33 Gas-Guzzling Buses, Trucks, Vans and Limos?

From Barbara Streisand's website: Simple Things We Can All Do to Help Stop Global Warming

The Streisand Foundation supports the non-profit group Earth Day Network, and they have compiled a list of a few easy ways you can conserve energy and help protect the environment from further deterioration:

1) Change old, incandescent lights to newer energy-saving models (compact fluorescent lights), turn off lights when not in use and dim lights when in use.
2) Update your heating/cooling system to a more efficient model
3) Tune up old heating/cooling systems, clean out the vents, buy a programmable thermostat
4) Make sure windows are sealed and doors are closed when running air conditioners and heaters
5) Turn on the energy saver switch near your refrigerator’s thermostat
6) Make sure that your refrigerator door seals properly
7) Clean out the condenser coil on your refrigerator (can improve the efficiency of your refrigerator by one third)
8) Wait until you have a full load before running your dishwasher
9) Invest in green stocks and renewable energy companies through socially responsible funds
10) Eat locally grown food and fruits and vegetables that are in season (if the food doesn't have to travel far, there's less carbon dioxide from the trucks that ship it)
11) Eat organic (the pesticides used on crops releases carbon contained in soil into the atmosphere)
12) Buy recycled

From Streisand's contract rider for her last tour (2006):

1. The building will need to supply the production office with 120 bath sized towels immediately upon arrival.
2. The show travels in our own thirteen (13) 53 foot semi-tractor trailer trucks. Please arrange parking for the following vehicles:

Thirteen (14) 53 foot semi-tractor trailers (one merchandising)
Four (4) rental vans
Fourteen (14) crew and band busses
One (1) limosuine (artist)

MP: I think that totals to 33 gas-guzzling, fossil-fuel burning vehicles for Ms. Streisand, including 28 large trucks and busses. I wonder kind of carbon footprint that tour left on the environment?

Is Min. Wage Behind the .50% Jobless Rate Jump?

Accoding to BLS data on unemployment rates by age, it looks like almost all of the .50% increase in May unemployment to 5.5% from 5% in April was due to increases in the jobless rates for young workers in the 16-24 year age group, especially the 16-19 year group (see chart above). For workers 25 years and over, the jobless rate has remained pretty stable at around 4%, compared to large increases from April for 16-19 year workers (+3.3% to 18.7%, the highest rate since 1993) and 20-24 year olds (+1.5%).

From the Patterico's Pontifications blog: Who does this age group represent? How about high school and college students coming into the job market for the summer.

And what do many such job seekers get paid? Minimum wage –which Congress increased last year from $5.15 to $5.85, and which will increase again next month to $6.55, and then again next year to $7.25 (see chart below).

Although it apparently hasn't received much media attention, perhaps there is a link between the rising unemployment rate for teenagers and the pending 12% increase in the minimum wage next month. Since we have evidence that consumers respond to higher gas prices by driving less, wouldn't it also be the case that employers of unskilled workers would respond to 12% increases in wages for unskilled workers by hiring fewer unskilled workers?

In nominal dollars, there will be a 41% increase in the minimum wage, from $5.15 per hour in 2007, to $7.25 per hour in 2009. In real, inflation-adjusted dolars, it will be a 25.5% increase, and will be the largest 2-year increase in the real minimum wage in at least 50 years (see chart below). And this HAS to have an adverse effect on employment of teenage workers.

Crisis? What Oil Crisis? Not in Russia!

The Economist -- There is one country where the high oil price is powering the expansion of the market, rather than painful restructuring. Thanks to abundant natural resources, Russia's economy has grown by an average of 7% a year for the past decade. Real disposable income has nearly doubled in the past five years and is growing by more than 10% a year. That means a lot of Russians can suddenly afford to buy cars.

High oil prices may be causing pain for carmakers in America, but they have helped create a booming market in Russia. Compared with other markets, burdened by debt and oil prices, “Russia is still magically isolated.”

The growth and size of the Russian market has confounded every forecast. In 2007 sales of new cars grew 36% by volume and, reflecting the steadily increasing buying power of customers, 57% by value. Sales of passenger vehicles exceeded 2.7 million (see chart above).

Russia could outstrip Germany as Europe's biggest market this year, with sales reaching around 3.3 million. By 2012 Russians will be buying more than 5 million new cars a year, of which nearly 90% will be foreign brands. With its big dealer network, Ford has done especially well: a decade ago it sold fewer cars in Russia in a year than it now sells in a week.

