What Hillary Clinton Doesn't Know About the Price of Oil
Ignorance would be bliss if it weren't so dangerous
By blackhedd Posted in Economy | Energy alternatives | Hillary Clinton | oil — Comments (54) / Email this page » / Leave a comment »
Hillary Clinton, campaigning in New Hampshire this weekend, appears to have promised that oil prices will fall as soon as she is inaugurated. Now observe, she didn't promise to reduce oil prices. She just said that they will fall on their own.
For the sake of argument, I'll assume that the reporters of the New York Daily News were actually present when Clinton made the statements they are reporting, and that they transcribed her words accurately. I add this caveat because I didn't know it was possible for anyone to be so ignorant. What exactly did Superwoman say?
Read on...
It's been hard to miss the spectacular hubris of Hillary Clinton. Whenever pressed on her chances to win the White House, she lashes out with indignation that the question even comes up. She may be as surprised as anyone else that she now faces a credible challenge from Sen. Obama, which would explain how fecklessly her people have responded to it.
So it's easy for me to imagine the excitement she feels at the prospect of finally getting her hands on Washington's big policy levers. She's talking about making America energy-independent through government action as if (like healthcare in 1993) she thinks it's an easy problem. This is what makes ignorance seem so empowering.
Thus the Daily News:
When the world hears her commitment at her inauguration about ending American dependence on foreign fuel, Clinton says, oil-pumping countries will lower prices to stifle America's incentive to develop alternative energy.
"I predict to you, the oil-producing countries will drop the price of oil," Clinton said, speaking at the Manchester YWCA. "They will once again assume, once the cost pressure is off, Americans and our political process will recede."
Oh dear. Oil-producing countries don't set the price of oil. They are one actor among many in a global market that is extremely large, extremely fast, and full of contradictory signals.
In addition, there are precious few countries that have enough incremental production capacity to actually pump significantly more than they do now. In fact, the only ones I can name are Saudi, Kuwait, and maybe the Emirates. Just about every other sovereign oil producer treats oil revenue as free cash flow, without considering the need for continuing capital investment.
The oil-producing countries would have a very hard time reducing oil prices even if they were inclined to try. There are too many buyers out there and too much demand. And a not-small amount of the demand comes from speculators instead of actual energy users, which ties the oil-price picture tightly to markets that are superficially not even related.
So that's one problem. But there's another one: I'm still shaking my head over the idea that players in a four-trillion global market are going to be so intimidated when the smartest woman in the world also becomes the most powerful one, that they'll roll over and show their tummies on the same day. That is what the Daily News says she said, isn't it?
As with so much else, Clinton doesn't bother to spell out what she actually intends to do. (Awfully convenient, because if she did, we'd have the opportunity to stop doubting her ignorance and know it for sure.)
I'm going to assume from her words, however, that she intends to put America on a sustained track to sharply reduce the need to import petroleum, regardless of the commodity's price. More quotes, giving her actual words:
Clinton argued that former President Jimmy Carter in the late 1970s actually started moving in the right direction toward energy independence, but his successor, Ronald Reagan, "dismantled" that work.
"Because costs were low, people didn't care, didn't complain," she said.
Because costs were low, people didn't... follow through on the development of alternatives. Well, yes, of course, that's how rational people operate. So that tells us that Clinton intends to pursue alternative-energy strategies that are not rational, in terms of the pricing signals given off by normal markets.
I think I can see the argument: we don't have time to let the markets work, because if we wait for oil to become too dear, we won't have time to develop alternatives.
This is a very, very powerful argument, folks. It actually works on economically illiterate people (which is to say, most voters) because it sounds completely rational.
But it's not a forgone conclusion that government actors, even if they're the smartest women in the world, will be able to anticipate and develop solutions to problems whose dimensions are not yet clear. There will be a strong temptation to pursue a Manhattan Project-style approach. The Manhattan Project involved simultaneously developing, at extreme cost, at least five different pathways to a nuclear weapon, correctly judging that the cost of failure (Hitler with a nuclear monopoly) was worse than national bankruptcy.
That's the wrong approach to the energy-independence problem. In short, the smartest women in the world don't have the knowledge and insight to know how to approach this, and they axiomatically will waste resources in the attempt.
And again, Clinton vastly overrates her own power by postulating that, simply by coming to office with a promise to pursue oil-alternatives without regard to cost, the oil producers will say "Uh oh, we need to cut prices now, this lady is serious and we need to fear her."
