An intrepid correspondent sends a petition our way:
Remember January 2001? Those were the good old days before George Bush and Dick Cheney took office. At the time, gas cost just a dollar eighty-seven a gallon. And now? $3? $3.50? Even four dollars for a gallon of gas.I may not be a man of Aspen-Institute confidence that we're all one electro-car fleet away from civilizational salvation, yet I can't help but feel a small twinge of satisfaction at seeing the goddamn bus stuffed to the gills with rocking commuters at every goddamn hour of the day. For the first time since the price-shocked seventies, economic circumstances are forcing change for the better when it comes to our automotoring habits. Although I consider it substantially and demonstrably moronic to imagine that George W. Bush and Dick "Dick" Cheney bear some direct causal responsibility for the rising "cost of energy," I suggest that the one lasting boon of their tenure will be its hastening of the end of the car culture as we know it.
The cost of driving to work and flying to visit family keeps going up. Meanwhile, Exxon-Mobil made more profits last year than any corporation in human history.
It's long past time for real energy independence in America and that starts by making sure oil companies pay their fair share.
Send a message to your Senator right now:
http://www.TrueMajority.org/StopPainAtThePump
Energy prices won't go down overnight. In the coming months we're going to be barraged with gimmicks like a tax day holiday which may poll well but do nothing to deal with our real problem of over reliance on fossil fuels.
That's because oil companies have all the money they need to make their case in Washington. They think that buying politicians will allow them to continue making record profits while we pay all the costs. Don't let them tell you a windfall profits tax wont work. Remember, we've done it before and it raised billions of dollars in revenue.
The oil companies and lobbyists underestimate the power of a movement of people from all walks of life. This debate isn't just about dollars and cents. It's about real people whose lives are suffering while corporations continue to rake in record profits.
Tell your Senator to Take Action:
http://www.TrueMajority.org/StopPainAtThePump
This message is just the beginning. Let's put a human face on the sacrifices we're all making. Together, we can magnify our individual struggles and make Congress pay attention.
Thanks.
-Ilya
Ilya Sheyman
Online Organizer
But IOZ digresses. Consider the incoherency of the email-argument. On one hand gas prices are too high; on the other hand, we're over-reliant on fossil fuels. On one hand, corporate profits are an obscenity; on the other hand, we're gonna put together a people-powered putsch that will force Congress (how? when? why?) to "do something," like taxing energy-company profits, in order to raise revenue (for what?), which seems somehow to translate in the addled mind of our intrepid online organizer into reducing the cost of gas at the pump. Now since we can all admit that costs aren't going to decline that much, Congresscritter action or no, what we're left with is a scheme whereby supposed consumer activists are crying for the government to artificially stimulate demand and consumption of the very thing on which we are evidently "over reliant [sic]." Also, this is going to impact profits . . . negatively.
Jesus Lord A-Mighty, buy some fucking bicycles, you whiny little bitches.
23 comments:
Preach it, Brother Ioz!
Although as a good Libertarian with a capital "L," I thought PUBLIC transit was teh evil and the automobile is like the liberation of the primal uberman???
if the gas suppliers are making record profits, then all of this has just been a matter of poor bargaining by consumers.
consumers have it within their own means to force a reduction in the price of gasoline. organize a series of targeted boycott. refuse to buy from a given oil company until it lowers its price to an "acceptable" level. then move on to the next company.
the fact that the first instinct of so many americans is to run to their congressperson... well, that's just sad.
I look forward to our wind-turbine & solar-panel powered commuter vehicles. Seriously, increasing taxes on oil companies is going to lower the price at the pump?
I agree that congress has to "do something". I propose mandatory universal tracker anklets that deliver electric shocks to anyone who travels more than 10 km away from home. That'll fix the gas price problem.
Well, I'm no low-tax market worshipper, but the idea that increasing taxation on oil companies will reduce the price to consumers seems just a tad counter-intuitive.
As for the record profits and who's making them... It's not the people who actually sell gas. Lots of people seems to get confused here - the major oil companies (IOCs to use the jargon - Exxon and the like) don't do retailing. The record profits are being made elsewhere in the supply chain.
she is definitely doubting your committment to Sparklemotion.
"we" need to "send a message"? "we" need to "magnify our individual struggles and make Congress pay attention." ? ? ?
if only we could tap into that bloated sense of empowerment; we'd have fuel for ages.
dunc,
if consumers don't pressure the retailers, why should the retailers pressure the suppliers?
apparently, nobody in the supply chain has any problems with sticking it to consumers, so why should consumers have any qualms with pushing right back?
there are no excuses for failing to bargain (boycott being one method).
...wind-turbine & solar-panel powered commuter vehicles...
I have a badass design that is super efficient when going downhill. Maybe I can engineer a retractable sail.
Regardless of what it does to prices (and exceptions to the email noted and shared), it still gives me a warm fuzzy to poke the oil companies. Maybe I'll telecommute or something.
