Some Non-Strategic Thinking About a Non-Problem
"It's confusing as to why we would wait to this point to release part of the (SPR), but we've still failed to step forward and say let's bring long-term supply to the marketplace, create American jobs at a time when we have 9.1 percent unemployment and produce millions of dollars of federal revenue at time when we're struggling with a debt and deficit crisis. ... Just yesterday the administration sent a letter to Capitol Hill opposing a permitting bill that was designed to expedite permits in Alaska to produce oil and natural gas. We are getting a confused message."
Larry Kudlow is rightly skeptical and suspicious of the "government solution" to the "non-problem" and wonders if the IEA delivered a "QE3 quick fix to save Obama’s skin?" and concludes "Lord save us from short-run government fixes. Haven’t we had enough of them?"
210 Comments:
This action by Obama is certainly dumb economics. But more to the point, it is not very smart politics. This action will have ZERO effect on voter’s thinking in November of 2012.
If Obama wants to use the SPR to try to influence the election, he should really wait until August of 2012; then dump 100+ million barrels on the market (between August 2012 and October 2012).
That, at least, would make political sense.
From watching the action of Wholesale Unleaded I, and I imagine the Obama administration, came to the conclusion that Retail Unleaded was probably leveling off in the $3.60 range.
Since the economy started stalling out somewhere between $3.25 and $3.50, they are probably trying to get back to the $3.00 to $3.25 area. It's unlikely to work.
However, even if it did work in the short run, it's a dead certainty to fail the moment they take the piggy bank away. Somehow, they've convinced themselves that all they have to do is add a couple of million barrels/day until Libya comes back online, and then the skies will clear, and everything will be hunky dorey.
For a lot of reasons, it's not going to work that way.
Not the least of these reasons is greatly increasing demand from China, India, and the rest of the emerging economies, and rapidly disappearing production from major oilfields such as the North Sea, Prudhoe Bay, and Cantarell.
This raid on the Savings Account is going to be very hard to put a stop to. This was dumb.
The real economy is collapsing so with an election coming Obama is afraid of losing. To him flooding the market with oil for a while seems like a good idea because it might prevent the consumer from rolling over and creditors from noticing the huge risk of holding USTs.
This should not be a surprise. The authorities hiked margin requirements four times in a row for silver and increased them for others commodities as well even as they dropped them for bonds and the S&P. The problem is that the manipulation is only capable of distorting the markets for a while and makes the ultimate recovery all that much harder. If things play out as usual expect some more pressure on silver and gold futures with a possible gold dump by the IMF in the next few weeks. But some time in the next 12 weeks we should see a strong bottom and a start of a huge move to the upside that should take out the old highs for silver and get gold over $1650. When that happens you better look out for a USD rout even if it goes up against other failing currencies.
Meantime, The Dems fight "drilling," and the Republicans fight "Renewables."
How did we ever manage to elect such losers.
Rufus,
I don't think that most Republicans are opposed to wind power, solar power, or biofuels. The issue is one of mandates and subsidies.
I enthusiastically endorse wind, solar and biofuels, as long as federal subsidies (and mandates) are minimal.
It would seem that a possible political compromise would be to impose a gasoline tax to fund alternative energy, and that in exchange for that, to permit drilling for natural gas and oil in places where it’s currently prohibited. (Probably it would take $200 per barrel oil for that to become a reality).
I wish you were right, DL, but the Republicans in congress are fighting biofuels tooth and nail. It's a Death Match.
If this breaks the (long) speculators, I'm all for it. Oil's been manipulated for too long through this recovery.
The world is producing, within the margin of error, the same amount of oil as it was in 2005, but the emerging nations are increasing their consumption by, on average, 1.5 Million bbl/day, annually.
Speculation doesn't appear to be the problem.
BTW, when you see that "Total Liquids" number (around 87 million bbl/day,) that includes biofuels.
Biofuel production is Up by about 1.5 Million bbl/day since 2005.
Take that away, and we would have reached this point considerably sooner. The Bad News is: The Rapid Expansion in biofuels is over. Most of that increase came from the U.S., and we're pretty much maxed out in the corn ethanol deal.
And, the Pubs are fighting, mightily, to keep the cellulosic expansion from taking hold.
QE2 ends next week. Washington and the Saudis keeping oil prices low may be QE3.
Obama is doing everything he can to avoid reversing course, and he's running out of options.
Oh yeah, this Is QE3.
I have to say, I’m sick of hearing about the evil “speculators”. Yes, there were “speculators” when WTI crude was recently at $100/bl. And there were “speculators” when WTI crude was at $140 in 2008. But equally true, there were “speculators” when WTI crude was at $39/bl in December of 2008. The speculators are only too happy to drive DOWN the price when supplies are ample relative to demand. Furthermore, “speculators” includes those who bet on currency values, it includes anyone who has the capacity to store oil in large quantities, and above all, includes the producers, as much as the producers may want to deny their influence on price. There is no way to “rein in” the speculators.
Increase supply, and the speculators will send the price plummeting.
(Increasing the value of the U.S. dollar in forex markets would also help a lot).
We just better pray that Al Queda doesn't pick this moment in time to "get lucky."
A Tanker sunk in the Straits of Hormuz, or a Saudi Pipeline/Pumping Station up in flames, and holy moly.
Or an Ad Hoc group of, oh I don't know, maybe Russia, Iran, Venezuel, and a couple of others deciding to cut production by a couple of million bbl/day. Umh.
Rufus @ 10:17
Al Qaeda would get far more “bang for the buck” by waiting for much higher oil prices.
They’re coming.
If they were to "get lucky," now, DL I'm afraid they would get their much higher prices. Followed of course by another deep recession in the developed world.
As far as that's concerned, we've already got the recession "baked in the cake;" it's, now, just a question of "how deep."
so.. here's a question.
Would it be possible - for the govt - to strategically take actions that would burn the underpants off of oil speculators?
Would it be possible - for the govt - to strategically take actions that would burn the underpants off of oil speculators?
Yes. The government is little more than a market manipulating fraud gestapo.
It can do what it did to the silver market this year and in 1980. It can jack up margin rates, forcing sales resulting from margin calls. In 1980, the increased margin was accompanied by a new rule at the CRIMEX..I mean COMEX that only sale orders would be accepted. No buy long orders would be accepted by the exchange.
Of course, silver is a relatively tiny market compared to oil. The U.S. could impose these draconian measures on U.S. traders and suffer the consequence - oil trading moving off U.S. exchanges. These days, technology allows traders to change where they trade without moving their asses two millimeters in any direction.
And, of course, the U.S. can do nothing about what's driving oil prices - global demand. Well, at least nothing you would enjoy.
So, as long as you're contributing to demand by turning on your lights and driving your car, suck it up. Sharpening your pitchfork for a witch hunt fueled by your self righteous indignation may feel good, but it's immoral, counterproductive and stupid.
" And, of course, the U.S. can do nothing about what's driving oil prices - global demand. Well, at least nothing you would enjoy."
that's true - but can the govt do anything about those who speculate in oil prices and are thought to be responsible for higher prices than even global demand supports?
Could we be entering a new era where the govt says: "speculate at your own risk because we're out to make it a bad risk if we can"?
in terms of "immoral", I suspect most people would support govt's efforts to punish the speculators rather than the speculators.
no?
so.. here's a question.
Would it be possible - for the govt - to strategically take actions that would burn the underpants off of oil speculators?
Any action will burn some speculators because there are two sides to any bet. The problem with government taking any 'action' is that it interferes with the markets and that it leads to unintended consequences. If the government wanted to really drive the price of oil down it would open up areas for drilling and let Canadian oil get to US markets. That would have a much longer lasting effect and would create actual jobs as it dealt with the supply side problem instead of enriching the few people who were leaked the information and front ran the announcement before trading opened and before the rest of us were given the information.
This is a big example of government corruption and will have some very bad consequences not too long from now. By the way, by sending this signal now governments have shown just how desperate they are and how worried they are about the ineffectiveness of the bailouts and QE programs to stimulate the real economy. With the housing collapse showing no sign of reversal, Bernanke lowering growth forecasts, and unemployment going in the wrong way just as Greece, Portugal, Spain, Italy, and Ireland are on the brink in the EU, and the federal and state governments are in the brink of default in the US desperate politicians looking for a way to get reelected made one last desperate move. (Expect the IMF to announce gold sales soon.)
But what does this accomplish? China can now get cheaper oil to meet its growing demand. Marginal projects needing higher prices to reduce risk will be postponed by nervous companies worried about real growth and demand. Sustainable supply will not increase. And speculators were just told that another round of stimulus is on its way and that once the pullback for commodities is done gold, silver, oil, and grains will be the lowest risk bets around. If you think that the last price run was bad just wait for the next one.
This is the reason why people should stay away from the futures markets. Even if they are right about the long term leverage can kill them. This is why it is better to be in the physical markets or to own the shares instead.
He'll probably wait until oil inventory starts running low and then think he needs to to build up the reserves, so the gov't will buy oil then and contribute to driving prices up. Shhhhh.....
"that's true - but can the govt do anything about those who speculate in oil prices and are thought to be responsible for higher prices than even global demand supports?"
larry-
that is naive populist grandstanding that has no basis in reality.
the only way for speculators to durably drive up the price of oil is to buy it, store it, and keep it off the market.
perhaps you can show me any way to physically do that with a meaningful portion of oil production for any length of time.
you rapidly fill all storage capacity, storage prices spike, and you lose your shirt as oil keeps getting pumped.
oil is large and expensive to store, and capacity to do so is quite finite over the short and intermediate term.
you'd lose your ass trying to do that for long periods.
this whole "speculators did this" argument is just political grandstanding. it has little basis in fact over any period longer than a couple months.
also: let's consider what you said:
"Could we be entering a new era where the govt says: "speculate at your own risk because we're out to make it a bad risk if we can"?
in terms of "immoral", I suspect most people would support govt's efforts to punish the speculators rather than the speculators."
you are saying that it is the government's job to makes sure prices are "correct" and decide what commerce is "immoral".
and you wonder why i call you a statist. you are in severe denial my friend. that is hugo chavez style thinking.
you want the government to set proper prices and punish those who try to deviate from them. that's hardly free market thinking. that's borderline marxism.
it's yet another glaring example of your belief that we are all subjects and that the government can tell us what to do and take our goods if it wants to and thinks it's pragmatic. for someone who gets so upset when called a statist, you sure to float a lot of fascist dogma.
for the most part futures markets reduce volatility. these "speculators" you want to punish make markets work better and more efficiently and keep costs lowers.
you would trust the government to determine who is a real buyer vs a speculator or when prices are correct. that's insane. not only could they not do it even with the best of intentions, but give n how political patronage works, it would rapidly become corrupt.
the government exists to safeguard our liberty, not to whip us into line and subject us to it's paternalistic control.