As we've seen, the oil producers aren't the only ones making these decisions. There's a whole market out there too. And they are swayed by their perception of reality, not by the words of one overconfident politician.
If America honestly embarks on a policy of developing expensive energy alternatives, the world price of oil is more likely to rise rather than fall, all else equal.
Think of it as a reverse-substitution effect. If you find a cheaper alternative to a constrained commodity (which free markets do naturally), it has the effect of reducing demand (and prices) for the commodity being replaced.
But if you replace a commodity with something more expensive (considering all the aggregate costs and inefficiencies of developing alternatives before the markets are ready), then the opposite will happen.
Hillary Clinton says often that she learned in 1993 just how little she really knew about how hard healthcare reform is, and she promises to come to power with new approaches to this problem.
Let's make sure she doesn't also get the chance to find out how little she really knows about energy markets.
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What Hillary Clinton Doesn't Know About the Price of Oil 54 Comments (0 topical, 54 editorial, 0 hidden) Post a comment »
Hillary's "alternative energy" ideas actually do involve replacing relatively inexpensive (the price of gas is still historically within normal ranges given inflation) energy with *much more* expensive energy "resources." They'll fund that reverse-efficiency program by taking the profits of oil companies. She's a nutcase, plain and simple.
But the Clintons will make up for that with taxes. I wouldn't be at all surprised if the price of oil went back to $60 a barrel (let's say, just for the sake of argument) that she would take Scientific American's advice from a couple of years past and instantly raise taxes on petroleum distillates so that all the rest of the money went to the government. She doesn't want to see real alternative energy development, she wants to tax people. And that's what she'll do.
Even I, an unrepentant lefty, groaned when I read that. She's either hopelessly naive, or cynically pandering to an electorate that she believes is hopelessly naive. More likely the latter; and, unfortunately, she's probably right about the cluelessness of the average voter.
Good diary.
peace,
lilnev
Perhaps we'll get you to repent yet!
Seriously, if you can see through the smoke screen that is Clinton's energy policy, you'll start seeing through the rest of the left's "big ideas" eventually. Most of the policies that the left supports are of the same flavor. They sound real good if you don't understand how things work. When you start digging into the economics of them, the programs fall flat.
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I'm with Fred!
I've always felt, in conversation with well-informed left-wingers, that they understand the consequences of any policy that restricts economic freedom: by simple axiom, such policies reduce overall prosperity.
One of the questions is: is this a good trade? I do think that Lefties and Righties can disagree over the uses to which redistribution can be put and the exact amount that we should do. And as a nation, we negotiate over this question every time we elect our representatives. It's a healthy process.
The time comes, however, when you have to ask whether we're overspending on social goods that can only be purchased at the expense of aggregate prosperity.
I think that time is upon us, largely because of the enormous competitive pressure being placed on us from elsewhere in the global economy. There's a time to reap and a time to sow. It's now a time to sow.
There's a great danger in not recognizing this, at this particular moment in history: the most productive elements of American society can and will find ways to integrate into the global economy, that will largely bypass the Federal government's ability to tax them.
The "Two Americas" of John Edwards are a real and frightening possibility. Irony of ironies, that dystopic future will come to pass if we pursue too much of what he and other Lefties think we should do, but not if we don't.
If she were to be elected the demand for fuel would instantly fall thus inspiring a price drop.
Quite simply put everyone would be too busy worrying about how to deal with the effects of her presidency to engage in much economic activity. By the time of inauguration we might well be into a full blown depression.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
Because she'd make Universal Health Care and Universal Pre-K a national industry, run by the Federal Government, wasting at least half of every dollar a taxpayer spends on it.
Hillary could yet lead America into the 21st Century's Great Depression. Her "Christmas Gift" ad says with a straight face that she intends to try.
for gasoline as millions of people would drive their cars into the next bridge abutment.
Envisioning when all that is Left is the Right.
your collection of funny one-liners.
It is monarchical and aristocratical government only that requires ignorance for its support.
- Thomas Paine, Rights of Man, 1792
I would be glad to sign some of them for you for a small, but lucrative fee. Hey, I am starting to sound like the Huckster.
Envisioning when all that is Left is the Right.
even he at 19 knows how silly she is.
Freedom of Religion not Freedom from Religion
Let me state for the record: Hillary would be a disaster if elected.
Now, in trashing her, I got the impression that you believe that OPEC doesn't set the price of oil (or has only a small part to play in the overall price).