(H/T: Greg Allar)

See related CD posts here and here.

Beer and Wine Trends: Falsie Pints and Chic Boxes

WSJ -- Beer prices at bars and restaurants have risen over the past few months, as prices of hops and barley have skyrocketed and retail business has slowed alongside the economy.

Some restaurants have replaced 16-ounce pint glasses with 14 ouncers -- a type of glassware one bartender called a "falsie" (see picture above).

And customers are complaining that bartenders are increasingly putting less than 16 ounces of beer in a pint glass, filling up the extra space with foam. Two of the world's biggest glassware makers, Libbey and Cardinal International, say orders of smaller beer glasses have risen over the past year.

Mainstreet -- Drinking wine out of a box, it’s pretty fair to say, has over the years generally not been the path to recognition by one’s peers as a gentleman or a lady. Problem drinker is more like it.

Indeed, as a conduit, wine from a box is usually lumped with the likes of keeping a cheap keg in the garage or stocking your liquor cabinet with Mad Dog. But the times, it seems, they are a changing.

Increasingly, some very good wineries have taken to packaging their product in a box. Boxed wines, in fact, have become the fastest-growing segment of the industry.

“Boxes are very, very chic now,” says Leslie Sbrocco, author of The Simple & Savvy Wine Guide: Buying, Pairing, and Sharing for All.

(Thanks to Craig Newmark for the pointer on box wine.)

The Outsourcing Billionaires from Taiwan and India

CBC News--Offshore outsourcing has led seven of Forbes' billionaires directly to their fortunes. These seven men hail from just two places: Taiwan and India.

The Taiwanese billionaires — Terry Gou and Barry Lam — lead companies specializing in contract manufacturing, namely in the production of electronics.

Hon Hai, the maker of Apple's iPod, among other everyday gadgets, is one of the world's largest contract electronics manufacturers. CEO Terry Gou has made billions off the company, which he founded in 1974. Founder and CEO of Quanta Computer Barry Lam has pioneered the design and manufacturing of notebook computers.

By contrast, India's offshore outsourcers have made their billions through software services. Wipro, Infosys Technologies and HCL Technologies all have C-level executives who have worked their way to 10-plus digits through companies that provide global software and IT services.

Forbes article "With Outsourcing Smarts, They Struck It Rich"

Forbes slide show

Forbes video

Current Odds: 59.7% Obama vs. 36.3% McCain

From Intrade.com.

Get Ready for the Oil-Price Drop

The world economy can't handle current energy prices, much less a big increase. Which in turn means that oil prices will fall.

When the price of anything gets unbearably high, it discourages demand. The resulting drop in sales, in turn, causes inventories to pile up and the price to come down. That has proven true of overpriced houses - and it will likewise prove true of overpriced oil.

~Alan Reynolds of the Cato Institute in the NY Post

YIKES!! $128 Million for Tiger

With close to $800 million in total earnings on and off the course over his 13-year career, Tiger should become the first billion-dollar athlete in the next two years -- and he's still only 32. With that kind of money, he can afford this yacht:
Ranking the 50 highest-earning athletes in the U.S., from Sports Illustrated.

The highest-earning international athletes.

Full Sports Illustrated story here.

Brits Fail To Cash In On Free £5 Notes

The full extent of Britain’s financial inertia was laid bare today when passers-by in London and Manchester were offered a free £5 note, no strings attached.

Representatives from price comparison website, www.moneysupermarket.com wandered the streets this morning wearing sandwich boards offering a free £5 note to anyone who asked. Despite encountering over 1800 people, only 28 passers by bothered to take advantage of the offer.

The exercise was designed to illustrate that, credit crunch or no credit crunch, Brits are unwilling to take even the simplest steps to improve their financial situation.

Full story here.

Energy: Government vs. Market Solutions

Coercive, government solutions to high energy prices:

1. Investigate oil companies for "price gouging."
2. Impose winfall profits taxes on oil companies.
3. Keep plentiful domestic energy resources off-limits.
4. Pressure (beg) Saudi Arabia to increase output.
5. Regulate stricter CAFE standards for fuel efficiency.
6. Waste taxpayer money to subsidize "demon ethanol."

