Gas Prices

[Clarkmeister]

http://www.washingtonpost.com/wp-dyn/articles/A5080-2004May31.html

Decent editorial. It's a bit extreme, but in general it's more sane than most of the opposing viewpoints. Of particular interest was the quote about Germany's oil consumption actually decreasing.

EDIT: I didn't realize it needed registration. I have pasted the piece below:

Why Gas Prices Are Too Low

By David Ignatius
Tuesday, June 1, 2004; Page A23


Let's imagine for the moment that the United States was a prudent nation and that its politicians, rather than pandering to the public appetite for cheap gasoline, decided to reduce the nation's dependence on energy from the volatile Middle East.



After America's annual Memorial Day drive-a-thon, the idea of such a rational energy policy may sound quaint. Millions of Americans hit the road this weekend in their cars, trucks and SUVs -- many of them doubtless grumbling about the 2004 "oil crisis" that has pushed gas prices well over $2.

It would be nice if politicians would tell these road-happy Americans the truth, which is that the energy situation will only get worse over the long run. And it would be nicer still if politicians proposed policies that would improve the energy efficiency of SUV Nation. But in America, there's a name for such politicians: losers. The reason the oil squeeze will only get worse can be stated in two words: China and India. As those countries become more prosperous, their consumption of energy will inevitably rise -- putting further pressure on the market. That has already begun to happen with China, whose growing demand sucked up the 500,000 extra barrels a day of crude that Saudi Arabia added to the market last year to compensate for lost Iraqi production.

Optimists hope that an easy way out of the energy crunch may be found in abundant cheap supplies of natural gas, but industry economists tell me that's wishful thinking. One Denver-based consultant says that recent price moves and merger valuations suggest a 50 percent or more rise in natural gas prices in the next three to five years. Liquefied natural gas may eventually help temper prices, but only if huge investments are made to store and transport it.

The people who make America's gas guzzlers know exactly what would force the country to deal with the energy crunch: higher gasoline taxes. A recent article by Danny Hakim in the New York Times had some astonishing quotes from auto executives. Ford chief executive William Clay Ford Jr. explained: "Every place else we operate, fuel prices are very high relative to here and customers get used to it, but they get used to it by having a smaller vehicle, a more efficient vehicle." GM's chief executive, Rick Wagoner, agreed: "If you want people to consume something less, the simplest thing to do is price it more dearly."

The European market illustrates how higher taxes push greater efficiency. Last week, premium gas prices in Europe were averaging more than double the U.S. level of $2.24 a gallon -- with prices at the pump averaging $5.07 a gallon in France, $5.36 in Germany and $5.59 in Britain. European consumers inevitably have demanded more efficient cars. According to Hakim, overall oil consumption has fallen in Germany and Britain since the 1970s.

The best plan I've seen for doing the politically impossible comes from an energy economist named Philip Verleger. He has spent much of his adult life arguing for a sensible increase in gas taxes. He first proposed such a plan in December 1973; the Ford administration considered the idea, then rejected it. He supported a 50-cent-a-gallon tax during the Carter administration; it got just 35 votes in the House of Representatives. He continued arguing for a tax hike through the 1980s and '90s and, as he says, members of Congress "just rolled their eyes." President Clinton finally embraced the idea and got a tax passed -- but it amounted to just 4.3 cents per gallon.

Now Verleger favors what he calls a "prospective gasoline tax," which would allow the country four years to get ready to do the right thing. Congress would enact a stiff tax of $2 per gallon, to take effect in January 2009, with further increases of another dollar in each of the following three years. To cushion the blow, the Treasury would borrow against the expected tax revenue to buy back the public's gas guzzlers (defined as vehicles getting fewer than 25 miles a gallon) at their 2004 value.

Verleger estimates that this program could reduce U.S. oil consumption by almost 2 million barrels per day in the program's first year and as much as 10 million barrels per day by 2020. At a stroke, that would reduce the power of the OPEC cartel and America's vulnerability to turmoil in the Middle East. As a bonus, it would also reduce emissions that contribute to global warming and increase employment in the auto industry as all those gas guzzlers are replaced.

There's one big problem with Verleger's idea. It's too sane. America likes roaring down Thunder Road, playing chicken with the oil cartel.

[Al_Capone_Junior]

Careful Dave, Flirting with the truth here could make you p'litically unpopular! /images/graemlins/grin.gif

al

[jdl22]

But why do something to reduce demand when we could get the 3 or 4 barrels of oil up there in the Alaskan wilderness?

[adios]

Let's imagine for the moment that the United States was a prudent nation and that its politicians, rather than pandering to the public appetite for cheap gasoline, decided to reduce the nation's dependence on energy from the volatile Middle East.

Ok. We've discussed on this forum that importing oil may not be bad at all but I digress.


After America's annual Memorial Day drive-a-thon, the idea of such a rational energy policy may sound quaint. Millions of Americans hit the road this weekend in their cars, trucks and SUVs -- many of them doubtless grumbling about the 2004 "oil crisis" that has pushed gas prices well over $2.

It would be nice if politicians would tell these road-happy Americans the truth, which is that the energy situation will only get worse over the long run. And it would be nicer still if politicians proposed policies that would improve the energy efficiency of SUV Nation.

Let's stop here for a moment. As I posted in another thread the hybrid Toyota Prius (Toyota has a patent on their technology too) is in such demand that there's a waiting list estimated to be 1 year+. I got on the waiting list. So as prices rise at the pump, demand for more fuel effecient automobiles will increase and supply should stay relatively constant.