"Oil-producing countries don't set the price of oil."
While technically correct, the statement is misleading. Oil-producing countries set the amount of production. And one of the most basic economic (and most powerful) forces is supply and demand. Low production equals high prices. OPEC does have a large impact on the price of oil. In fact that is its reason for EXISTING.
I don't believe that there is a conspiracy of Bush Inc. collaborating with the Saudis to keep the price of oil high for record profits. However, if you take a major oil producing country (Iraq) and cripple its production capacity by making it the primary battleground in the global war on terror, an unintended consequence might be to dramatically reduce the SUPPLY of oil.
This would force OPEC to decide if they should increase demand to cover the shortfall (if that is even possible) or to do as they have done, which is to keep production relatively unchanged.
Your post also implies that OPEC has NOT acted in a manner that is consistent with monopolistic price fixing. I thought this was an undisputed fact.
I also watched a C-SPAN2 Book Event this weekend where an author (I am blanking on the name right now) was discussing Methanol which can be made from non-food products and used in Flex Fuel Vehicles for $.90/gallon (with half the energy of gasoline thats equivelant to $1.80/gallon). And, making alcohol based fuels isn't any more expensive or complicated than making alcohol (which we are very good at doing). So an oil substitute wouldn't have to cost more than current gasoline prices.
US energy independence is an important national security issue that should be pursued. I for one would be willing to pay a slightly higher price for fuel if it meant that US workers were making the profits instead of Arab/Persian Sheiks (call me jingoistic) and their was no chance that any of my fuel money could be re-directed towards furthering Extremeist Islamic Fundamentalist goals.
As a professional salesperson, I understand that the best VALUE isn't always found with the lowest PRICE.
I respectfully request you point out where I am mistaken.
"However, if you take a major oil producing country (Iraq) and cripple its production capacity by making it the primary battleground in the global war on terror, an unintended consequence might be to dramatically reduce the SUPPLY of oil."
Iraq's oil production in 2000 was 2.8-2.9 million barrels per day.
They now produce slightly over 2 million barrels per day.
(first figure was a yahoo search and second came from OPEC's website)
Your post is unclear if you meant to use them to refute or agree with my point. I will give you the the benefit of the doubt and assume you meant to agree (because the numbers you provide support my point).
Should we assume that Iraq's oil production was completely static and didn't rise with increased investment? This alone in the face of rising demand would have increased price pressures. There is an opportunity cost to consider.
And, if today their prodction is roughly 67% of the 2000 levels, I would definately consider that a crippled production. Imagine if your boss cut your pay to 67?% of its 2000 level, would you not say he has "dramaticly reduced" the supply of your pay?
There is no denying that oil prices have risen from our invasion of Iraq. Some from reduced supply, and some from speculative fears of an unstable market. This amounts to a "hidden war tax" that we are all paying.
Merry Christmas, Happy Holidays!
Even before the war.
And according to both Fox and ABC New last week, Iraq just passed the pre-invasion oil production mark.
If they keep it up, they may just return to major oil producer status like they were 30 years ago...
"Hillary is a blonde. But what she's got is a testicle lockbox."
-Rush Limbaugh
that oil prices have been affected by our invasion of demand.
Especially if you look at the price in correlation with the invasion or even just the announcement of the intent to invade. Now, if you compare the price to Iran's statements over the past several years...
Well, there's a whole new correlation, indeed. Because Iran IS a major producer. And they're scaring the oil economists with the idea that either Israel or the USA will glass that country...
"Hillary is a blonde. But what she's got is a testicle lockbox."
-Rush Limbaugh
You say Iraq isn't a major oil producer.
You say Iran is a major oil producer.
You say Iraq just surpassed pre-war production levels.
http://www.eia.doe.gov/oiaf/ieo/oil.html
Iraq production in 1999: 2.8 mb/d
Iraq production in 2007: 2.0 mb/d
Compared to:
Iran 4 mb/d, Saudi Arabia 8-9 mb/d, and Angola 1 mb/d
I guess I'll have to disagree with everything you said. I feel that 3 mb/d does have a major impact on oil supply. If Iraq at 3 isn't major, then Iran at 4 isn't either. Not sure how 2.0 = 2.8, is that new math?
Thank you for challenging me on these facts. Its part of why I like to post here (motivates me to do more research) and it keeps me sharp.
Would you care to try for the calendar year just prior to the war ?