Voluntary, market solutions to high energy prices:

1. Producers develop fuel-efficient cars like the 300 mpg Aptera (watch CNN video above, click on arrow) that can go cross country on one tank of gas, and the 230 mpg Volkswagen coming in 2010, WITH NO GOVERNMENT SUBSIDIES.
2. Consumers drive less voluntarily and buy more fuel-efficient cars to conserve gas.
3. Producers attempt to find more oil in Canada, North Dakota, the Outer Continental Shelf and ANWR, subject to government restrictions.
4. Oil refiners attempt to build more, energy-efficient, environmentally-safe oil refineries, subject to government restrictions.

Future government solutions?

1. Impose windfall profits taxes on Aptera and other energy-efficient vehicle makers if they start making "windfall profits" from booming sales of small cars.

2. Investigate "price gouging" if consumer demand for the Aptera and other small cars results in "excessive prices."

Finally, Some Rational Thinking in South Dakota

Investor's Business Daily: Thirty-two long years have passed since the U.S. had a new oil refinery. But a small South Dakota community wants to change that. Finally, some rational thinking.

Union County, home to 12,584 in South Dakota's southeastern corner, voted 58% to 42% Tuesday to approve a request by Hyperion Energy to build a refinery north of Elk Point, the county seat of 1,855. The facility, expected to turn out 400,000 barrels of ultralow-sulfur gasoline and diesel fuel a day, just might be the biggest thing to happen to the area.

As far as energy is concerned, it could be the biggest thing to happen to this nation since 1976, widely known as America's bicentennial year but less so as the date the last new oil refinery was built in the U.S. Since that refinery was built in Garyville, La., more than three decades ago, environmental groups have successfully bullied policymakers into blocking any new ones.

Meanwhile, America has gone from 301 refineries in 1982 to less than half that (149, see chart above). The refining process is far more efficient today, yet output hasn't kept pace with demand. As domestic oil consumption has increased from 17 million barrels a day in 1982 to nearly 21 million a day in 2007, the country now has to import 10% of the gasoline we burn. We just don't make enough.

Wonder no more why we've become so reliant on foreign crude to fuel our economy and have little choice but to do more business with unsavory characters than we should.

See previous CD post here on this topic.

The Power of $4 Gas: It's A World Transformed

At $3 a gallon, Americans just grin and bear it, suck it up, and, while complaining profusely, keep driving like crazy. At $4, it is a world transformed. Americans become rational creatures. Mass transit ridership is at a 50-year high. Driving is down 4%. (Any U.S. decline is something close to a miracle.) Hybrids and compacts are flying off the lots. SUV sales are in free fall.

The wholesale flight from gas guzzlers is stunning in its swiftness, but utterly predictable. Everything has a price point. Remember that "love affair" with SUVs? Love, it seems, has its price too.

America's sudden change in car-buying habits makes suitable mockery of that absurd debate Congress put on last December on fuel efficiency standards. At stake was precisely what miles-per-gallon average would every car company's fleet have to meet by precisely what date.

It was one out-of-a-hat number (35 mpg) compounded by another (by 2020). It involved, as always, dozens of regulations, loopholes and throws at a dartboard. And we already knew from past history what the fleet average number does. When oil is cheap and everybody wants a gas guzzler, fuel efficiency standards force manufacturers to make cars that nobody wants to buy. When gas prices go through the roof, this agent of inefficiency becomes an utter redundancy.

At $4 a gallon, the fleet composition is changing spontaneously and overnight, not over the 13 years mandated by Congress. (Even Stalin had the modesty to restrict himself to five-year plans.) Just Tuesday, GM announced that it would shutter four SUV and truck plants, add a third shift to its compact and midsize sedan plants in Ohio and Michigan, and green light for 2010 the Chevy Volt, an electric hybrid.

Some things, like renal physiology, are difficult. Some things, like Arab-Israeli peace, are impossible. And some things are preternaturally simple. You want more fuel-efficient cars? Don't regulate. Don't mandate. Don't scold. Don't appeal to the better angels of our nature. Do one thing: Hike the cost of gas until you find the price point.

Charles Krauthammer

The Power of the Market: 600 Million People in China Have Been Lifted Out of Poverty Since 1981

Economic reforms that started in 1978 have helped lift 635 million Chinese people out of poverty, from 839 million in 1981 to 204 million in 2005 (see chart above), according to this study (Table 2). The poverty rate has fallen from 53% of the population in 1981 to 8% by 2001 (see chart above from the World Bank).

Bottom Line: Free market capitalism is the best path out of poverty. The difference between capitalism and socialism? Capitalism works.

America's Energy Policy

America says to foreign producers: We prefer not to pump our oil, so please pump more of yours, thereby lowering its value, for our benefit. Let it not be said that America has no energy policy.

