We Are Paying for Entitlement Programs for Saudi Arabia's Citizens

Thursday, June 2, 2011

When Middle Eastern countries recently began to destabilize, Saudi King Abdullah created a "stimulus package" which included a fifteen percent raise for all its government employees, among other things. A similar entitlement program in Kuwait was initiated by Emir Sheikh Ahmad Al Sabah for his citizens, including a year's worth of free food staples for all Kuwaiti citizens.

They are trying to pacify their people to avoid an uprising.

And who is footing the bill? Americans. These extra expenses — in addition to the welfare-like programs they already have for their citizens, not to mention a rapidly-increasing population, the opulent lifestyles of their various princes and kings, and all the expensive building projects, etc. — means that the price of oil must go up.

The way to raise prices is to make oil scarce, so the Saudis cut their oil production last month by 800,000 barrels a day. In an article in the Baltimore Sun, Gal Luft explains what this costs each of us.

"The premium on the price of oil exacted by the increase in Gulf social spending," wrote Luft, "adds about 35 cents to the price of a gallon of gasoline Americans pay at the pump, or roughly $6 per fill-up. Since oil goes into everything we buy, from food to plastics, propping up the House of Saud could add $1500 annually to the expenditures of the average American family."

This is $1500 more than we're already paying the House of Saud.

If you've had enough of this, what can you do? What can any of us do? OPEC has a large enough share of the world market that they can decide to raise or lower their production in unison, thus lowering or raising the price of oil around the world. The only thing that would work would be to break up their monopoly. But how?

By passing the Open Fuel Standard Act.

This won't stop OPEC from controlling the world price of oil, but it will stop them from having a monopoly at the pump. We will have a choice when we fill up our cars. We'll be able to choose to pay for alcohol fuels if we want to (like methanol and ethanol) — fuel that was made by an American workforce. Once the fuel market opens up, alcohols will often be cheaper than gasoline, as they are right now. And as a bonus, these American-made fuels will create less pollution and put significantly less carbon into the atmosphere.

You can do something about this today. Urge your representative to co-sponsor the Open Fuel Standard Act. Click here to find out how.

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