After all if you are going to do research to keep you sharp it might as well be relevant and useful rather than pointless numbers.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
The original commenter gave a pre-war figure from the year 2000 as an example. The information that was explicitly stated in the article I linked to used 1999 (and I like to use concrete numbers when possible). From browsing around, both the 1999 and 2000 numbers seem very representative of pre-war production levels. So being "pointless" is a matter of opinion.
If you would like to challenge the validity of that claim you are welcome to do so.
As I recall, and as my post reads, I mentioned that Fox and ABC stated something that info you found suggests to be incorrect. On the other hand, you didn't show us what the 2002 production level was, since that is probably what was being referenced by Fox and ABC.
"Hillary is a blonde. But what she's got is a testicle lockbox."
-Rush Limbaugh
and you'll find the commentor I was referring to was Gator1, not you. That comment was the one that interjected some historical data into the discussion. Your comment was added to the conversation later and provided some opinions and undocumented sources of information (would it have killed you to post a link to the ABC/FOX articles you mentioned?).
The reality of the situation is that Iraq was producing about 3.5 mb/d before Saddam invaded Kuwait. Ever since the Gulf War, Iraq has had lowered production output. Oil produciton did vary by year and was regulated by sanctions/programs.
In any event, whether oil production levels have returned to "pre-war" levels (depending on which sources you use) or whether they will soon return to those levels isn't the issue. The disruption of oil supply DID impact oil prices as did the unstability in the region.
If you see some benefit in continuing to quibble about this issue, by all means continue. You have my express permission to do your own research, draw your own conclusions, and talk amongst yourselves.
I'm a sales dude too, not an economist. Please keep that in mind.
"Oil-producing countries don't set the price of oil."
Correct. Markets set the price. However, their are a number of factors that the market considers. Risk, due to political instability, is currently a big factor in the price. Because the market is afraid of future disruption in the supply, they have bid the price up. If the supply were disrupted, then the stocks currently held by various entities would be even more valuable.
"OPEC has NOT acted in a manner that is consistent with monopolistic price fixing"
Yes and no. If OPEC raises the price too high, their actions will have the correspnding effect of reducing the economic activity that requires all the oil they are currently producing. If you or I raise our prices to increase profits, at some point our sales will decrease. There is a optimal point where sales and profit are maximized, a sort of equilibrium, if you will. So while OPEC has the power to resrict supplies even further (monopolistic), it is not in their economic self interest to do so at some point.
On ethanol.
The manufacture of ethanol also has a corresponding trade off. By consuming corn, sugar, and other organic products to produce ethanol, there is a reduction in the supply of these products available for use in food products and hence, an increase of those foodstuffs. This change is already occurring in the corn tortilla market. So while the fuel that ethanol is replacing is the same price as petrol based fuels,food prices will go up.
One of the biggest issues we currently face in this country is the distortion in the market created by the government and envrinmental movement restricting the exploration for and drilling of oil that exists within this country. No off shore drilling, no ANWR, no new refineries, etc.
Another alternative energy source that has been similarly restricted is nuclear energy. It has been proven to be economically and evironmentally viable but scaremongering (China Syndrome) has effectively stopped its' development as well.
Hope this helped.
Kick butt & take orders!
When you talk about OPEC:
"If you or I raise our prices to increase profits, at some point our sales will decrease. There is a optimal point where sales and profit are maximized, a sort of equilibrium, if you will."
Please don't forget we are not talking about individual countries making independent decisions (like you or I). They control a large segment of the oil market by working in concert to avoid market pressures.
Also they are dealing with a product that has a high inelasticity of demand. Meaning that higher prices have limited effects on usage. How much less have you driven since gas prices started to rise?
On a lighter note:
I had a good sales day today, I got TWO orders.
Get out! and Stay out! (oldie but a goodie)
Merry Christmas and Happy Holidays!
"How much less have you driven since gas prices started to rise?"
I can say with absolute certainty that, while I make less than $50k/year, I would not be impacted in the slightest by anything less than $5/gal and probably not until the price reached $10 per...
"Hillary is a blonde. But what she's got is a testicle lockbox."
-Rush Limbaugh
Where to begin, where to begin...