But in America, there's a name for such politicians: losers. The reason the oil squeeze will only get worse can be stated in two words: China and India. As those countries become more prosperous, their consumption of energy will inevitably rise -- putting further pressure on the market. That has already begun to happen with China, whose growing demand sucked up the 500,000 extra barrels a day of crude that Saudi Arabia added to the market last year to compensate for lost Iraqi production.

If I'm not mistaken Iraq is actually producing close to pre-war levels. But yep Asian demand is increasing as many have mentioned on this forum prevously.


Optimists hope that an easy way out of the energy crunch may be found in abundant cheap supplies of natural gas, but industry economists tell me that's wishful thinking. One Denver-based consultant says that recent price moves and merger valuations suggest a 50 percent or more rise in natural gas prices in the next three to five years. Liquefied natural gas may eventually help temper prices, but only if huge investments are made to store and transport it.

I may have posted the article but Liquid Natural Gas (LNG) storage facilities are viewed by many in the US as terrorist targets as well as tankers.

The people who make America's gas guzzlers know exactly what would force the country to deal with the energy crunch: higher gasoline taxes.

It's easy to show (mathematically BTW) that gasoline taxes will DECREASE the supply of gasoline. This is due to the fact that the effect to suppliers is to lower the price they receive for their product. Therefore marinally profitable suppliers will no longer be able to make a profit. If they can't make enough to cover their fixed costs they quit producing. The lowest cost producers ultimately win and the lowest cost producers are the OPEC countries in the Middle East. I've made this arguement before, such a move will ultimately INCREASE our dependence on OPEC not decrease it.

A recent article by Danny Hakim in the New York Times had some astonishing quotes from auto executives. Ford chief executive William Clay Ford Jr. explained: "Every place else we operate, fuel prices are very high relative to here and customers get used to it, but they get used to it by having a smaller vehicle, a more efficient vehicle." GM's chief executive, Rick Wagoner, agreed: "If you want people to consume something less, the simplest thing to do is price it more dearly."

Ok.

The European market illustrates how higher taxes push greater efficiency. Last week, premium gas prices in Europe were averaging more than double the U.S. level of $2.24 a gallon -- with prices at the pump averaging $5.07 a gallon in France, $5.36 in Germany and $5.59 in Britain. European consumers inevitably have demanded more efficient cars. According to Hakim, overall oil consumption has fallen in Germany and Britain since the 1970s.

With much slower economys and more unemployment as well.

The best plan I've seen for doing the politically impossible comes from an energy economist named Philip Verleger. He has spent much of his adult life arguing for a sensible increase in gas taxes. He first proposed such a plan in December 1973; the Ford administration considered the idea, then rejected it. He supported a 50-cent-a-gallon tax during the Carter administration; it got just 35 votes in the House of Representatives. He continued arguing for a tax hike through the 1980s and '90s and, as he says, members of Congress "just rolled their eyes." President Clinton finally embraced the idea and got a tax passed -- but it amounted to just 4.3 cents per gallon.

Again this will INCREASE our dependence on OPEC oil.

Now Verleger favors what he calls a "prospective gasoline tax," which would allow the country four years to get ready to do the right thing. Congress would enact a stiff tax of $2 per gallon, to take effect in January 2009, with further increases of another dollar in each of the following three years. To cushion the blow, the Treasury would borrow against the expected tax revenue to buy back the public's gas guzzlers (defined as vehicles getting fewer than 25 miles a gallon) at their 2004 value.

Personally speaking I think this a friggen horrible idea. Create more government bureaucracy and more incentives for special interests to pedal their influence. Yuk.



Verleger estimates that this program could reduce U.S. oil consumption by almost 2 million barrels per day in the program's first year and as much as 10 million barrels per day by 2020. At a stroke, that would reduce the power of the OPEC cartel and America's vulnerability to turmoil in the Middle East.

Awful wrong not true. Again the marginally profitable suppliers are the ones that are threatened and ultimately the lowest cost producers win and OPEC produces oil at the lowest costs.

As a bonus, it would also reduce emissions that contribute to global warming and increase employment in the auto industry as all those gas guzzlers are replaced.

Ok.

There's one big problem with Verleger's idea. It's too sane. America likes roaring down Thunder Road, playing chicken with the oil cartel.

The big problem is that it will increase our dependence on OPEC not lessen it. To lessen depence on OPEC alternative sources to fossil fuel are required.

[CCass]

To lessen our dependence on OPEC, all we need to do is start using our own supply (ANWAR). Additionally, we need to continue to search for a long term replacement to fossil fuels.

[andyfox]

"Therefore marginally profitable suppliers will no longer be able to make a profit."

But isn't this market an oligopoly? Don't just a few companies control most of the production?

It's amazing to me that car basically run on the same technology they did a hundred years ago.

[Jimbo]

[ QUOTE ]
But why do something to reduce demand when we could get the 3 or 4 barrels of oil up there in the Alaskan wilderness?

[/ QUOTE ]

ANWR could produce nearly 1.4 million barrels of oil a day, while Texas produces just more than one million barrels a day, California just less than one million barrels a day and Louisiana produces slightly more than 200,000 barrels a day.

Jimbo

[Kenrick]

What's the real point of this, that since someone doesn't like someone else driving a Hummer or a Suburban they want to raise taxes so the person might not drive it anymore? Why? Jealousy? Spite? There's enough oil for at least hundreds of years yet, and we could already use alternate fuel sources if we had to. And if we had to, that would mean those alternate-fuel vehicles would be commonplace enough to be affordable and worth the bother to use. The main reason alternate fuel sources aren't used right now is because there's little reason not to use what we're currently using.

