Saturday, April 21, 2012

Median Florida Home Prices Increased by 10% in March from a Year Ago, Condo Prices Gain 21%

"Florida’s housing market had increased pending sales, higher median prices and a reduced inventory of homes for sale in March, according to Florida Realtors latest housing data.

“With the continued steep decline of inventory, historically low interest rates and buyers no longer willing to wait on the sidelines, Florida’s real estate market continues on its road to recovery,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “The latest numbers show that pending sales are up almost 30 percent for single-family homes and almost 20 percent for townhomes and condos.”Pending sales refer to contracts that are signed but not yet completed or closed; closed sales typically occur 30 to 90 days after sales contracts are written.

The statewide median sales price for single-family existing homes in March was $139,000, up 10.3 percent from the year-ago figure. The statewide median for townhome-condo properties was $105,000, up 20.8 percent over March 2011."

Source

HT: Gary Lyle

Oil Speculator Smackdown: Kennedy vs. Hamilton

In a recent New York Times op-ed, Joseph Kennedy (D-MA) explained why he believes that speculators are responsible for high oil prices, and why pure speculation should be "eliminated":

"Today, speculators dominate the trading of oil futures. According to Congressional testimony by the commodities specialist Michael W. Masters in 2009, the oil futures markets routinely trade more than one billion barrels of oil per day. Given that the entire world produces only around 85 million actual “wet” barrels a day, this means that more than 90 percent of trading involves speculators' exchanging "paper" barrels with one another.

Eliminating pure speculation on oil futures is a question of fairness. The choice is between a world of hedge-fund traders who make enormous amounts of money at the expense of people who need to drive their cars and heat their homes, and a world where the fundamentals of life — food, housing, health care, education and energy — remain affordable for all."

James Hamilton responds:

"Last Friday, 227,000 contracts were traded corresponding to 227 million barrels of oil, which is indeed a large multiple of daily production. But it is worth noting that at the end of Friday, total open interest-- the number of contracts people actually held as of the end of the day-- was only 128,000 contracts, much smaller than the total number of trades during the day, and not much changed from the total open interest as of the end of Thursday. Many of the traders who bought a contract on Friday turned around and sold that same contract later in the day. If the purchase in the morning is argued to have driven the price up, one would think that the sale in the afternoon would bring the price back down. It is unclear by what mechanism Representative Kennedy maintains that the combined effect of a purchase and subsequent sale produces any net effect on the price.

It's also worth noting that on that same day, there were 146,000 May natural gas contracts traded, which if held to maturity would call for delivery of natural gas at Henry Hub in Louisiana. A single contract represents about 10 million cubic feet, so Kennedy's calculations would invite us to compare the 1,146 billion cubic feet of "paper" natural gas traded on Friday with the total of 78 billion cubic feet of natural gas that the U.S. physically produced on an average each day in 2011. Once again, the vast majority of Friday's natural gas futures trades were matched by an offsetting trade during the same day so as to have little effect on end-of-day open interest.

By what mysterious process can all this within-day buying and selling of "paper" energy be the factor that is responsible for both a price of oil in excess of $100/barrel and a price of natural gas at record lows below $2 per thousand cubic feet? I suspect the reason that Kennedy does not explain the details to us is because he does not have a clue himself."

MP: Great question, Professor Hamilton!

Glenn Greenwald on Drug Legalization



Salon columnist, blogger and constitutional lawyer Glenn Greenwald discusses drug legalization/decriminalization with Reason.tv and at the Cato Institute.

Saturday Morning Links

1. Strong earnings reports from Union Pacific and CSX suggest that the U.S. economy is continuing its long, slow recovery. 

2. Let's Be Blunt: It's Time to End the Drug War

3.  Get ready for a third industrial revolution that is coming from the digitization of manufacturing - it will completely transform the way goods are made.  

4. Almost 50% of Large U.S. Manufacturers Are Planning to Move Production Back from China to the U.S.

5.  Abundant, Cheap Shale Gas Could Spark a U.S. "Manufacturing Renaissance," says Dow Chemical CEO Andrew Liveris on CNBC.