Note that the estimated loss in GOM production caused by the moratorium & permit slowdown is about 240K bbl/day. Over a year this has caused a loss of almost 90 Mbbl. The irony is too rich...
that's true - but can the govt do anything about those who speculate in oil prices and are thought to be responsible for higher prices than even global demand supports?
Speculators are on both sides of any bet. All the government can do is choose sides.
Could we be entering a new era where the govt says: "speculate at your own risk because we're out to make it a bad risk if we can"?
I have news for you. We have lived in such an era for decades. Governments used the London Gold Pool to manipulate the price of gold in the 1960s. They have attacked the gold and silver price increase all along the latest secular bull. In fact, Gordon Brown managed to sell off half of the UK's gold right at the bottom. While that harmed speculators at the time, particularly those that made one way bets and used leverage, it did nothing for the trend. At the time the desperate action was the equivalent of ringing the bell so signal that a bottom was near. This may be a similar situation.
in terms of "immoral", I suspect most people would support govt's efforts to punish the speculators rather than the speculators.
Most people are clueless about economics and unintended consequences. The problem for Benrnake/Obama is that they will remember the futility of this action next year when oil prices are much higher and the government is in a position where it promised to buy oil to replace what it just released while the price action is unfavorable. I was pretty sure that given the stupidity of the mainstream Republican voter we would see Obama have a good chance of winning next year even with unemployment rates being very high. But these kinds of desperate measures show that he is very scared about the election. (I wonder if some of his supporters got the information leaked to them before the market opened in exchange for campaign contributions.)
" you want the government to set proper prices and punish those who try to deviate from them. that's hardly free market thinking. that's borderline marxism."
Nope.
how about the govt elected by the people taking action to undermine those who would speculate at the expense of consumers?
"Statism", "marxism", pick your favorite ideological platitude, is the cry of those who want and benefit from anarchy and chaos and resent other property owners reining them in - via govt regulation.
Govt and Statism comes from property owners themselves, no?
" Most people are clueless about economics and unintended consequences."
true but they notice things like the price of gasoline going up 40 cents in two weeks in the middle of a serious recession - also.
"how about the govt elected by the people taking action to undermine those who would speculate at the expense of consumers?"
do you even listen to yourself?
what you are saying is "how about the government takes away the freedom of one group because i don't like they way they use it."
how about we get a majority to ban you from ever speaking such nonsense.?
you seem happy to take away the rights and property of others if it benefits you. how will you feel when they wield the whip hand of the majority against you?
your answer to everything seems to be "the government should step in, curtail freedom, and get me what i want."
face it lar, you're a fascist.
"true but they notice things like the price of gasoline going up 40 cents in two weeks in the middle of a serious recession "
and you have some proof that speculators did this?
gasoline prices rise at the beginning of every summer.
several incremental producers are in the middle of civil wars (like libya) or horrific underinvestment (like venezeula) which reduces supply.
demand is up. oil is a global commodity. chinese and indian and brazillian consumption are all up.
gee, you think that might affect prices?
" what you are saying is "how about the government takes away the freedom of one group because i don't like they way they use it."
I'm saying we have a Constitutional process for deciding the issue.
It's called representative government and it does indeed decide what freedoms we have and don't have.
Fascist?
The founding fathers fully intended for our country to operate as a representative government.
I support that Constitution.
I don't have a problem with the process.
fascism?
you are really juvenile... grow up you say you understand our history but you essentially reject it...and engage in name calling when you get nailed to the wall.
we have, on purpose, a form of government called one-man, one-vote that decides what property rights that we have and don't have.
get over it.
" and you have some proof that speculators did this?"
I did not make that claim.
I said that people who buy gas notice when it price goes up fast and high even as demand is down.
Larry, speculation keeps future markets in equilibrium.
Higher oil prices decrease demand and increase supply, which can prevent future disequilibrium, i.e. a price spike or a quantity shortage.
" speculation keeps future markets in equilibrium"
I see your point but I'm not totally on board with it - quite yet.
I don't think the average person who buys gasoline - and votes - is on board with it.
"Statism", "marxism", pick your favorite ideological platitude, is the cry of those who want and benefit from anarchy and chaos and resent other property owners reining them in - via govt regulation."
what a pile of gibberish.
you propose governmental intervention in markets, then deny that such is statism?
you propose to deliberately harm the wealth of investors and call not doing so anarchy?
you propose to ruin financial players and call it "protecting property"?
larry, you are suffering from some severe delusions.
shall we apply your philosophy to the stock market as well?
if prices go up "too much" due to "speculation" and we are all forced to pay higher P/E's when we buy, should the government step in and drive prices down to deter speculation?
how about in the housing market?
if not, then why not?
"I did not make that claim."
sure you did.
"but can the govt do anything about those who speculate in oil prices and are thought to be responsible for higher prices than even global demand supports"
"I don't think the average person who buys gasoline - and votes - is on board with it."
who cares? you don't get to take away rights by majority rule.
the average person may not be "on board" with homosexuality either. that's no argument for restricting it.
you keep making this same flawed claim over and over that expresses your statist view than tyranny of the majority trumps rights.
that is not the society we live in, nor it is one anyone ought to want to live in.
tyranny of the majority is still tyranny.
you have the right to speak here no matter how many of us might with to silence you.
you want to single out "speculators", as if you could ever even determine such a thing, as an underclass and deprive them of the sort of rights you enjoy.
that's hypocritical and tyrannical.
Career politician-lawyers don't understand how hundreds of major forces in a dynamic macroeconomy interact.
Even the Fed avoids micromanaging the economy.
And they called GWB a "cowboy."
Well put, Morganovich.
"The founding fathers fully intended for our country to operate as a representative government."
no. then envisioned a representative government limited drastically by the rights of the individual. once more you demonstrate that you do not understand our form of government nor why it was created.
the whole purpose of the bill of rights is to prevent "representative" government from becoming tyranny of the majority.
pure democracy is just popular tyranny.
how about the govt elected by the people taking action to undermine those who would speculate at the expense of consumers?
Your inner statist is showing again. If I short oil and buy a contract that you are selling we are both speculating. Why should the government try to manipulate the market to help me just because it does not like your bet?
"Statism", "marxism", pick your favorite ideological platitude, is the cry of those who want and benefit from anarchy and chaos and resent other property owners reining them in - via govt regulation.
That 'anarchy' is actually price discovery in the market. That process of price discovery is what makes the unhampered markets so superior at providing a higher standard of living for the most people. I do not expect an ideologue like you to understand.
Govt and Statism comes from property owners themselves, no?
No. It comes from a parasitic criminal class who knows that government is the best racket there is. The irony is that those that praise that parasitic class are most hurt by it while those that attack its immoral actions are in the best position to honestly profit from its tyranny.
The fact that a desperate attempt to manipulate the markets only caused the value of my portfolio to drop by less than $5K could not be better news for me and my family. If that is the worst that Obama and the EU politicians can do sure makes me sleep a lot easier.
true but they notice things like the price of gasoline going up 40 cents in two weeks in the middle of a serious recession - also.
Of course they do. But that price increase is a signal to let the energy industry build more refineries and to allow for more Canadian oil to be imported via that proposed new pipeline. What are 'they' going to do when prices begin to rise in the summer and everyone figures out that the only way to put the released oil back in storage is to bid for it in a rising price environment? Will we see another announcement that will release more oil next month? What do you think happens when producers decide to idle a few wells for maintenance reasons because there is sufficient supply coming out of storage? Or when pissed off Saudis go after their regime because they are selling their future short by driving prices artificially? Or when some producers choose to sell their oil in Renmenbi rather than USDs?
This is a very slippery slope that will only have transient effects. You better be careful what you wish for.
demand is up. oil is a global commodity. chinese and indian and brazillian consumption are all up.
This is what the cheerleaders are missing. With China having a hard time getting diesel and gasoline products to consumers it will be very happy to pick up some very cheap crude even as demand in the US and EU are falling. So what we have seen is the US and IEA use sovereign storage facilities of users help out Asian countries needed supply that cannot be met by actual production.
Just how stupid is that and when do they figure it out?
I disagree.
We are getting a very clear message.
Why did Obama decide to tap the Strategic Oil Reserve NOW? Because his international handlers told him to.
does anyone not think that the tax code that exists in 200 countries across the world is not statism?
bonus question.
If someone or a bunch of someones or a corporation or a bunch of corporations lobbies the govt to alter it's tax treatment of something - is that "statism"?
more to the point - If govts are empowered in their Constitutions and supported by their citizens to act in this way - does that make all of the countries and most of worlds population "statists"?
how many of the 200 govts in the world do NOT operate in such a way that they are the ones who control what property rights are and which property owners pay what taxes.
my point here is that this is, in fact, the way the entire world operates.
calling someone a "statist" because they simply pragmatically recognize this reality.... is silly.
Like most people, I'd like a govt to go to when the guy next door starts doing goat sacrifices on his front porch.
so yes.. I'm a statist.... :-)
" Why did Obama decide to tap the Strategic Oil Reserve NOW? Because his international handlers told him to"
are we saying that govts that represent consumers cannot ALSO speculate like individuals, hedge funds and the like do?
I'm saying we have a Constitutional process for deciding the issue.
The Constitution does not give Congress the power to violate the rights of citizens. And you seem to be forgetting Jefferson's words in that other document.
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness."
I know that you do not understand what the words mean because if you did you would not be making the stupid comments that make most of the time. But the bottom line is that the American Founding Fathers believed that men were born with rights. They instituted governments to protect those rights, not to trample on them.
It's called representative government and it does indeed decide what freedoms we have and don't have.
No. Rights are unalienable.
Fascist?
Your preference for fascism is obvious. You are not alone in that because many cowards and losers on both the left and right are with you. The problem is not a lack of support but the inability of central planning to work and a natural resistance among people who are not afraid of their own shadows as you are. Those people would resit any move towards fascism and without their consent your schemes cannot be implemented.
Well, this is probably going to "work." Gasoline prices will drop, substantially, and this will juice the economy. It Will stave off our recession for one, or two months. Maybe, 3, or 4.
BUT, what happens when it ends? What if it takes 6 months to get Libya back online?
Do we take 180 Million barrels out of our Reserve? That's 25%.
What if, in a few months Libya Is back online, but something blows up somewhere else, or we find out that Demand has increased by as much as Libya's production in the meantime?
This strategy is a bad idea.
The founding fathers fully intended for our country to operate as a representative government.
Which had very limited powers and was powerless to trample on the rights of citizens.
I support that Constitution.
While I consider the Constitution to be far inferior to the Articles of Confederation it still does not support the power grab and tyranny that you favour.
I don't have a problem with the process.
Good. Then what you need to do is to pass amendments that would give the power to Congress and the President that the Founders and the states never did.
fascism?
Absolutely.
you are really juvenile... grow up you say you understand our history but you essentially reject it...and engage in name calling when you get nailed to the wall.
I think that it is you who need to understand the history. You could try by actually reading the Constitution and the Federalist/Anti-Federalist Papers.
we have, on purpose, a form of government called one-man, one-vote that decides what property rights that we have and don't have.