~George Will

6 Week Low for Unemployment Claims

WSJ/WASHINGTON -- The number of U.S. workers filing new claims for unemployment benefits posted a surprising drop last week to a six-week low, signaling some improvement in labor-market conditions ahead of Friday's employment report for May (DOL report here).

The four-week average of new claims, which economists use to gauge underlying job trends, fell for a second-straight week, by 2,750 to 368,500. Despite the recent improvement, that average remains well above levels seen in 2007 and at the start of this year.

MP: The downward trend over the last two months looks hopeful, and the market today seemed to like it (+214 point jump in the DJIA).

LA vs. Boston: All Economic Indicators Are Up

The nation may be struggling with soaring fuel prices, high food bills and rising home foreclosures, but when it comes to the revival of the celebrated Lakers-Celtics matchup in the NBA championship series after 21 years, all economic indicators are up. Ticket prices and merchandise revenue have risen steadily through this postseason, as have television ratings and online hits, with an even bigger jump anticipated for the Finals.

According to StubHub, the average resale price for the Finals is $772 in Los Angeles and $547 in Boston. In last year's championship series, between the Cleveland Cavaliers and the San Antonio Spurs, the average was $366 in Cleveland, $311 in San Antonio. (Face value for the most expensive seat at Staples Center for the Boston series is just under $4,000.)

LATimes Full Story

Ebay auction: $6,500 for 4 tickets

Retail Health Clinics in the U.K.?

The demand for cheaper and more accessible healthcare in the U.S. has led to the proliferation of retail health clinics, which offer simple medical treatments for walk-in patients. Could a similar model work in the UK?

Retail health clinics have succeeded in capturing the US public's imagination because they are organized around principles valued by their customers. Retail health clinics:

• Offer easy access to healthcare
  
• Are backed by strong consumer brands, such as Wal-Mart and CVS Pharmacy
  
• Offer value for money, created by the focus on specific treatments, low turnaround time and the use of non-doctor clinical staff
  
• Are regarded positively by regulators
  

As a result, they have tapped into both revealed and latent demand and boast high customer satisfaction rates. In terms of a business model, the obvious comparison is with the hospitality industry. Just as motels forego room service and fancy decor to offer clean, comfortable and economical rooms for the night, so retail health clinics dispense with the complex and costly apparatus of full-service medicine to offer quick treatments for minor ailments.

Conclusion: PA Consulting, a global management consultancy, believes that so-called “retail health clinics” in the U.K. have the potential to provide a wider variety of care for patients, delivering more convenience and greater choice. (News report here)

Tax Consumption, Not Savings

Like philanthropy, saving is an act of self-denial that enriches your neighbors (by leaving more goods available for them to consume). But unlike philanthropy, saving is punished by the tax system (via the taxes on interest, dividends, capital gains and inheritance). That's nuts. When you tax saving, you encourage people – wealthy people in particular – to spend more and grab a larger share of the consumption pie. "More consumption by the rich" should not be among the primary objectives of the tax code.

The alternative is to tax consumption. I and probably most economists believe that a consumption tax is better than an income tax, at least in principle. You can easily implement a consumption tax with a Form 1040 that says: "How much did you earn this year? How much did you save? Now pay tax on the difference." And you can make that tax as progressive as you like.

~Economist Steven Landsburg in today's WSJ

Forget Alaska, There's 40X As Much Oil in N.D.

June 3 (Bloomberg) -- The Bakken formation is a sprawling deposit of high-quality crude oil beneath the durum wheat fields of North Dakota, Montana and southern Saskatchewan and Manitoba. The Bakken may give the U.S. -- the world's biggest importer of oil -- a new domestic energy source at a time when demand from China and India is ratcheting up the global competition for supplies and propelling average U.S. gasoline prices to almost $4 a gallon.

And unlike the tar from Canada's oil sands, Bakken crude needs little refining. Swirl some of it in a Mason jar and it leaves a thin, honey-colored film along the sides. It's light - -almost like gasoline -- and sweet, meaning it's low in sulfur.

Best of all, the Bakken could be huge. The U.S. Geological Survey's Leigh Price, a Denver geochemist who died of a heart attack in 2000, estimated that the Bakken might hold a whopping 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field, which has produced about 55 billion barrels (see chart above).

In contrast, there are 10.4 billion barrels estimated to be recoverable in Alaska's Arctic National Wildlife Refuge (ANWR), which remains off limits. On the other hand, North Dakota is open for business.

