The maximum of our SPR (strategic petroleum reserve) is 700 million barrels, per the DOE http://www.fe.doe.gov/programs/reserves/spr/. We use 20 million barrels a day, half of which is imported, http://www.channelone.com/news/2004/05/04/alternative. This SPR comes from “Royalty Oil” comprising 12-16% of the onshore oil production. The level was at 592 million barrels in Nov of ‘02, and 700 now. That didn’t cause the spike (the oil companies either pony up the oil or monetary equivalent) because 108 million barrels is a whopping 10-ish days worth.

But to use the SPR to lower gasoline prices, let’s do the math, shall we? To drop the prices for the end user (75% of that 20 mbpd which is used for transportation), let’s say we delete the 10 million barrels from where-ever and add 15 million out of the SOR to cause a glut and therefore reduce prices. That’s only 46 days of oil “plenty.” If we totally lost our imports and bad guys blew up every well head in the country at the same time, forcing us to rely on the SOR to make all 20 million gallons a day, we’re only good for 35 days. That doesn’t count the time needed to ship, refine, and distribute the resulting products.

And even during presidential order to accelerate the fill of the SPR, it can be drawn on. For example, during Hurricane Lili (Sept 2002), oil from the SPR was pumped to Shell Farms to keep refineries in production. http://fossil.energy.gov/news/techlines/02/tl_spr_hurricane.html

In short, SPR is really for doomsday, not politics.

Posted by: Mona B. at May 19, 2004 03:25 PM

The punchline is when Venezuela comes back on line and the Arabs start pumping more oil to get in on the hot market while it’s still hot, which will drive prices down just in time for the democrats to claim it was an election year conspiracy on the part of the republicans.

Posted by: eric at May 19, 2004 04:53 PM

Well maybe if Bush hadnt flip flopped off his campaign 2000 promise- that he would use diplomacy to fight spikes in gas prices- things might be better. And of course there’s Bush criminal violation of antitrust laws where he made a deal with the Saudi’s to drop prices in time for the election- which the Saudi’s have done by tightening supplies in the interim.
And there’s Bush’s continued insistence on filling the SPR, now, even though the market is tightest, that is competing for an already tight supply.
And finally, in addition to not filling the SPR, part of the price problem is perception, so making public threats to release SPR oil would likely drive prices down, at least for awhile.

On the flip side, as indicated previously, part of the problem is perception so instability in Iraq and attacks on Saudi oil fields are likely having a negative effect.

Kerry, in a campaign statement on his website, calls for the negotiation and diplomacy angle, and to stop filing the SPR. He has not called for an SPR draw down.

As for the strategic importance of the SPR.. it was created during the cold war for the purpuse of keeping the nation supplied in the event of a conventional war with the Soviets severly disrupting ocean shipping. That threat no longer exists. Clearly then, it should be used to stabalize a maket dominated by antitrust forces- the actual danger we suffer from.

Posted by: Loofa at May 19, 2004 06:43 PM

Americans are spoiled as far as gas prices go.
The very reason the USA lags behind in alternate fuel development is because of cheap light crude.

At 50$ a barral, which is still much more than todays price, it would cost about $1.20 a gallon before profit and tax.

At 25 dollars a barrel, 60 cents before prophet and tax. light crude hardley needs refinining, except for jet fuel and lighter gas, you can filter it right from the well and run it in a diesel.

And thats for good high quality fuel, nothing like what we buy at the pump, which has water, and other crap added to it. Goo gas was something our ancestors used to get, where it didn’t go skunky in 30 days. With blended ethonal fuels, we can take a gallon cost down to 15-20 cents before prophet and tax @ 25-30 a barrel crude prices. There is alot of profit in the oil industry. The by products from refining are used in just about everything you can imagine, plastics, medicine, you name it.

One barrel of oil can make $400- $500 us dollars of useable industrial product, including KY gel gay guys love so much.

What the government doesn’t do is scale tax to oil barrel prices, so at the pump, when those prices reflect oil barrel prices, government multi layer tax on tax increases 20 times the value of the pennies oil barrel prices do.