What a stupid loser you turned out to be. You tell others to learn their history while you show just how ignorant you are of it.
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.
So Spake the Slave-owner.
Puhleeze.
Larry, speculation keeps future markets in equilibrium.
Larry is a waste of oxygen. He is one of the most ignorant people on this site and has no idea what he is talking about. Usually I have no problem with ignorance because most people want to learn. Sadly, Larry does not seem to be one of those people.
" No. Rights are unalienable. "
horse manure.
tell that to the blacks and women when the doc was written.
" The Constitution does not give Congress the power to violate the rights of citizens."
I guess it depends on what you think those rights are or are not.
The Constitution INTENDED for us to have laws and regulations AND a judiciary for making the judgement calls.
you are free to believe what you want to but it don't change history or the way the country really operates.
There are all kinds of folks who say the govt is operating illegally.
When enough of ya'll get together and change the way govt operates. I'll believe you.
Until them.. you're mostly blather-butts.
Fascism?
ha ha ha
you're essentially calling OUR govt Fascist... right?
You believe that most of the 535 members of Congress and the Executive and much of the Supreme Court is Fascist.
right?
are we saying that govts that represent consumers cannot ALSO speculate like individuals, hedge funds and the like do?
Yes we are. They have no authority to speculate and manipulate markets.
I must be ignorant, also, then; because I find myself agreeing with Larry quite often.
On a more practical side: I just saw a young oil trader on CNBC that made a lot of sense. He said, don't worry about where the bottom is, etc; just sell the near end of the curve, and buy the long end.
As I said before, "I'm way too retired to try to trade commodities," but if I were going to try, I think that's the route I would take.
"Yes we are. They have no authority to speculate and manipulate markets."
even if their citizens/property owners want them to?
Well, this is probably going to "work." Gasoline prices will drop, substantially, and this will juice the economy. It Will stave off our recession for one, or two months. Maybe, 3, or 4.
Possibly, but not if demand actually picks up and we still have the same supply hurdles. I would suggest that a drop in prices will simply mean that we have weak demand and a contracting real economy in Europe and the US.
BUT, what happens when it ends? What if it takes 6 months to get Libya back online?
You know this is not about Libya. The contraction due to Japan took out about as many barrels as Libya was adding to markets.
Do we take 180 Million barrels out of our Reserve? That's 25%.
That would really help speculators clean up when prices rebound. The biggest assistance would come from the inability to create distortions that would muddy price discovery. But a secondary effect might be the added demand when oil has to be put back into storage at much higher prices even as supply issues persist or are getting worse.
What if, in a few months Libya Is back online, but something blows up somewhere else, or we find out that Demand has increased by as much as Libya's production in the meantime?
Russia already sees this as an attack on its interests. It might react by cutting back on natural gas shipments to Germany and the rest of Europe and by doing so increase the demand for oil.
This strategy is a bad idea.
It is great if you are ready to bet against the IEA and Obama. The last time they rang the bell we had Brown selling off half of England's gold at a multi-decade low. Look how that worked out.
So Spake the Slave-owner.
Puhleeze.
Whether you like it or not, that is the foundation on which the US was built. The states ratified documents that made it clear that rights were natural and not granted by governments. The only role of government was to protect those rights.
Let's be honest. If there was a competency test for voters, there'd be few liberals or socialists in office.
I guess it depends on what you think those rights are or are not.
The writings of the period make it very clear. Even the Federalists agreed on this issue.
The Constitution INTENDED for us to have laws and regulations AND a judiciary for making the judgement calls.
No. The states could nullify any federal laws they felt were unconstitutional and it was the individual that was sovereign. Any powers not delegated to the government were retained by the citizens.
I suggest that you need a good education. When it comes to history and economics you are one of the most ignorant people on this board.
"I wish you were right, DL, but the Republicans in congress are fighting biofuels tooth and nail"...
Thankfully the Gutless Old Parasites are attempting do something to wipe out that waste of extorted tax dollars...
There is no such thing as 'renewables'...
From the Asia Times dated August of '07: The great biofuel fraud
" I suggest that you need a good education. When it comes to history and economics you are one of the most ignorant people on this board. "
I'd suggest you need a better connection with reality.
you clearly don't know the difference between what you wish to believe and the realities all around you.
"natural law" is an ideology.
If it were actually true -you'd be able to show that around the world that "natural law" is the standard for Constitutions and governance.
Instead, all you can do is stammer and sling insults.
ignorant does not begin to describe your problem.
The SPR should be for bona fide emergencies, such as oil cut-offs due to war or thug-state politics.
In fact, the globe is awash in oil, and liquid fuels. Cushing is literally full to the brim, and they are building even more tanks.
At more than $100 a barrel, we see immediate and accumulating demand destruction, and alternative growth. Oil at more than $100 a barrel cannot be sustained.
Obama has shown no clue he is a good president when it comes to energy policy.
As for oil drilling our way to independence, they probably is impossible. More likely we can get to independence (if we want it) through CNG and PHEV vehicles, and ordinary much higher mpg cars.
I am fine for drilling in the USA, but unless Bakken is really big, don't get your hopes up.
"but can the govt do anything about those who speculate in oil prices and are thought to be responsible for higher prices than even global demand supports?"...
LMAO! Oh dear! Those evil speculators should be flogged I tell you!
From US News dated June 27, 2008: 6 Myths About Oil Speculators
So now we know who's really responsible for $4 gas. Finger-pointers from Washington, the International Monetary Fund, and even Saudi Arabia no longer seem to buy the idea that the demand for oil around the world is simply growing faster than the supply, driving prices to record highs close to $140 per barrel. There must be a more nefarious reason, it seems. So now entering this drama is a villain everybody can hate: The Evil Speculator...
(there's more)
"ignorant does not begin to describe your problem"...
Nor your's apparently...
Welcome to the Economics Website. This site is an introduction to basic concepts on economics and contains information, quizzes, activities and links to various online resources to learn more about our global economy
You can't pay much attention to Cushing, Benny. They have just, simply, built more pipeline In than Pipelines Out. I like to watch Brent, and Tapis. Tapis is small, but it's closer to China.
Also, Louisiana Light Sweet, although only a few hundred miles from Cushing, and approx same grade, sells for about a $15.00/bbl Premium. The sole reason, of course, is that it's not "landlocked."
Larry, the benefits and consequences of choices under "natural law" is what determines morality.
Government has gone too far when it makes immorality a way of life.
larry-
"If it were actually true -you'd be able to show that around the world that "natural law" is the standard for Constitutions and governance."
this may be the stupidest thing you have said yet and that's really saying something.
you means just like all the texts that claimed that the earth was flat never existed? or those that said the sun revolves around the earth?
just because something is true does not mean that everyone believes it.
look at the countries that protect the rights of their citizens well. compare them to the one that don't. notice anything?
prosperity, creativity, progress, and longer, happier lives.
can you seriously not see this?
"tell that to the blacks and women when the doc was written"
you are confusing inalienable with universal. it appears that your knowledge of language is as poor as your understanding of history, economic, and logic.
also: you have already lost this argument earlier. just because the principles were not implemented as well as they could have been does not make them untrue.
that's like adopting an exercise program, skipping most of your workouts, and claiming that the program doesn't work.
it works just fine, you just didn't implement it correctly.
"The Constitution INTENDED for us to have laws and regulations AND a judiciary for making the judgement calls.
you are free to believe what you want to but it don't change history or the way the country really operates."
of course it did, but it also intended for us to have inalienable rights that could NEVER be taken away by those laws and to prevent democracy from being tyranny. by design, rights ALWAYS have primacy. even if 99.9% of amercians vote to keep you from spouting ignorant populist fallacies, you win. you have the right to do so and it cannot be taken away.
that's why our government has worked as well as it has. could it work better if we stopped passing stupid laws that impinge upon rights? of course. it's good, not perfect.
our founders were worried about guys just like you larry. they know how short sighted and tyrannical you are. they knew that you and others like you would seek to use majority rule to take the property and freedom of others to benefit yourself.
that is precisely why they put in specific affirmations of natural law (rights) and their primacy.
with every statist utterance, you further demonstrate their wisdom.
Well, this is not a good idea. It won't work in anything but the shortest of runs, and it will serve to take the Americans' eyes off the ball.
Demand out of the rest of the world is expanding steadily, and Supply isn't.
We need to be addressing the problem, instead of relying on short-term fixes.
By next year Everyone will realize that this was a Bad idea.
"even if their citizens/property owners want them to?"
yes.
you keep making this same stupid argument over and over. it gets terribly tiresome. if you wonder why people on the board are being rude to you, it's because you are saying the same thing that has been debunked over and over. it's enough to frustrate anyone.
majority rule is not a basis for many actions.
if 77% of citizens wanted to seize your house and savings to split the money amongst themselves, would you call that a well functioning democracy?
why not? "even if their citizens/property owners want them to?"
i suspect, as in the medical discussion, there is some real hypocrisy in your position.
Also, I may add, if there was a competency test for voters, there'd be fewer conservatives in office, but even fewer liberals.
It seems, after the 2010 election, most of the Democrats (left) in office are liberals.
"you're essentially calling OUR govt Fascist... right?"
seriously, are you actually this stupid? you see no gray at all, do you?
if you son is good 99% of the time and bad 1% of the time, is he a good boy or a bad boy?
our form of government is not fascist. it was designed not to be.
our current president (like his hero FDR) is almost certainly a fascist.
he believes in violating rights for his conception of the collective good. just look at his health care plan.
The problem with Governments "speculating" is that governments, invariably, take the Suckers' side of the trade.
This is going to end up costing the taxpayers a lot of money before it's over.
I understand the CONCEPT of natural law and I understand that some believe that it is an integral part of our Constitution as well as thought by some to be universal worldwide.
but I also know that there are a variety of different versions of it including Sharia Law where the idea of what is and is not "inalienable" is not the same.
But where I part company entirely is where some believe that if our laws are inconsistent with THEIR view of WHAT THEY THINK "natural law" should be that this country, indeed virtually all countries routinely violate "natural law".
Natural Law is supposed to be a universal concept.
In reality not only is it now but the simply reality is that it is not a fundamental concept of our laws, regulations and jurisprudence.
That's the reality.
That's what I go by.
Whether I actually believe in it or not or advocate for or against it is a separate issue from how I believe we ACTUALLY DO OPERATE RIGHT NOW.
Those who believe in "Natural Law" have to convince a majority of the rest to also sign on to it.
That's the way our system was DESIGNED by the forefathers to work.
Even the ones who believed in "natural law" played a pivotal role in setting up a Constitutional form of governance that would, in the future, allow de facto (case law) and de jure changes (amendments) to the original.
The lunacy of talking about "all men being created equal and having "inalienable" rights is exposed when it is realized that it did not include women or people of color or even indentured servants.
This statement came from the same forefathers who believe in "natural law".
One has to ask ...what THEIR idea of Natural Law really was if they considered women and blacks not equal.