6. California Home Sales Increase to the Highest Level for the Month of March Since 2007.

7.  Ohio fracking for oil and gas could lead to economic recovery.

8. The boomerang effect: As Chinese wages rise, some production is moving back to the rich world.

9.  Let's Legalize Skyscrapers in the Nation's Capital: D.C.’s height restrictions on buildings are raising rents and hurting America. 

10. Defying the Naysayers, U.S. Manufacturing is Booming in the Greenville/Spartanburg, South Carolina corridor.

Previously posted on Twitter, follow me on Twitter here.  

Chart of the Day: Drill, Drill, Drill= Jobs, Jobs, Jobs


The chart above displays monthly "natural resources and mining" employment levels in North Dakota (blue line, right scale) and Pennsylvania (red line, left scale) over the last ten years (data here). After more than a decade of flat employment levels for energy-related jobs in both states, employment levels recently have been booming, along with the Bakken oil boom in North Dakota and the Marcellus natural gas boom in Pennsylvania.

In just the last three years, energy-related jobs have almost tripled in North Dakota and almost doubled in Pennsylvania.  And while the "Great Recession" crippled the U.S. labor market with job losses approaching 8 million, the recession had almost no effect on the shovel-ready, job-creating labor market for energy jobs in North Dakota and Pennsylvania.

Update: Here's the same data graphed on the same scale, for Larry G. 


U-Haul Rates Confirm The Great California Exodus

U-Haul rates for one-way 26 foot truck rentals in May:

From Sacramento to Houston: $2,370
From Houston to Sacramento: $1,007

From San Francisco to San Antonio: $2,214
From San Antonio to San Francisco:  $1,069

Dynamically-determined U-Haul rates reflect the differences in relative demand for one-way truck rentals between any two U.S. cities.  The 2:1 California-Texas price ratios above suggest that demand for trucks leaving California is roughly double the demand for trucks coming into the Golden State.  In other words U-Haul's one-way truck rental rates provide empirical evidence of "The Great California Exodus" discussed in yesterday's WSJ interview with demographer Joel Kotkin.  Here's an excerpt:

"The Golden State's fastest-growing entity is government and its biggest product is red tape. The first thing that comes to many American minds when you mention California isn't Hollywood or tanned girls on a beach, but Greece. Many progressives in California take that as a compliment since Greeks are ostensibly happier. But as Joel Kotkin, one of the nation's premier demographers notes, Californians are increasingly pursuing happiness elsewhere.

Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.

Part of California's dysfunction, he says, stems from state and local government restrictions on development. These policies have artificially limited housing supply and put a premium on real estate in coastal regions.

"Basically, if you don't own a piece of Facebook or Google and you haven't robbed a bank and don't have rich parents, then your chances of being able to buy a house or raise a family in the Bay Area or in most of coastal California is pretty weak," says Mr. Kotkin.

While many middle-class families have moved inland, those regions don't have the same allure or amenities as the coast. People might as well move to Nevada or Texas, where housing and everything else is cheaper and there's no income tax."

Friday, April 20, 2012

George Carlin on Environmentalism and Earth Day

Classic George Carlin on "Saving the Planet," featured annually on Carpe Diem around Earth Day (some profanity).


On Earth Day 2012, Let's Celebrate our Abundant Domestic Energy Treasures from Mother Earth

Fossil Fuels: Reliable Energy of the Past and the Future


According to Wikipedia, Earth Day is a "day early each year on which events are held worldwide to increase awareness and appreciation of the Earth's natural environment." 

We're coming up on Earth Day this Sunday, and it might be a good time to celebrate the fact that we still get most of our plentiful, affordable energy directly from Mother Earth in the form of fossil fuels (coal, natural gas and petroleum) that helps to fuel our vehicles and airplanes, and heat and light our homes, businesses and factories.  Shouldn't that be part of the "awareness and appreciation of Earth's natural environment," to celebrate the Earth's bountiful natural resources in the form of fossil fuels? 