Breakthrough? First U.S. Oil Refinery in 30 Years?

ELK POINT, S.D. — Voters in Union County on Tuesday approved rezoning for what would be the first new U.S. oil refinery in more than 30 years.

Texas-based Hyperion Resources said it would help the United States reduce its dependence on overseas oil. The refinery would process 400,000 barrels of thick Canadian crude a day. Hyperion officials said the project would mean 1,800 permanent jobs and another 4,500 construction jobs over a four-year period.

Hyperion called it a "green refinery" and said it would produce ultra-low sulfur gasoline and diesel and be among the cleanest and most environmentally friendly in the world.

HT: Anonymous comment on this CD post

Seismic Shift: Asian Rivals Outsell Big Three

FORBES: Hong Kong - U.S. carmakers have relinquished primacy of position on their own home turf to Asian rivals for the first time. In a seismic shift in the automotive industry, consumers are voting with their wallets for the smaller, more fuel-efficient vehicles that Asian manufacturers have excelled at producing.

The combined U.S. market share of Detroit's Big Three--General Motors, Ford Motor and Chrysler--slumped to a record low of 44.4% in May, compared with 47.8% for Asian automakers collectively. Japanese car producers by themselves seized a record share of the U.S. market, 42.5%, according to data for the month of May from Autodata Corp.

MP: The chart above shows cumulative, year-to-date (through May) market shares for the Big 3 vs. all foreign automakers this year, compared to last year.

The Miracle of the Market and Political Silliness

With a couple billion Chinese, Indians and others joining the global marketplace, they will need energy, and lots of it. The price mechanism is our only hope.

Sure enough, it's working. Money is pouring into Canada's massive tar sands. A thousand substitutions are taking place on the demand side. Sales of SUVs are falling; sales of four-cylinder sedans are up. The number of miles driven by American motorists shrank in February for the first time in 26 years.

Yet there's one miracle of adaptation that even $135 oil apparently can't vouchsafe. It can't bring intellectual coherence to American rhetoric or policy on energy.

By one count, America sits on enough oil and gas to meet its own needs for half a century. We won't help ourselves although our environmental delicacy somehow doesn't stop us from screaming at other countries to tear up their own pristine wildernesses to supply us with cheap energy.

President Bush rushes to the Saudis, supplicating for more oil. Congress threatens OPEC with antitrust action. Go figure. That U.S. politicians can afford to indulge a persistent unreality about a basic input of industrial civilization only testifies to how responsive and resilient the global energy market has been despite the political silliness it meets at every turn.

From "The Coming Oil Investment Boom" in today's WSJ

San Diego Housing Market: Buy One, Get One Free

Link.

Dynamic Maps of Income Distribution Over Time

INDIA

The Rise of India's Middle Class

Check out the dynamic, time-series graphs of income distribution from Gapminder.com here. Pick a country (or the world), and click the arrow on the left to watch the year-by-year change in income distribution. For an interesting comparison, watch India (see charts above for 1970 and 2000) and then Nigeria - two different stories.

Africa = U.S. + Europe + China + India + Argentina

Africa (30.3 million km²) is larger than China (9.6 million km²), the U.S. (9.4 million km²), Western Europe (4.9 million km²), India (3.2 million km²) and Argentina (2.8 million km²), three Scandinavian countries and the British Isles COMBINED (see map above, click to enlarge).

Link here.

Big 3 Want to Build Cars, Just Not With Union Labor

Word that Ford will build its new fuel-efficient Fiesta "global car" in Mexico City is bad news for American auto unions. U.S. companies still want to build cars; they just don't want to build them with union labor.

We don't fault workers for trying to get more in labor negotiations. But the fact is, past UAW deals have saddled U.S. companies with such high costs that they can no longer make cars here and compete on a global market. So they make cars elsewhere.

Like a coyote caught in a trap, U.S. automakers have been desperately gnawing off a leg to escape certain death. They're closing plants and slashing jobs in Michigan, Ohio and other U.S. union havens, in favor of non-union, foreign places. Like Mexico and China.

Meanwhile, foreign companies have no problem making cars here. They do it in the non-union South, where the UAW is weak.

Ford's move to Mexico should be a warning to the UAW, which has seen its membership shrink from 1.5 million in 1979 to about 500,000 today. The UAW may "win" every negotiation they enter from now until doomsday, but to what end? The decline of Ford, GM or Chrysler is bad news for the U.S. — but it may be a death-knell for the UAW.