Natural Law is a concept and an ideology.
I understand it but I reject it - almost entirely because it's obvious that the world around us does not work that way.
I must be ignorant, also, then; because I find myself agreeing with Larry quite often.
Really? Do you think that the government should manipulate the markets and trample on individual rights? If you do then you are just as ignorant as he is.
On a more practical side: I just saw a young oil trader on CNBC that made a lot of sense. He said, don't worry about where the bottom is, etc; just sell the near end of the curve, and buy the long end.
As I said before, "I'm way too retired to try to trade commodities," but if I were going to try, I think that's the route I would take.
The problem with the futures markets is the outright manipulation that takes out the leveraged traders even when they happen to be right about the long term. I would take advantage of any gifts that Obama offered and buy the shares of producers, preferably ones in safer jurisdictions than the US.
even if their citizens/property owners want them to?
Correct. Pretending that 51% of the citizens who vote support an act of theft does not justify that theft.
Let's be honest. If there was a competency test for voters, there'd be few liberals or socialists in office.
But there isn't so many ignorant fools get to vote for other ignorant fools. The rational person should accept things as they are and take advantage of the surplus of stupidity to clean up even as s/he promotes liberty and individual rights. You don't get many opportunities in life to make a lot of money by following a simple strategy that has little risk associated with it. This is one of those times so we better enjoy ourselves as we become wealthy thanks to the stupidity of our fellow citizens and their voting patterns.
you clearly don't know the difference between what you wish to believe and the realities all around you.
"natural law" is an ideology.
Your ignorance is showing. But I thank you for it because without simpletons like you it would be a lot harder for me to make money by betting on stupidity being the norm rather than the exception.
If it were actually true -you'd be able to show that around the world that "natural law" is the standard for Constitutions and governance.
As my old Straussian professor kept reminding me, one cannot ignore human nature. Where there is loot to be had we will have the looters form a government. Our choice is to see human nature as it is or to ignore it. And if we choose to see it as it is we have to make further choices about how to proceed. Do we want to be in the parasite class that benefits from the arrangement or in the serf class that has its rights trampled on and gets looted? While the former has financial advantages it presents moral and ethical dangers to one's being. (Of course, he did not really believe in morality as ethics as being important but that is another story.) One can also choose to be a serf and have a clear conscience but that is a game for losers who have no trouble with the idea of being prey.
Smart individuals choose a different route. In a social democracy they take advantage of human nature and become rich by betting on the stupidity of both the parasitic predators and their serf prey. Being long stupidity is never a bad bet but there are times when it pays off handsomely. That has been a particularly profitable play over the past decade.
Instead, all you can do is stammer and sling insults.
Not at all. I am in a great position where I can call it the way I see it and still get very rich off the stupidity that is so evident when I read the type of crap that you write. In a way I owe you a debt of gratitude because you are a great indicator that reduces my risks and makes it easy for me to earn a very good living.
ignorant does not begin to describe your problem.
As usual, you are barking up the wrong tree. At least you are being consistent.
" As my old Straussian professor kept reminding me, one cannot ignore human nature. Where there is loot to be had we will have the looters form a government. Our choice is to see human nature as it is or to ignore it. And if we choose to see it as it is we have to make further choices about how to proceed. Do we want to be in the parasite class that benefits from the arrangement or in the serf class that has its rights trampled on and gets looted? While the former has financial advantages it presents moral and ethical dangers to one's being. (Of course, he did not really believe in morality as ethics as being important but that is another story.) One can also choose to be a serf and have a clear conscience but that is a game for losers who have no trouble with the idea of being prey.
Smart individuals choose a different route. In a social democracy they take advantage of human nature and become rich by betting on the stupidity of both the parasitic predators and their serf prey. Being long stupidity is never a bad bet but there are times when it pays off handsomely. That has been a particularly profitable play over the past decade. "
hmm... seems like the guys that ran Enron had a philosophy like that....
this is what Natural Law is about?
and here I thought you were worried about governance!
:-)
If this is the way you operate why do you care about "natural law" in governance?
"but I also know that there are a variety of different versions of it including Sharia Law where the idea of what is and is not "inalienable" is not the same."
one more, you demonstrate that you do to understand what natural law is.
no one with even a rudimentary understanding could mistake sharia for natural law.
what you call "reality" is actually trumped up tyranny and you own odd delusions.
"Those who believe in "Natural Law" have to convince a majority of the rest to also sign on to it.
That's the way our system was DESIGNED by the forefathers to work."
wow. your teachers should be truly ashamed. how anyone could even get out of gradeschool believing something this totally wrong astounds me.
that is not how it was designed at all. you have rights. you need no ones approval to use them. not matter how many people vote to take them from you, they cannot.
THAT is the basis of our government.
as i have said before, even if 99.9% of us vote to deprive you of the right to speak such foolish distortions, you still win.
the rights of the individual trump the whim of the crowd.
This comment has been removed by the author.
our form of government is not fascist. it was designed not to be.
It may not have been designed to be but that does not mean that it is. Even when the means of production is in private hands the government regulates or controls that production one way or another. If you own a toilet factory you can't deign and sell any product that you want. If your tank holds more water than you are permitted to by regulations you get fined or shut down. Same is true if you want to make shower heads. Now if we have something as simple as toilet production controlled as much as it is which voluntary commercial activities are not regulated?
If you want more examples look at the Healthcare industry, education, banking, or the mortgage lending activities. You have the government working hand in hand with the large players to control all aspects of activities and hundreds of regulatory agencies looking over the shoulder of honest individuals looking to service customers who want to buy what they are offering.
How much longer will this have to persist before you start to see just how bad things are?
It doesn't seem fair Bernie Madoff is punished for operating like Social Security.
" jefferson would weep to hear you speak"
did Jefferson believe that black people and women were covered by "natural law"?
the man was a human being - not a God.
lord o'mighty
"Where there is loot to be had we will have the looters form a government."
which is precisely why you need rights to save you from a tyrannical majority.
good luck getting larry to understand that.
" that is not how it was designed at all. you have rights. you need no ones approval to use them. not matter how many people vote to take them from you, they cannot."
is that what the women in Saudia Arabia are telling their folks?
so.. Jefferson was a FOOL for saying we all had Natural Law rights and then turned around and set up a government that would be ruled by the ignorant majority?
how smart was that?
but I also know that there are a variety of different versions of it including Sharia Law where the idea of what is and is not "inalienable" is not the same.
Just how ignorant are you again? Please support what you are saying with logic and or facts or we will be forced to see you as you really are rather than what you pretend to be.
larry-
now you are just making stupid straw man arguments to try and wriggle out of your earlier stupidity.
who said jefferson was a god?
he was a man who helped shape and institute some of the most important political ideas in history.
his grasp of them may have been imperfect and his application fo them certainly was, but what the hell does that have to do with the ideas themselves.
newton had some important insights about physics and we can call him one of the fathers of our scientific heritage, but he didn't get everyhting right nor apply it all properly.
so what?
you are not even making the rudiments of sense.
not understanding how gravity works does not make gravity and different. neither does failing to comprehend natural rights. like a geometric proof, they exist with or without your comprehension.
" "Where there is loot to be had we will have the looters form a government."
which is precisely why you need rights to save you from a tyrannical majority.
good luck getting larry to understand that"
I thought youse guys said ALL govt's were LOOTERS?
Didn't you say this country is a LOOTER ...but then you turned around and said it's the best "natural law" country in the world?
which is it?
where is your list of the top 5 countries that don't LOOT?
that's why I thought.. no list..right?
I'm getting bored.
got any more cool quotes from your learned professor to entertain me with?
Islamic natural law
Abū Rayhān al-Bīrūnī, an Islamic scholar and polymath scientist, understood natural law as the law of the jungle. He argued that the antagonism between human beings can only be overcome through a divine law, which he believed to have been sent through prophets. This is also the position of the Ashari school, the largest school of Sunni theology.[68] Averroes (Ibn Rushd), in his treatise on Justice and Jihad and his commentary on Plato's Republic, writes that the human mind can know of the unlawfulness of killing and stealing and thus of the five maqasid or higher intents of the Islamic sharia or to protect religion, life, property, offspring, and reason. The concept of natural law entered the mainstream of Western culture through his Aristotelian commentaries, influencing the subsequent Averroist movement and the writings of Thomas Aquinas.[69]
hmm... seems like the guys that ran Enron had a philosophy like that....
Like what? The guys at Enron committed fraud. You don't need to do that to get very rich. In my case all I have to do is to bet that there will be many people as stupid as you. It works quite well.
this is what Natural Law is about?
No force or fraud are permitted. As I said, you need to read a bit more and get an education.
and here I thought you were worried about governance!
I am. Many people will be hurt by the parasites because they are not as informed as those of us who understand human nature, morality, governance, and economics. Of course, if they choose to be stupid it is very hard to have too much sympathy for their self inflicted wounds.
"... not as informed as those of us who understand human nature, morality, governance, and economics."
now.. I AM... IMPRESSED !!!
Holy Moly..
why didn't you say that before?
geeze....
"scholar and polymath scientist, understood natural law as the law of the jungle"
you are just taking different uses of the same phrase and pretending they have the same meaning. it's just sophomoric stupidity. it's not even sophistry.
what he calls "natural law" we call "a state of nature".
you are trying to shied your stupidity with semantics. (either that, or you really are so dumb you don't see the distinction)
the reason that discipled philosophy uses very specifically defined terms is to avoid this sort of morass.
east germany called itself democratic, but that did not make it so.
so.. Jefferson was a FOOL for saying we all had Natural Law rights and then turned around and set up a government that would be ruled by the ignorant majority?
Your ignorance is showing. Jefferson had little time for your idea of Federalism and supported the Articles of Confederation. When the coup came and created the Constitution he happened to be in Paris and could not speak against the Federalist abomination.
I thought youse guys said ALL govt's were LOOTERS?
That was me. All governments are looters. What is your point?
where is your list of the top 5 countries that don't LOOT?
Relative to a country that meddles a lot one that does not meddle much is better. It does not mean that it passes some purity test. You have to try and argue the ideas without setting up straw men to knock down. It makes you look less ignorant.
why didn't you say that before?
I did. You are ignorant. Lots of people on this board aren't.
you are trying to shied your stupidity with semantics. (either that, or you really are so dumb you don't see the distinction)
I think that he is that dumb. Nobody could be as stupid as Larry appears. (Don't you think that he makes the same type of arguments that Benny used to?)
okay.. I fess up..
no one told me I'd need hip waders to participate in Carp Diem.
Now that I know the realities here.
youse guys have PHDs in crap-ology...
you're right. I'm ignorant.
It took me THIS LONG to see that ya'll are world class shovelers.
:-)
I'm on to you now.
you better go running to your mommies.
"that's true - but can the govt do anything about those who speculate in oil prices and are thought to be responsible for higher prices than even global demand supports?"
Wow! Did you even read the rest of Methink's comment? She answered that question completely.
