Power & Market

Meme-ing the Express-News

Thank goodness for memes! A witty, well-placed caption on a still frame from a movie, cartoon, etc. provides welcome comic relief amidst the steady drip of stressful news these last few years. 

The latest templates are rich celebrities and bureaucrats who are basically telling us to suck it up, or buy an electric car to counter spiking gas prices in the wake of the Russian invasion of Ukraine.

Now the press is vying for some of the meme mockery.

A recent editorial in the San Antonio Express-News tells us that it’s “a small price to pay to help save Ukrainian lives and cripple Russia’s invasion.” What about the “already high fuel and oil prices” they mention in the next breath?

In any case, all of which can be summed up in three words: a weak dollar.

After the chaos that ensued from President Nixon severing its link to gold, both Presidents Reagan and Clinton came out explicitly for a strong dollar. Remember how much it cost to fill-up then? 

Probably not, because it was negligible.

Oil more clearly reflected the commodity that it is: one that is in abundant supply (we’re on “Peak Oil 3” by my count), and nearly identical from one producer to another. That kind of perfectly competitive setting keeps a natural lid on prices. 

Neither OPEC, nor Russia, nor any other producer could do anything about it because oil is priced in dollars globally (though Saudi Arabia and China are trying to shake that up). 

At the dawn of the 21st century however, our leaders’ support for the dollar started to flag. With its subsequent devaluation, it took more to buy the black gold. Hence, its price soared to almost $140 a barrel in mid-2008 before bottoming-out at $31.

We know what else was happening then: the so-called Great Recession. Incidentally, the mortgage crisis that precipitated that can also trace its roots to the beaten-down greenback.

When the dollar is destabilized, investors start parking more of their resources in established assets, where returns are more certain. In addition to gold, the traditional hedge against dollar volatility, housing is another such asset. 

All this seem eerily familiar right now?

Multiple rounds of “quantitative easing,” two more weak-dollar presidents, and another crash (2014-2016) later, owners of energy companies had had enough. No longer interested in simply financing growth, they started demanding more fiscal discipline.

As so often happens, bankruptcies and consolidations followed. Some organizations have emerged in private hands, which might help them avoid a new headwind: ESG limitations. 

The environmental, social and governance movement dictates that investment flow only to politically correct ventures. Needless to say, that doesn’t include oil and gas firms.

That’s ironic given that it has been them, via the deluge of natural gas unlocked by hydraulic fracturing, that have been as responsible for the steep drop in emissions as any other energy source.

Unsurprisingly, that gets as little attention in the mainstream media as does the fallout from a weak currency, which has only gotten more flaccid since the Fed floored the printing press in response to the dictatorial government shutdowns. 

Now we have politicians in self-preservation mode calling for a suspension of the federal gas tax, and naïve bureaucrats imploring the industry to produce “more right now.” No doubt that includes from the “9,000 approved, but unused, drilling permits on federal land.”

Nevermind that many of those have little potential, or how long it would take to bring product to market from the others.

It’s especially disingenuous after they, buttressed by their media cheerleaders, have erected all manner of regulatory hurdles to push the fossil fuel industry toward extinction.

Supply and demand fundamentals are not out of whack here. The price at the pump has actually gone down by a dime in my neighborhood recently. And though it is inexplicable that we’d court the likes of Venezuela and Iran for their oil, it would matter little.

When the conflict in Ukraine subsides, will these elites start to explain the (near-)doubling of energy prices of the last year or so? Will they put aside political spin, and instead consult facts, figures and history, and level-up with citizens? 

Or are we just supposed to accept it like the unnecessarily heavy-handed government response to the coronavirus? 

We’re being set up for another economic crash, and those don’t make for funny memes. 

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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