Crude Bidding
by pessimist
Do I Hear $5? Five it is. Can I get $6? Can I get more?
Today during lunch, KCAL in Los Angeles presented some fuel industry pollster [sorry - no link on their site] who believes that $4/gal. gasoline isn't going to faze the American people. Instead, they will make adjustments in other spending categories to accommodate the higher pump prices. Indeed, he insists - they already have!
To their credit, KCAL didn't merely take him at his word without checking with consumers directly. They presented a route sales representative and a college student, both of whom claimed that they had already cut back on their driving. But both agreed that if gas went up more, they would again cut back on their driving. "I'll be out less and make fewer sales," said the sales rep.
Realistic economic forecasts indicate that the situation is only going to get worse:
Crude oil cost pushes up gasoline prices
The Portland Business Journal
July 12, 2006
Analysts at the Oil Price Information Service, which provides AAA's fuel information, forecast that momentum, spurred by demand and the increasing number of drivers and vehicles, could push the price of crude oil to more than $80 per barrel within the next 60 days. In addition, global political issues and the potential for hurricanes could add more upward pricing pressure. If crude hits $80, OPIS says motorists could see pump prices jump by as much 10 cents to 30 cents per gallon.
Terence Samuel of The American Prospect may have the reason why such an 'expert' would be given so much free air time by KCAL. Back on 04.28.06, he wrote:
With $4-a-gallon Republican gas on the horizon, the GOP is running a little scared, and already it’s funny to watch: When Republican senators start talking about biofuel from switch grass and soy, it’s time to start asking about the drink minimum. And when the President goes all the way to California to talk about immigration and ends up talking about hydrogen-powered cars and hybrids, you know you got his full attention.
For whatever THAT is worth!
It's my personal observation, based on 28 years of 100-mile round-trip Southern California commutes, that the amount of people driving is definitely down. This can't be good for oil company profits - which are already massive:
Oil Companies and the High Price of Gasoline
Big Oil shared its first-quarter profit sheets with the world, and - surprise - they're seeing record profits. Here's a few:* ConocoPhillips - $3.29 billion profit
* Chevron - $4 billion profit
* BP (Arco) - $5.6 billion profit
* Exxon - $8.4 billion profitAnd, remember, this is profit. This is what's left after all the expenses are taken out.
These prices are a wakeup call, alright - the one that says the faster we get Big Oil and its buddies out of the White House, the better.
Easy to say, but difficult to do. With the markets buying into Bernanke's snake oil about inflation being checked today, it would be hard to refute the long-term energy cost outlook in too many Red Stated minds.
But for those who aren't too blinded to see, what is the real situation? Bernanke himself can't hide the bad news no matter how hard the media attempted to stay on the inflation portion of the message. As Bernanke put it:
"The extent and timing of any additional firming that may be needed to address inflation risks will depend" on what incoming barometers say about the price climate and economic activity, Bernanke said. "Persistently higher inflation would erode" the economy's performance "and would be costly to reverse," Bernanke added. "The Federal Reserve must take account of these risks in making its policy decisions."On the other hand, a slowing economy should reduce inflation pressures going forward, he indicated. A lowing housing market and more cautious consumers — whose spending accounts for a big chunk of economic activity — are the main factors behind the moderation in overall economic growth, Bernanke said.
* Higher inflation would raise interest rates, cost jobs and piss off voters.
* Higher costs would cut sales, cost jobs, and piss off voters
These are the inflation figures released by the Bush Administration:
Before Bernanke spoke, the government said the Consumer Price Index rose by just 0.2 percent in June, the smallest increase in four months.
But core inflation, which excludes energy and food, rose by 0.3 percent in June, higher than the 0.2 percent Wall Street expected. That increase left core inflation rising for the past three months at an annual rate of 3.6 percent, far above the Federal Reserve comfort zone of 2 percent or less.
In other words, inflation continues to evade control by the Fed.