And, no one seriously believes that "evil speculators" are manipulating oil prices. They actually perform a useful function.
To blame speculators is just an emotionally appealing way for politicians to deflect blame from their own clueless actions.
The real question should be: Why would anyone favor government meddling in the oil market at all, considering the highly predictable damage caused by such meddling?
" The real question should be: Why would anyone favor government meddling in the oil market at all, considering the highly predictable damage caused by such meddling? "
well 2 points -
1. "meddling" does not really describe what some folks see as necessary "regulation".
2. do people think that unregulated markets will never screw them?
The people at Enron did not believe they were acting fraudulently.
There are folks in other markets who do not believe they are acting fraudulently.
Does the govt stay uninvolved no matter what?
"I'm saying we have a Constitutional process for deciding the issue.
It's called representative government and it does indeed decide what freedoms we have and don't have."
Is that the same Constitution you refer contemptuously to as "words on a piece of paper"? The one that you have so little knowledge of?
Your hypocrisy is breathtaking.
You would now call on the Constitution whan you think it supports your claim?
" Is that the same Constitution you refer contemptuously to as "words on a piece of paper"? The one that you have so little knowledge of? "
it's words on paper verses the mechanisms it set in motion for governance.
words on paper lose to 51% governance - every time.
It may not happen over night.
but in the long run - what people want is what will happen.
It's a direct consequence of one-man, one-vote rule.
The reality of this is all around you.
You say "natural law" but the world around you, including the Supreme Court says otherwise.
If the founding fathers REALLY wanted the country to operate STRICTLY according to unfettered/unchanged natural law why did they set up one-man, one-vote?
"so yes.. I'm a statist...."
This is an important first step, Larry, maybe there is hope for you after all.
"are we saying that govts that represent consumers cannot ALSO speculate like individuals, hedge funds and the like do?"
The mind boggles.
A couple of things have become clear.
1) We are at "functional peak oil."
2) Demand from the rest of the world will only increase.
3) Prices must rise.
4) Alternatives must be found (and, embraced.)
"I must be ignorant, also, then; because I find myself agreeing with Larry quite often."
Wow! at least you are honest enough to admit it.
A couple of things have become clear.
1) We are at "functional peak oil."
2) Demand from the rest of the world will only increase.
3) Prices must rise.
4) Alternatives must be found (and, embraced.)
That is not "a couple of things". It is four things and not a single one of them is at all clear to anyone but a person who is completely ignorant of the most basic facts about petroleum.
:)
Okay, let me put it this way:
4 things seem to be certain to the truly ignorant among us.
Better?
"sell the near end of the curve, and buy the long end."
That's great advise. I remember something similar to that. I believe it was "buy low, sell high".
"The Constitution INTENDED for us to have laws and regulations AND a judiciary for making the judgement calls."
This, from a Constitutional expert. LOL. Actually you are correct. Why else create a law making body? However, there are clearly defined and enumerated powers that Congress has been granted by the states. The states are the ultimate arbiters of Constitutionality, not the SCOTUS.
"So Spake the Slave-owner.
Puhleeze."
That failure has been corrected. As was previously pointed out, the failure was in implementation, not concept.
109 comments.
A touchy subject, it would seem.
"1. "meddling" does not really describe what some folks see as necessary "regulation"."
What would you call moratorium on drilling, failure to issue permits, release of oil from the SPR? Is that some new form of regulation?
"2. do people think that unregulated markets will never screw them?"
People expect that unregulated markets will operate more efficiently, and not screw them any more frequently than regulated markets.
"The people at Enron did not believe they were acting fraudulently."
...I don't know what to say. You can't really believe that. Of course they did. What they didn't believe is that they would get caught.
"If the founding fathers REALLY wanted the country to operate STRICTLY according to unfettered/unchanged natural law why did they set up one-man, one-vote?"
They didn't.
1. "meddling" does not really describe what some folks see as necessary "regulation".
Of course it does. Price controls have never worked and have very predictable consequences that you lefties always seem to want to ignore.
2. do people think that unregulated markets will never screw them?
No but they work significantly better than regulated markets which screw more people more times.
The people at Enron did not believe they were acting fraudulently.
Well, pretending there was a trading floor in operation when none existed was fraud. But in some of the cases they were clearly permitted to commit fraud according to the FASB rules that they followed.
Look at SS and Medicare and you see much bigger fraud.
There are folks in other markets who do not believe they are acting fraudulently.
There are rules against fraud that can be used in civil courts without the need for government involvement. Having the government commit fraud is not exactly a better solution.
Does the govt stay uninvolved no matter what?
Yes. The markets are none of its business.
"words on paper lose to 51% governance - every time."
is this some sort of mental block with you?
you repeat that over and over, and it is still as absolutely wrong as it was the first time.
if 51% of americans vote to torture you with jumper cables until you understand the constitution, does that trump the words on a piece of paper in washington that forbid any such law?
would you want to live in a country where it did?
1) We are at "functional peak oil."
I agree that this is one of the possible signals being sent by the panic move by Obama and the IEA. But by lowering prices they will only make things worse.
2) Demand from the rest of the world will only increase.
Agreed. China loves the idea of getting oil from the US strategic reserve while it is busy creating one of its own.
3) Prices must rise.
They will unless demand collapses along with the real economy.
4) Alternatives must be found (and, embraced.)
They will be as soon as the government gets out of the way. But if it continues to waste resources on wind, solar, or ethanol we will have to wait a lot longer.
"I think that he is that dumb. Nobody could be as stupid as Larry appears. (Don't you think that he makes the same type of arguments that Benny used to?)"
no. he's even stupider than benji, and that takes doing. benny would just babble and make appeals to authority.
at least he would occasionally understand what others were saying.
larry just repeats his same flawed conceptions over and over like some sort of sock puppet.
his return arguments are ofter complete non sequitors.
i don't even think he understands the discussion he is in, he's just repeating "majority rule" over and over like some sort of mantra despite not understanding that he is proposing tyranny, not freedom.
the only other plausible explanation is that larry is a sociology or psychology student deliberately being an outlandish troll to study our responses for his thesis "the repose of reasonable people to willful stupidity: a study in frustration".
it sort of makes sense.
as you say, no one could really be that stupid.
"if 51% of americans vote to torture you with jumper cables until you understand the constitution..."
This remedial course of action has my vote.
the only other plausible explanation is that larry is a sociology or psychology student deliberately being an outlandish troll to study our responses for his thesis "the repose of reasonable people to willful stupidity: a study in frustration".
That has been my guess about him, Benny, and a few others because there is no way that they can be as stupid as they appear.
as you say, no one could really be that stupid.
Sadly, this may not be true. I recall many people in my university days being just as stupid as they hung on their Marxist ideology in the face of all of the evidence that it was falling apart in front of them. Some of the same people have not changed and refuse to see any evidence that contradicts their false view of the world. Larry would fit perfectly with them.
ignorance? ha ha bahahahaha!
here's what ignorance is:
a refusal to accept the REALITY that our current political and economic system is driven almost exclusively by majority-rule governance NOT "natural law".
Ask Mr. Obama or Mr. McCain or the EPA or OSHA or FDA that question.
In fact the GOLD STANDARD for governance IS, in fact, the right of people to decide - in one-man, one-vote elections.
there is no "natural law" template that we give to invaded countries like Iraq and Afghanistan as suggested Constitutional starting points. The starting point is - "free elections" not "natural law".
That THAT system, the one-man, one-vote system was explicitly designed by the VERY SAME forefathers who liked the concept of "natural law" but felt one-man, one-vote had primacy over "natural law".
Had they not felt that way, they would have gave "natural law" primacy over one-man, one-vote.
they would have REQUIRED laws to always be based on "natural law" and that the Courts to interpret law ONLY with respect to "natural law".
They did not do that.
The courts have traditionally NOT used "natural law" in deciding the Constitutionality of cases and no significant case law is grounded on "natural law".
even the forefathers argued whether the Bill of Rights "weakened" "natural law" or not because they had concern that rights not enumerated were subject to interpretation.
and even then did not consider women and blacks as deserving of "natural law" rights - not even when they wrote the Bill of Rights.
how "inalienable" can so-called "universal" rights be when more than 1/2 of the population is not thought to hold those rights?
that the simple reality is that we NOW have thousands of laws and regulations created over two hundred plus years of majority one-man, one-vote rule that even those who believe in natural law - ADMIT - clearly violate many of the tenants of "natural law" and abridge some the so-called "inalienable" rights.
It is fervently believed by some almost as if it were a religion but it has virtually no import at all in modern law and politics.
that's the simple truth.
It's comical that those who believe so fervently in "natural law" hurl the "ignorance" label at those who point out the simple and undeniable realities.
so in my view - "ignorance" is a refusal to deal with the obvious realities and to insist like a tantrum-throwing 2 year old that the world is not right unless it suits the sensibilities of a "my world" 2yr old.
people who base their stated economic and political philosophies on "natural law" are not playing with a full deck in my view.
It's one thing to believe something, to hold a philosophy.
It's quite another to acknowledge the realities that are all around you and to admit that your philosophy does not fit the way the world actually is.
"natural law" plays virtually no role in modern day politics and law.
that's the truth.
the people who believe in it are willingly self ignorant about the realities.
Ouch!
Larry, that kind of posting could get you an invitation to The Elephant Bar.
"a refusal to accept the REALITY that our current political and economic system is driven almost exclusively by majority-rule governance NOT "natural law".
Ask Mr. Obama or Mr. McCain or the EPA or OSHA or FDA that question.
In fact the GOLD STANDARD for governance IS, in fact, the right of people to decide - in one-man, one-vote elections"
no larry, that is not the gold standard.
it's just your febrile imaginings.
rights trump majority rule.
90% of the population cannot vote to disallow the remaining 10% to speak, not can even a 99.9% majority vote to take all your assets and take them for themselves.
can you seriously not see this?
our form of governance is based SPECIALLY and UNQUESTIONABLY upon the primacy of the rights of the individual.
the purpose of government is to protect those rights, not pander to the fiat of the majority.
every time you open your mouth, you demonstrate just how wise such a system is. petty tyrants like you will always seek to take control and use "majority" politics to take away the rights of others.
i, for one, am deeply thankful that our constitutional framers had the sense to anticipate guys like you and keep you from wielding the power you seek.
they put express limits on one man one vote to prevent tyranny of the majority.
a refusal to accept the REALITY that our current political and economic system is driven almost exclusively by majority-rule governance NOT "natural law".
You are mistaken. Most of us see the fact that government tramples all over natural rights and that Congress, the courts, and the President treat your Bill of Rights as a piece of paper. In fact, I make my living by betting on the fact that they will continue to do so until they force a crisis that will break the country.
In fact the GOLD STANDARD for governance IS, in fact, the right of people to decide - in one-man, one-vote elections.
Actually, it isn't. Democracy is a false God, which is the reason why the American Founders chose a republican system that was based on limited government having enumerated powers with lots of checks and balances to control any side from getting too much power.
