Why Nations Subsidize Oil: Growth

RUSH: Father Paul in Dallas, Texas. Hello, Father.

CALLER: Yes, hi, Rush. I’m a Catholic priest here in Dallas, and what you said about Gregorian chant, I thank you personally and on behalf of Pope Benedict. He’s promoting Gregorian chant, too.

RUSH: Well, thank you, sir, I appreciate that.

CALLER: Hey, Rush, what you said about India and a subsidy on gas and it being removed over there, I was talking to a parishioner down in Mexico, he said that in September the government of Mexico is removing their subsidy, and then when I heard what you said about India, it starts to make sense that the other countries are going to feel the same pain we’re feeling, so it’s a reason for hope.

RUSH: Well, why these governments were subsidizing gasoline purchases for their citizenry is interesting. They were doing it for growth. The Indians want massive economic growth. They’ve got a lot of people to feed and take care of. The ChiComs, the same thing. The ChiComs don’t care a whit about global warming or anything else, they just want to grow. And something crucially relevant to understand about the ChiComs and the Chinese premier is that is his job, his primary responsibility right now is creating 25 million new jobs a year and he’s gotta do this outside of the cities. The cities are already teeming with people. ChiCom major cities are overrun. If those people that live out in the countryside throughout China decide to come to the cities for their jobs, he’s got a big problem. He’s not going to be able to control it, he’s not going to be able to keep the communist sickle poised as easily. He’s gotta keep them out there, and for that they were subsidizing gasoline. And now with the prices going where they are, they can’t afford it. So they’re going to end the subsidies gradually, which is causing less usage by the subsidized customers, the citizens, which is relaxing pressure on supply now, and I’m just positing that as a possibility why the crude oil price is down about ten bucks from its all-time high. I haven’t checked it in the last half hour to see what’s happening. And Mexico, as you pointed out, Father, the same thing, Mexico City, they were subsidizing gas, two bucks, and Americans are driving across the line to buy gasoline, and they did this not because they’re nice people. I mean, they wanted economic growth. Which reminds me of something else when we get back.

BREAK TRANSCRIPT

RUSH: As usual, half my brain tied behind my back just to make it fair. So let’s talk a little bit more about these gasoline subsidies that governments around the world are using to facilitate their citizenry being able to get around and create economic growth. I mean, just stop and think of that for a second. I’m not advocating subsidies. I’m talking about the whole subject of growth here. They have a population which is in most cases very poor compared to ours, and yet they need growth, the governments need growth. They’ve got to feed these people. They have got to keep these people fed. They’ve got to have jobs for them otherwise you’re going to have anarchy. And so one of the ways they’ve done this is to subsidize gasoline, but up ’til now, the price has gotten so high that they’re removing all or part of the subsidies. I wish I could remember the exact figure, but I think in India, as recently as a month ago, a gallon of gas was 80 cents. Now, don’t quote me on that. I can find it, it’s just my memory is not clear on the exact number. But it’s cheap, nowhere near the worldwide street price, and the same thing in China and the same thing in Mexico. Why were they doing it? They weren’t doing it out of benevolence.

These governments weren’t looking at the poor and saying, ‘Oh, we’re going to help you.’ They needed growth, and the fuel price, the use of energy is fundamental to growth. These people had to be able to move around. They had to be able to have enough money left over to buy products in stores, grocery stores, what have you, be it in India, be it in China, be it in Mexico, wherever it was happening. So the lesson learned is that you cannot separate fuel price from growth. You cannot separate energy from growth. Now, it’s all fine and dandy to start talking about alternative fuels and windmills and all these wonderful pie-in-the-sky dreams, that ain’t going to have any effect today, we may as well not do it, right, Senator Obama? We may as well not even start these new technologies ’cause it’s going to be decades before they come online and mean anything significant. Of course, that’s not the way we do things. We start a process, we give it a shot, entrepreneurs, as opposed to government make these kinds of things work, and yet here in this country, nobody’s talking about subsidizing gasoline, but at the same time the Democrat Party is opposed to everything that would make energy cheaper!

India just raised the price to 70 cents per liter, so it was less than that. And even at that, it’s still being heavily subsidized. So $2.66 a gallon is what Indian citizens are paying for a gallon of gasoline, and that’s an increase over what it was because it’s gotten to the point the governments can’t afford the large subsidies. Well, this is going to cause a downturn in usage, and it’s gonna relieve some of the pressure on supply. The whole lesson to learn here is, when entities, bureaucratic governmental entities realize that growth is necessary, they realize that energy must be affordable and it has to be as cheap as it can be for people. The Democrat Party is the party in this country opposing that very concept. Which is why this is a gold mine year for the Republican Party. How can a party whose essential belief is that this is a nation in a state of decline and deserves to be in a state of decline, by the way, because the rest of the world justifiably hates us because they justifiably recognize we have stolen all of their resources, that we have sent our armies and our Air Force all over the world and we have killed innocent civilians, of course the rest of the world should hate us, because so many leftists hate us for the very same fallacious reasons. So we owe a debt and we need to pay a price. We need to be in a state of decline. We need to learn what our imperialism has forced other people around the world to experience and live.

This is the Democrat Party today. This is the American left. They smile when you suffer, because they think it will mean electoral success for them. But in the real world, how can a party identified proudly as a party that believes in a state of decline and thinks this country deserves it, have a chance at anything?