The two charts above illustrate the fact that despite Obama's claims that oil and fossil fuels are "energy sources of the past," they are still very much the primary energy sources for both domestic production and consumption (EIA data here) of energy, and will likely remain so for many generations to come. Despite all of the billions of dollars in government taxpayer subsidies of renewable energy, they provided only 9.3% of energy consumption in 2011, which was barely more than the 8.9% share in 1983, almost 30 years ago - that's not a lot of progress for the politically popular renewables.  And when it comes to solar and wind, together combined they provided only 1.6% of the total energy produced in the U.S. in 2011 - an almost insignificant amount.  Given the abundance of shale oil and gas in the U.S. it's highly likely that fossil fuels will continue to fuel our economy and continue to be our dependable, affordable "fuels of the future." 

The theme of 2012 Earth Day is "Mobilize the Earth," and I suggest we recognize the significant increases in recent years mobilizing our country's energy treasures in the Bakken Formation of North Dakota, the Marcellus Formation in Pennsylvania, and the Eagle Ford Formation in Texas.  On Earth Day, we should also celebrate the fact that extracting oil and gas from the earth creates thousands of jobs for Americans.  We now have more direct jobs in the domestic oil and gas industry (193,000) than at any time since 1988, and the industry has been creating more than 100 new jobs every day for the last year. 

Happy Earth Day 2012~!

More Creative Destruction for Traditional University Education, This Time From Within

Michigan, Stanford, Penn and Princeton have teamed up to offer free online college-level courses (not for credit) in a wide variety of disciplines, here's a link to their "Coursera" website. 

Intrade Speculators Predict Obama Re-Election

The greedy, market-manipulating, market-destabilizing speculators on Intrade are favoring an Obama re-election with odds of 60.4%, see chart above.  Will Obama call for an investigation? Probably not, since Intrade is based in Ireland.


Thursday, April 19, 2012

America Revealed: Made in the USA

PBS has started airing its four-part series titled "America Revealed," based upon the BBC’s award-winning Britain From Above.  Episode #4 of America Revealed is titled "Made in the USA," and I served as a consultant for that segment. Here's a preview:

"American manufacturing has undergone a massive revolution over the past 20 years. Despite all the gloom and doom, America is actually the number one manufacturing nation on earth. Yul Kwon crosses the nation looking at traditional and not-so traditional types of manufacturing.
  
Along the way, he meets the men and women who create the world’s best and most iconic products, engineers who are reinventing the American auto industry, steelworkers who brave intense heat to accommodate radical new ideas about recycling, and engineers who are re-imagining the microchip. He visits one of the most innovative manufacturers on earth: a small start-up company that is building personalized robots – machines that may one day reshape our homes and offices, driving our revolution further forward.

Yul further explores the emerging notion that manufacturing itself is changing from a system based on the movement and assembly of raw materials like steel and plastic to a system in which ideas and information are the raw materials of a new economy based around communications and social connections via companies like Facebook and Google."

This episode premieres May 2nd, 2012Check Local listings.

Natural Gas Spot Prices Now Below $2: Adjusted for Inflation, That's the Lowest Since the Mid-1970s

Natural gas prices continue to fall, and spot prices have been below $2 per million BTUs for the last week, trading as low as $1.87 last Friday (see chart above, EIA data here).  The last time natural gas prices were consistently below $2 was in the spring of 1999, thirteen years ago.  Adjusted for inflation, those 1999 prices would be about $2.75 in today's dollars, so the current string of prices below $2 might be the lowest inflation-adjusted natural gas prices in modern U.S. history.

Update: EIA spot price data only go back to 1997, but another data source, Global Financial Data, has natural gas prices back to 1930, at least annually for all those years. Natural gas prices were pretty low between 1930 and the mid-1970s, with nominal prices ranging between $0.05 and $0.30 per million BTUs during that period.  Adjusted for inflation, those prices were below $1 per million BTUs in some years, so today's prices haven't yet reached those lows.  Thanks to Benjamin, who pointed this out in a comment below.  I stand corrected.  