The Che Guevara Fan Club, based at The Wharton Business School of the University of Pennsylvania, sees this economic Scylla and Charybdis awaiting the 'kaptin' of the sinking Ship of State:
Higher prices are crimping the pocketbooks of motorists who are now paying $3 per gallon or more at the pump, up from about $1.50 in January 2003. Gasoline prices, which could continue to rise this summer, will have a ripple effect throughout the economy in the weeks and months to come and will dampen GDP (gross domestic product) growth in 2006.Indeed, a recent survey found that one group of American CEOs sees rising energy costs as the biggest threat to the world economy over the next two years. And as long as the United States continues to rely on oil producers in unstable parts of the world, high prices and price volatility will be the norm, these experts say.
Wharton finance professor Marshall E. Blume puts it this way:
India and China are growing very rapidly.
They are going to want more oil.
That's going to increase the price of oil."
Even King George could understand such Plain Talkin'! He should thus be able to understand these warning statements of other economic observers:
Jason Schenker, an economist at Wachovia Bank in Charlotte, N.C., who follows the energy sector, says gasoline prices have risen faster than the price of crude oil in recent weeks. As a result of the rise in energy prices, David Wyss, chief economist at Standard & Poor's in New York, has lowered his forecast for 2007 GDP growth to 2.5% from 2.9%.A survey released April 13 by the Financial Services Forum, an association made up of the CEOs of 20 large financial institutions doing business in the United States, found that its members see energy prices as the biggest threat to U.S. economic growth, ahead of rising healthcare costs and terrorism. (In addition, the CEOs said rising energy prices were also the biggest threat to global growth, followed by terrorism and protectionism.) [Scroll down to third bar graph]
There is only one solution to the dilemma according to the Wharton Che Guevara Club sees:
Says Wharton finance professor Richard Marston: "In the long term, if the price of oil stays in its current region of $60 to $70, we'll see major changes on the demand side. We'll see a switch to much more efficient capital equipment.
As would be the days of supply-side economics!
"We won't be moving to smaller cars because of concern about the environment; we'll be moving to smaller cars because the price of gas is just too high and we simply cannot afford these big automobiles. The price mechanism is an amazing force in the long term."
Even volunteer Administration shills are climbing onto Al Gore's shrinking environmental ice cap:
Thomas Friedman Promotes Geo-Green, All While Cutting George Too Much Slack [My title!]
We are, quite simply, witnessing one of the greatest examples of misplaced priorities in the history of the U.S. presidency," Friedman proclaimed in a March 27 column. "Look at the opportunities our country is missing -- and the risks we are assuming -- by having a president and vice president who refuse to ... marry geopolitics, energy policy, and environmentalism."
As Friedman says in the interview concerning this topic:
The New York Times and The Washington Post are not going to start a movement. We can write about it seven days a week, but if the bully pulpit isn't talking about it, it's very hard to get a national movement.
No matter how badly he mismanages it!
When he talks about Social Security, everyone in the country is talking about it. People would have no choice but to change their behavior. In reality, most people don't change when you tell them they should, they change when they tell themselves they must. It takes leadership, it takes the bully pulpit. It requires a new mind-set, and I think the American people and industries are there to be led. $4-a-gallon gas will [make it happen].
To his overdrawn credit, Friedman realizes the laxity of Owwer Leedur:
The hallmark of George Bush's presidency is that he's never asked Americans, let alone his own base, to do anything hard. And a president like that is going to leave nothing behind. He needs to say, "This is something that is going to drive our reform agenda, pay down our deficit, strengthen our international standing, leave a greener earth for your kids, and make us energy independent."
And just what is Friedman doing to walk his own big talk?
Environmental awareness is very much a part of our household. My wife is on the board of Conservation International; it's the biggest check we write every year.
Big Whoop! What else have you done, Tommy? Tommy, can you hear me?
We live in a big house in Bethesda, [Md.,] but our home is heated and cooled by geothermal. We drilled some 30 wells in our backyard. We tried to do solar but couldn't get the capacity -- there wasn't enough sun to make it possible.We bought a Prius [The sticker price for a base Prius will be $22,305 for the '06 model.] right after 9/11, and we just got a Honda Civic hybrid [The 'new and improved" 2006 Civic Hybrid fetches $21,850]. I have one of the Lexus hybrids on order -- I'll be one of the first in the group to get those, probably within a month [Dealer mark-up will push RX 400h prices above $50,000].
