profit from market speculation, this does not involve the average American worker or their families.  

The reality is when work stops. So does the income. Such is the case with the decrease of shale oil production.

A Decrease in the Production of Shale Oil

While entertaining in the media, blaming a sitting President because of fluctuating gas prices does little to stabilize an alarmingly volatile industry.  Neither does allowing a legislative body to approve billions in funding alternative energy sources which have proven financially disastrous to the American coffers.  The need to deter oil speculators, and set aside reserves of crude oil while increasing America’s reduction on fossil fuel dependency would ease the pains for the consumer.  It would also bring about a tremendous growth in the economic stability of the United States. 

The problem lies in the declining production of shale oil within the last year.  In their report of September 2015, the EIP stated that production of shale oil had declined by 208,000 barrels of oil per day. This astonishing amount translates to roughly 10 percent of the over-all global supply. This causes gas prices to fluctuate not only here in the United States but also in other countries that are dependent on fossil fuel.  While the reduction in shale oil production may increase greater health to the environment, it will ultimately cause greater volatility in the economy if countries are not given alternatives to their dependency of fossil fuel.  Think of it as a long term energy “methadone program.”  It is not enough to ween the United State away from their dependency of fossil fuel, there has to be a successful and productive alternative to sustain stability.

Unsuccessful Alternative Energy Production

In an article Nov 28th, 2015, Gateway Pundit made claims that the current administration has spent over $150 billion dollars of taxpayer money to fund green energy projects within the last five years.  The average cost to tax payers was to the tune of $30 billion per year.  While that may seem like a progressive move away from fossil fuel dependency, the government subsidies have produced little increase in the way of alternative energy. The increase of renewable energy resulted in only 1% growth here in the United States.  To add to the failure of this green energy initiative, thirty-six of the companies that were subsidized went belly up. The dissatisfaction of the American public is further exacerbated by the commitment of billons in U.S. tax dollars to funding green energy development in countries such as India; while prices at the pump continue fluctuating. It is this incompetence and mismanagement of US tax dollars in developing alternative energy sources that has many American distrustful of the possibilities that green energy offers.

The Problem of Perception

There is much one can say of the perception that the crude oil market is something that one can turn on and off, similar to a light switch. When this unseen dark force or monolithic cabal filled with society’s Illuminati wishes, they stick to the masses.  This underlying mindset feeds into the big-brother paranoia of a fear driven media that wants the public to believe that their lives are being controlled by malevolent forces driven by greed and reckless ambition. The problem simply stems from supply and demand and the lack of understanding in how to manage the available resources while developing the ability to harness other forms of energy. In some parts of the world, crude oil inventory will remain high. In other countries, particularly here in the United States, as production shrinks, so will the inventory.  Unfortunately, the crude oil market will not wait until we strike the right balance between crude oil production and utilizing other sources of energy.