For example, if say a gallon of gas goes up 5 cents, the tax goes up 20 cents.
This is why you get hit hard, not because of the barrel price.
And, if you think it’s bad in the USA, In Canada, it is now $4.55 cents an Imperial gallon (about a quart more than a US gallon, or equal to 5 litres)

In the UK, it’s about $7.50 us an imperial gallon, and much the same through Europe. This is due to government tax, not the barrel price.

At $2.55 us for 4 litres (a shy gallon) It’s not that bad at all.
Just think what it would be if Kerry slaps on the 50 cent gas tax on top of taxes already. then you’d be like Canadians and get taxes on taxes on taxes.

Posted by: Fat Guy at May 19, 2004 08:02 PM

Oh, and about the Saudi’s promissing increased oil supply.
They did.
The problem is, WE don’t have the refinery capacity, due to what?

The green people, who make it so hard to build new refineries, because of Blockes to proposals, and what not.
The demand for citezen fuel grows, but our own capacity to produce it doesn’t. Especially the watered down blends we are using.

All you greeny and lefty dems, including kerry, who runs a huge fuel consuption bill, 50 times more than the average person, need to cur down, ride your bikes or something.

The only people I see conserving fuel and being enviromentaly freindly are Republicans.

Posted by: Fat Guy at May 19, 2004 08:08 PM

Loofa, WTF are you talking about? Some highlights:

“Well maybe if Bush hadnt [sic] flip flopped [sic] off his campaign 2000 promise- that he would use diplomacy to fight spikes in gas prices- things might be better.”

How do you know that Bush has not used diplomacy to attempt to moderate oil prices? Sometimes, diplomacy can be overtaken by events (war in Iraq, attacks in Saudi Arabia and unrest in Sudan, Nigeria and Venezuela) and facts (huge demand from China and the U.S. thanks to rapid economic growth). And by the way, you should be focusing on oil prices, which are impacted by events in the Middle East and demand throughout the world, and not gas prices, which are impacted by the additional concerns of the lack of refinery capacity and the numerous environmental additives (which often vary from state to state).

“And of course there’s Bush [sic] criminal violation of antitrust laws [sic] where he made a deal with the Saudi’s [sic] to drop prices in time for the election- which the Saudi’s [sic] have done by tightening supplies in the interim.”

If the President has made such a deal, what anti-trust law was violated? How, if he has (illegally, in your view) arranged a deal with the Saudis to drop prices by Election Day, would the Saudis’ actions in tightening the supply of oil be helpful to him? His grand scheme is to raise prices so high that OPEC members will cheat and he will convince the Saudis to ride to our rescue by increasing production?

“And there’s Bush’s continued insistence on filling the SPR, now, even though the market is tightest, that is competing for an already tight supply. [Let’s just sic the whole thing]”

I guess what you’re saying that it is not wise to be filling the SPR with higher priced barrels of oil now, especially since the purchases for the SPR are increasing the pressure on supplies. While I have seen a number of studies showing that the effect of the SPR purchases is negligible, at least you understand a little about supply and demand, so you earn a few points. However, you ignore the fact that President Bush may know a little more about the availability of future oil supplies than the average schmuck like you and me.

“And finally, in addition to not filling the SPR, part of the price problem is perception, so making public threats to release SPR oil would likely drive prices down, at least for awhile [sic].”

That was the argument when Clinton released something like 30 million barrels in thirty days in 2000, and there is near universal agreement that the impact was negligible and short-lived. In my view, recent calls by 20 or more Democrats in Congress (but, as you later point out, not Senator kerry) to draw on the SPR are part of a cynical, disingenuous political trap designed to hurt the President.

“On the flip side, as indicated previously, part of the problem is perception so instability in Iraq and attacks on Saudi oil fields are likely having a negative effect.”

Eureka! A valid, lucid, mostly grammatically-correct point. Bravo! This, along with the lack of refinery construction in the U.S. (largely due to questionable environmental lawsuits), a multitude of required additives and burgeoning demand in China and the U.S., is mostly to blame for the price spikes. It is widely acknowledged that each barrel of oil currently carries a $5-10 risk premium.

“Kerry, in a campaign statement on his website, calls for the negotiation and diplomacy angle, and to stop filing [sic] the SPR. He has not called for an SPR draw down.”

This paragraph’s not too bad, either. However, to my mind, it was no accident that Kerry’s fairly reasonable position was articulated on the same day as the more extreme positions of more than 20 members of his party. By comparison, Kerry looks rational and relatively responsible. Look for more of this coordination by the Democrats — by comparison to other Democratic leaders, Kerry will be made to seem not so bad.