Oil Shipments by Rail Up, Coal Shipments Down

More evidence of the decline of coal....
RankCarload Commodity Group2012 YTD2011 YTD% Increase
1Petroleum Products129,25699,89029.4
2Motor Vehicles235,296199,72117.8
3Metallic Ores92,88479,99016.1
4Metals164,297148,34410.8
5Lumber and Wood45,59341,5179.8
6Stone, Clay and Glass105,34497,6947.8
7Crushed Stone, Sand, Gravel246,869229,2837.7
8Coke50,87848,7654.3
9Pulp and Paper91,55489,3902.4
10All Other Carloads69,62368,4301.7
11Iron and Steel Scrap73,34572,6750.9
12Forest Products22,63122,5560.3
13Waste and Nonferrous Scrap44,63644,5880.1
14Chemicals453,890459,106-1.1
15Food Products97,09598,364-1.3
16Grain Mill Products142,419144,430-1.4
17Nonmetallic Minerals66,34769,873-5
18Coal 1,770,1571,983,041-10.7
19Grain312,713352,623-11.3
20Farm Products12,02613,866-13.3

The table above shows the carload commodity group rankings for rail traffic through April 14 (week 15) of this year, according to data released today by the American Association of Railroads.  Note that Petroleum Products have experienced the biggest percentage increase in rail shipments over last year at 29.4%, followed by Motor Vehicles and Equipment at a 17.8% increase.  In contrast, coal shipments have decreased by 11.3% this year compared to last year, because of the shift from coal to natural gas for electricity generation.  

These new rail statistics support recent data from the EIA that: a) U.S. carloads of coal by rail during the first quarter of 2012 fell to the lowest level for any quarter since the beginning of 1994, and b) coal's share of monthly power generation in the United States dropped below 40% in November and December 2011 for the first time since March 1978, see recent CD post


Thursday Energy Links

1.  Chesapeake Energy Corp. CEO Aubrey McClendon in a speech Tuesday in Oklahoma City,"In my opinion, natural gas is no bridge. It is absolutely the foundation of our economy for decades."

2. "The nation's drilling boom has lowered the price of natural gas dramatically. It costs less than half what it did just a year ago. That's cut heating bills and brought some unexpected savings to a lot of families. It's also good news for plenty of businesses, as NPR's Chris Arnold reports from Boston.  A recent study by IHS found that the average household disposable income in the near term was nearly $1,000 higher because of these lower prices of natural gas."

3. Hydraulic fracturing and natural gas development, well under way in Ohio and Pennsylvania, may soon come to Illinois, the latest state to experience an energy rush.  Brad Richards, vice president of the Illinois Oil and Gas Association, said southern Illinois is in the midst of an oil and natural gas lease boom.

"In places like Wayne, Hamilton and Saline counties, there have been tens of millions, perhaps even a hundred million or more spent to acquire these leases," Richards said. The leases are being bought up in the hope that companies could soon start developing shale formations. The formations are part of a large basin that straddles the Illinois, Kentucky and Indiana borders, said to hold up to 87 trillion cubic feet of natural gas.

4. Why Shale Gas Matters to U.S. Manufacturing: New steel mills, chemical plants and jobs could be coming to a shale field near you.

5. Dow Chemical Co. will build a multibillion-dollar plant to convert natural gas into the building blocks of plastic in Freeport, Texas, becoming the latest chemical maker to capitalize on the abundant gas supplies that are helping spur a renaissance in U.S. manufacturing. Even as natural-gas producers cut back drilling in response to the low prices, chemical firms are increasing their manufacturing investments. Dow's new plant here will create 2,000 jobs at the peak of construction, the company says, and is scheduled to be completed in 2017.


Wednesday, April 18, 2012

World's Ten Most Resource-Rich Countries

No. 1 is Russia with an estimated $75.7 trillion of natural resources, according to this list from 24/7 Wall Street, and the U.S. is No. 2 with $45 trillion. 

Markets in Everything: 3D Printer for Medicine

YahooNews -- "From creating intricate guitars to delicious pieces of chocolate, 3D printing is moving beyond the realm of making simple models and into the realm of creating useful things. And thanks to researchers at University of Glasgow, this cutting-edge technology could take an incredible new turn that could save millions of lives: A 3D printer capable of creating drugs.

Professor Lee Cronin and his team introduced the tech in a research paper, published in Nature Chemistry. The researchers modified a currently available 3D printer they purchased for $2,000, adding vessels with chemicals in them. In doing so, they created what they call "reactionware," a far cheaper, smaller scale version of incredibly expensive chemical engineering equipment.

