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OIL GLUTS ARE FOR GLUTTONS There is an oil glut. OPEC countries have lots more oil available than non-oil producing nations are buying. The price of crude oils is going down, something which helps curb inflation and the balance of trade deficits. Some say OPEC is falling apart at the seams; that the once powerful cartel can't keep its members to hug uniform prices the way they did when they caused the price of oil to rise about $20 per barrel in the '70s. Enter our first Law of Economic Gravity (with no appleologies to Newton): What goes up may or may not come down. Now, according to the National Satirist's Law of Economic Gravity, the price of gas at the pump, home heating oil and related products will not drop commensurate with the drop in the price of crude oil. No way. Consumer prices will hold steady or rise, just like they did with mortgage and other interest rates that went sky-high also in the '70s. That is because of the First Corollary of the Law of Economic Gravity: When you raise the ceiling, you also raise the floor. It's enough to make us really angry at the way the '70s were conducted. Just look at the evidence, as if the above were not sufficient: In the '70s... The Defense budget went sky-high as we wound down the Viet Nam war. Has the Defense budget dropped since? No,no,no. Consumer prices went way up. Did they come down? Nope. They just stopped going up, even though many wholesale prices have dropped. And so on. Our Second Corollary: It's easier to climb the tree and let the fire dept. rescue you than it is to climb down yourself. Now, according to the National Satirist's Second Corollary of the Law of Economic Gravity, what is keeping the cost of money, oil, defense and consumer goods high isn't, as we noted above, increased demand for such things. What is keeping the floor up is Fear of Inflation. Consumers aren't afraid of it, but manufacturers and lenders are. And they're the ones who hold the purse strings. All of this brings us to a fork in the road. Left fork: What can you do about the situation? Right fork: What's going to happen next? The answer to both forks is: Nothing. Not for a while. Then all you-know-what will break loose. We will be gobbled up in a huge tax increase which will absorb Fear of Inflation and all of our extra money to reduce the Federal budget deficit, causing a lowering of the ceiling (but not the floor--in other words, we'll be squeezed juiceless). The inflation of the '70s was fueled by oil prices which caused everything else to go up too. The inflation of the '90s will be fueled by deficit reduction. Which brings us back full circle to our premise: Oil Gluts are for Gluttons. We have learned to be sensitive to oil prices and the cost of things like we never were before the '70s. In a few years, we will learn to be sensitive to the amount of our money to which the public sector helps itself. But probably not before Uncle Sam gets all of it.