Well, gas prices certainly aren't going to go down if they impose a windfall profits tax. So I don't see how it will "artificially stimulate demand and consumption of the very thing on which we are evidently 'over reliant [sic].' Seems reasonable that they should pay a tithe for their recent good luck, especially if the money goes into some alternative energy boondoggle or another. If the tax is high enough it might even have the salutary benefit of inhibiting further exploration! Of course, a retail tax on gasoline would be a good idea too, but, you know, election year politics. I'd vote for it, but then, I've been on a bicycle since 2005 and when I drive it's in a Zipcar, for which you don't pay the gas bill.
Ironically, one of the things inflating oil prices is the same thing inflating food prices: market speculation from electronic investors who have fled from the blast zone of the mortgage securities bubble. So maybe the most effective thing we could do to lower gas prices is deregulate the fuck out of the banking industry and get those folks back to doing what they're best at, mulcting people out of their retirement savings.
In theory, the idea is that once an oil company's profits pass whatever arbitrary threshold is set, its overall rate of taxation bounces to such a high percentage of revenue that it not only wipes out the "windfall" but substantially cuts into whatever is left, creating a clear incentive for the company to keep profits down, presumably by lowering the price of gasoline. Of course, there are plenty of other ways to "reduce profit" so, yeah, in theory...
Also, folks, if you really want to lower the price of gasoline, what you need to be boycotting is gasoline. This idea that you can "move from one company to the next" or whatever is just a feel-good fantasy concocted by people who either cannot or will not reduce (or eliminate!) their gas consumption and don't want to face reality. Exxon-Mobile is more than happy to sell its boycott generated excess capacity to Philips-Conoco so that the latter can handle the boycott generated spike in demand for its supply. And I'm sure that PC would happily return the favor when its turn to be squeezed comes around.
Oil is fungible, kids.
thanks, anon.
well, then it's belt-tightening time. (fairly certain that riding a bike will burn off at least a few calories.)
Aaron - I don't think I suggested that their little plan would work, but only noted that if some external intervention were to lower prices for consumers, then the natural result would be an increase in consumption, in direct contravention of the stated goal of, uh, "energy independence."
I can just see all those brilliantly healthy Americans pedalling the 30 - 60 miles they commute each day all the while enjoying the fabulous weather. ole Jim Kunstler has a more realistic take on what's gonna happen - say goodbye to suburban sprawl but watch out for all those disgruntled folk pissed at being stranded in the hinterlands.
entertainment from the other "side" of the demublican "divide" (the American Family Association):
calls to stop those nasty environmentalists from making our gas prices so high and get the far-left fellow travelers in congress to act.
Critical mass!
'Dick "Dick" Cheney'
IOZ, you've made my morning.
by the way, I'd enjoy your thoughts on the 'Treaty of Lisbon', if you accept topic suggestions.
Ah, excuse me, but where have all of you been?
Driving slow in the fast lane?
Anyone here remember that bit of recieved wisdom from Our Leader?
All that reefer you people is smoking is going right to your brains!
Ronald
if consumers don't pressure the retailers, why should the retailers pressure the suppliers?
apparently, nobody in the supply chain has any problems with sticking it to consumers, so why should consumers have any qualms with pushing right back?
Well, as anon#1 mentioned back upthread a bit, the only way you could make that work would be by boycotting gas altogether, because oil, and all it's refined products, are fungible at every stage of the supply chain. If you want to completely quit using gas until the price drops, all I can say is "Good for you. Do it!"
As for whether anybody's "sticking it to consumers", I simply don't think that's the case. Crude is bought and sold on the international commodity markets at whatever price refiners are willing to pay. Refinery products are bought and sold on other international commodity markets at whatever price blenders are willing to pay. Blended gasoline products are sold in the wholesale market at whatever price retailers are willing to pay. Retailers try and scrape a living off razor-thin margins on top of that. Nobody is gouging at any stage, as far as I can see. Anybody who isn't prepared to pay market rates at any stage of the chain just doesn't get to buy anything - someone else will take it. You pay market rates or you stand in gas lines, like so many people in India, China and Pakistan right now.
The IOCs are making record profits because people are so desperate to buy crude they're prepared to pay $135 a barrel - because they can't get it any cheaper anywhere else - while the capital investments that enabled that production were made assuming prices of $30 a barrel.
You want cheaper gas, you have two options:
1. Use much, much less, and make everyone else in the world use less too.
2. Repeal the laws of supply and demand.
Ironically, one of the things inflating oil prices is the same thing inflating food prices: market speculation from electronic investors who have fled from the blast zone of the mortgage securities bubble.
I keep hearing this, and it keeps not making sense. Somebody, somewhere, is taking delivery on settlement day, and they're doing it at those high prices. We're talking contracts for actual delivery of a physical commodity (at a given location, on a specified day) here, not share options. Somebody has to take delivery in the end. If the run up was down to pure speculation, there would be a price collapse on the last day of trading for the front-month contract, as all the speculators tried to flip and found no buyers for the contracts that they're physically unable to take delivery of. Unless you reckon the speculators are building tank farms in their back yards...
