Fuel Prices

For those who do not have access to Transport Topics, "Dear Mr. President" presents a scheme to rescue homeowners who cannot pay their mortgages due to high fuel prices raising the cost of everything else. The author, John Simourian, suggests giving each homeowner $300 per month. At the same time, ramp up oil shipments from Iraq until the world price of crude oil falls. As it falls, thus reducing the cost of everything else, reduce the monthly payment to each homeowner.

There are a few too many problems with this scheme. We do not control Iraq's oil production. As Iraq increases production, other countries lower production to maintain the price. What about the folks who are not upside down in a mortgage, or those who rent?

The current bailout of banks may be the wrong approach because it promotes more borrowing and living beyond our means. At least, it will have an immediate affect. The "Dear Mr. President" plan will take years to be effective, if at all, and it maintains the bubble of inflated house prices while rewarding those who bit off more than they could chew.

I feel that the author of the Transport Topics article had various interesting statistics at hand such as the number of mortgages that exceed the value of the house, oil production and reserves in Iraq, etc. He tried to tie these facts together without considering a realistic time table and the probability that we cannot cause a 6% change in world oil production. There must be a better plan to prevent foreclosures.