“As for the strategic importance of the SPR.. it was created during the cold war for the purpuse [sic] of keeping the nation supplied in the event of a conventional war with the Soviets severly [sic] disrupting ocean shipping. That threat no longer exists. Clearly then, it should be used to stabalize [sic] a maket [sic] dominated by antitrust forces- the actual danger we suffer from.”

I am not sure what led to the creation of the SPR, but it is naive to think that there is no threat that ocean shipping of Middle Eastern oil will be disrupted. What if an Islamicist party seizes power in Egypt and closes the Suez Canal? What if terrorists succeed in closing the Straits of Mollocca (sp.?) in Southeast Asia? And also, who are these mysterious anti-trust forces, and whose side are they on?

I have no idea where you got these arguments, but they sound like talking points from some left-leaning website that you have repackaged here. Is this original thought or have you cobbled this together from various sources (as I did with my response)?

Posted by: tibor at May 19, 2004 08:08 PM

So called Spiking barrel prices only represnt a small part of our gas increases we see, as I have mentioned.

tax on tax is our biggest killer, and also refined gas prices, which don’t even come close to being on par with barrel prices. they are like 400% more.
They reflect refinery prices, the incapacity. Or so they say. I suspect gouging has alot to do with it.

Posted by: Fat Guy at May 19, 2004 08:14 PM

And besides, I wouldn’t cry too much about fuel prices. The government has doubled it’s revenue.
This means the extra money Bush had to spend doing the Job Clinton and the Democrats didn’t do will be paid for all the much faster.

Those unwilling to pay for this war against terrorism can protest by taking the bus, walking, riding a bike, which in turn will make my drive to work that much more pleasant due to decreased democrat idiot traffic.

Posted by: Fat Guy at May 19, 2004 08:21 PM

Fat Guy-Get a clue.
Oil refinery capacity isnt limited by the environmental movement becouse a huge proportion of it is overseas, in the countries of production.

Your suggestion that we need to continue filling the SPR is ludicris. We’ve already fought wars and established the principal that free traffic (well paid) through the suez canal cannot be stopped. Its an act of war. Even if it wasnt, tankers can always take the long way around. And we get substantial oils from outside the middle east. And the straights of mollaca? Puh-leaze. Unlike the US army, Bush has not succeeded in critically weakening that august service, and it is easily capable of protecting free oil trade there. And if Egypt turning islamo fascist was a real concern then Bush should really stop doing all he can to provoke that outcome.

You admit that filling the SPR is causing upwards preasure on prices but suggest that effect is minimal. Yet its a combination of effects that are pushing oil and gas prices up. The president should be doing all he can to keep prices stable. What was that figure- every 1$ increase in oil prices translates to a tax on americans of a billion dollars a day? (Im not sure of that figure)

Also, conspiring to control commodity prices is a criminal act. Those ‘anti-trust’ forces that you ask about are the laws and regulations of the United States. Theyre on our side. See the Hunt brothers who tried to corner the silver market a decade or two ago. The Saudi’s arent liable under US law. Bush is. And just becouse there are issues of proof doesnt mean its not a criminal act. (Bandahr has already denied it, and has diplomatic immunity)

And while there may be near univeral agreement among right wing nut jobs that everything Clinton did was innefective, apocalyptic and immoral, the fact is that Clintons taping into the SPR was effective and instrumental in reducing oil prices from high 30’s a barrel to low 30’s.

And how do we know that Bush hasnt done the diplomacy? Lots of evidence:
1) they asked Mcllelen, Bush press secratary. He tap danced through a dozen questions.
2) The plan is in woodwards book. Bush was the primary (only?) on the record source. Last I heard woodward’s book was on the whitehouses suggested reading list. ratification.
3) Bush lies so we look to his actions. Continuing to fill the SPR supports the thesis that Bush wants higher gas prices.
4) We only have to look to Bush’s energy policies, to see how much he wants to benefit his family friends in Saudia Arabia… Tax breaks for buying SUV’s. fighting CAFE. The future ANWR benefits described as somehow being an asset in the current climate. canceling energy efficient vehicles in favor of hydrogen vehicles…
And then theres the non energy policies- Bush clearly doesnt care about the financial burden on ordinarly americans- but lets not go there now.