IBD Editorial

Consumer Confidence About Economy Might Be Low, But Foreign Investor Confidence is High

According to data released today by the BEA, foreign investors pumped $276.8 billion into the U.S. economy in 2007 to acquire U.S. businesses ($255 billion) or to establish new U.S. businesses ($22 billion). This investment activity by foreign investors represents a 5X increase since 2002, when FDI was only $54.5 billion (see chart above, click to enlarge).

Certainly some of the increase could be explained by the 17% depreciation of the USD between 2002-2007 (data here), but that has to be a relatively insignificant factor in the +400% FDI increase.

Bottom Line: Americans might have lost confidence in their economy over the last few years, but foreign investors apparently haven't, and in fact, are increasingly bullish about the U.S. economy and its businesses. Despite subprime mortgage problems, a housing slump, threats of a recession in 2007, and comparisons to the Great Depression, foreigners almost doubled their investments in U.S. businesses in 2007 ($277 billion), compared to 2006 ($165 billion). Consumer confidence might be low, but foreign investor confidence in the U.S. economy is close to an all-time high.

The Global Flat Tax Revolution

24 countries now have a flat tax, with great success.

Can the U.S. learn something about taxes from the emerging market countries of Eastern Europe? Dan Mitchell of the Cato Institute breaks it down in the video above, click on the arrow.

Thanks to Cafe Hayek for the pointer.

It's Over: From 70% Odds to 5.5% in 135 Days

Hillary's odds on Intrade.com, from 70% in February 2008 to 5.5% today (click graph to enlarge).

How Rich Are You? Even Minimum Wage Workers in the U.S. Are Richer Than 87% of People in World

Check it out here at the Global Rich List. Enter your annual salary and find out how you rank (percentage ranking) among the 6 billion people on the planet, based on world salary data from the World Bank Development Research Group. Here are a few examples:

A single American living at the poverty level of $10,294 annual income (in 2006) would be in the top richest 13.25% people in the world.

An American worker earning the minimum wage of $6.55 (July 2008) would be in the top richest 12.64% people in the world.

The median income per household member of $26,036 (in 2006) would be in the top richest 9.47%.

An American making the average hourly wage of $17.88 ($35,760 in 2008) would be in the top richest 4.4% people in the world.

A U.S. high school teacher earning the average salary of $52,450 (in 2007) would be among the top richest 0.96% people in the world.

A UAW worker making the average hourly wage of $39.68 (in 2007 with overtime, holiday and vacation pay, etc.) would be in the top 0.79% richest people in the world.

Bottom Line: We might complain about declining real wages in the U.S., increasing income inequality, the "middle-class squeeze," and the "disappearing middle class," etc., but think about it: even minimum wage workers in the U.S. are richer than 87.36% of the people on the planet. As much as we might complain, just by being alive in 21st century America, even if you're lower or middle class, you've "won first prize in the lottery of life."

Want Cheaper Gas? Here Are 4 Solutions

To address rising oil and gas prices, there's not much we can do about rising global demand, but we can do a lot to increase supply. Cato Institute's Jerry Taylor outlines 4 ways to increase domestic supplies of oil and gas in today's NY Post:

1. Open up key areas for oil and gas exploration and development.

2. Open up the West to oil-shale development.

3. Empty out the Strategic Petroleum Reserve.

4. Suspend federal rules that force refiners to use only low-sulfur oil to make gasoline and diesel.

Thanks to Cafe Hayek for the pointer.

Return of King Dollar?

The chart above shows the one-year forward premium or discount for the USD vs. the British Pound (BP) and the euro, on the first trading of June in 2006, 2007 and 2008 (data available here). Compared to two years ago when the dollar was selling at a one-year forward discount versus both the BP (-0.60%) and the Euro (-2.1%), the dollar is now selling at one-year forward premiums of +2.6% for the BP, and +1.8% for the euro.

Does this signal the return of King Dollar?

Global Market Flows for Oil: U.S. Sucks It Up

The global oil flow map tells an interesting story: The U.S. sucks in oil from oil-producing countries around the world on five continents, despite the fact that it has much of its own domestic energy resources that are currently off-limits. Then when demand for oil increases in emerging markets like Russia, China, India and Brazil, and these countries compete with the U.S. for a limited supply of global oil, the U.S.: a) complains about high oil prices, but b) refuses to open up its own domestic oil supplies.