First, I suppose I would suggest memory exercises so you can remember the past. Or, if I'm mistaken about how long you've been alive, perhaps spending a couple of weeks at the local library news archives reading the papers from 1978-1982 so you can see how badly Carter had things frelled before Reagan came in to fix the mistakes of the only nuclear engineer ever to be President. But since you probably need something more quickly than that:
1) OPEC is not ALL oil producing countries. It is a large percentage of them, and it has an effect on oil prices when they maintain production discipline. Blackhedd pointed out in his article that of all the members of OPEC, only three have the theoretical ability to increase oil production significantly. Everybody else pretty much runs full out to grab as much money as they can. Furthermore, if OPEC actually did have the mystic powers you and Hillary seem to attribute to them, there is no way Reagan's deregulation in the 1980s would have resulted in falling oil prices, because it simply left oil profit determination to the markets. Since it worked, OPEC can't have that control. Since OPEC doesn't have that control, the real reasons for the price rises must lie elsewhere. Blackhedd has previously pointed out the rising demand for oil in China, India and other large developing countries. A lot of us here at Red State also regard the enviro-nazi stranglehold on the US developing new domestic production as major impediment to reducing oil prices.
Without a name for your methanol expert there is no way to know whether or not he was a crackpot. Just because he was on CSPAN doesn't mean he was reliable, or has a clue about how to determine energy efficiencies. The last time I spent a couple of hours looking into it, ethanol wasn't fiscally productive to ethanol producers without government intervention either through direct subsidies, price supports, or discounts on the vehicles which use them. Which you can translate as not economically effective for the economy. Next, it isn't enough to simply consider the gallon to gallon price consideration. Different fuels have different energy densities and you have to compare them on that basis. As I recall the energy density of ethanol was about 85% that of gasoline. Which means you need 15% more ethanol than gasoline. I think methanol has similar numbers. Lastly, you need to consider the energy yield of the production process. Whether you drill for oil and then refine it into gasoline or grow corn to distill into ethanol, each part of the production process consumes energy. You need to deduct that from your final energy production to figure out your net gain from the process. While trying to determine what the limits of these numbers are is a difficult process, the first swipe show that ethanol really loses out on this one, consuming about 35% more energy density than oil production.
If you believe energy independence is important, do you support drilling in ANWAR? Off the coast of California? How about off the coast of Florida just a few miles from where Fidel is currently putting his oil fields? If the answer is "no" you don't support energy independence, you support something else.
Lastly, whenever a sales guy goes for the value angle, I tend to start moving toward the door. I generally know what I want in terms of goods and services, and having determine that I want the lowest price. So if your price isn't the lowest and you start talking value, I'm never sure if its a smoke and mirror routine or three card monte, but I can be pretty sure it isn't going to work out well for me. What I want for my vehicle's fuel supply is a high energy density, low cost (including hidden government subsidies), non-evaporating, relative easy and safe to transport fuel with reliable production. Ethanol and Methanol it ain't.
Let me just reiterate the point about supply: there is very little extra oil-production capacity in the world. There's no magic spigot controlled by OPEC or anyone else that you can just turn to increase the supply of oil. That's why OPEC, Canada, Norway, West Texas, and other places couldn't reduce the price of oil at will, even if they wanted to.
Getting a little more technical: oil fields require management, maintenance and investment. That takes capital. And as often as not, sovereign oil producers don't make the investments. They just pump and pump until their daily production starts to decline.
In a lot of countries, oil revenue is the heart of the government's budget. These countries can't afford to just cut production whenever they want to teach us a lesson, any more than they can raise production. OPEC's "pricing discipline" is notional at best.
The only OPEC country that has the flexibility to pursue something reminiscent of a long-term pricing and supply strategy is Saudi. Given that the global demand picture for motor fuel is expected to grow explosively, they know it's only a matter of time before alternatives appear. What the Saudi royal family really wants is to extract enough wealth while they can and salt it away, so that they will acquire a "thousand-year fortune," enabling them to wield geopolitical power for centuries after the oil under the sand is gone.
If a future Clinton Administration decides to push the issue and develop oil-alternatives ahead of the market, they'll be playing right in the hands of the Saudis.
I guess you could say that I'm a professional salesman too, since that's really what a CEO is. At any rate, I've managed teams of salespeople for years. Although you're absolutely right about the relation between price and value, I believe that's part of the marketing function rather than the sales function. I'm sure that statement will frustrate the heck out of you! But I've tried it both ways, so I'm pretty confident about this. ;-)
To your point, however, remember that paying a higher price for fuel means you're displacing other consumption or investment. Across the whole economy, this makes a real difference. You can't just decide to pay a little more for fuel unless you're clear on what you're going to buy a little less of.
It's definitely possible to get this question right or wrong, but many people aren't even aware that it's a question. That's precisely why, given power, an ignoramus like Hillary Clinton is so dangerous.
some of which were good and some not so much.