What gets me the most about articles like this is the people who are for higher gas (and other) taxes are also often the same people who want to raise the minimum wage and such things, thinking "it sounds good" but not realizing that it would only hurt the country as a whole, as well as not helping the people they think it would help anyway. Add a $2 a gallon tax on gas and then let's see how much they want to raise the minimum wage so people can afford it. That'll be fun -- government subsidies on gasoline purchases for the poor, funded by anyone who makes over 28k a year.

More taxes are bad when the government is already a bloated pig that wastes money at every turn. Higher gas taxes just means the only people who would then be able to drive anywhere are rich people who can afford to drive anything they want anyway. If someone wants to complain about $2 a gallon gas while driving their 8mpg vehicle, let them. Last time I checked, it was still a free country. Many people who agree with higher gas taxes need to take an honest look at the real reasons they are for such a thing because "saving the planet" and other nonsense doesn't cut it.

The law of supply and demand will determine what people drive and how much they drive it. It's already started with people buying hybrids now that they are more affordable and practical than they used to be. Like most things, the law of supply and demand doesn't need any "help" from the federal government.

[Cyrus]

You wanna check the market prices? Go to platts (http://www.platts.com/), hit "Create Chart" and then you can draw up any oil product price graph you want. I am looking at Premium Unleaded Los Angeles as I write this and it's like a nice rising mountain range. (You have to register a name.)

"Iraq is actually producing close to pre-war levels."

No, it isn't. Two thins the Army War College planners strongly advised the Prez, when he was gonna go in Iraq : Don't disband the Army and the police and don't hurt the infrastructure of oil and electricity. Dubya paid no mind to either. Army War folks predicted that it would be a bastard to bring the infrastructure up to pre-war levels, on the basis of the Serbian experience after the 1990s bombings. They were, again, correct.

"As prices rise at the pump, demand for more fuel efficient automobiles will increase and supply should stay relatively constant."

It's not just the USA. China's oil consumption is growing by some 8-9% yearly. That's an awful lot of oil. And there's nothing to cover the imbalance, in the form of new oil field findings.

But the oil price rise is a very healthy thing, overall, as you say. Provided the prices stay up -- if not rise a little more.

"The European market illustrates how higher taxes push greater efficiency. ---With much slower economys and more unemployment as well."

The economies of Europe are far from weak. And if you substitute a couple of percentage points of GNP growth with a couple of percentage points in employment (I mean if that was as straightforward as you put it), then I'd say that this is a good trade off.

"It's easy to show (mathematically BTW) that gasoline taxes will DECREASE the supply of gasoline. This is due to the fact that the effect to suppliers is to lower the price they receive for their product."

I'd be very interested to see the proof of that argument, which, as you say, is mathematical. I would settle for a simple logical justification, though.

"To lessen dependence on OPEC alternative sources to fossil fuel are required."

Isn't this the wrong thing to do when a Fossilman is world champion? /images/graemlins/smile.gif

[andyfox]

Why wouldn't the real point be that the author and the analyst he cited, believe what they are recommending are good things? Why do jealousy or spite have to come into the equation?

Whether or not government is a bloated pig has nothing to do with the efficacy of the policy the author is recommending. I might think the Defense Department is a bloated pig, but I might still be in favor of the war in Iraq.

The laws of supply and demand work well with many small companies. When we're talking about OPEC, and the oil and auto companies, we're dealing with something different than the world envisioned by Adam Smith.

[MMMMMM]

Adios and Kenrick have provided good arguments against this idea, I think.

It is also worth noting that punitive type taxes or sanctions do not automatically always achieve the results they were intended to achieve.

Smaller cars also have a hidden cost: loss of lives, and more crippled persons. Cheaper isn't always cheaper overall. More lives lost in accidents, higher insurance premiums, more loss of productivity, etc. More gas-efficient cars are already becoming more in demand, though, which will eventually be better for the planet.

The R&D, development, and production curves can only go so fast. There are backlisted orders already for hybrids. Consumers are being pushed in that direction already by higher gasoline prices. What good will it do to push them into line even faster, faster than the manufacturers can keep up with the demand for hybrids? Doubling the price of gasoline is not going to magically make those cars appear much sooner (though it might well enable auto manufacturers to gouge consumers more severely).

And just what the heck would the government do with the massive extra funds raised from this tax? Waste most of it, probably, and salt a lot more barrels of pork.

The market itself will adapt to truly higher prices, based on suply and demand--as it already is beginning to do with the new hybrid cars.

A massive gas tax increase wil also devastate our overall economy by increasing the cost of doing nearly every kind of business. Consumers too will spend less on other things. We would likely incur a recession, and possibly even a depression.

There is no magic wand solution to this situation. The claim that a large gas tax will fix the problem relies on great (and probably erroneous) presumptions. More likely, it will exacerbate the problem (as Adios pointed out), and create a host of new economic problems to boot.

Two big refineries closed in the USA due to lack of economic viability. The effects of their closures are one reason West Coast gasoline prices are so high today. If gasoline itself will be taxed more steeply, there will be even less incentive to increase our refining capacity (which we need more of), because consumers will be buying less gasoline.

It's just an all-around bad idea.

[ACPlayer]

Lowering the rate of growth of the demand (forget about lowering total demand, aint happening) is a better long term solution. It forces investment in alternative energy sources. It preserves an asset the US has (the oil reserves in ANWAR) for when the price of the gas starts hitting $10 and gallon (in current terms) as it will eventually.

[ACPlayer]

All you say is correct, however allowing OPEC the control of being able to "Tax" us by manipulating the supply is also a bad idea.