According to Cronin, "we could use 3D printers to revolutionize access to health care in the developing world, allowing diagnosis and treatment to happen in a much more efficient and economical way than is possible now." The innovation could expand access to expensive cancer drugs, allowing pharmacies to fill prescriptions for patients on demand or even allowing patients to print their own medicine from home."

Next "Equal Occupational Fatality Day" in 2021


Yesterday was Equal Pay Day, which supposedly represents how far into 2012 the average woman has to work to make the same pay that the average man earned in 2011. The National Committee on Pay Equity started Equal Pay Day in 1996 as “a public awareness event to illustrate the gap between men’s and women’s wages.”

In 2010, I created “Equal Occupational Fatality Day” on the Enterprise Blog and started an annual tradition:
Inspired by Equal Pay Day, and in recognition of the significant gender differences in workplace deaths, let me propose the creation of “Equal Occupational Fatality Day.” That date symbolizes how long women will have to work before they experience the same loss of life from work-related deaths that men experienced in a given year. Because most women work in much safer occupations than men, they must work longer than men to experience the same number of occupational fatalities.  Equal Occupational Fatality Day is being originated to illustrate the gap between men’s and women’s occupational deaths, and bring awareness to the fact that closing the pay gap would also close the work-related death gap and expose thousands of women to occupational fatalities each year.
Now that another year has passed, and with new data on occupational fatalities from the Bureau of Labor Statistics, I hereby declare that the next “Equal Occupational Fatality Day” will occur on October 11, 2021. In 2010 (the most recent year available), 4,192 men died from fatal injuries while working compared to only 355 women (see chart below), so that women would have to work for almost the next decade to experience the same loss of life on the job as men in just one year.

Read more here at The Enterprise Blog

Architecture Billings Index Positive for 5th Month


Washington, D.C. – April 18, 2012 – "The commercial sector continues to lead the Architecture Billings Index (ABI) which has remained in positive territory for the fifth consecutive month (see chart above). As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the March ABI score was 50.4, following a mark of 51.0 in February. This score reflects a slight increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 56.6, down from mark of 63.4 the previous month."

“We are starting to hear more about improving conditions in the marketplace, with a greater sense of optimism that there will be greater demand for design services,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “But that is not across the board and there are still a number of architecture firms struggling so progress is likely to be measured in inches rather than miles for the next few months.”

Tuesday, April 17, 2012

Garth Brooks Show Sells Out in 58 Seconds = Tickets Were Undersupplied and/or Underpriced

Calgary Herald -- "Some 15,322 tickets to country superstar Garth Brooks' highly anticipated July 12 show went on sale at 10 a.m. last Saturday and were snapped up in 58 seconds — the fastest sellout in the Calgary Stampede’s 100-year history.

Country music fans vented on social media. Indeed, by mid-morning, “Garth Brooks” was trending Canada-wide on Twitter. Fan frustration was mostly directed at online resale sites. Prices for single tickets on StubHub, for example, ranged from $275 to $4,500 a piece — much higher than their original $62 cost. That had music lovers like D.J. McMillan of Calgary crying foul about rampant ticket scalping."

MP: Fan frustration shouldn't be directed at online ticket websites, but at those ultimately responsible for creating a ticket shortage, which then creates a market for ticket resales: Garth Brooks and the concert promoters.  Obviously, the artist and promoter failed to both: a) price the tickets according to market demand, and b) supply the appropriate number of tickets to satisfy fan demand.  By under-supplying and under-pricing Garth Brooks tickets, it was the artist and promoter who guaranteed a secondary market for tickets above face value.  The secondary market can easily be eliminated by: a) raising the face value of tickets and/or b)  adding additional shows and increasing the number of tickets for sale.  

Basic Economics: Since the artists and/or promoters  have direct control over P (price) and Q (quantity supplied), simple economics tells us that it's the actions of the suppliers (artists and promoters) that create ticket shortages and ticket re-selling.  Eliminating ticket re-sales can easily be eliminated: simply raise P or raise Q and most of the secondary market and "ticket shortage" would disappear.   