Let me clarify: Methanol and Ethanol are different, Methanol can be produced from non-food sources (as I stated), and I already addressed the energy density issue (read carefully).
As for your points blackhedd:
You insult my intelligence if you believe that I hold a "magic spigot" theory of oil production. Your points about investment and management costs are a given. However, if expansion was desired, they would not be a significant impediment.
To increase oil prices, you don't have to CUT production. In fact, if you don't INCREASE production as much as demand is increasing (which you admit it is), then you are "raising prices."
You could have made a much more convincing case by saying that world demand had outstripped additional capacities, and that OPEC is doing all they can to keep up. After all they don't want to keep building production larger and larger until their supply of oil is gone. You can't fault them for strategic management of their largest resource (I wouldn't have believed it, but at least it would have been more plausible).
Not being an expert on OPEC, I cannot say with certainty exactly how much power they have. It is possible that over the last 30 years it has declined. They could be the victims of demagogary (sp?) by US politicians. However, where are the headlines say "OPEC loses ability to control oil prices?" or "OPEC disbands: We just can't keep up!" I don't buy it.
My sales experience has been mostly with companies that are too small to have a separate "marketing" departments. So I handled sales, marketing, and customer service roles interchangably. Technically I think you are correct that it is marketing that is responsible for building value.
As for your point about my spending being a zero sum game and that higher fuel spending will mean a loss to the economy in another area, I have an answer that may frustrate you:
How about if none of my money is re-directed to fund terrorism, I could "decide" to give less to the government to pay to patch up our brave soldiers who met up with an IED. And, I get the additional VALUE of having all of my loved ones keep the limbs they were born with. Unless you think that would negatively impact the prosthetics industry?:)
There is no downside to breaking the monopoly of oil for vehicle fuel. There will be plenty of uses left for oil to support our entire current infrastructure given the continued rise in global demand.
I repeat, Hillary is a train wreck. Thanks for the discussion, Happy Holidays.
I would have ignored this if your tone weren't so petulant. I thought we were having a civil discussion.
I can barely understand what you're trying to say about OPEC. Anybody with eyes can see that oil supply and demand are very closely matched now, with supply constraints (both upstream and downstream) imposing a great deal of volatility on the day-to-day oil price.
It simply isn't the case that oil-producing states face no impediments to expanding supply. And in many cases, one of the reasons is the same one that keeps us from increasing both crude supplies and refining capacity in the US: politics.
Forget about nut-cases like Hugo Chavez. Look at slightly more sane countries like Brazil and Mexico. Their free cash flow from oil exports tends to be in the 70% range, whereas for your typical integrated oil company it's usually in the mid-teens. The difference is cap-ex, or more precisely, cap-ex that they're not making to maintain production capacity.
Spending is not a zero-sum game. Who ever said it was? But if we convert to a high factor-cost for economic inputs (specifically motor fuel), that's just putting us at a competitive disadvantage to other economies.
Don't forget it's not just the per-gallon cost of things like methanol or ethanol. You also have to add in the economic inefficiency of pursuing alternatives development outside of the free market.
I am a bit short due to my busy holiday schedule right now, so perhaps I am more blunt than courteous. My apologies, no offense intended.
...we need to be arrogant/ignorant/enviro-pandering politician independent.
according to Mark Steyn, Hillary's message:
It Takes A Santa’s Village Staffed By Unionized Government Elves To Raise A Child, and I’m Santa and you’re gonna need a much bigger chimney for all the federal entitlements I’ll be tossing down there. Your stocking’s gonna be packed tighter than Monica in fishnets.
Now there's no more oak oppression,
For they passed a noble law,
And the trees are all kept equal
By hatchet, axe, and saw.
She's describing an effect that has never been observed in the history of mankind.
Invoking Jimmy Carter's brilliance in energy strategy is mind-numbingly dumb. Carter brought us the windfall profits tax. His policies brought us oil prices that on an inflation-adjusted basis, are even higher than today.
Reagan's decontrol was undoubtedly seen by the Clintons as a sop to oil producers back in 1981. Decontrol brought on low prices that lasted for 20+ years.
There is more stupidity than hydrogen in the universe, and it has a longer shelf life. - Frank Zappa
You know, I told her to go with, "Vote for me and you'll become a millionaire!!!" ...But she went for the oil line.
This is why her campaign is crashing. She doesn't listen.