Working on the demand by perhaps:

1. Modest tax increases, along the lines of cigarette taxes. Atleast here as the price point moves up some of the consumer dollars stay onshore.
2. Large tax incentives for alternate energy sources. No reason that Las Vegas residents should not be encouraged to use solar energy.

The problem presently is that the Energy Policy is reduced to lets drill in ANWAR. That is a simple minded approach, IMO. Of course, all of our administration's energy (!) is focussed on a) political survival and b) the Iraq boondoggle, so these things move to the bottom of the in-basket.

[Zeno]

The price hikes (tax) recommended is too high. A .25 or .30 cent increase in the FED gas tax would be a good idea, if the money were allocated wisely, say for R&D, upgrade of transportation infrastructure and a concentration of monies for public transportation systems in densely populated corridors where there is a high probably that the systems can work well and make money - For example the Boston to Baltimore corridor on the east coast. Amtrak should be annihilated and private business hogs and money tycoons given some tax incentives (from the increase in Fed gas tax) to finally build a fast, efficient, people friendly rail system on the East Coast of the US. This would not only alleviate some auto traffic but also unclog some of the airports in the process. A few smaller systems could be built in other areas also. All except California – that place should be left alone.

If wise heads prevail we should be drilling in Alaska within 10 years but there really is no need to hurry. The US needs to up its refinery capacity and do much more offshore drilling and exploration.

The hackneyed comparison of the US to Europe is at best weak. Not only is the culture different it is small, more compact, and vastly denser in population. The US is much larger; more spread out, and only approaches the density of European populations in a few urban centers. I do not care what the Europeans are paying for gas as that is irrevalant.



As an aside, Europe is a vast wasteland of fascist and imperialist morons that have spent the last 1,000 years butchering each other up and dragging much of the rest of the world into their internecine wars, usually over trivial or religious matters. Fucccck Europe. They are Scum, and once we blow the Middle East to hell, the US should team with the Limey’s and lay waste to Central Europe. The Scandinavians and the Italians should be left alone but the rest should become a fiefdom to the US. The Russians can take whatever is left over. The Chinese will dominate most of Asia and this Triumvirate (US [plus allies] Russia, China) can hack up the Middle East as it sees fit. Africa should be left alone to muck along as best it can. Mexico and Central and South America will supply drugs and women to the rest of the world. No one will pay any attention to Canada. Now that is utopia.


Le Misanthrope

[MMMMMM]

Incentives for alternate technologies might be a good idea; the devil too might have a bit of a say in the details.

As for allowing OPEC to "tax" us, I suggest my former proposal might actually merit a bit more serious consideration: we tell the countries which are supporting terrorism against us to cease and desist if they wish to be allowed the continued privilege of being able to sell us oil. If they persist in supporting terrorism against the West, we will just TAKE their damn oil.

Of course, 90% of Europe and 70% of the USA would be too chicken for such an approach, but if we stood together and spoke plainly and were willing to put the hammer down, it would solve many problems. But tell Iran and Syria (and the perhaps the Saudis) to go screw? Tell them to shape up or lose their oil? Why, the U.N. would be up in arms!(for the first time in history). That however is the only equitable approach. If they want fair trade (if a cartel can be called "fair") and to be able to sell to us, they ought to be told they had damn well better stop supporting jihad warriors against us--or else they won't be selling their oil, they'll be giving it. Their choice, plain and simple. What could be fairer?

[MMMMMM]

^

[ACPlayer]

we tell the countries which are supporting terrorism against us to cease and desist if they wish to be allowed the continued privilege of being able to sell us oil

Well, I suppose we could tell these countries. Unfortunately we are mired in a war that has nothing to do with terrorism, except for creating more of it.

Secondly most of the these countries (the sources of threats against the US) are our friends already. Their leaders would have been invited to the White House for sleepovers if it were not for the fact that that would be political suicide in an election year. The only reason these countries are fomenting terrorism is because we are busy supporting their leaders. Even such neo-cons as Richard Perle pretty much agree that the bulk of the terrorism problem (at least against the US) is from Saudi and Egypt.

Lastly, we continue to bite ourselves in the a** by supporting the immorality in Israel, which contributes directly to threats against us and to possible higher prices. Israel has pretty much hijacked our policy against Saudi, Egypt and the rest of the middle east.

What we should do is to tell Israel to come to a political solution pronto and if not we will just darn stop our one sided support. THAT would help oil prices and perhaps allow us to pursue policies that would stop the fascist Arab states from suppressing their own people.

[jdl22]

As Bush said you need to put "the off button on" on your sarcasm detector.

You are correct though that lowering total demand won't happen barring some sort of catastrophe.

[adios]

[ QUOTE ]
But isn't this market an oligopoly? Don't just a few companies control most of the production?

[/ QUOTE ]

Don't think so. I believe Boris posted something about some studies he did showed that OPEC doesn't have that much control over prices.

[ QUOTE ]
It's amazing to me that car basically run on the same technology they did a hundred years ago.

[/ QUOTE ]

The technology certainly has advanced and 100 years isn't a long time really especially considering how long it took to invent the auto.

[adios]

[ QUOTE ]
"Iraq is actually producing close to pre-war levels."

No, it isn't....

[/ QUOTE ]

Depends on how you define close.

Iraq 2004 oil revenues may hit $20 billion-Carroll (http://www.forbes.com/iraq/newswire/2004/02/12/rtr1259439.html)

[ QUOTE ]
It's not just the USA. China's oil consumption is growing by some 8-9% yearly. That's an awful lot of oil. And there's nothing to cover the imbalance, in the form of new oil field findings.

[/ QUOTE ]

Right. All the more reason not to constrain supply.

