Gas prices keep going up since Trump became President:
This is no accident. Gas prices went up the first 6 years of Bush’s presidency as well, until the economy crashed. The reason is quite simple: Trickle Down Economics.
Most of the time when you read explanations of why gas prices are rising, you are seeing a description that is intentionally non-partisan. Here’s an example:
“It’s been about demand growth worldwide,” said Tom Kloza, global head of energy analysis for the Oil Price Information Service. And when it comes to sanctions on Iran, a major oil producer, “there’s no shortage of scary comments” that inject fear into the market and drive up prices further.”
And if gas prices are going up in the Spring or Summer, you’ll see explanations that mostly dwell on Summer or holiday driving increases.
While there is more demand in the Summer, and there can be some truth to geo-political explanations for gas price increases, these explanations often miss the bigger picture. Besides the obvious Middle East disruption of the Iraq War, has there really been a difference in Middle East stability from year to year? Is there really more instability in the Middle East now than there was 2 years ago? Absent the immense disruption of the Iraq War, citing instability in the Middle East as a reason for gas price increases is often just lazy analysis. There is almost always instability in the Middle East.
What has been a consistent influence on whether the price of gas is going up or going down, an influence that should be obvious but is rarely cited, is the value of the U.S. dollar. Why would the value of the U.S. dollar affect gas prices? Simple: because most oil is bought using dollars, and despite the fact that we produce a good deal of energy, we still import 10.1 million barrels of oil a day. Those 10.1 million barrels each day are purchased from other countries using U.S. dollars. If the U.S. dollar is relatively strong (worth relatively more than other currencies), the U.S. dollar can buy more oil per dollar. If the U.S. dollar is relatively weak (worth relatively less than other currencies), the U.S. dollar can buy less oil per dollar. This relationship between the relative strength or weakness of the U.S dollar to oil prices has shown to be very influential for many years:
Simply put, the value of the U.S. dollar relative to other world currencies greatly translates into the price people pay at the pump. If the dollar has more value, people generally pay less. If the dollar has less value, people generally pay more. So, what influences the value of the U.S. dollar relative to other world currencies? There are many factors that can influence the value of the dollar, but one of the main and most consistent influences to the value of the dollar has to do with structural (as opposed to economic) budget deficits. If the federal budget deficit is increasing because of structural changes (tax cuts, spending increases), the value of the dollar tends to go down. If the federal budget deficit is decreasing because of structural changes (tax increases, spending cuts), the value of the dollar tends to go up.
As can be seen from this chart, the US dollar gained strength throughout most of Bill Clinton’s Presidency, due to policies that were put into place that ended up balancing the federal budget. As a result, Gas prices plunged.
George W Bush was elected and enacted a series of large tax cuts for the wealthy and increases to military spending – Trickle Down Economics – greatly increasing the structural budget deficit, and the value of the dollar fell steeply. Gas prices nearly tripled before falling when the economy crashed.
Barack Obama was elected and enacted a temporary fiscal stimulus to turn the economy around. This stimulus increased the structural deficit temporarily, and the value of the dollar fell while gas prices rose. After the stimulus, Obama then enacted tax increases on the wealthy and spending cuts, and the structural deficit began falling, while the value of the dollar increased greatly, and as a result, gas prices dropped.
Now, Donald Trump is President, and has passed tax cuts for the wealthy and increased military spending – Trickle Down Economics – just like George W Bush did. And what has been happening as a result? It shouldn’t be a surprise. The value of the dollar has been falling and gas prices have been increasing.
This is a part of the insidiousness nature of trickle down economics that people don’t often realize. Not only does the wealth go to the top, then never trickle down, but the budget deficits caused by the tax breaks for the wealthy are paid for by the poor and middle class. These budget deficits result in government services being cut, and they cause prices to rise for necessities like gas and food, which are paid for by a much larger percentage of the income of the poor and middle class than by the wealthy. Think about what percentage of your budget goes to gas and food. Then think about what percentage of your budget would go to gas and food if you had a million dollar income. It’s pretty difficult to spend hundreds of thousands of dollars on gas and food. This increase in prices of necessities, like gas, that is caused by trickle down economics is in effect a tax increase on the poor and middle class, in order to give a tax cut to the wealthy.