Oh and complaining about grammer and spelling in a comment section? Thats pathetic.

And “The government has doubled it’s revenue.”- What are you talking about? Fuel taxes are not percentages. Theyre a price per gallon. Theyre fixed. Higher gas prices dont produce more revenue to the USGov. They do produce a hell of a lot of money for the Rusians!

Clearly Bush doesnt care about the burden that higher fuel prices inflict on this country. Why does Bush hate ordinary Americans?

Posted by: Loofa at May 19, 2004 10:01 PM

Loofa, I resent being called a fat guy. You seem to have conflated my critique of your comments with the wacky comments of Fat Guy.

On your first point, there are many sources to refute your assertion. On a quick google search, I found a number of articles. Here’s one: http://www.embavenez-us.org/news.php?nid=114. It is from a representative of the Venezuelan government, so it’s got an agenda behind it, but it does lay out the fact that no new refineries have been built in the US in 25 years, there are as many as 20 different formulas of gasoline required by varying state and local laws, etc.

I have no idea what your second paragraph is getting at. International law will prevent the closure of the Suez Canal or the Straits of Molloca? Just like they prevented 19 hijackers from crashing a bunch of planes into buildings. The point is that the terrorists obey no law (not even their own religious laws), and if they think it’s in their interest to destroy the oil trade by making the export of oil from the Middle East exceedingly difficult or impossible, they will do it.

Then there’s the amazing juxtaposition of these statements in consecutive paragraphs: “The president should be doing all he can to keep prices stable.”

and

“Also, conspiring to control commodity prices is a criminal act.”

Setting aside the question of why the President should do all he can to stabilize oil or gas prices, why would asking the Saudis to increase production (which is what you admit that Senator Kerry is advocating) be a violation of US anti-trust laws. I am no anti-trust expert (and it’s obvious that you aren’t either), but how is that a violation of the law? Are you alleging that President Bush had a personal commercial or other profit motive?

On your “right-wing nut job” comment, I heard a commentator on a CBS radio affiliate (hardly a bastion of right-wing thought) state that Clinton’s move in 2000 had a minimal impact on prices (i.e., a few cents).

Your next paragraph reads like the (illiterate) talking points from a left-wing site. I ask again whether you sourced your comments from a public site or from your own knowledge/experience. I would honestly like to see what your sources are. As to the “substance,” the only point I will address is another curious juxtaposition — Bush lies, so we can’t trust what he says about wanting lower oil prices, but Bush was the (sole — your suggestion) on the record source for the Woodward book, which alleged that there is a deal with Saudi Arabia to keep prices low. Was he also lying to Woodward about the Saudi deal?

Complaining about my criticism of your grammar and spelling in a comment reflects a pet peeve of mine. I will not apologize for it. (I don’t even mind your utter lack of apostrophes, but some of the misspellings are just flat out funny — “ludicris” instead of “ludicrous” is a favorite.) And besides, coupling atrocious spelling and grammar with poorly reasoned and articulated arguments makes you look dumb.

The last two paragraphs respond to Fat Guy’s comments, so I won’t address them other than to say that you offer no evidence that President Bush does not care for the financial burdens affecting average Americans. I think that the Bush tax cuts can hardly be seen as a detriment to Joe Six-Pack.

Well, that’s enough of my time wasted on you. Good night.

Posted by: tibor at May 19, 2004 11:22 PM

There has been no new refinery built in the US for the last 25 years. In the meantime the environmental bureaucrats have created a large number of gasoline mixes to be delivered to different cities. Hence the refineries we do have must keep changing their product.

Last year in Phoenix, we had a fuel shortage because one of the two lines feeding the town went down. The other line wouldn’t deliver “Phoenix blend” so we ran low on gas. Our governor the blamed “hoarders” (people with enough sense to buy extra gas early, and then sell it to those who REALLY need it an dhence are willing to pay more).

Meanwhile, a refinery was supposed to be built in the desert SW of here. Out in the middle of nowhere. An environmentalist lawyer threatened to sue on the grounds of “environmental racism.” A reporter discovered that the site was near the town of Mobile, which was named by freed black slaves who moved there from Mobile, AL over a hundred years ago.