Yeah, Tom, we all work for both The New York Times and the Republican National Committee and can thus afford three new cars!
According to the USDA, it costs a minimum of $7300 a year to raise one child [2005 figures - PDF]. On a minimum-wage job - a wage level which the Congress recently refused to raise immediately after giving themselves a 'cost-of-living' increase - a parent would not earn enough:
For example, it's impossible to deny the national minimum wage of $5.15 is not enough for a family to live above the poverty line. The annual salary for workers earning the national minimum wage still leaves a family of three about $6,000 short of the poverty threshold.
Or - more than it cost to raise the kid that year.
But I digress.
US government statistics indicate that the National average wage in 2004 was only $35,648.55
But that isn't the whole story. In Red State Oklahoma, the 2006 Average Annual Wage was only $30,019.45 [$577.30 a week, or about $14.43/hr], according to the Oklahoma Employment Security Commission.
Anyone notice a little problem with these numbers? Tommy, can you see them?
For those who aren't making that much - and there are far too many all over the country at less-than-average wages - the recent historical Russian example might be the only way they can cope with rising costs in a fixed-wage siege:
THE PARADIGM IS THE ENEMY: The State of the Peak Oil Movement at the Cusp of Collapse
A Speech by Michael C. Ruppert for the Local Solutions to the Energy Dilemma Conference, April 27-29, New York City, at Cooper Union
I have been to Russia and I will never forget a little piece of Russian humor left over from the siege of Leningrad (now St. Petersburg) in the Second World War. I told my Russian hosts that I wanted to get a little outside of the cosmopolitan center of Moscow and see some “real Russia ”.
I hesitated and then asked, “Why?”
“Because”, they said, “ever since the Germans laid siege to Leningrad, chicken is what we have called it when we had to eat our comrades to stay alive and in the fight. In some parts of Russia one is still never sure.”
When one is preoccupied with survival, anything beyond survival becomes an imponderable luxury. And to mistakenly label a luxury a necessity makes it impossible to survive.
and somehow exempt from all the vicissitudes
that have befallen every other collapse of empire in history?
As M. King Hubbert wrote, and as Catherine Austin Fitts [another Whatron Guevarista] teaches, and as I have said for so long, “Until you change the way money works, you change nothing.”For those of you who chided me last year for predicting an American economic collapse this last winter, which some argue—in spite of this evidence — failed to materialize, let me point out that—and we will talk about it tonight — there are strong signs that collapse has already begun.
As the effects of Peak Oil intensify there is less and less wiggle room on the planet for any miscalculation. Worse, there is less and less room to recover from or adjust to any “surprises” that might come along.
What are some of these possible surprises?
• Just one more major hurricane
• A major earthquake in any oil producing region or pipeline corridor from Russia ’s far east, to Iran , to Alberta
• Any one of a dozen possible side effects from global warming, whether from melting tundra that might sink pipelines, to rising sea levels that might endanger offshore production
• Civil unrest in any oil-producing region that gets out of control and damages more infrastructure than can be quickly repaired
• A decision by Venezuela ’s Hugo Chavez to redirect just 10 or 15% of his US exports to other customers
• A successful attack on Saudi Arabia ’s Abqaiq terminal
• Political unrest in our second-largest oil supplier, Mexico
• Major unrest in the Caspian basin – another region where covert operations are now probably the second- or third-largest GDP component for several nations.
There are many more possible precipitating events that could push the first dominoes in the chain of collapse. Any one of them could trigger a massive and sudden descent into chaos that would catch all of us by surprise.
• New stories are reporting that some Americans are pawning precious objects for gas money.
• Consumer debt continues to skyrocket as the US trade deficit continues to explode.
• Bankruptcies are at an all-time high.
• As Reuters told us on April 22, the Finance Ministers of the G7 nations have just announced after their recent meeting in Washington that the dollar is going into decline.
