How Foreign Policy Affects Gas Prices

by Rep Ron Paul

We’ve heard how the value of the dollar affects gas prices – and indeed the price of everything.  I was pleased that my request for a hearing on such was granted by the Financial Services committee and we were able to hear some very informative testimony.  Certainly domestic policies, regarding off-shore oil drilling bans, ethanol mandates, refining capacity, and CAFE standards are interventionist and harmful enough in the energy market.

But how does foreign policy affect gas prices?  One important factor is that oil on the world market has been priced in dollars exclusively since 1973.  Only two leaders have gone against this arrangement – Saddam Hussein in 2000 and more recently Mahmoud Ahmadinejad with the recently opened Iranian Oil Bourse which trades in non-dollar currencies. 

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The Falling Dollar and Rising Energy Prices

by Rep Ron Paul

Oil prices are on the minds of many Americans as gas hits $4 a gallon, and continues to surge.  How high can prices go?  How can we solve these problems?  What, or who, is to blame?

Part of the answer lies in understanding bubbles and monetary inflation, but especially the Federal Reserve System.  The Federal Reserve is charged with controlling inflation through interest rate manipulation, however, many fail to realize that creating money, and therefore inflation, is really its only tool.  When the Federal Reserve inflates the dollar as drastically as it has in the past few decades, the first users of the newly created money go in search of investments for their dollars.  They must invest this money quickly and aggressively before it loses value. 

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