[ QUOTE ]
The economies of Europe are far from weak. And if you substitute a couple of percentage points of GNP growth with a couple of percentage points in employment (I mean if that was as straightforward as you put it), then I'd say that this is a good trade off.

[/ QUOTE ]

Tell that to the millions you put out of work.

[ QUOTE ]
I'd be very interested to see the proof of that argument, which, as you say, is mathematical. I would settle for a simple logical justification, though.

[/ QUOTE ]

Take your supply and demand equations for oil where quantity is a function of price. Find the equilibrium price where the suppliers quantity is a function of price - the tax. From the suppliers viewpoint the price received is the price paid by the consummer - tax taken out.

If your interested I'd recommend the book:

Mathematics for Economics and Finance by Martin Anthony and Norman Biggs. One of the first topics covered is the effect of taxes on quantities supplied.

[MMMMMM]

I was talking primarily about Iran and Syria. Iran especially supports jihadist lunatics. Saudi Arabia needs to stop exporting Wahhabism.

I'm not saying it would necessarily be a good idea to put it to these countries in such a way but it very well might be.

[andyfox]

I hope you're referring to his first paragraph, and not this:

"Europe is a vast wasteland of fascist and imperialist morons that have spent the last 1,000 years butchering each other up and dragging much of the rest of the world into their internecine wars, usually over trivial or religious matters. Fucccck Europe. They are Scum, and once we blow the Middle East to hell, the US should team with the Limey’s and lay waste to Central Europe. The Scandinavians and the Italians should be left alone but the rest should become a fiefdom to the US. The Russians can take whatever is left over. The Chinese will dominate most of Asia and this Triumvirate (US [plus allies] Russia, China) can hack up the Middle East as it sees fit. Africa should be left alone to muck along as best it can. Mexico and Central and South America will supply drugs and women to the rest of the world."

I love to say things here that get a rise out of people. But I finish a poor third to my friends Zeno and Tommy. /images/graemlins/smile.gif

[HDPM]

Why should you be surprised at this paragraph. In the '50's it became popular to go on a European vacation. Many immigrants did this. Somebody asked my grandfather if he planned on going. He said basically that he didn't like it much the first time around and the prior 20 years or so had not added to the allure. His language was probably a bit more blunt tho. I am sure he recognized that less walking would have been required on the vaction than on the departure however. /images/graemlins/tongue.gif

[MMMMMM]

The first paragraph was largely analysis; the latter mostly commentary. Still the latter may turn out to be more on the mark than might be surmised. Also, "fascist and imperialist morons" is not an altogether unlikely description.

[andyfox]

I'd been to Italy about a dozen times when this incident occurred: My wife and I are looking at furniture in a store here in L.A. The stuff is made in Italy and it's kinda cool-looking and the person who's helping us is herself Italian. My wife compliments the selection, and the salesperson says, "They do everything well in Italy." I mumble under my breath (at least I thought so), "Yeah, except for everything that's important." The salesperson is offended, my wife is embarrassed and we end up not buying anything there. (Not my intention, but at least it worked out well.)

Several years later we go to Milan and Florence. After a week, my wife admits I was right. /images/graemlins/wink.gif

[Cyrus]

"Europe is a vast wasteland of fascist and imperialist morons that have spent the last 1,000 years butchering each other up and dragging much of the rest of the world into their internecine wars, usually over trivial or religious matters."

Hah... Hah... Hah... It's your clothes, mo-fo.

[Cyrus]

The salesperson says, "They do everything well in Italy." I mumble under my breath, "Yeah, except for everything that's important."

Depends on what one considers important, of course.

Italy has a lousy military and mostly weak companies. I guess Italy is bad at "important" things such as these.

But what about the "not important things"? Have you never tasted food in Italy, or wine in Italy? Ever been inside a Testarossa or a Miura? Is it a silly fad that people all over the world think of Italian cars when they think of class and excitement? And what about Italian cinema?

.."Everything that's important" ?! Sounds like that Italian salesman was too good looking in front of your wife. /images/graemlins/smile.gif

[Cyrus]

-- Iraq is actually producing close to pre-war levels.
-- No, it isn't....
-- Depends on how you define close (http://www.forbes.com/iraq/newswire/2004/02/12/rtr1259439.html)

The ex-Shell guy who headed Iraq's oil industry for a while claims that Iraq is now producing 2.5 mln bbls/day. That's close enough to the pre-invasion level of 3 mln bbls/day but remember that the sanctions were in place. You wanna compare output, you should compare it with pre-Gulf War levels, when the production was above 3.5 mln bbls/day.

I also dispute the figure of 2.5 million, by the way. There's no way they are producing that quantity. I will wait for corroboration from the oil industry. They have a smaller agenda than Bush appointees.

-- China's oil consumption is growing by some 8-9% yearly. That's an awful lot of oil. And there's nothing to cover the imbalance, in the form of new oil field findings.
-- Right. All the more reason not to constrain supply.

What do taxes have to do with the supply of a commodity such as oil? (Oil's not a luxury item!) I will repeat once again the facts :

* Demand is red hot in the Far East.

* Extreme (and silly) diversity in specs inhibits inter-state oil trade in the U.S.

* Med refineries are shutting down for turn-arounds or, mostly, for spec upgradings, to meet the new, 2005 Euro specs (on sulphur and the like).

* The United States (for some reason) is stockpiling gasoline like crazy.

* Crude oil supply is actually pretty hot right now but cannot meet current demand. OPEC's countries except S.Arabia are already producing at full tilt. Saudi Arabia is close to full tilt. But, get this, even if we were to be flooded with crude, the refining capacity is well below consumer demand.

