Bush is an oilman. What do you expect? Kirk sail4free <[EMAIL PROTECTED]> wrote: To: [EMAIL PROTECTED] From: sail4free <[EMAIL PROTECTED]> Date: Tue, 22 Apr 2008 13:20:44 -0700 (PDT) Subject: [LittleHouses] There Is No Gas Shortage
========== It's rare that I would post a complete article -- especially one that is arguably OT -- but this one strikes to the heart of what is going on with our rapidly escalating fuel prices (with no end in sight). FWIW, we here in Idaho (on average) have reduced our demand nearly 10% from one year ago -- no doubt as a direct result of high prices. If you read only one article about the WHY of gas prices this year, this needs to be that article: ========== Viewpoint April 1, 2008 ========== There is No Gas Shortage, but Washington, Wall Street, and ethanol and oil and gas companies want you to think there is, says automotive expert Ed Wallace: ========== "They see speculation in the market, I see decline in global inventories. I don't think this is a big surprise, that we've had a jump in price when there has been a decrease in crude inventories." Energy Secretary Sam Bodman, Bloomberg News, Mar. 5, 2008 ========== "It should be obvious to you all that the [gasoline] demand is outstripping supply, which causes prices to go up." President George W. Bush, Associated Press, Mar. 5, 2008 ========== One wonders if verifiable facts ever get in the way of this administration's statements on issues that are critical to the average American's wellbeing. After all, last time I checked, when politicians are elected to public office, or appointed, as is Energy Secretary Samuel W. Bodman, they must take an oath to the American people before assuming their new positions. How can they forget a sacred oath so quickly? Were they daydreaming when they took it, so it never meant anything to begin with? Maybe it's just another promise you have to make to get into office: When you're securely incumbent you can ignore even solemn oaths you took. ========== Obviously, the two quotes that led this article came from discussions concerning the current high price for oil on the futures market. Bodman appears to be protecting the speculators in oil, as opposed to looking after the interests of all Americans. President Bush, apparently, has never talked to the Energy Dept.'s Energy Information Agency to see whether gasoline demand is actually up. More troubling, the writer of that particular Associated Press article obviously didn't look up the EIA's numbers to verify the President's assertions. They weren't accurate. ========== 1. There Is No Shortage ========== Gasoline reserves on hand are at the highest levels since the early 1990s, which is remarkable considering the nation's refineries have been cutting back on the production of gasoline because their margins have declined. In fact, average gasoline reserves on hand have risen since this past October, while oil reserves in this country have gone up virtually every week this yearand only fog in the Houston Ship Channel that kept oil tankers from unloading their crude one week kept it from being every week. ========== In the same Bloomberg article that quotes from Bodman's CNBC appearance on Mar. 4, he also said that it was thanks to ethanol that the gasoline problem isn't even worse. He then added that the fact that making ethanol is forcing up prices of other farm commodities, including hog and chicken feed, is "nowhere near as important as trying to relieve pressure on [gasoline] supplies." ========== Of course, there is no pressure on gasoline supplies in this country as of today, but Bodman's statement must have made eyes roll among the executives at Pilgrim's Pride PPC; the Pittsburg, (Tex.) poultry producer announced 1,100 layoffs on Mar. 13, closing one processing plant and 6 of their 13 distribution centers because their company's outlay for chicken feed went up $600 million last fiscal year and was on track to increase by another $700 million this year. ========== Here's the scorecard, in case you missed it. There's no shortage of gasoline or oil in the U.S. today, and we have near-record reserves on hand. Meanwhile the Congressional mandate for ethanol has jacked up the price of chicken feed for Pilgrim's Pride, which is the U.S.'s largest processor of chickens and turkeysby $1.3 billion. And that's for just one company processing chicken. This is what passes for acceptable to our Energy Secretary? ========== 2. Demand Is DOWN, Yet Prices Are UP ========== Just so we can all get on the same page, here are the verifiable facts on oil supplies, production, and gasoline demand. ========== In January of this year, the U.S. used 4% less petroleum than we did a year ago. (Oil demand was down 3.2% in February.) Furthermore, demand has been falling slowly since July of last year. Ronald Bailey of Reason Online has pointed out that worldwide production of oil has risen 2.5% in the first quarter, while worldwide demand has grown by only 2%. ========== Production is expected to increase by 3.3% in the second quarter, and by as much as 4.1% by the third quarter. The net result is that the U.S. daily buffer for oil production against demand, which was a paltry 1.5 million barrels as recently as 2005, is now up to 3 million barrels in excess capacity today. ========== So what is going on here? Why would our Energy Secretary say there's a supply and demand problem when none exists? Why would he say that speculators have little or nothing to do with the incredibly high price of oil and gasoline, when it's clear they do? President Busha former oilmangives