So, if you believe in the bizarre concept of environmental racism, it sounds like that was happening.

However, the idiot reporter didn’t bother to go to the “town” or even check census track data. I did. See here for what I found - panoramic pictures from the site, census data, picture of the “town”, etc.

Yes, folks, we do need more refineries.

If I were Al Qaeda, gasoline refineries would be a sweet target. RPG’s could do a lot of damage, and taking out just a couple would screw us up for a long time.

As the survivors of the Rodeo-Chedeski fire here two years ago said, Thank You enviroMENTALists.

Posted by: John Moore (Useful Fools) at May 20, 2004 02:36 AM

mona. I had to laugh as your argument against using the SPR is the same as the argument against ANWR!

John Moore: It isnt the refineries that cause anything but the most transient of spikes. Demand for gasoline used by motor vehciles is what is growing. You can add refineries up the wazoo, the price of crude isn’t going to go down.

Fact: US refinery production is rising all the time. We are at record production. to say the number of refineries hasn’t gown is a laughable straw man to anyone who knows the business. the capacity of our refineries has grown plenty, thank you. It isn’t the long term problem and is a tiny part of the short term problem.

People are fond of saying that 50% of refineries have closed, what they don’;t mention is the fact that the remaining refineries have more than made up for total capacity.

Buying gas from Venezeula refineries which are below capacity adds about five cents per gallon. Western Europe has a good deal of extra refining capacity and their prices have risen more than ours!

Posted by: oily at May 20, 2004 08:50 PM

tibor- sorry about confusing you with fatguy.

While Im at it, I would like to correct another mistake I made! Earlier I stated that the SPR was created during the cold war for the “purpuse of keeping the nation supplied in the event of a conventional war with the Soviets severly disrupting ocean shipping. ” (ha, lots of spelling errors there!) anyway, an article on slate’s explainer, points out that the SPR was created in 1975 in response to OPEC! The whole point was to moderate oil prices!!
And why do we care about keeping oil prices stable? Becouse we’re running a friggin country! and Gas and oil are critical commodities. We’ve built a society and civilization based on its regular availability! Ever hear about something called a suburb? Jeez get a clue. Its called competant leadership.

And Bush caring about the burdens on ordinary Americans. Tell it to the Californians. You maybe remember them from this centuries electricity crisis. Lots of relevant lessons there. With a tight supply of a critical commodity, electricity, prices spiked leaving the people of california with a 15 billion dollar (or more) bill. Thats becouse as the case with criticical commodities, people cant go without. And what did Bush do in response to this crisis? oh right- nothing.

And as for Bush caring about ordinary people… well lets see, Democrats had to fight tooth and nail to get a middle class benefit into Bush tax cuts, then we have Bush using the excess Social security monies I paid (as well as every worker) and using it to pay for his unafordable tax cuts. and the local tax crisis which are all to largely going up..oh but of course this is all offset by the 50 bucks that I got and the 300$ I could go on. then we have the resulting 5000$ per person cost, oh yeah that certainly made it worth it.

Oh and Bush didnt make a deal to lower prices. He made a deal to lower prices as the election approaches. In the meantime prices will stay high. As for asking, indeed pressuring the Saudis to raise production- thats what Bush promised to do during the 2000 election. of course he flip floped on that. And conspiring to raise prices on a a critical commodity for your own reelection? illegal. and immoral.

Posted by: Loofa at May 20, 2004 11:28 PM

Oh look, a new york times article. Here’s a picture of a command center. Its the Saudi oil command center. Oh look at the caption “The control room for the Saudi Arabian national oil company, Saudi Aramco. Technicians say that in a matter of hours, they can raise output 1.5 million to 2 million barrels a day. “

Posted by: Loofa at May 20, 2004 11:36 PM

Loofa,

You seem to be doing very well in Indymedia 101, Koolaid segment.

Do the following questions bear on your points:

1. What is the Chinese oil demand picture—presently, and for the last 5 years?

2. Does it affect America’s oil price picture. If so, why.? If not, why?

3. What is a “terrorist premium” and how and where is it applied?

4. What does “fungible” mean and how does it apply to oil markets?

5. Who attacked oil facilities in Iraq and why?

6. Who (or what) actually “sets” oil prices world-wide?

7. Does the idea of a changed response to obviously changed conditions always indicate a “flip-flop,” or can it mean something else entirely?