* The non-fundamental factors, such as the Middle East-caused "nervousness", only contribute to the rise. They do not cause it. We would have seen a very different reaction in the posted prices from events such as OPEC's announcements if the non-fundamentals were driving the market.

* The tax effect diminishes in strength in relation to the importance of the taxed product. Oil is damned near essential. It is not like slapping taxes on SUVs or jet skis.

And

* Dubya doesn't know his Texas pecker from an oil drill.

[Zeno]

[ QUOTE ]
"They do everything well in Italy."

[/ QUOTE ]


Only an Italian would (or could) say this with a straight face. That is why Italy must be saved at whatever cost. It is vacation land supreme. Always amusing to visit and always fun to leave. Perfection.


Thank You for the compliment in your other post.

-Zeno

[MMMMMM]

That's Europe for ya, Cyrus.

That's also why the USA was created: to be a refuge from the cesspool, the barbarism, the tyranny of the rest of the world.

[Zeno]

Aside from a few bright spots scattered in time and place, Europe has been morally bankrupt for centuries. Few places on the globe have instigated slaughter in their own backyard on such a massive scale, and also exported the same globally. It is about time Europe received its comeuppance. /images/graemlins/wink.gif

Thank you for the complimentary remark.

-Zeno

[Zeno]

Dali did a painting that is interesting New Man (http://www.allposters.com/gallery.asp?aid=38216&item=151695)


Naked from the egg of the New World - no clothes. And no 'mo-fo'.

[adios]

He must have read my post last night /images/graemlins/smile.gif.

BUSINESS WORLD
By HOLMAN W. JENKINS, JR.

Nothing to Say? Talk
About 'Energy Independence'
June 2, 2004; Page A15

Before John Kerry gave his much-touted national security speech last week, an adviser anonymously assured the press that it would be "big." Some of us even dared hope for a crunchy, substantive strategy for success in Iraq. Nope. Instead we got a paean to "allies" (putting a future President Kerry in hock to the French, Germans and Russians even before he takes office) and, even more depressingly, a tribute to the false deity of "energy independence."

To cite his exact words, Mr. Kerry credited himself with having "proposed a plan for energy independence from Mideast oil in the next 10 years."

He puts himself in excellent company here, since the same shibboleth has been paid lip service by every president since Nixon. It's also a favorite of prominent newspaper columnists who, throwing up their hands about the Middle East and finding Americans more tractable targets for castigation, cite the urgent need for a "Manhattan Project on energy." The idea never fails to elicit applause from audiences of ordinary voters and focus groups too, in about the same way that Mom, apple pie and stopping foreigners from "stealing our jobs" are reliable applause lines.

That is to say, as a goal, energy independence is neither desirable nor practical and, were it otherwise, would still not solve any real problem. But it provides a useful service as a vehicle of escapism and an emblem of personal virtue.

Any voter wishing to join Mr. Kerry in chasing his own tail in this matter need only refer to the candidate's actual plan. The fine print has already watered down the goal to merely "reduce our dependence on Mideast oil," but even this is an apparent forgery. As his Web site explains, "Kerry's plan will reduce oil dependence by two million barrels of oil a day, as much as we currently import from the Middle East."

Oil is oil: We'd still be bound by prices in the international marketplace with all their unsettling volatility. Mr. Kerry proposes nothing more than a symbolic slap at the Arabs, his target accounting for less than 10% of total consumption. In fact, were his plan to have any effect at all, the U.S. would likely become more dependent on imports as high-cost U.S. producers were squeezed out; and more dependent on Mideast oil, as high-cost foreign producers were squeezed out.

Mr. Kerry's motivations are no mystery: He affords himself a chance to be heard giving a speech dealing with America's current foreign policy dilemmas without actually dealing with them (say, by acknowledging that they're dilemmas). Still, it's worth picking apart the energy independence fantasy. Oil has acquired a totem status, crossing that line beyond which an instinct to mystify seems to prevail over an instinct of realism. Let's deal with the unspoken assumptions that underlie the escapist fallacy.

We'd be able to wash our hands of military and security entanglements in the Mideast. No, we wouldn't. Oil would remain a commodity in global markets, so we'd still be exposed to the international price of oil, including all gyrations caused by Mideast politics. Even in the improbable and bizarre circumstance that the U.S. swore off oil consumption altogether, we'd still have to live in this world. Notice that we invest heavily in the security of Japan, South Korea, Israel and Western Europe, though none has oil.

Our dependence makes us beholden to Arab oil states. This is similar to the argument put to President Truman by the State Department when it vehemently opposed his recognition of Israel. Yet it's hard to imagine how we could make ourselves more irritating to Arab states than by supporting Israel, which we've done for 50 years. Somehow we still manage to keep buying all the oil we want.

We'd be freer to press for democracy and human rights in the Mideast. Huh? The U.S. is going to engage in campaigns of destabilization against unattractive regimes in which we no longer have an interest? On the contrary, their co-optation by petrodollars and consequent integration in the world economy is the main inducement to the Arab oil states to eschew antisocial behavior.

The Saudis spend our oil money on religious schools preaching hate against the West. The Saudis would continue to receive billions for their oil even if the U.S. weren't buying. In any case, their support for radical Islamists has nothing to do with oil and everything to do with the Saudi regime's domestic insecurities. We can't fix this problem with energy policy; let's hope we're not so feckless as to evade the real fight against terrorism in favor of a fantasy that all will be well if Congress is allowed to spend billions on a pork-barrel scheme to wean industrial society off hydrocarbons.

