<p>No need to make it complicated. According to the Center for Strategic and International Studies in Washington, the US military (not just in Iraq) uses 1.2 million barrels a month — or roughly 40,000 barrels a day – out of global demand of 86 million barrels per day. That’s .047%. Hardly enough to have a big impact on world prices.</p>
<p>It’s far more likely that the increase in demand over the last ten years from China (almost 8% per year average increase over a 10-year span) and India (not sure what the % is) has a lot more to do with price increases than US military usage. US increases in energy consumption ran about 1.5% annually over the same period – at a time when the population went up about 8% or so over the 10 years.</p>
<p>That’s about what production in Anwar would be. Couple that with the destruction of Iraq’s oil infrastructure for five years, and we are talking BIG amounts.</p>
<p>Prices (as we all know) are set at the margins.</p>
<p>I thought that Fed interest rate cuts had much more to do with devaluing the dollar than Bush has been able to directly influence. You seem to give Bush way to much “credit” for all of this mess, including the rising prices of oil as WashDad points out. </p>
<p>Tax increases in the magnitude of what you have described would be a disaster for our economy. Just doing the “opposite” of what Bush has done is not the answer.</p>
<p>“I thought that Fed interest rate cuts had much more to do with devaluing the dollar than Bush has been able to directly influence.”</p>
<p>You thought wrongly. Take out one of the largest oil producers in the world, add consumption on the margin, and run up the largest deficit in world history and you’ve got the recipe. </p>
<p>We will pay for the deficit either in inflation, long-term recession, and higher oil prices, or in taxes that can actually produce what people need, and allow it to trickle up. We’ve tried one approach. We will pay in either case - one ends us up without energy alternatives, without mass transit, without repaired infrastructure, and without health care, the other with all of the above.</p>
<p>There’s more to it than that. As mini said, the budget deficit plays a role, as does our weak economy and the recent mortgage crisis. It’s rumored that at least one major US bank is facing serious financial difficulties (Citi?). Some economists believe at least part of the dollar’s decline is due to the negative psychological impact the Iraq war has had on foreign investors, as well.</p>
<p>And we might ask ourselves why the Fed has had to cut interest rates to such low levels in the first place?</p>
<p>Sorry, but I am not wrong about the cut in US interest rates being a MAJOR contributor to the devaluation of the dollar. I can site numerous articles stating this fact, but I won’t bother because I’m sure you will dismiss all my sources as being biased.</p>
<p>mapesy, yes definitely there are several factors at work here. As far as interest rates, they have to be viewed in relation to euro and other foreign currency ratesInvestment in US is decreasing as a result of more attractive rates abroad.</p>
<p>some days, we all feel like, Marvin and Eeyore.</p>
<p>The economist I know says that we should be prepared to relive the mid 70’s-early 80’s. To which I said, then I hope we have someone who is charismatic to lead us.</p>
<p>In some weird way, I am happy for the high prices. In a long time this has forced a serous discussion on the use of gas at the grass root level. I am also happy to see that it is making people change their habits some what. I always thought that we Americans believe that we are ‘entitled’ to cheap energy. </p>
<p>On the plus side it would speed up the development/production of Canadian Tar Sand and Colorado Oil shale.</p>
<p>It is amazing how this mess is Clinton’s fault. Does Bush Jr, ever have any responsibilty for anything going wrong in this country? Whatever happened to the buck stops here? Guess time will tell the legacy of oil mess Bush has left us with.</p>