Isn't it kind of like Jed Clampett discovering oil on his land while hunting, but refusing to use it or sell it?

Update: The global oil flow map is from the API.

No New Oil Refineries Since 1976

A new oil refinery has not been built in the United States since 1976. During that time, our gasoline use has increased over 25%. The nation's 149 existing refineries have been running at maximum capacity trying to meet record demand and, as a result, not only do we import oil, we actually have to import 10% of our daily gasoline from refineries overseas.

For the wealthiest, most powerful nation in the world this is a ridiculous situation that will only get worse as our insatiable demand for gasoline keeps growing and refinery capacity falls further behind in the coming years. Just a few new refineries would alleviate the problem and help keep our gas prices lower and steadier.

But getting an oil refinery built is next to impossible, hence the 30-year construction drought. There will always be environmental activists who fight any new proposed refinery, regardless of where it might be located and how environmentally safe it is. And our environmental rules give them the upper hand.

Consider the example of Arizona Clean Fuels, which has been trying to build a small refinery outside Yuma for almost 10 years. It took five years just to get air-quality permits. Now they hope to be operational in 2010, 15 years after they started the project.

The opposition to building new refineries ignores the dramatic technological improvements that have been made since an oil refinery was last constructed here in 1976. New, clean refineries emit far less pollution than older refineries, with new scrubbers and design changes that dramatically reduce sulfur and other emissions. And at the same time our ability to model and map emission characteristics and distribution lets us choose the best locations for new facilities – where they will have the least possible impact on people and the environment.

Reason Magazine

The Ultimate Commandment: Carbon Chastity

Via WonderMark, click to enlarge.

The Founding Fathers Were Bloggers

Well, OK, let me rephrase that. Many of the Founders were the 18th-century equivalent of a certain category of modern-day bloggers — writers on political topics, typically using a pen name, who are also connected to formal journalism and simultaneously active in partisan politics.

John Adams, Thomas Jefferson, James Madison, Alexander Hamilton, Benjamin Franklin, John Jay, Gouveuneur Morris — these and other notables of the Founding were not just drafters and signers of America’s founding documents, wartime leaders, statesmen, diplomats, and jurists. They were also prolific media commentators capable of great works of political philosophy as well as ribald jests, character assassination and political rumor-mongering.

Read more here.

Zimbabwe: Everybody's a Billionaire, But Starving

Zimbabwe's Official inflation rate: 165,000 percent
Actual inflation rate: 1,700,000 percent

Amount of money an average family of six needs per month for basic services and goods: $100 billion

The Progressive Teachers’ Union of Zimbabwe's salary demand: $76 billion per month

Amount awarded to the teachers by the government: $60 billion per month

Result: 16,000 teachers have left Zimbabwe for South Africa and elsewhere

Harare Tribune link

Girls vs. Boys

The Economist

Inflation Fighters: McDonald's and Steve and Barry's

We hear a lot about bad news about inflation, agflation, higher food prices, the middle-class squeeze, high gas prices, rising income inequality, etc. etc.

How bad can things really be for the average person when you can get a double cheeseburger or a McChicken sandwich at McDonald's for $1, and can buy any item of clothing at Steve and Barry's for $8.98 or less?

See previous CD post here on Steve and Barry's.

Iowa Farms Harvested $4 Billion of Cash in 3 Years

Iowa may be a blue state politically, but when it comes to farm subsidies Iowa is all red (see picture above, red dots indicate locations receiving farm subsidies). According to the Environmental Working Group Farm Subsidy database, 70% of Iowa farms received subsidies in 2002 (most recent year available, data here), the second highest percentage in the country (see chart above).

During the 2003-2005 period, Iowa led the nation by harvesting almost $4 billion in cash, i.e. farm subsidies (data here), or 10.8% of the $37 billion paid in total farm payments during that period. Iowa benefited from the generous $18 billion of subsidies given out by the U.S. government for growing (or not growing) corn, which is an amount equal to the subsidies paid for cotton, wheat, rice, soybeans, dairy, peanuts and barley COMBINED (data here).

Farm subsidies in Iowa are so popular and common that many citizens of the city of Des Moines partake of the government's generous agricultural largesse (see map above, red dots represent mailing addresses of "farmers" receiving subsidy payments).

Blogosphere Dictionary

Blogossary is an online dictionary for bloggers, wannabe bloggers, or those who just want to know what a blog is.

Average Price of a House in Detroit? Only $20,514!!