"Energy independence" is a cipher phrase of American political speech, existing mainly to meet a public appetite for escape from a troubled world. In fact autarky (the dream of economic independence) is perhaps the most destructive idea of the past century, worse than socialism. Most politicians, including John Kerry, engage in such rhetoric knowing full well that it's humbug. (Others engage in it and don't know it's humbug -- say, Nancy Pelosi.)

None of the above means we don't have a real, workaday concern for "energy security -- more accurately stated as a concern about price, price, price, and even more importantly, volatility of price.

But this problem is steadily fixing itself as oil consumption becomes a smaller part of total consumption, leaving the economy better able to withstand price gyrations. Per unit of economic output, we burn 55% fewer petroleum Btus than we did 30 years ago. As is the case with most historical dilemmas, we will overcome our reliance on Mideast oil by surviving long enough for history to give the U.S. new and different problems.

[andyfox]

I love Italy. But just to visit. The place is unlivable. Because show is more important to the Italians than things that work.

[andyfox]

We land in Florence, arriving from London. There is no security, no customs official. We get into the terminal when a uniformed man comes running up to us beseeching us to go back to the gate so he can check our papers. half the people do so, half don't. The half that don't are the impatient Britishers. Awaiting (interminably, despite the snafe at the gate) our luggage, an Englishman with a gaggle of kids asks if there is a shuttle into town. "A shuttle?" says the airline official. "No, we do not have shuttles in Italy. But you might be able to get a taxi outside, although they were on strike this morning. But that usually only lasts a few hours."

[MMMMMM]

I recently ordered La Ratirata de Madrid and various Boccherini quintets and quartets (violin and guitar, violin). When the CDs arrive from Amazon, I may toast them with the only bottle of Montepulciano in the house.

Italy must be saved as the birthplace of Boccherini if for no other reason.

[MMMMMM]

^

[paland]

[ QUOTE ]
What gets me the most about articles like this is the people who are for higher gas (and other) taxes are also often the same people who want to raise the minimum wage and such things, thinking "it sounds good" but not realizing that it would only hurt the country as a whole, as well as not helping the people they think it would help anyway.

[/ QUOTE ]

Yep. Giving the poor more money for their work wouldn't help them anyway. What drug are you on?

I make decent money ($65,000) and work in a building where most make very good money (Quite a bit more than me). I'm just the tech guy so I am the low end of the totem pole. But the one thing I have learned is, the less work you do, the more you get paid. Sure, we say that we get paid for our knowledge or for responsibility, but truthfuly, if we screw up, we don't take responsibility. We just blame the minimum wage worker. Fire his ass and hire another one. And the crap about knowledge? Well, there is some truth to this, but proportionately, we are still living high on the hog on the backs of the working class. I got paid $250 today and I worked one hour, then went home. But I guess this is all good for the minimum wage worker.

[Cyrus]

"That's Europe for ya. That's why the USA was created: to be a refuge from the cesspool, the barbarism, the tyranny."

And if you don't know the line I'm talking about, you have no b (http://www.imdb.com/title/tt0041959/quotes)usiness in the Italy thread!..

[Cyrus]

Think about it.

[ACPlayer]

Last I checked neither Iran nor Syria had made any overt actions against the US.

We need to stop supporting the House of Saud which is a corrupt tyrannical dictatorship. A good first step would be to rid the white house of their good buddy.

[ACPlayer]

I just have a hard time believing anything Bush says anymore. /images/graemlins/grin.gif

[MMMMMM]

Most minimum wage earners are high school students, college kids, new immigrants. Most minimum wage earners don't stay earning minimum wage for very long. So sure we benefit from their services...but I was once a minimum wage earner too. It's part of the growing up phase for many.

Raising minimum wage ought to result in fewer available jobs, due to simple economics.

Of course minimum wage is not a living wage...so all the more incentive for them to get doing something else...which nearly everyone manages to do somehow.

If you're viewing minimum wage earners as a permanent underclass, I think that view is erroneous. Most are simply "passing through" so I don't see much of a problem with it. And there's nothing wrong with newbies (in the workforce or in any field) making little money when they first start out.

[nicky g]

I don't have any figures to hand but I recently read a Paul Krugman essay which suggested that the statistics on income/class mobility in the US are not at all encouraging.

[MMMMMM]

"The 'working poor' scam
Thomas Sowell (archive)

June 1, 2004 | Print | Send

BusinessWeek magazine has joined the chorus of misleading rhetoric about "the working poor." Why is this misleading? Let me count the ways.

First of all, Census data show that most people who are working are not poor and most people who are poor are not working. The front-page headline on the May 31st issue of BusinessWeek says: "One in four workers earns $18,800 a year or less, with few if any benefits. What can be done?"

Buried inside is an admission that about a third of these are part-time workers and another third are no more than 25 years old. So we are really talking about one-third of one fourth -- or fewer than 10 percent of the workers -- who are "working poor" in any full-time, long-run sense.

Nevertheless, the personal human interest stories and the photographs in the article are about people in this one-twelfth, even though the statistics are about the one-fourth.

As for "What can be done?" that is a misleading question because the article is about what other people can do for the "working poor," not what they can do for themselves, much less what they did in the past -- or failed to do -- that led to their having such low earning capacity.

The theme is that these are people trapped by external circumstances, and words like "moxie" and "gumption" are mentioned only sarcastically to be dismissed, along with "Horatio Alger." But the cold fact is that what the intelligentsia call the American Dream is no dream.

An absolute majority of the people who were in the bottom 20 percent in income in 1975 have since then also been in the top 20 percent. This inconvenient fact has been out there for years -- and has been ignored for years by those who want more government programs to relieve individuals from responsibility for making themselves more productive and therefore higher income earners.