The fact that you are ignorant of this shows just how ignorant you really are.
there is no "natural law" template that we give to invaded countries like Iraq and Afghanistan as suggested Constitutional starting points. The starting point is - "free elections" not "natural law".
There has been nothing 'Constitutional' about the wars that the US has been engaging in. And the fact that you have rejected the very foundation that made the US so great a long time ago does not mean that the foundation was wrong. All it means is that most Americans have become cowardly and corrupt. For proof just go to any Republican or Democratic debate.
That THAT system, the one-man, one-vote system was explicitly designed by the VERY SAME forefathers who liked the concept of "natural law" but felt one-man, one-vote had primacy over "natural law".
Ignorance alert. Back to the history books my friend. It is time to shed that ignorance.
My Cherokee ancestors weren't particularly impressed with the U.S. Guvmint's "Natural Law."
Larry is right; 51% of the vote in 38 State Legislatures will get you any changes in the Constitution you want (I'm assuming you can get 2/3rds of the vote in Congress if you can get 3/4 of the State Legislatures.)
Interesting how powerful your vote becomes if you live in a state like N. Dakota, Wyoming, Montana, etc.
""natural law" plays virtually no role in modern day politics and law.
that's the truth."
no. that's a preposterous lie.
our rights are determined by natural law. why do you thing the supreme court (who rules on the constitution and on interpretations of rights) is the highest law in the land?
because any law that violates your rights can be struck down.
obamacare's insurance mandate will likely go this way.
so did jim crow laws.
that's reality, not your ludicrous fantasies.
our constitition says that rights trump legislated law and are a basis to invalidate any law that violates them.
it's not always perfect, but that's how it was designed to work and how it usually does.
no human institution is perfect, but that's no reason not to strive towards it.
you would pull us back to tyranny and subjugation because you are too deluded to see where your freedom actually comes from.
i note you never answer any of the questions posed to you.
i suspect this is because you cannot. the fact that you can't yet persist in spewing the nonsense you cannot defend makes you a dogmatic charlatan.\
examples:
"if 51% of americans vote to torture you with jumper cables until you understand the constitution, does that trump the words on a piece of paper in washington that forbid any such law?
would you want to live in a country where it did?"
"if 77% of citizens wanted to seize your house and savings to split the money amongst themselves, would you call that a well functioning government/society?
why not? "even if their citizens/property owners want them to?""
etc etc.
until you can answer those questions, you do not have a leg to stand on with your claims.
so how about it lar, can you answer them?
if you can't, then sit down and shut up. it proves you have no argument.
If 51% say you cannot drive a car you manufactured - you lose.
your SCOTUS BLATHER is not supported by the realities that virtually NONE of the rulings of the SCOTUS are based on your silly "natural law" and virtually ALL of the decisions of the SCOTUS are based on enumerated rights and case law that derives from it.
youse guys live in a serious alternate reality.
Ultimately - 66% CAN change your "natural law" rights.
The forefathers intentionally DESIGNED a system where the MAJORITY Would decide - no matter what was in the original constitution and a majority has consistently and frequently agreed to restrict rights of property owners and it's what the forefathers intended - as long as such restrictions apply equally to everyone.
what part of this do you not accept?
"natural law" is a foolish concept for those who have oatmeal for brain matter.
"if 77% of citizens wanted to seize your house and savings to split the money amongst themselves, would you call that a well functioning government/society?
Been there, Done that. It's called the 16th Amendment.
Larry, the U.S. is a republic, not a democracy:
The chief characteristic and distinguishing feature of a Democracy is: Rule by Omnipotent Majority. In a Democracy, The Individual, and any group of Individuals composing any Minority, have no protection against the unlimited power of The Majority. It is a case of Majority-over-Man.
A Republic, on the other hand, has a very different purpose and an entirely different form, or system, of government. Its purpose is to control The Majority strictly, as well as all others among the people, primarily to protect The Individual’s God-given, unalienable rights and therefore for the protection of the rights of The Minority, of all minorities, and the liberties of people in general.
It's a Republican, I agree but governance is elected and governance makes the laws and appoints the judges.
And it's a governance that was designed to hey to the majority - over time or over numbers as in enough numbers to alter the Constitution.
I'm not advocating for a particular kind of governance or opposed to another kind - I'm pointing out the realities of governance - as practiced right now.
I actually subscribe to the basic tenants of "natural law" but I'm also pragmatic enough to know that it's more concept than guiding process.
there are those who fervently believe that it should be and I would not deny their right to believe that or to convince enough others that it is the right path but at the end of the day - you have to have a majority to make it happen.
oops.. a Republic... geeze
our rights are determined by natural law. why do you thing the supreme court (who rules on the constitution and on interpretations of rights) is the highest law in the land?
I interpret him as saying that natural law is ignored by the ruling class and the courts. If that is his point I agree with him. I certainly do not believe that Congress and the President are in compliance with the Constitution or that the courts are making sure that they are in compliance.
Larry, the U.S. is a republic, not a democracy:...
I disagree. It was supposed to be a republic but that republic died quite some time ago. It is now a tyranny of the masses and ruled by a political elite that is not bound by very much.
Larry is right; 51% of the vote in 38 State Legislatures will get you any changes in the Constitution you want (I'm assuming you can get 2/3rds of the vote in Congress if you can get 3/4 of the State Legislatures.)
But it doesn't. That is the point. It is very hard to make changes to the Constitution that would have individuals give up liberty to the government. That is why the ruling class avoids the amending process.
Peak Trader @ 10:09
Good thing the politicians in Washington are so respectful of the 9th and 10th Amendments.
George Bernard Shaw quote:
Democracy substitutes election by the incompetent many for appointment by the corrupt few.
http://bit.ly/kwUxeF
"a refusal to accept the REALITY that our current political and economic system is driven almost exclusively by majority-rule governance NOT "natural law""...
Hmmm, arbitrage789's allusion to that George Bernard Shaw's quote pretty much covers that...
"And, the Pubs are fighting, mightily, to keep the cellulosic expansion from taking hold"...
Well as usual rufus has it wrong again but that's hardly suprising...
The GOP for all their collective wind isn't against bio-fuels per se (well at least publicaly), what they don't think needs to happen is the taxpayer having to subsidize the making of bio-fuels...
We all remember the Cello Crapola, right?
Juandos, every one of those Pubs that voted to end any subsidies to ethanol Voted TO CONTINUE All of the Oil Subsidies.
An ex: BCAP is a very small, itty-bitty program to help farmers through their first couple of years of planting switchgrass, miscanthus, etc.
A very small program, but very, very important to try to get cellulose off the ground.
The Republicans voted to kill it in the House.
REAP, another very samll program to help station owners install Blender Pumps. Same thing.
Yes, the Pubs are Owned by the Oil Companies, and they're trying to kill ethanol as dead as they can.
"your SCOTUS BLATHER is not supported by the realities that virtually NONE of the rulings of the SCOTUS are based on your silly "natural law" and virtually ALL of the decisions of the SCOTUS are based on enumerated rights and case law that derives from it."
our enumerated rights are derived from natural law. read the writings of the framers of the constitution. they are VERY clear about that.
your teachers must weep larry.
the whole notion of rights is what natural law is.
when a law is made that violates rights, it is struck down. thus, a law that violates natural law is struck down. it's the same thing.
rights (and hence natural law) have, by design, primacy over democratic legislation.
"I interpret him as saying that natural law is ignored by the ruling class and the courts. If that is his point I agree with him"
that's not his point. he thinks natural law is "a state of nature".
clearly, we have a current political class that, like larry, are determined to take away rights and believe in collectivism, fascism, and coercive redistribution.
this is flawed application of out constitution to be sure, but it is not a flaw in the original ideas.
the reason we must protect our rigths so vigorously is precisely becsue the larry's of the world are so determined to take them away. they have already succeeded in a great many places.
time for some rollback.
Juandos, every one of those Pubs that voted to end any subsidies to ethanol Voted TO CONTINUE All of the Oil Subsidies.
I would not cry for the ethanol industry. It likes the new laws because it would force more ethanol to be used as fuel and drive up prices. And I am not sure if the new law will scrap the ethanol tariffs. If it did, Brazil could send the US all the ethanol it wants and American farmers could concentrate on growing food.
You also need to get a dictionary. Tax credits are not subsidies.
the reason we must protect our rigths so vigorously is precisely becsue the larry's of the world are so determined to take them away. they have already succeeded in a great many places.
Yes they have. But thanks to idiots like Larry we have had opportunities to get rich without taking huge risks. When you can get rich by betting that the stupidity will continue it is easy to get around most of the restrictions enacted by the political class.
I had a nice laugh a few days ago. For the third or fourth time in the past few months I was approached by someone who was willing to install illegal toilets in my house. The premium offered was only around $50 a pop and the quality was excellent. As my twelve year old keeps reminding me, every time the government tramples on natural rights the mob steps in to defend them.
"If 51% say you cannot drive a car you manufactured - you lose."
untrue.
no one can tell you what to drive on you own property or require an licensing or insurance of any kind.
it is only if you wish to use public roads that this is true.
on your own property you can drive whatever you want be it a golf cart, combine, or dragster.
Well, Vange old bubba, if tax credits aren't subsidies then ethanol wasn't getting any subsidies.
VEETC stands for "Volumetric Ethanol Excise Tax Credit."
And, that bill did eliminate the Import Tariff, but it won't make any difference; American Corn Ethanol is, and has been for a long time, Selling on the World Market for less than Brazilian Cane Ethanol (w/o subsidies.)
Oh, wait, I got it now. Tax Credits for oil are just Tax Credits, but Tax Credits for ethanol are "Subsidies."
Okay!
Rufus @ 6:16
I don’t pretend to understand the “ins and outs” of the tax code as it pertains to oil drilling. But one thing’s for sure, it’s extraordinarily expensive, especially deep sea drilling. But even obtaining oil on land can be very expensive, in part because of the effort that has to be expended just to find the oil in the first place. So the more that the oil companies are allowed to deduct the costs of the drilling (assuming they are allowed to drill in the first place), the more drilling they will do, as opposed to merely importing oil from foreign countries. Drilling in the U.S. (and U.S. territorial waters) will create FAR more U.S. jobs than just buying the oil from Saudi Arabia or Venezuela.
For me, a key question is that of the costs of acquiring one “unit” of energy (kcal, BTU, or whatever) from (domestically obtained) oil versus the costs of acquiring one unit of energy from ethanol. And by “costs” I would include all economic costs on an after-tax basis.
Surely, the oil has got to be a lot cheaper, even with the so-called “subsidies” taken into account.
One thing, Arbitrage: Think miles per dollar, not btus per dollar. In a halfway well-designed engine ethanol will get more miles per btu than will gasoline.
The most important thing, however, is to look into the future.
An ex: just a couple of years ago the enzymes used in the production of cellulosic ethanol (ethanol from grass, corn stalks, cobs, etc) cost between $5.00 and $6.00 per gallon of ethanol produced.