-----------------------------------------------------------------------
“It must not be supposed that folly is as powerful as truth,
just because it can, if it likes, shout louder and longer than truth.”
--Augustine
In the words of Pedro (Napoleon Dynamite)
"Just tell them if you vote for me all of your wildest dreams will come true."
* PRIESTCRAFT is thus defined: “The stratagem and frauds of priests; fraud or imposition in religious concerns. Management of selfish and ambitious priests to gain wealth and power, or to impose upon the credulity of others.”
rick554
Please!! You shouldnt bother "Hill" with the facts or even the Truth. Ignorance for the moveon.dems right now is bliss. Let 'em sleep a little while longer :-)
....pronouncing, in May or June of 1998, as she announced her husband's decision to enact further troop cuts as a result of the 'peace dividend', that the troops would learn to fight in two different places at the same time in order to maintain the same level of national safety.
However, when one dons the uniform of the Armed Services of the United States, one can expect to be asked to go into harm's way with it's element of uncertainty. How was the Liberal First Lady expecting to train the troops to die in two different places at the same time?
She's quite used to uttering inanities ad lib and having the media and the populace unquestioningly swallow them whole.
Without getting too deep into this, we know she has to play the cattle futures, so it sounds to me like Hillary is getting ready for an oil futures play - giving herself a little cushion in the old bank account. We know it won't be her doing it, but look for one of her surrogates like her main butt squeezer Terry McAulliff running off with a big payday. Ahh, the Clintons, they are the best money train money any lobbyist or foreign government can buy.
I only want the price of oil to drop if we get to buy and burn as much of it as we want.
On the other hand, if the government makes laws to limit us to more expensive forms of energy, we are put at a serious disadvantage. By artificially restricting American oil consumption, world market prices may drop, but it would be at the expense of the average American. We would then be, in effect, subsidizing oil for the rest of the world.
What environmental kooks and the White Witch apparently don't realize is that we live in a world where the competition for Top Nation status is very serious and very deadly. Subsidizing our competition's (read: China's) energy consumption is foolhardy at best.
What do you think of the credit worries that Gordon Taylor is talking about over in the user blogs? I'd like to hear your take on his concerns.
...that purported to have analyzed a big raft of data on the quality of credit-card portfolios. Is that what GordonTaylor is concerned with?
I have to admit, I kept trying to read between the lines because so much of the story made little sense. It's awful easy to be misled when reading business and finance journalism.
The quality of unsecured credits tied to households always deteriorates at the beginning of a recession. The AP story didn't make a comparison to past recessions so didn't address the question whether things are better or worse than usual.
Capital One Financial reports that out of 30 million card accounts, some 4% are "delinquent." That number was a shocker to me, but then they quoted a COF spokeswoman to the effect that the delinquency rates increased this summer after they shortened their grace period.
And of course the AP made the inevitable connection to mortgage distress. But that feels more like a coincident relationship rather than a causal one.
If households are letting their credit-card payables deteriorate, there must be a reason. Like inflation running ahead of wage growth, or job losses. None of that is in evidence (yet).
The other possibility is that mortgage-rate resets are already squeezing households. But I thought the number of resets which have already occurred is relatively small.
He's worried about the "domino effect" that the story highlights and that we're looking at a big uptick in defaults after the new year especially.
It's a typically AP article and I wanted your comments because without access to any hard data all I can do is guess and speculate about whether the delinqencies are going from "bad to worse" or just "temporary rough patch and then back to normal."
I don't know where the AP gets the idea that people don't see high credit card debt as "something bad" unless they're trying to tie it to Bush economic policies (as seen through the AP editorial lens) which I consider likely.
I do know, however, that I've tried very hard to keep my credit card balances as low as possible in the past few months and that especially on my business credit accounts I'm working very hard to pay them down to Zero as fast as possible. We want to be as debt-free and as good a credit risk as possible going into this next year, because we intend to reapply for a business loan in a couple of months, and we want to have a very, very strong credit rating going into the application process.
...you just might find that credit is hard to obtain at any price, irrespective of your credit rating. That has nothing to do with you, but with the fact that banks don't want any commercial exposure these days.
If you have receivables or signed purchase orders from top-rated very large corporations, you might be able to borrow short-term against them, but the interest rates will probably shock you. I'll be curious to hear how it works out for you.
I'd pay as much attention to your D&B rating as to your credit rating if I were you. Getting favorable terms from trade creditors is money in the bank too.