• On April 24th, Qatar announced that it will begin diversifying out of dollars and into Euros.
• On April 4th, according to Reuters, the Vice Chair of the Chinese parliament urged that China reduce its holdings of US debt.
• On February 22, the director of Norway ’s stock exchange recommended that Norway drop out of the London Petroleum Exchange (priced in dollars) and open an oil trading bourse priced in Euros.
• On January 12, Britain ’s Independent announced that Norway had begun preparations for a global environmental and economic collapse. The story reported that “ Norway has revealed a plan to build a ‘doomsday vault’ hewn out of an Arctic mountain to store two million crop seeds in the event of a global disaster. The store is designed to hold all the seeds representing the world's crops and is being built to safeguard future food supplies in the event of widespread environmental collapse.
• In a sign of pending inflation, the Federal Reserve last month stopped telling us what the M3 money supply was in a surefire indication that inflation is on the way. This came conveniently after further inflationary indicators were hidden by removing the cost of gasoline and food from the Consumer Price Index.
• On March 28, Al Jazeera warned that Asia must be prepared for an imminent dollar collapse.
• On March 26, India moved to relax all currency controls for the Rupee. This suggests that India knows a dollar crash is coming and hopes that the Rupee will enjoy the bounce.
• China has made another adjustment re-evaluating the Yuan, accelerating the dollar’s decline.
• The Asian Development Bank has announced plans to develop a regional currency index as a preliminary step in the creation of a Euro-like currency for Asia.
• The dollar has lost six cents against the Euro in the last six weeks.
It’s simple, and I know that my good friend and colleague, Catherine Austin Fitts will agree, that the DOW Jones Industrial Average has absolutely nothing to do with measuring the quality of American life.Indeed ladies and gentlemen, we have reached the point where every increase in the Dow will mean that life has actually gotten worse for Americans and riskier for the world as a whole.
So any assurance that Saudi Arabia has made in the past to stabilize the price of oil may not be worth the paper it isn't written on - especially now that the latest Israeli war has begun:
Jordanian cities witnessed mass demonstrations in solidarity with the Lebanese people and in protest against the Israeli aggression.
Prime Minister Nuri Kamal al-Maliki of Iraq on Wednesday forcefully denounced the Israeli attacks on Lebanon, marking a sharp break with President George W. Bush's position and highlighting the growing power of a Shiite Muslim identity across the Middle East.
Thousands of Yemenis took to the streets of the capital Sanaa on Wednesday to condemn Israeli attacks on Lebanon and the Palestinians. In Khartoum, about 400 Sudanese staged a similar protest outside the Lebanese embassy, condemning the Israeli air strikes and calling on Arabs to fight the Jewish state in solidarity.
There have been similar protests across the Middle East in recent days. Thousands of Bahrainis marched in the capital Manama and about 400 people demonstrated in the Egyptian capital Cairo on Tuesday, chanting slogans in support of Hizbollah and Palestinian guerrillas.
In a joint statement, a group of ten Egyptian opposition parties demanded that Arab governments “cut all relations with (Israel), freeze all agreements with the enemy and expel ambassadors and diplomatic representatives from all Arab and Islamic countries.”
“The Camp David agreement has become nothing more than ink on paper,” Kefaya spokesman George Ishak told AFP, referring to peace agreements between late Egyptian President Anwar Al Sadat and Israeli Prime Minister Menachem Begin which led to the signing of a full peace treaty in 1979.
And it's only just the beginning. We have a long and very hard road left to travel ahead - and there are no detours open. There aren't any filling stations out there, either.
Do I hear $7? I'm bid seven! Do I hear eight? Eight it is! Am I bid $9 ...
Copyrighted [©] source material contained in this article is presented under the provisions of Fair Use.
FAIR USE NOTICE
This article contains copyrighted material, the use of which has not always been specifically authorized by the copyright owner. I am making such material available in my efforts to advance understanding of democracy, economic, environmental, human rights, political, scientific, and social justice issues, among others. I believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material in this article is distributed without profit for research and educational purposes.