Today, that cost is down in the $0.30 range.
The point is, one product is headed North, and one is headed South. It's not hard to figure which is which.
O.K. Rufus, miles per dollar is a reasonable parameter.
I’m all for ethanol as long as the cost is low enough.
(The other factor I would put in your column is the fact that farmers in this country have a lot of political power in the Senate, and there’s no way around that)
Strangely enough, Arbitrage, the farmers are pretty much out of the argument, now. All of the Corn State Senators are Co-Sponsors of the Thune-Klobuchar Bill that Does Away with the Corn Ethanol Subsidies (Tax Credit.)
They will, of course, fight to the death for the RFS (Mandates.) W/O the RFS the oil companies would kill ethanol. No one even, really, tries to deny it.
Anyway, Corn ethanol is pretty much last year's news. 15 Billion gpy is mandated, and they are just about there right now.
At present, the oil companies, and their lackeys in Congress are aiming their biggest howitzers at cellulosic ethanol.
Cellulosic ethanol is the future, and, unfortunately, it doesn't have a very powerful constituency. Think: distributed energy. Good idea/no constituency.
It's going to be a struggle, but in the medium term, it's "all we got." The good news is some big companies like BP (yes, that BP,) Dupont, and Abengoa are breaking ground this year on some major cellulosic projects.
These companies should be able to produce cellulosic ethanol, profitably, for less than $2.00/gallon - without subsidies.
That will be a game-changer.
"I had a nice laugh a few days ago. For the third or fourth time in the past few months I was approached by someone who was willing to install illegal toilets in my house. The premium offered was only around $50 a pop and the quality was excellent. As my twelve year old keeps reminding me, every time the government tramples on natural rights the mob steps in to defend them."
The market WILL provide what is demanded, whether its toilets, drugs, shower heads, prostitutes, or light bulbs. If not the open market, then the black market.
"An ex: BCAP is a very small, itty-bitty program to help farmers through their first couple of years of planting switchgrass, miscanthus, etc.
A very small program, but very, very important to try to get cellulose off the ground."
Why would such a great idea need help getting off the ground? There is a mandated market for it and it STILL need help? This tells you that it's a bad idea, or the market would be all over it with bags of money. Instead potential farmers are unwilling to even begin without guarantees. How hard is it to grow wild, native grass? This is a bad idea: you just refuse to admit it.
"REAP, another very samll program to help station owners install Blender Pumps. Same thing."
It's a bad idea, Rufus. Why do station owners need help? Who helped them install gas tanks and pumps? Diesel pumps? Mini marts?
The market will provide what customers want. No taxpayer help is required.
"your teachers must weep larry."
At each of Larry's former schools the teachers now wear name tags stating: "Don't Blame Me, Larry G. Wasn't My Student."
Grass isn't like corn, or soybeans, Ron. The good news is: It's a perennial; it doesn't have to be replanted every year. The bad news is: It takes two years to get any kind of a decent yield at all.
You can imagine being a small farmer (two, or three hundred acres) in Ga, and someone coming up to you and saying, "why don't you forego any cashflow on your farm for a couple of years so you can gamble with us on our assault on Exxon, and Shell?"
A few big companies will do what BP is doing, and buy 20,000 acres, and raise the grass on their own lands, but that's almost surely not the business model that will produce the volumes we need.
And, in the meantime, what do we have? A year of modest growth, followed by recession, drawing down our Strategic Storage, sending a Billion Dollar a Day overseas, spending Hundreds of Billions/yr keeping the shipping lanes open, and the oil secure?
How long can That last?
Rufus, the Roman Empire lasted about a thousand years.
The free market can supply all the energy we need, not the government, which adds more costs and inefficiencies.
We've already seen how the U.S. government raised health care costs to high levels, while Western European governments created massive shortages and low quality.
Well, that's fine, PT. So why are we tapping our Strategic Oil Reserve? What happened to the "free market," there?
Why am I spending hundreds of billions of dollars protecting the oil companies' interests in the middle east? Shouldn't the "Free Market" be doing that?
The oil companies want to do away with the RFS, which would allow them to do away with 10% ethanol in our gasoline.
Yet, Academic Studies show that would have cost me $0.89/gal, or about $1,100.00 last year. Ezzackly how would the "free market" be helping me in that deal?
And, where in the world did you all ever come up with the phrase "free market" to describe the global oil, and gas market?
"Free Market?"
Really?
It's cheaper to protect Middle East oil than not to protect it, because it's so cheap to produce.
I suspect, if the U.S. government didn't protect Middle East oil, the free market would, and it would protect the oil more cheaply.
Sadly, Rufus’ point is correct (11:13 Post).
Nearly all oil in the world is under the control of one government or another (including the oil that exists in the U.S.)
Cheap to produce? They're charging us $100.00/bbl for it.
Gas prices made it to $4.00/gal before they finally sent us sliding into recession.
It's cheaper to send foreign producers $1 Billion/Day, and spend another $150 Billion/Yr protecting them than it is to spend a couple of billion at home on a program that can get us free from all, or most, of that?
One last thing before I call it a night: Demagoguery, and idealogical purity, at this point in time, is likely to get us dead broke, and planted.
I can go to the Church of the Free Market, sit in the front pew, and sing just as loud as the rest, but, right now, we better be concentrating on finding something that works.
We can argue over how "idealogically pure" it was at a later date.
G'nite, all.
Rufus, you're confusing market price with production cost.
Rufus, you seem to have more faith in government than the free market.
"You can imagine being a small farmer (two, or three hundred acres) in Ga, and someone coming up to you and saying, "why don't you forego any cashflow on your farm for a couple of years so you can gamble with us on our assault on Exxon, and Shell?""
Rufus, I just can't say this strongly enough. IF THIS IS A GOOD IDEA, THE MARKET WILL BE ALL OVER IT WITH BUCKETS OF MONEY TO LOAN. If private money isn't available to help this small farmer get started, then it's just flat out a bad deal. There's no reason to involve taxpayer money.
Those who know best how to evaluate business ventures, and calculate risk, are saying they don't want to risk their own money, or their investor's money, on an idea that even has a guaranteed market for every gallon this small farmer can produce!
That should tell you everything you need to know about the value of this boondoggle.
You don't seem to understand this, as you keep coming back with the same bad recommendations.
"Well, that's fine, PT. So why are we tapping our Strategic Oil Reserve? What happened to the "free market," there?"
Who is "we"?
Did you read the original post? It pretty well explains that the tapping of the reserve by the Obama administration - not WE - is a political move, and not an economic one. US oil stocks are the highest in 4 months, and the price the lowest in 3 months.
This is not the time to sell. If the reserve is later replenished, it is likely to be a higher prices. You DO understand, don't you that buying large amounts of oil in the future will raise the price, right?
No one recommends "buy high & sell low'
Something else to consider, is that China is building a strategic oil reserve at this time. If the additional supply from the US DOES result in lower prices, additional amounts may be bought by the Chinese. It would be easier & make more sense to just sell it to them directly.
"It's cheaper to send foreign producers $1 Billion/Day, and spend another $150 Billion/Yr protecting them than it is to spend a couple of billion at home on a program that can get us free from all, or most, of that?"
If that were all there were to it, it would already be in place. So, what are you missing?
You understand, don't you that when $1 billion/day is sent to foreign producers we get oil that we value more than that in exchange. It would cost more than that to produce it in the US, even if it was physically possible. So, we are getting a better deal buying oil from foreign producers.
"Nearly all oil in the world is under the control of one government or another (including the oil that exists in the U.S.)"
It doesn't matter who owns the oil, it is bought and sold freely.
The oil in the US is owned by whoever owns the mineral rights to it.
illegal toilets?
You know, guys, that "free market" was operating like hell in 2008.
Don't confuse "U.S. Oil Stocks" with oil that is "Landlocked" at Cushing.
Meanwhile, European stocks are the lowest they've been in many years.
Look, this childish belief in the infallibility of the "free market" will end in a feudal economy. Government action is not only warranted, from time to time, but absolutely necessary. Sherman - Adams remained law for a reason.
As did the FDA, EPA, etc. Glass - Steagall stayed in force, and served its purpose for a long time. Then, we repealed it. How did That work out?
This strawman of: If you don't believe in pure, unfettered, laissez-faire free enterprise you're a "statist" is naive, and simplistic. And, Bubbas, Naive, and Simplistic will get you buried.
Oh, wait, I got it now. Tax Credits for oil are just Tax Credits, but Tax Credits for ethanol are "Subsidies."
The oil companies do not want to use ethanol because it imposes extra costs that make their product more expensive and of lower quality. The problem is that the government forces oil companies to add ethanol to the fuel mix. That adds a huge cost to the companies that will have to be written off or passed on to the consumer. Since it did not want to see the true price of blending reflected at the pump the government chose to have taxpayers subsidize it. But as I said, the solution was to remove the mandates and have the oil companies use whatever they wanted in their gasoline.
Normally, tax credits are put into place to stimulate an activity. But in the case we are talking about the activity was mandated by the force of Congress. That mandate is a huge subsidy for ethanol because it forces American consumers to use a certain amount of it. Of course, this would not work in favour of the ethanol lobby if competition were permitted so the government has put into place a large tariff that allows the ethanol producers protection from more efficient producers.
Given where the US is heading I would guess that the tariff will be in trouble some time over the next few years and that the mandate may follow. Consumers and taxpayers have had enough with subsidies that rip them off.
I don’t pretend to understand the “ins and outs” of the tax code as it pertains to oil drilling. But one thing’s for sure, it’s extraordinarily expensive, especially deep sea drilling. But even obtaining oil on land can be very expensive, in part because of the effort that has to be expended just to find the oil in the first place. So the more that the oil companies are allowed to deduct the costs of the drilling (assuming they are allowed to drill in the first place), the more drilling they will do, as opposed to merely importing oil from foreign countries. Drilling in the U.S. (and U.S. territorial waters) will create FAR more U.S. jobs than just buying the oil from Saudi Arabia or Venezuela.
Rufus is either confused or disingenuous. If a hydro producer is allowed to write off the cost of building a dam why shouldn't a oil producer be allowed to write off the cost of drilling a well?
I'm not confused about anything. The statement was made that "tax credits for the oil industry weren't subsidies."
I said, "Fine, then ethanol doesn't get subsidies, either, since the VEETC is a Tax Credit, not a subsidy."
Try to keep up.
One thing, Arbitrage: Think miles per dollar, not btus per dollar. In a halfway well-designed engine ethanol will get more miles per btu than will gasoline.
Where is this engine? Do you mean that Brazilians, who are very reliant on ethanol and have a domestic automobile industry that uses ethanol as fuel, are too stupid to use such engines? We live in the real world, not one in your fantasies. Down here automobile makers try to get the best possible engines to put in their vehicles because they make more money when they offer an advantage that their competitors do not have. If there were such an engine it would have been on the market years ago. The fact is that there isn't.
The most important thing, however, is to look into the future.