And if you're frustrated by the difficulty in obtaining credit, just keep in mind that your competition is frustrated too. :-)
If you were in manufacturing and had to finance production you were screwed. If you had money to lend you were living high on the hog.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
You are being a bit unfair. Perhaps since she knows so much about gas and hot air that knowledge was being extrapolated into the oil arena, n'est ce pas?.
The theory is driven by a premise which assumes the more she talks, the more hot air is produced. In the face of this overproduction and combination with less demand for her "hot air" the price will come down. On face value, it seems reasonable in a Keynesian sort of way.
"Nec Aspera Terrent"
bene ambula et redambula
Contributor to The Minority Report
suppliers of prognostications:
A. Kind of a bitch without wheels!
Q. Could you predict the outcome for the nation of Hillary's efforts to control oil prices?
I love America, and it pains me to say it, but our dollar is pretty weak in the world market...and growing weaker daily. That's part of the problem with gas prices. Gas is not that much higher in value, part of the problem is that our pay checks don't go as far.
One of the issues that "hill-REE" (as my grandmother calls her)will have to fix is the weak dollar. I'm not economist, but I have read the magazine while staying in a holiday inn express the other night, but I imagine if that was easily fixable by any american, it'd be done.
Can someone who is more ecomomically inclined tell about what is going on with all this?
Thanks.
I've been reading the futures commentary from IBD and the currency news, just opened a currency account after 2 years of paper trading, here's an amateur's summary:
Yes, a week USD does reflect in higher commodities in general, oil included, oil is bought in USD$s. Many people are also putting their money in managed commodity market funds. The week USD is a sign of a good economy worldwide- when the economy is week worldwide they tend to hold USDs hence making the USD$ strong- and falling interest interest rates or speculation that yields will widen between countries, for pre AUG 2007 the speculation was that the Euro zone will raise and the USD will lower rates, hence the Euro was at the 1.50 and is well supported so far above 1.40$/Euro. For example, take a look at a British Pound chart, since the speculation has changed from a rising yield to a falling one in late November on, it may get brutally crushed, www.stockcharts.com>market summary can provide a chart for free. Notice the GBP index, peaked at around 2.11USD/GBP, and is now gapping down below 1.97$/GBP.
Also contributing was frequent news of Nigerian rebels unrest, kidnapping workers- Iranian and US saber rattling and just plain old speculation from these funds that have billions in new money to invest in a trending upward market.
Since the US economic numbers have come in strongly, GDP at 3.9, spending at high levels, and inflation at high levels in a some reports, yet the economy is not slowing enough then oil speculators continue to speculate that US demand will not slow down. Hence the price of oil is back over $90.
The markets may be at a fork in the road, will see after the first week in Jan which way we will go, but for now the prospect of inflation may halt the slide in the USD index, up to $77.5 from a low of 74.?? in November.
As for OPEC they maintain that there is ample global supply, and that they will maintain trading oil in USDs so that they do not upset the currency markets. One of the IBD editorials quotes a Saudi as saying that the price of oil is not OPEC's fault, but the fault of American politicians who will do nothing for themselves like increase their own supply of oil through additional drilling or homogenous refining standards for the whole country.
Recommended books-Technical Analysis of the Financial Markets and the Stock Traders Almanac for seasonal cycles.
For what it is worth,
methanol 63K BTUs/gal
ethanol 85K BTUs/gal
butanol 110K BTUs/gal
Gasoline 115K BTUs/gal
Butanol can be made from non food biomass and works.
If Butanol can be made from "non food biomass", why does the link you posted say Corn is the basic biomass material?
I have no problem with alternatives, but they must be as market ready as gasoline in order for average Americans to use them.
In the mean time, we need to drill, dig, and produce nuclear until such time can can get these market ready.
"Elections.. nowadays.. seem more to resemble fencing operations, than the selection of qualified leadership."
This is a person who basically does not understand economics and a significant portion of the country is voting to support her candidacy for President of the United States.
Beneath Clinton's rhetoric, if you scratch the surface, is a conspiracy theory: that the Arab emirates and Big Oil and the Bush people have been conspiring to keep prices high, and that as soon as they are held responsible by Hillary Clinton and her cadre of alternative-energy zealots, they'll react by lowering the prices, to stave off any such intervention and keep Americans addicted.
It's important to note that when Hillary talks about the putative effect of her being elected on oil prices, it is because she views them as being artifically supported, and that they can fall back to any previous level once they're not being artifically pumped up by BushCo.