Just asking.

Posted by: Stephen at May 21, 2004 10:59 AM

All I know is in Minnesota right now, one of our refineries has experienced a “MAJOR equipment breakdown” which supplies 20% of the state’s gasoline supply. This WILL drive up prices at the pump for the average Minnesotan. While I agree that adding refineries will not affect the price of a barrel of crude, not having enough of them around to cover any issues like we are experiencing (which CAN drive up the price at the pump for the consumer) isn’t a bad idea.

How about building a few more nuclear power plants? OR using the fuel rods we have to more of their life?

Posted by: WPoS at May 21, 2004 11:06 AM

The energy problems is one thing but I’d like to respond to the tax issue. Yes, Bush’s tax cuts had little effect on middle class WAGE EARNERS. However, they have had a huge impact on middle class BUSINESS OWNERS. Of which I am one. Any small business owner, especially if it is a small manufacturing or agricultural business should be able to tell you that. And, the nice part of it is. The tax cuts are actually scaled to where the SMALLER businesses actually get more net benefit because the tax cut levels are low enough that the super big operations are way OVER the limits. There are some points of the tax plan I don’t agree with, ie, the whole estate tax thing, but overall, Bush’s tax plan made a HUGE difference in our tax bill and many others like me.

Chads

Posted by: chads at May 22, 2004 07:06 AM

“Setting aside the question of why the President should do all he can to stabilize oil or gas prices,”

Congratulations, you have just received the Karl Rove prize. In great republican tradition simply remove or obscure the critical issue when discussing the facts and you to can win.

It is curious how Bushophiles are unable to see the headlights of the oncoming train, but rather choose to see the “light at the end of the tunnel”.

The lack of stability of oil prices and the upward movement of prices (does anyone seriously argue that if oil prices fall, they will fall more than a few dollars, when they do fall?) has created tremendous uncertainty in all markets. Every task that requires oil-based energy is now effected, which is virtually everything, either directly or indirectly. Costs are now being passed on. However, these are and will continue to be passed on where in a rather pell-mell fashion and in difficult to foresee ways (ie truckdrivers cutting back on where they buy lunch, if they can now afford to buy it at all, etc.). This in itself will lead to further unpredictable economic dislocation.

Bush energy policy always has been all about raising gas prices to satisfy those who paid big money to put him in office. In this, like in getting into Iraq, he has been largely successful. Unfortunately, for most Americans, including many who voted for him, the laws of unintended (conveniently unmentioned?) consequences are now taking over and dictating the shape of our economic and security future regardless of short term efforts by those on any side of the debate.

Add this to the tax cuts for the wealthy, and the war (which doesn’t cost us anything since its off budget), baby-boomers who are now beginning to retire, and we are in for a HUGE increase in budget DEFICITS and INFLATION for the next few years at least. Politicians, especially those like Bush, prefer inflation to budget cutting to balance accounts, because it is more difficult to directly trace its source back to poor leadership. It just sort of happens, “beyond control” (like 911).

No wonder the politicans took “volitile commodities” like out of the CPI. Folks would freak-out if they could figure out what was about to happen to them.

Now if you use Bush’s track record of predictions on how well its going to go in Iraq as a guide, you can feel pretty confident that they will nimbly manage the economic fallout of higher oil prices to your own personal economic advantage (especially if you make more than 250K$/yr). If your not, don’t despair, you can get one of those many high-tech jobs in the hydrogen economy that the Bush administration has created at the center piece of their forward looking energy policy.

Posted by: sgposs at May 22, 2004 10:06 AM

“Setting aside the question of why the President should do all he can to stabilize oil or gas prices,”

Congratulations, you have just received the Karl Rove prize. In great republican tradition simply remove or obscure the critical issue when discussing the facts and you too can win.

It is curious how Bushophiles are unable to see the headlights of the oncoming train, but rather choose to see the “light at the end of the tunnel”.