Today is Tax Deadline: Bring Us Back to 1913 (Or Better Yet, Take Us Back to Pre-Income Tax 1912)

This post has become an annual tradition at CD around April 15.  

Page 1 of the original IRS 1040 income tax form from 1913 appears above. There were only four pages in the original 1040 form, including two pages of worksheets, the actual 1040 form above, and only one page of instructions, view all four pages here. In contrast, just the current 1040 instructions, without any forms, runs 189 pages.

Individual income tax rates started at 1% in 1913, and the maximum marginal income tax rate was only 7% on incomes above $500,000 ($11.6 million in today's dollars). The personal exemption was $3,000 for individuals ($69,500 in today's dollars) and $4,000 for married couples ($92,700 in today's dollars), meaning that very few Americans had to pay federal income tax since the average income in 1913 was only about $750. The Tax Foundation has historical federal income tax rates for every year between 1913 and 2011 here.

Chart of the Day: New Records for Oil/Gas Split

A new record was set last week when the share of U.S. rigs drilling for natural gas fell to only 32%, which was the lowest percentage since Baker Hughes started keeping records of the oil/gas split in 1987 (see chart above).  The previous record low share of rigs drilling for natural gas was 32.5% in September 1987.  As natural gas prices keep falling to record lows at the same time that oil prices are rising, the industry has shifted drilling activities from gas to oil, bringing the share of rigs drilling for oil from below 20% as recently as May 2009 to a record high of 68% last week.

This shift from gas to oil drilling illustrates how the price system transmits valuable information about relative scarcity, and brings about an automatic reallocation of productive resources by suppliers in response to price changes.  The power of the market, the invisible hand, and the profit motive in action....

Monday, April 16, 2012

Monday Afternoon Links

1.Recycling America’s Abandoned Auto Plants: Shuttered U.S. auto plants aren't eyesores, they're valuable assets worth saving and recycling.

2. Exxon's Big Bet on Shale Gas: ExxonMobil now produces about as much natural gas as it does oil, and CEO Rex Tillerson thinks the fracking party has just begun.

3. Hitchhiking in Cuba: It's about the only way to get around outside Cuban cities. Gasoline costs about what it does in the United States. Most Cubans don’t have cars. Most earn a monthly government salary of less than $20.

4. EveryHeartBeat.org: An online network into which anyone can record their medical data through a wireless phone.

5. George Will in The Washington Post asks "Should the U.S. Legalize Hard Drugs?" and I think his answer is Yes. 

6. Netflix's Unlimited Employee Vacation Policy; Why It Works

7. Indian Farmers Use Cell Phones to Pre-Purchase Solar Energy on a "Pay-As-You-Go" Basis.

8. Racial racketeer Marion Barry demonstrates the black racism against Asians that tends to get ignored. 

All originally sent through Twitter, follow me here

Energy Facts of the Day: The "Decline of Coal"

1. "Total U.S. carloads of coal by rail during the first quarter of 2012 fell to 1.55 million carloads, the lowest level for any quarter since the beginning of 1994, as demand for coal by the U.S. electricity sector decreased." Source: EIA

2. "Although still the largest single fuel for electricity generation, coal's share of monthly power generation in the United States dropped below 40% in November and December 2011. The last time coal's share of total generation was below 40% for a monthly total was March 1978. A combination of mild weather (leading to a drop in total generation) and the increasing price competitiveness of natural gas relative to coal contributed to the drop in coal's share of total generation." Source: EIA

Let's Abolish the Boutique Gasoline Regime


"Quick: How many kinds of gasoline do we use in America? Most people would say three or six: regular unleaded, mid-grade, and premium, along with the ethanol blends of the same that have become nearly universal. The actual number is somewhere above 45, though hard to pin down exactly, according to the Government Accountability Office (GAO). It might even be closer to 70. Thirty-four states use specially blended gasoline, usually during the summer, which is one reason gasoline prices always rise during the “driving season.”

Is this a conspiracy of the evil oil companies to fatten their margins? Mostly no: It’s the product of EPA bureaucrats and the Clean Air Act, stubbornly maintained even though boutique fuels now deliver only marginal reductions in air pollution from cars, if any at all. And it’s a regulation President Obama could clear away if he wanted to. It wouldn’t deliver a large reduction in gasoline pump prices, but even 10 to 15 cents a gallon—a plausible figure for California’s market—would help.

