They're At It Again

Hi Everyone:

In my college Economics 101 class, I learned about supply side economics. If demand increases, supply goes down and prices rise. On the other hand, if demand decreases, supply increases and prices decrease. Everything you and I learned about supply side economics can now be thrown out the window or better yet flushed down the toilet because that theory no longer holds any water!

I have written about a similar problem twice before on 3/8/09 and 6/21/09; but today's topic is about natural gas prices. On 9/16/09, I read in my newspaper, an article that was buried in the paper and not front page news; that natural gas prices spiked more then 13%, while crude oil prices fell for the second straight day. Natural gas prices settled at $3.297 per 1000 cubic feet. That is up 33.7 cents. Now you might be thinking that natural gas prices usually do climb right before the heating season begins, but a 13% increase in prices? Not so fast with that way of thinking. Presently, there is an enormous glut in the supply of natural gas. We are also obviously still in a terrible recession which means with less money to spend, people conserve and use less natural gas in order to save money. In addition, people buy less manufactured products to also save money. That translates into manufacturers using less natural gas to build less products. All total it means less demand. But wait, supply side economics says that when demand is down and supply is up, prices decrease. That no longer seems to be true in this day and age of never ending greed with the investment banks.

If demand is down and supply up, why then the huge increase in prices when the prices should be going down? It doesn't take a rocket scientist to figure this one out. Just like crude oil prices that more then doubled last year, the one and only reason I can figure out why there was such a huge price increase is due to.................drum roll please.................here we go again..................... speculators. What other reason is there? To my knowledge, there are no distribution problems. Last year it was speculators, (not the supposed increase of China's and India's demand as we were told) who drove up the price of crude oil to levels never before seen and they made a ton of money doing it. Investment houses greed is rearing its ugly head again because now they are starting with natural gas prices. What the hell?

With such a huge supply glut of natural gas and prices jumping 13%, why isn't this front page news and a hot topic for TV news. Why aren't all the millions and millions of natural gas customers yelling out their windows that they are mad as hell and aren't going to take it anymore!!!!!!!!!!!!!! That I do not have an answer for.

I do believe though, that a law should be passed that forbids speculating on natural gas and crude oil. Let the prices of natural gas and crude oil be based solely on supply side economics without any outside influence, i.e.: speculators. Risking the health of our already terribly weak economy is absolutely the wrong way to go and will do more damage. If we head down that road, our recession could very easily turn into a depression and the current 9.7% national unemployment rate will seem like the good old days. Speculators, in my book, started this recession last year with their greed regarding crude oil and have to be stopped ASAP. If anything, our country's economy and also the world's economy needs stable prices in order to help us all climb out of this recession.

Increasing natural gas prices when there is such a glut makes no common sense and we need a whole lot of common sense right about now. Something needs to be done today because waiting until tomorrow just may be the straw that breaks the camels back.

What do you think? Post a comment and let me know.

Common sense rules and greed drools.

Til next week.