If you could do that you would be very rich and successful. (And a lot smarter.) But you can't look into the future. All you can do is pretend to have an insight that is no better than that of the average person.
An ex: just a couple of years ago the enzymes used in the production of cellulosic ethanol (ethanol from grass, corn stalks, cobs, etc) cost between $5.00 and $6.00 per gallon of ethanol produced.
Today, that cost is down in the $0.30 range.
I see no company claiming that it can make ethanol for $0.30 per gallon. And if such a company existed the mandates should be ended as should the tariffs and subsidies.
The point is, one product is headed North, and one is headed South. It's not hard to figure which is which.
I know that in your fantasy world the picture is quite clear. But out here in the real world things are a bit more murky. If something great comes along we will start to use it without the help of government. And why would we prevent that from being implemented by supporting losers like corn based ethanol that has a negative return on the energy invested?
Strangely enough, Arbitrage, the farmers are pretty much out of the argument, now. All of the Corn State Senators are Co-Sponsors of the Thune-Klobuchar Bill that Does Away with the Corn Ethanol Subsidies (Tax Credit.)
Why do you think that is? First, corn prices are near record levels because of huge demand for corn as food. Second, the mandates remain in place and force even more ethanol to be used as a part of the mix without regard for the price. Third, there is a tariff in place that protects corn ethanol from the more efficient Brazilian ethanol production.
The way I see it the ethanol lobby got exactly what it wanted.
They will, of course, fight to the death for the RFS (Mandates.) W/O the RFS the oil companies would kill ethanol. No one even, really, tries to deny it.
No, it will be the consumers who will kill ethanol because they prefer lower prices to higher prices. If there was money to be made by selling higher priced ethanol blend fuel the oil companies, who care about profit more than oil, would be happy to sell it. But they do not live in your fantasy world and understand that consumers only care about getting from one place to another at the lowest cost. The ethanol lobby is free to set up a system in which it blends gasoline with ethanol and sells it to the consumers.
At present, the oil companies, and their lackeys in Congress are aiming their biggest howitzers at cellulosic ethanol.
How is that? The cellulosic ethanol companies are free to make all of the ethanol that they want and compete against the corn and sugar cane ethanol producers.
Cellulosic ethanol is the future, and, unfortunately, it doesn't have a very powerful constituency. Think: distributed energy. Good idea/no constituency.
What a stupid statement this is. If people can make ethanol at a very low cost and use it for transport they will. They don't need government to help them any more than Rockefeller and his competitors did when they offered gasoline and kerosine to consumers in search of a solution.
It's going to be a struggle, but in the medium term, it's "all we got." The good news is some big companies like BP (yes, that BP,) Dupont, and Abengoa are breaking ground this year on some major cellulosic projects.
These companies should be able to produce cellulosic ethanol, profitably, for less than $2.00/gallon - without subsidies.
Great. This means that we don't need subsidies or tariffs.
Can you read at all? I made reference to "Enzyme Costs" being down to the $0.30 range (google Danisco Trio.) I didn't say anything about "producing ethanol for $0.30/gal.
Vange, you just babble about stuff you don't know the slightest thing about. Even "corn" ethanol has a positive energy balance. And, what energy it does use is almost entirely nat gas.
E85 Mileage with the Buick Regal 2.0L engine is approx. 90% of its gasoline mileage. The next iteration is expected to be close to 100% (according to GM.)
You're going to reference "Rockefeller" to bolster your argument? really?
The guy that blew up his competitors pipelines? Figures.
AGAIN: Academic Studies This One For Example have shown the having ethanol in the marketplace Lowered the Price of Gasoline by $0.89 Last Year.
"And by “costs” I would include all economic costs on an after-tax basis. "
this is an interesting point.
one of the things that gets left out of the ethanol pricing discussions is what it does to the price of food.
what, about half of US corn goes to ethanol?
that drives corn prices much higher. corn is a feed stock. that drives the price of several animal products higher. people shift land from other crops to corn. that drives wheat higher.
so, even if ethanol makes sense on a per BTU basis, it may well be driving large other costs elsewhere in the economy.
i'm not really sure you can do anything about that, as demand for corn is demand for corn and without stepping in to market, (highly undesirable and ineffective) there is not much you can do (apart from getting rid of legal requirements for ethanol and import restrictions on more efficient sorts).
The market WILL provide what is demanded, whether its toilets, drugs, shower heads, prostitutes, or light bulbs. If not the open market, then the black market.
It always does.
My twelve-year old son just finished reading, The Walton Street Tycoons, and is now in the process of reading Kornbulth's, The Syndic. He has read enough dystopian literature by now to understand that the government, even when run by well meaning people, is often the biggest problem for the average person because bureaucrats can't make the necessary judgements that will make the lives some people better without making life harder for others. Sadly, many state-worshiping adults like Lenny, Benny, and Rufus have yet to figure that out.
A few big companies will do what BP is doing, and buy 20,000 acres, and raise the grass on their own lands, but that's almost surely not the business model that will produce the volumes we need.
If it works it will be all that is needed because others will see the advantage and do the same thing. Profit is all the motivation that is required in the real world.
So why are we tapping our Strategic Oil Reserve? What happened to the "free market," there?
You have Bernanke and Obama panicking because none of their meddling turned out to have a long term positive impact on the economy. The tapping of the reserve is a desperate act to provide another 'stimulus' without printing a lot of money and risking inflation. If the playbook works as I think it does you might see some more margin hikes for commodities and a possible IMF/EU gold sale in the next few weeks. That would be a signal to the big money that they need to get out of the USD and take advantage of the new supply without worrying about driving the price up too quickly. Just as the Chinese will step up to get more oil at lower costs they will step up to take the IMF's gold at a low cost.
Why am I spending hundreds of billions of dollars protecting the oil companies' interests in the middle east?
You are not. You are protecting Middle Eastern national oil companies like ARAMCO.
The oil companies want to do away with the RFS, which would allow them to do away with 10% ethanol in our gasoline.
Of course. Ethanol is a bad idea at the current cost and cannot justify the investment required.
Yet, Academic Studies show that would have cost me $0.89/gal, or about $1,100.00 last year. Ezzackly how would the "free market" be helping me in that deal?
Sorry but I do not believe 'economic studies' paid for by government or special interest groups. Economic studies said that the housing market was fine just before it collapse. And economic studies concluded that the Euro was a good idea.
Rufus says: "You know, guys, that "free market" was operating like hell in 2008."
You mean the government created economic conditions that sent the country to hell.
I suspect, if the U.S. government didn't protect Middle East oil, the free market would, and it would protect the oil more cheaply.
I disagree. The Middle Eastern national oil companies and dictatorships are about as far from a free market situation as you can get. A free market would not give control of Saudi oil to a few thousand 'princes'.
Cheap to produce? They're charging us $100.00/bbl for it.
That is cheaper than the equivalent amount of coffee from Starbucks. Or mineral water. And that includes finding costs, test wells, production wells, gathering system, distribution system, port construction costs, and ship rentals. Yes, I would say that oil is very cheap.
BTW, Morgan, did you see where Dec Corn is down to $6.30/bu? Over a third of the way there. :)
Actually, taking Distillers Grains into account, ethanol will use about 20% of our corn this year (and, about 2% of Worldwide Grains.)
The University of Iowa is not a "special interest" group. They have presented studies pro, and con.
You understand, don't you that when $1 billion/day is sent to foreign producers we get oil that we value more than that in exchange. It would cost more than that to produce it in the US, even if it was physically possible. So, we are getting a better deal buying oil from foreign producers.
Actually my friend, he clearly does not understand this. Rufus is an economic illiterate and one of those naive individuals who gets taken to the cleaners by investing in bad ideas or a predator who takes naive individuals to the cleaners by selling a bad idea.
Let's be honest; Ethanol is good for everyone but Exxon, and the Sauds.
Even Exxon admitted that the tax credit was, mostly, passed on to the consumers, and you can tell by the pricing all over the country that E10 sells for considerably less than E0.
illegal toilets?
Yes. The Energy Policy Act (1992) mandated that all toilets sold in the United States use no more than 1.6 gallons of water per flush. (Canada has a similar law.) Before that time the typical toilet had a tank capacity of 3 to 5 gallons.
If you violate the law you can be fined or imprisoned.
You know, guys, that "free market" was operating like hell in 2008.
Really? How is that?
I am probably an economic illiterate for sure. I've been every other kind of illiterate, I might as well be one of the economic variety, as well.
But, even I can figure out that you can't run a $1.3 Trillion Budget Deficit, and a $1.5 Billion/Day Trade Deficit for long.
BTW, Morgan, did you see where Dec Corn is down to $6.30/bu? Over a third of the way there.
There are two things at play. One is the increase in margins for all commodities in the futures market. Another is the failing US economy. If an economic contraction will mean fewer American miles being driven the demand for ethanol will fall.
Actually, taking Distillers Grains into account, ethanol will use about 20% of our corn this year (and, about 2% of Worldwide Grains.)
Where are you getting your numbers from?
The U.S. Department of Agriculture projects about 40 percent of the 12.4 billion bushels of corn harvested in the United States this year will go toward producing ethanol.
Thanks to Washington, 4 of every 10 ears of corn grown in America — the source of 40 percent of the world’s production — are shunted into ethanol, a gasoline substitute that imperceptibly nicks our energy problem. Larded onto that are $11 billion a year of government subsidies to the corn complex.
Given the fact that you failed to check your numbers on something as basic as actual corn use why would anyone pay any attention to your guesses about future costs of ethanol production?
Let's be honest; Ethanol is good for everyone but Exxon, and the Sauds.
Even Exxon admitted that the tax credit was, mostly, passed on to the consumers, and you can tell by the pricing all over the country that E10 sells for considerably less than E0.
I don't think that you are capable of being honest. Please support your claims above with a proper reference please.
But, even I can figure out that you can't run a $1.3 Trillion Budget Deficit, and a $1.5 Billion/Day Trade Deficit for long.
I agree. That is why we need to stop wasting money on subsidies, foreign wars, useless government departments, etc.
Look, this childish belief in the infallibility of the "free market" will end in a feudal economy. Government action is not only warranted, from time to time, but absolutely necessary. Sherman - Adams remained law for a reason.
What free market? The government regulates how much water you can have in your toilet or how much can go through your shower heads. There is nothing free about any of the markets that you see around you because the government meddles with all of them.
Can you read at all? I made reference to "Enzyme Costs" being down to the $0.30 range (google Danisco Trio.) I didn't say anything about "producing ethanol for $0.30/gal.
You are still confused. I believe the cost of the enzyme is $0.30 per gallon of ethanol produced. But that does not tell you how much the rest of the process will cost.
Vange, you just babble about stuff you don't know the slightest thing about. Even "corn" ethanol has a positive energy balance. And, what energy it does use is almost entirely nat gas.
If it were positive you would not need subsidies. The price of the energy is imbedded in both the cost and the sales.
No chance that GM has figured out a way around the laws of thermodynamics.
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