Here’s an opportunity for President Obama to “do something” about gasoline prices, even if it’s only by a dime per gallon. (And the difference between $4.95 gas and $5.05 gas might be the difference between reelection and defeat.) The Clean Air Act allows the EPA to waive the boutique gasoline requirements in the event of supply disruptions or shortages. Indeed, the boutique gasoline requirements were waived in the aftermath of Hurricanes Katrina and Rita in 2005, when more than half the Gulf Coast refineries were knocked out of commission for several weeks. During the waiver, we imported gasoline from overseas to fill the gap, and prices were kept stable. There was no noticeable uptick in ozone levels in the EPA data. While high-priced gasoline might not meet the precise definition of a disruption or shortage, it shouldn’t be a problem for the clever lawyers of the Obama administration to come up with a plausible legal rationale for suspending the regulations.

Failing that, the House should pass a quick amendment to the Clean Air Act abolishing the boutique gasoline regime, and then dare the Senate or the president to block a measure that would offer relief at the pump this summer. The ethanol lobby would scream, along with environmentalists who never met a regulation they didn’t like, while refiners would quietly rue the loss of an artificial market-segmenting system that expands their profit margins. Sounds like a win-win all the way around."

Sunday, April 15, 2012

Manufacturing is Booming in Alabama; 313 Companies Expanding, 70 New Ones are Coming

NEW YORK (CNNMoney) -- "As manufacturing picks up across the United States, Alabama has become an unexpected beneficiary. The state -- best known for agriculture and textiles production -- is enjoying the best pickup in industrial manufacturing in five years as U.S. and foreign companies flock there.  The credit goes to the state's low taxes, top-grade trade schools, a statute that curbs union power, and other incentives spurring many manufacturers to move to or expand in the state, experts said. 

In 2011, 70 domestic manufacturers announced plans to set up a factory in Alabama. They're expected to create 4,879 jobs and $1.6 billion in capital investment over the next two to three years. In the same year, an additional 313 manufacturers, already in the state, announced expansion plans that would create another 12,369 new jobs and pour $2.5 billion in capital investment."


Markets in Everything: No Surveillance, Privacy-Protecting Cell Phone and Internet Service

CNET.com -- "Nicholas Merrill is planning to revolutionize online privacy with a concept as simple as it is ingenious: a telecommunications provider designed from its inception to shield its customers from surveillance.

Merrill, 39, who previously ran a New York-based Internet provider, told CNET that he's raising funds to launch a national "non-profit telecommunications provider dedicated to privacy, using ubiquitous encryption" that will sell mobile phone service and, for as little as $20 a month, Internet connectivity.

The ISP would not merely employ every technological means at its disposal, including encryption and limited logging, to protect its customers. It would also -- and in practice this is likely more important -- challenge government surveillance demands of dubious legality or constitutionality."

Supply Matters

From my article in today's Washington Examiner, "Gas prices are complex, but not mysterious": 

Simply put, oil supplies matter. Larger supplies of secure oil -- oil that won't be withheld from the market for political reasons -- can result in lower retail gas prices at the pump.
 
The importance of secure oil cannot be overstated. It's quite likely that oil and gasoline prices would decline over the long term if more oil were produced domestically and Canadian oil were allowed to flow freely through the rejected Keystone XL pipeline. In fact, just imagine how different the U.S. economy and the energy situation would be today if, 30 years ago, our elected officials had allowed drilling in the oil-rich areas of Alaska, along the West Coast, the East Coast and in the eastern Gulf of Mexico. Instead, they chose to block access to those supplies, keeping us dependent on foreign oil from politically unstable countries.

Our economy runs on oil, and DOE forecasts suggest that oil will be the "fuel of the future" and continue to play an important role in our energy mix for decades to come. It's time to embrace the facts about oil and discard the "fuel of the past" mentality. There is nothing that provides as much energy bang for the buck as oil. Basic economics tell us that if we had more of it, our bucks would go a lot further.