The lack of stability of oil prices and the upward movement of prices (does anyone seriously argue that if oil prices fall, they will fall more than a few dollars, when they do fall?) has created tremendous uncertainty in all markets. Every task that requires oil-based energy is now effected, which is virtually everything, either directly or indirectly. Costs are now being passed on. However, these are and will continue to be passed on where in a rather pell-mell fashion and in difficult to foresee ways (ie truckdrivers cutting back on where they buy lunch, if they can now afford to buy it at all, etc.). This in itself will lead to further unpredictable economic dislocation.

Bush energy policy always has been all about raising gas prices to satisfy those who paid big money to put him in office. In this, like in getting into Iraq, he has been largely successful. Unfortunately, for most Americans, including many who voted for him, the laws of unintended (conveniently unmentioned?) consequences are now taking over and dictating the shape of our economic and security future regardless of short term efforts by those on any side of the debate.

Add this to the tax cuts for the wealthy, and the war (which doesn’t cost us anything since its off budget), baby-boomers who are now beginning to retire, and we are in for a HUGE increase in budget DEFICITS and INFLATION for the next few years at least. Politicians, especially those like Bush, prefer inflation to budget cutting to balance accounts, because it is more difficult to directly trace its source back to poor leadership. It just sort of happens, “beyond control” (like 911).

No wonder the politicans took “volitile commodities” like out of the CPI. Folks would freak-out if they could figure out what was about to happen to them.

Posted by: sgposs at May 22, 2004 10:18 AM

Wacky comments? Look, you can have all the crude in the world parked at the door, it’s the refinerery capacity that makes all the difference.
The simple fact is, we don’t have the capacity for peak useage anymore, due as I and others said, The enviromentalist lobby. The same stands in the way of alternate fuel devwelopment.

personaly, I could care less if gas cost $5 a gallon. I see that as a good thing.

For one, it brings more expensive wells online, and fuels development of alternative fuels, which do exist, like Bio-diesel, which costs about $4 a gallon to refine. Those markets use existing infrastruture, and would fuel the ag industry and trucking industry, buses etc.
But again, the enviomentalist lobby stands in the way with growing canola to produce the needed oil.
They stand in the way of GM crops, and even some states ban growing of rapeseed.

So, $5 a gallon is good regardles, or even $7.50 like Europe. There are plentry of fat American democrats that need to walk or ride a bike more anyway.

Posted by: Fat Guy at May 22, 2004 10:28 AM

Thought I’d weigh in a little on alternative fuels. I’ll give a little info on myself. I worked in biofuels research, specifically soydiesel, at the very beginning of the program in Missouri. I also farm.

I would think the liberals would be jumping up and down Joyous at high gas prices. This is the ONLY thing that will bring research in alternative fuels. With no impetus from high prices there is just no reason to commercialize any of it. Why would you bring a fuel to market that is higher in price than what is already existing? .

We know how to do a lot with alternative energy sources for transportation. But there has to be an economic reason to commercialize systems.

Also, the reason to work with the current energy companies is infrastructure. It makes no sense to try to have alternative fuels with a whole seperate distribution network. If alternative fuels are successful it will, at least initially, be within our existing distribution grid.

An agriculture. A wide range of raw stocks can be used to make Biofuels. The problem is that most of them rely on commodity prices being low to be competitive. When prices go up due to increased demand from fuel use then they become uneconomical to produce.

GM crops are really kind of a trojan horse. They are really more of a conveniance trait than anything else. GM crops allow farms to become larger and easily farm more acres. Just by the use of GM crops alone yield increases are not gauranteed.

Chads

Posted by: chads at May 23, 2004 09:08 AM

Let’s deport the environmentalists and drill for oil in Alaska.

Posted by: Jeff MacMillan at May 24, 2004 01:25 PM

sgposs,

My questions (to the since absent Loofa, above) apply as well to you, considering the content of your post above. A ferrago of citeless nonsense IMO.

In addition, The facts presented here would appear to affect your overall point, and not positively.

To wit: “…low prices are better than high ones, and everyone grumbles when it costs more to fill up the tank. But the good news is that the economy depends much less on oil than it once did. As the nearby chart shows, the U.S. is almost twice as energy-efficient as it was in the “crisis” days of the late 1970s. If the current high prices are sustained over the next several months, economists expect this could shave anywhere from 0.5% to 0.9% off U.S. GDP growth. That’s lamentable, but for an economy growing by 4% or more it is hardly terminal.”

Posted by: Stephen at May 25, 2004 05:41 PM