the ever-growing demand for gasoline as the primary reason prices are so high, yet that notion can be dispelled with one minute of research. That's the problem with rhetoric; it rarely matches the facts. ========== 3. Speculation is Up, and the Dollar Is Down ========== On the same day the President and our Energy Secretary made those foolish comments, no less an authority than ExxonMobil (XOM) Chief Executive Officer Rex Tillerson was quoted by Marketwatch as saying, "The record run in oil prices is related more to speculation and a weakening dollar than supply and demand in the market." He added, "In terms of fundamentals, fear of supply reliability is overblown." ========== As for the speculators, in 2000 approximately $9 billion was invested in oil futures, while today that number has gone up to $250 billion. Now, if any publicly traded company had an additional $241 billion put into its stock in the same period, its stock would rise out of sight tooeven if the company was not worth anywhere near that amount of market capitalization. ========== Moving on to the weak U.S. dollar as a primary cause for skyrocketing oil pricesthere is "some" truth in that statement. But consider this: The dollar has depreciated 30% against the world's currencies since 2002, while the price of oil has gone up 500%. So is it the weak dollar that has caused a 500% increase in the price of oil, or is it the extra $241 billion worth of speculation? You can make the call on that one. ========== Possibly just to ensure oil prices don't respond to real-world market conditions, Goldman Sachs (GS) forecast on Mar. 7 that turbulence in the oil market could cause oil to spike as high as $200 a barrel. This flies in the face of all known informationbut then again, Goldman Sachs is the world's biggest trader of energy derivatives, and its Goldman Sachs Commodities Index is a widely watched barometer of energy and commodities prices. ========== What Is Washington Thinking? ========== Rounding out the list of experts discussing our oil and gasoline situation is Bill Klesse, head of San Antonio (Tex.) Valero Energy (VLO). He spoke in San Diego a week after those comments from Goldman Sachs, the President, and Secretary Bodman. Believe it or not, Klesse said poor margins may cause Valero to sell one-third of its refinery operations; he stated that poor margins in recent months had caused planned refinery expansionswhich would have produced 500,000 more barrels per dayto be canceled. Moreover, according to a report from Reuters on Mar. 11, 2008, Klesse recently released the information that gasoline production has been curtailed in response to slowing demand. ========== Imagine that: Refiners cut gasoline production, yet gasoline reserves have grown to their largest since late 1992. So much for "surging demand." ========== Klesse also called for the government to start imposing a tariff on imported gasoline to protect U.S. refiners' profits. Protectionism? As famed economist John Kenneth Galbraith correctly said, "In America, the only respectable form of socialism is socialism for the rich." ========== Which takes us back to the original question: Why is Washington doing everything it can to convince us there is a shortage when there isn't one? After all, the only people they're protecting are those heavily invested in oil futuresand that's to the detriment of all other Americans. ========== We're Paying for What? ========== When it became undeniable that poor decision-making by company executives had put a respected 85-year-old U.S. institution in financial peril, why did the Federal Reserve rush in to save investment bank Bear Stearns (BSC)? Of course, we need to restore confidence in our financial institutions, but why protect the personal assets of those who were responsible for the mess? Both the corporation's officers and its board members should contribute their personal assets toward saving the bank they put in the ditchthe bank all of us are going to pay to bail out. ========== Instead, the Bush administration is protecting those responsible for creating yet another speculative bubble in oil futures, and is protecting investors in the ethanol industrymuch to the detriment of food-processing companies such as Pilgrim's Pride. And the net result of all this is that the prices of crude and gasoline rise ever higher thanks to a "shortage" that does not exist, while food costs are soaring thanks in part to the ethanol mandate. ========== The Federal Reserve lowers interest rates, but the cost of mortgages goes up six weeks in a rowand last month Bank of America (BAC) credit-card holders started being charged more than 24% interest on new purchases. ========== This is what they call "Republican Prosperity?" Ronald Reagan was both right and wrong when he said, "Government is not the solution, government is the problem." And government is still the problem. Instead of a fair and open market they gave us a free-for-all marketplace with no regulations at all, which lately these "bubble boys" have sent south for all of us. ========== One would guess that Washington missed the obvious: Protect all U.S. consumers and you're also protecting business expansion. ========== http://www.businessweek.com/lifestyle/content/apr2008/bw2008041_945564_page_3.htm ========== sail4free ========== --------------------------------- Be a better friend, newshound, and know-it-all with Yahoo! Mobile. Try it now. [Non-text portions of this message have been removed] ------------------------------------ Yahoo! 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