Also, you seem to be assuming that all the speculators are only ever going long... That's suicide. You make money as a speculator by playing both sides of the market, milking intra-day fluctuations on both the way up and the way down. High levels of speculation make for high volatility, but they don't necessarily increase prices averaged over time.
dunc writes:
"If the run up was down to pure speculation, there would be a price collapse on the last day of trading for the front-month contract, as all the speculators tried to flip and found no buyers for the contracts that they're physically unable to take delivery of."
to varying degrees that's not an uncommon occurrence in the futures markets. and on the flip-side, when there is more demand for delivery than available supply the prices shoot up.
the July nymex contract expires on the 20th. I'm not making any predictions, but it's entirely possible you'll see some downside volatility next week.
"Unless you reckon the speculators are building tank farms in their back yards..."
actually they have been hoarding the product on tankers off-shore. some have postulated thats why tankers have been so scarce and inventories have been declining a bit.
the only shortage in the oil market is a shortage of barrels to put the shit in. but...that doen't mean the price can't move higher.
actually they have been hoarding the product on tankers off-shore.
I presume you're talking about Iran there... Who are "hoarding" 28 million barrels (one third of one day's global consumption) of heavy sour for which there is no currently available refinery capacity. A drop in the bucket, which no one can use.
I'm not making any predictions, but it's entirely possible you'll see some downside volatility next week.
Sure, I'd completely agree and expect that. But there's a huge difference between expecting some downwards movement prior to close of trading and the collapse you'd expect if the current run-up was primarily due to speculation. Like, I say, someone is taking delivery, and they're paying top dollar for it. You could argue that it's being arbitraged, but again the question is: who's storing it, where, and how are they doing it cheaply enough to make it worthwhile? Storage costs money.
why do we have to pay them for our oil?
dunc,
first of all I'm not of the opinion that the current run up has been totally speculation. at least speculation in the narrow sense. but I'm not a physical supply/demand purist either. take for example the very large move last week when the unemployment numbers came out. to the extent that they contributed to the spike, how can someone say that the price is being driven by 'fundamentals'? the world's largest economy gets bad economic news and that induces panic buying of a GDP sensitive commodity? yeah.
plus, even if the price is driven up by speculators it doen't mean that consumers will necessarily decline to pay the new price, at least for a little while.
and when we talk of speculators let's not forget to include the producers. production has been stagnate the last few years, then when the price gets to record levels in real terms (relative to incomes, cpi, gold, or whatever) the Saudis, for example, suddenly find an extra 1.7 million a day capacity. and if prices stay high (or if they lock in enough forward sales at the high levels here) they'll probly utilise it. and I'll bet other producers turn up new capacity pretty soon too. I think they call this 'demand to hold'.
"Storage costs money."
-- well, aside from 'storing' it in the ground like like I just mentioned, there is oil being stored all over the world right now, though probly not by speculators in the narrow sense. the price structure on the futures market had been in backwardation since about a year ago, and has just recently started to move into a mild contango. it would make absolutely no sense for a speculator in the strict sense to hoard oil when the front months are trading higher than the forwards. in 2006, early 2007, when the contango was huge it was quite profitable to buy oil, store it, and sell futures contracts against it. that might become viable again as the market structure changes. but of course the rub is finding a place to store it.
and yes I heard about the Iranians tanker 'hoarding', but I've also heard that full tankers were parked off the American coasts as well. (I think I got that from John Mauldin, if you want to look it up.)
Full tankers are always parked off all sort of coasts. You can't always unload on the day you arrive, and this is perfectly normal. Heck, sometimes the oil is loaded before anyone knows where it's going, so you sail round in circles in the Indian Ocean because that's cheaper than staying in port. You could regard the entire world tanker fleet as a floating storage facility, just like Wal-Marts so-called "warehouse on wheels". But given that there are only so many tankers in the world, and they're all in demand to actually move product, I think it's a stretch to imagine that tanker storage is contributing seriously to the price run-up.
take for example the very large move last week when the unemployment numbers came out. to the extent that they contributed to the spike, how can someone say that the price is being driven by 'fundamentals'?
Well, anything that affects the value of the dollar also affects the price of oil, because it's priced in dollars. I haven't been following the market closely enough to tell if that's the whole explanation for the the move you mentioned though. I'd expect that it's significant, but not the whole story.
I'm not saying that there isn't any speculation going on. I'm just saying I don't think that it's the primary driver of prices over the medium-to-long term.
production has been stagnate the last few years, then when the price gets to record levels in real terms (relative to incomes, cpi, gold, or whatever) the Saudis, for example, suddenly find an extra 1.7 million a day capacity.
So they say...
and if prices stay high (or if they lock in enough forward sales at the high levels here) they'll probly utilise it. and I'll bet other producers turn up new capacity pretty soon too.
Well, that's the 64 billion dollar question, isn't it? Is there spare production capacity out there? Anybody who knows certainly isn't telling. Guess the right answer and make a fortune.
As you might have guessed by now, I'm very much of the opinion that production growth is going to be severely constrained going forward, to the point where we'll be lucky if it manages to offset declines. If we're not actually at peak now, we're damn close to it.
nonsense. have you seen people riding their bikes on a bike path? I don't think most people are capable of riding bicycles with any frequency without serious injury and frequent accidents. I think it's too much stimulus for them.
forget living arrangements, they simply shouldn't be.
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