The good news is that Detroit home sales through April are up by a whopping +48% (YTD) compared to last year (3,360 homes sold in 2008 YTD vs. 2,267 last year), but the bad news is that the average price for a home sold in Detroit has fallen by almost 56% to only $20,514 so far this this year, compared to an average price last of $46,183 for the January-April period! Compared to the peak of $97,850 for the average Detroit home price in 2003, prices have fallen by 79% (see chart above, values are annual except for 2008, which is YTD, data available here).

(Hat Tip: James Hohman)

Cancer Kills, But So Does The FDA's Bureaucracy: Cancer's Cruel Economics

BUSINESSWEEK -- Billions of dollars are spent developing cancer drugs, but precious few get approved. Is the FDA part of the problem?

The U.S. government has doled out more than $75 billion for oncology research since President Nixon declared his War on Cancer in 1971. Outlays by the pharmaceutical industry have been far greater. Yet the death rate from cancer has dropped only about 7% in the past three decades, with most of the progress in the last few years. The disease continues to strike 1 in 3 Americans, and it kills 1 in 4. That averages out to 1,500 deaths every day, at an annual cost to the nation of $210 billion and climbing. Cancer is expected to become the nation's biggest killer within a decade, surpassing heart disease.

There are many plausible reasons for so much disappointment, not least the complexity of the disease. But more and more researchers, companies, and patients lay part of the blame on the FDA. They complain that the agency is using outmoded and overly rigorous methods for evaluating a new generation of cancer treatments, rather than doing everything possible to get better drugs to sick patients.

Since 2005 the FDA has approved 18 new cancer drugs, many of them breakthrough products. But the pipeline contains hundreds more that will never get to market because corporate developers aren't able, or willing, to come up with the money, time, and patients necessary to establish acceptable data. Only 8% of experimental cancer drugs end up receiving FDA approval, compared with 20% of medicines for all other diseases.

Those difficulties haven't kept the pharmaceutical industry from trying. There are currently some 750 cancer drugs in human trials, far more medications than in other disease categories. Successfully ushering any one of these drugs through the necessary development stages will take up to 15 years and typically cost more than $1 billion—about $200 million more than is spent winning approval for a noncancer drug. The clinical trial sinkhole most threatens small biotechs that develop the bulk of new cancer drugs, and it is these firms that complain the loudest about the FDA.

There's Some Relief: Falling Gas Prices in Michigan

Gas prices in Michigan have fallen for 8 consecutive days, according to MichgianGasPrices.com (blue line above), reflecting falling crude oil prices over roughly the same period (red line above).

Windfall Profits for Big Food, Where's The Outrage?

As Food Prices Spiral, Farmers, Others Profit

WILLMAR, Minn. (AP) — The steepest run-ups in food prices since 1990 are hurting grocery shoppers, restaurants and school cafeterias but they're making others rich.

The winners in the new food economy include crop farmers selling corn and wheat for near-record highs after years of crushingly low prices. Ingredient makers like Cargill and ADM are rife with profits. Fertilizer and tractor companies are cashing in.

Profits at seed and pesticide maker Monsanto Inc. reached nearly $1 billion last year — a 14-fold increase since 2003. They've tripled to $1.1 billion at agrichemical maker Syngenta and agriculture divisions of DuPont Co. and Dow Chemical Co. have also seen their earnings balloon. Cargill, which makes ingredients, boosted its profits to $2.3 billion, up nearly six-fold since 2001. Meanwhile, profits at agricultural processor Archer Daniels Midland Co. have more than quadrupled to $2.16 billion during the same period.

Question: Why don't the "obscene, windfall profits" of Big Food get the same attention as the profits of "Big Oil?" Where are the Congressional hearings and proposals for windfall profits taxes on Big Food? After all, the increase in profits for major food companies from 2005 to 2007 are ridiculously and obscenely higher than the paltry 12% increase in profits for Exxon Mobil (see chart above).

Capitalism In A Nutshell

4-Block World.

Oil Market Fundamentals

The chart above (data available here from Net Oil Exports blog) shows Net Oil Exports of the top 20 oil exporters, representing 93% of total world exports, versus the world price of oil, from January 2001 to April 2008 (for oil exports) and May 2008 (for oil prices).

The story seems clear: Net oil exports peaked during the 2004-2006 period, and they have been declining in 2007-2008. In the face of rising global demand, oil prices have been increasing. Of course, there are the effects of the falling USD and speculators, but the chart below looks basically the same when oil is priced in euros.