My grandmother was a conspiracy theorist. Nanny, as we called her, saw communists behind every bush. I do not know if being a conspiracy theorist is genetic or psychological but I have a touch of it myself. If a definition of conspiracy theory is the tendency to think about how specific events fit into the big picture, then I come by it honestly.
This post is about is why I think there is a conspiracy driving oil prices so high. I have a theory. First consider that when the government wants to raise taxes, i.e., a lot of money, they do it by raising taxes on the middle class where the most money can be made. Translate that into business and one must assume that the most money can be made by selling to the middle class.
In the past twenty years or so, the middle class has been “sold” on technology, houses and cars. This is where the economic bubbles have been created, technology, housing and now oil = gasoline = cars. And lots of big cars remember. I’m thinking that there is more to this than free market forces.
The tech bubble created lots of excitement in the 90’s. I was working in Silicon Valley on some contracts around 1999 near the end of the tech bubble. It hadn’t burst yet but it was close. The mood down there was electric. Hotel rooms were impossible to get and restaurants were full late at night and buzzing with energy. I imagined that it was like being in a ritzy gold rush town in around 1850. The very air was vibrating with excitement and greed.
The tech bubble burst. Middle class people who made money in that market and had some of it left went into the housing market with a vengeance. A new bubble was created. Prices were driven up and up as people bought expensive homes on exponential equity; and more importantly, as lenders offered mortgages to anyone who could write their name. New houses were climbing in price by thousands of dollars before they were even finished. I have a friend who once bragged to me about his home under construction; he said that the price had climbed 20 thousand dollars in the month after he signed the mortgage papers. Now my friend couldn’t sell that house if he wanted to. The price went down as fast as it rose.
Housing prices soared until the line in the sand between income and payments was being crossed so egregiously that even crooked lenders had to fold their tents and flee the country with their riches. Why these crooks are not being prosecuted or investigated by Congress is another conspiracy theory for another day. Quickly after the housing bubble burst, the next bubble appeared, this time in oil.
The price in oil prices is so excessive and has risen so fast that there is only one credible answer to an ignorant, non-economist, conspiracy theorist like me. A group of very wealthy people and/or companies are manipulating the commodities market to make up for their huge losses in the mortgage and tech bubbles. What’s the solution to a burst bubble? Dip the wand and blow another bubble of course.
The tech bubble soaked the middle class through the stock market, the housing bubble soaked the middle class through the credit market, and now the gasoline bubble is soaking us through our day-to-day lives meaning; food, energy, and everything else. It appears possible that the rich are using bubbles to wring the money out of the middle class. The middle class has been twice conned into collaborating through false promises of a fast track to wealth. The oil bubble is more devious because it means they can force us to fund it simply in order to live. Now the middle class don’t even have to collaborate, it’s the perfect bubble, the one that may not break.
Well that’s my theory and I’m pretty sure if my Nanny was still here, she’d agree with me.