While the economy is "rewarding the growing ranks of educated knowledge workers," BusinessWeek says, this is not so for "workers who lack skills and training." In a country with free education available through high school and heavily subsidized state colleges and universities, why do some people lack skills and training?

More important, what is likely to cause them to get skills and training -- pay differentials or largess in money or in kind from the taxpayers as "entitlements"?

This is an agenda article and facts that get in the way of the welfare state agenda get little attention, if any. Meanwhile, notions that have no factual basis are asserted boldly.

For example: "Working one's way up the ladder is becoming harder, not easier." Evidence? Wage rates for people in the bottom 20 percent have not risen much over the past 30 years.

The fallacy here is that it is not the same people in the bottom 20 percent over the past 30 years. Most people in the bottom 20 percent do not stay there even one decade, much less three. Young, inexperienced beginners do not remain young or inexperienced or beginners their whole lives.

Some people, of course, never learn -- and never rise. Creating entitlements for them reduces any need to learn. But that is the way BusinessWeek urges us to go.

They want higher minimum wages imposed, despite evidence that minimum wage laws reduce employment. Why would anyone think that making labor more costly would not affect employment, when higher prices reduce the amount of anything else that is bought?

BusinessWeek wants "better day-care options" -- "especially for single moms." In other words, unmarried girls should have babies and expect the taxpayers to pick up the tab for taking care of them. And if we subsidize such irresponsible decisions, will that not have the same effects as subsidizing other things?

Another liberal notion promoted by BusinessWeek is making it "easier to form unions." Workers can get unionized right now just by voting for a union in a government-supervised election. How much easier should it be?

The problem is not a difficulty in forming unions. What has happened is that workers themselves increasingly vote against unions because they have learned the hard way that unions cost jobs, even if BusinessWeek is unwilling to learn that lesson.

©2004 Creators Syndicate, Inc."

http://www.townhall.com/columnists/thomassowell/ts20040601.shtml

"'Living wage' kills jobs
Thomas Sowell (archive)

November 5, 2003

Give credit where credit is due. The political left is great with words. Conservatives have never been able to come up with such seductive phrases as the left mass produces.

While conservatives may talk about a need for "judicial restraint," liberals cry out for "social justice." If someone asks you why they should be in favor of judicial restraint, you have got to sit them down and go into a long explanation about constitutional government and its implications and prerequisites.

But "social justice"? No explanation needed. No definition. No facts. Everybody is for it. Do you want social injustice?

The latest verbal coup of the left is the phrase "a living wage." Who is so hard-hearted or mean-spirited that they do not want people to be able to make enough money to live on?

Unfortunately, the effort and talent that the left puts into coining great phrases is seldom put into facts or analysis. The living wage campaign shows that as well.

Just what is a living wage? It usually means enough income to support a family of four on one paycheck. This idea has swept through various communities, churches and academic institutions.

Facts have never yet caught up with this idea and analysis is lagging even farther behind.

First of all, do most low-wage workers actually have a family of four to support on one paycheck? According to a recent study by the Cato Institute, fewer than one out of five minimum wage workers has a family to support. These are usually young people just starting out.

So the premise is false from the beginning. But it is still a great phrase, and that is apparently what matters, considering all the politicians, academics and church groups who are stampeding all and sundry toward the living wage concept.

What the so-called living wage really amounts to is simply a local minimum wage policy requiring much higher pay rates than the federal minimum wage law. It's a new minimum wage.

Since there have been minimum wage laws for generations, not only in the United States, but in other countries around the world, you might think that we would want to look at what actually happens when such laws are enacted, as distinguished from what was hoped would happen.

Neither the advocates of this new minimum wage policy nor the media -- much less politicians -- show any interest whatsoever in facts about the consequences of minimum wage laws.

Most studies of minimum wage laws in countries around the world show that fewer people are employed at artificially higher wage rates. Moreover, unemployment falls disproportionately on lower skilled workers, younger and inexperienced workers, and workers from minority groups.

The new Cato Institute study cites data showing job losses in places where living wage laws have been imposed. This should not be the least bit surprising. Making anything more expensive almost invariably leads to fewer purchases. That includes labor.

While trying to solve a non-problem -- supporting families that don't exist, in most cases -- the living wage crusade creates a very real problem of low-skilled workers having trouble finding a job at all.

People in minimum wage jobs do not stay at the minimum wage permanently. Their pay increases as they accumulate experience and develop skills. It increases an average of 30 percent in just their first year of employment, according to the Cato Institute study. Other studies show that low-income people become average-income people in a few years and high-income people later in life.

All of this depends on their having a job in the first place, however. But the living wage kills jobs.

As imposed wage rates rise, so do job qualifications, so that less skilled or less experienced workers become "unemployable." Think about it. Every one of us would be "unemployable" if our pay rates were raised high enough.

I would love to believe that the Hoover Institution would continue to hire me if I demanded double my current salary. But you notice that I don't make any such demand. Third parties need to stop making such demands for other people. It is more important for people to have jobs than for busybodies to feel noble.

©2003 Creators Syndicate, Inc."

http://www.townhall.com/columnists/thomassowell/ts20031105.shtml

[nicky g]

"An absolute majority of the people who were in the bottom 20 percent in income in 1975 have since then also been in the top 20 percent. This inconvenient fact has been out there for years -- and has been ignored for years by those who want more government programs to relieve individuals from responsibility for making themselves more productive and therefore higher income earners."

This is what the Krugman essay disputes. I can't remember how. It's in The Accidental Theorist, which ias an interesting read overall.