When the price for a barrel of oil was nearing $150 and setting new records on a nearly daily basis, we heard a public outcry for congress to investigate oil speculators. Some of our citizens felt it somehow unfair that those who make their living taking risk in speculating the oil market were earning a profit at the apparent expense of consumers. Now that oil prices have subsided dramatically, no one seems to see the need to investigate the speculators now. As I said this past summer, rather than blame the speculators, we should pay attention to what they are telling us so that we as a nation can make informed decisions regarding our energy plan. The message the speculators are now sending has never been more important.

Why have oil prices dropped to nearly one fourth of their value in just a few short months? The equation I gave last summer has not changed. Speculators buy and sell oil futures based upon anticipated future demand and forecast supply. Clearly in the last six months the forecast supply has not been dramatically increased, therefore the anticipated future demand has been greatly decreased. Inflating our tires, getting tune-ups, and parking our SUVs are not responsible for this decreased demand. What has changed is the anticipated demand in developing nations. This demand has decreased so much so that even when OPEC met and agreed to decrease production levels, the price of oil continued to decrease unabated.

Essentially, the speculators believe that the global recession has stunted growth and development to the point that even at current prices, developing nations will be unable to afford oil. It is no coincidence that as oil prices were hitting record highs, food prices were also reaching record highs. Just as the price of oil has plummeted, so has the price of commodities to farmers although consumers have not seen the level of relief in food prices as we have in gasoline. This is driven by the same economic predictions and scenario, that nations will not have money to purchase food let alone oil in the very near future.

When prices continue to drop despite reduced production of commodities, it paints a very bleak picture for not just our economy, but for the global economy as well.

Aside from the Biennium Budget, one of the hottest issues in our State House is the Pay Day Lending industry and how to close the apparent loop hole they have found. Personally, I cannot understand why this is such an issue. Opponents of these loans state interest rates of over 350% as the prime reason to shut them down and claim that these are predatory loans. A $100 two week loan will cost $15, which opponents claim is excessive and predatory. Yet, if it were not for these institutions being available to make these short term loans and a person wrote a check that subsequently bounced, the bank will charge them a $30 fee, the business that they wrote the check to will charge them a $25 fee, and they still owe the original $100. Which is worse, paying the $15 interest to a Pay Day lender or the $55 penalty fees for bouncing a check? No one is going to mortgage a home through a Pay Day lender, but this industry provides a needed service at a reasonable price that is not available anywhere else.

If the Legislature is successful in its bid to eliminate the Pay Day loan industry, where will the people who have been using their services go to borrow money? Banks and Credit Unions will not make these short term loans so the individuals that have been utilizing these short term loans will now be left out in the cold. They will not be able to purchase parts to repair their car to get to work so now they lose their jobs. I am sure that they will be thankful that the Legislature was looking out for their best interest as they lose their job and walk to the unemployment office.

            On both the state and federal level the current focus is on the economy and how to stimulate its growth.  As the details of both plans become known, it becomes apparent that these plans are really little more than thinly veiled plans to grow the size of government, increase our dependence on government, and further remove our economy from capitalism towards socialism.  In fact, whether we look at either the federal or state plan, there is very little in either plan that will actually stimulate the economy.

            As President Obama tries to pressure the Senate to quickly pass the stimulus plan before the public discovers the truth, he has tried to minimize the outcry regarding the cost and amount of spending by saying that the very basis of a stimulus plan is spending.  While it is true that an effective stimulus plan will involve some spending, not all spending will actually stimulate the economy or create jobs.  Japan tried to spend its way out of a very similar situation in the 90’s.  Japan’s problems started much the same as ours, with a mortgage bubble where property values were elevated above sustainable levels.  Japan spent trillions of dollars over 10 years trying to support property values and create jobs with no real success.  The same will happen here.  We are spending billions of dollars and in the end the only thing we will have accomplished is accumulating billions of dollars of additional debt or create massive inflation.

            Both the president and the senate majority leader have said that this stimulus bill will create 4 million jobs in the next 2 years.  They fail to mention how many additional jobs will be lost because of this bill.  As government moves corporate America from capitalism toward socialism and dictates what products industries are allowed to produce, there will be massive job losses in the industries that government has determined should go away, such as the coal and petroleum industries, conventional electrical power companies, conventional automobile manufacturing, and the airline industry.  At a cost of nearly 800 billion dollars, that equates to a $200,000 cost for every job they hope to create.  If interest is included, the cost to create one job balloons to nearly $400,000.  I fail to see how this is cost effective and I think it is very optimistic to assume that 4 million additional jobs will be created in the next 4 years much less in the next 2.

            The whole goal of a state or federal stimulus bill in theory is to create jobs.  Government does not and can not create jobs.  Businesses create jobs, therefore the most effective way to create jobs and stimulate the economy is to allow businesses to be successful and encourage growth here within our borders by reducing the corporate tax rate and eliminating the restrictions that are choking small business growth.  This approach is needed in Ohio as well as at the federal level.  Very few of the jobs that left Ohio went overseas, most were relocated to other, more business friendly states like Texas and Tennessee.  By reducing the state and federal corporate tax rates, we will allow businesses to reinvest in themselves, creating a need for additional employees, which will revitalize our communities and in the end increase potential tax revenues.