Posted on 05/24/2008 6:58:14 AM PDT by kellynla
WASHINGTON -- Have you noticed that ever since the Democrats took control of Congress, oil and gas prices have been going through the roof?
The Dems won control of the House and Senate last year in part on the notion that sinking billions of taxpayer dollars into corn-based ethanol would combat global warming; itself a dubious superstition that some scientists say is part of the Earth's natural environmental changes over many eons.
Among the predictable results: increased gas prices because of higher refinery costs to blend ethanol into petroleum-based fuel, and higher grain and food prices because the government-induced demand for corn drove up agricultural prices on the commodities market. This is known as the law of unintended consequences, and it seems to be popping up with just about everything the Democratic-run Congress has been passing lately.
The Democrats also ran against the oil companies, charging them with collusion to drive up the price of oil and gas, attacking their rising profits and high salaries, and proposing that the answer to all this was to smack Exxon-Mobil and their partners in crime with an "excess profits" tax so that Congress can spend that money on other things -- like ethanol subsidies.
Every so often, to demonstrate their concern about higher gas prices, Congress calls oil executives up to Capitol Hill to explain why the numbers keep rising. Lawmakers angrily wag their fingers at the cornered businessmen, threatening to uncover their alleged skullduggery. The executives in turn patiently explain how oil prices rise and fall in global trading and are largely driven by the laws of supply and demand. The hearings end and not much comes of it except some newspaper headlines.
An abysmal level of ignorance about all this pervades Congress, a cloud of cluelessness breathtaking to behold. Apparently these lawmakers skipped Economics 101 or were never taught about the principles of supply and demand. Here's what Democratic Sen. Herb Kohl of Wisconsin told senior oil company executives at a recent Judiciary Committee hearing: "People don't get it. Demand is not crazy. Why are prices going crazy?"
I guess Kohl must have missed all the stories about skyrocketing global demand for oil. One executive explained that world demand was certainly crazy, driven by fast-growth economies like China and India. Oil and gas inventories have barely kept pace with that demand, but the gap between supply and demand has grown tighter, and that drives up prices in global commodities markets.
Kohl seemed unconvinced by this explanation because it did not fit in with his party's belief that oil executives are crooks who charge excessively and draw lavish paychecks. Indeed, the executives were actually asked how much they were paid, as if this had anything to do with production and refinery capacity, inventories and oil exploration.
"Where is the corporate conscience?" Sen. Richard Durbin, Democrat of Illinois, asked the executives at one point in the hearing. Such is the demagoguery that now permeates congressional inquiry.
But Durbin faced some uncomfortable cross-examination that evening when he was challenged by CNN news anchor Campbell Brown who wanted to know what he and the Democrats were doing about rising oil and gas prices. Durbin responded by attacking President Bush, suggesting that the answer lay in a change in administrations, but he did not utter a single plausible solution to the problem.
Brown tried again, reminding him that Democrats said they were going to deal with this issue, and asked, "What are you proposing to do to bring down gas prices?" Again Durbin dodged the question, saying instead that the answer was to elect more Democrats to Congress in November. That ended the interview.
Perhaps the reason Durbin's responses were so evasive has to do the fact that Democrats don't have answers that make any sense. Ethanol is now a big political problem for the Democrats and is seen as one of the chief causes of higher food prices. Fatter farm subsidies, which Democrats stuffed into last week's farm bill, is the other, pushing up the price of grains, milk, bread, beef and poultry. Democrats talked of expanding ethanol subsidies last year, expanding production into other environmentally friendly resources such as witch grass and wood chips. Two things Democrats did not run on last year: boosting oil and natural gas exploration here at home and building more refineries.
"The basic story that has brought oil from $20 to $130 is that world demand is growing robustly when world supply is not," says Jeffrey Rubin, chief economist of CIBC World Markets.
"It all comes down to supply and demand," says oil magnate T. Boone Pickens who knows a thing or two about both.
That's the problem and the solution in a nutshell. But it's not the answer Democrats like Kohl and Durbin want to hear because in an election year, fanatic finger-pointing sells better.
So they continue to point the finger of blame at oil-company executives, commodity traders, and gas-guzzling SUVs, and promote wood chips, witch grasses and windmills as the answer to all our energy needs.
Liberal DemoRAT Energy Plan to be shared with everyone in your address book:
1. You can’t drill for oil anywhere.
2. You can’t build a refinery anywhere.
3. You can’t build a nuclear power plant anywhere.
4. You can’t burn coal for electricity.
5. You can’t allow the oil companies to reinvest their profits into exploration.
6. But you can drive up the price of food by subsidizing an ethanol industry that takes land out of food production while using more energy than it creates.
7.You must continue to tax every gallon of gas that we put in our tanks.
8.You must threaten all energy users with additional ‘carbon taxes’.
9. And just in case some entrepreneur out there somewhere may have an idea for an alternative energy concept that just might work, you must raise the capital gains tax so that investors have less capital and less incentive to invest in his/her project. count your blessings.
With the coming change in administration and Liberals in Congress, it will be guaranteed that the price of gasoline hits $10 per gallon as our economy dumps. All this and more thanks to anti-American, anti-military Liberal DemoRATS whose platform is “enjoy living in America the new third-world toilet” Liberal politicans created in their insatiable quest for power.
Hate to agree with a Democrap, but I think he is right! I think this is all just a shell game by fund managers trying to recoop losses from bad real estate investments by artificially keeping prices high through overspeculation. Remember it was Goldman Sachs (Jon Corizines company) that said oil prices would be $200 a barrel. Chinas supposed demand is expected to rise less than 1/2 a million barrels a day. The market is screwing us big time!
http://www.marketoracle.co.uk/Article4793.html
The chief market strategist for one of the world's leading oil industry banks, David Kelly, of J.P. Morgan Funds, recently admitted something telling to the Washington Post, “One of the things I think is very important to realize is that the growth in the world oil consumption is not that strong."
One of the stories used to support the oil futures speculators is the allegation that China 's oil import thirst is exploding out of control, driving shortages in the supply-demand equilibrium. The facts do not support the China demand thesis however.
The US Government's Energy Information Administration (EIA) in its most recent monthly Short Term Energy Outlook report, concluded that US oil demand is expected to decline by 190,000 b/d in 2008. That is mainly owing to the deepening economic recession. Chinese consumption, the EIA says, far from exploding, is expected to rise this year by only 400,000 barrels a day. That is hardly the "surging oil demand" blamed on China in the media. Last year China imported 3.2 million barrels per day, and its estimated usage was around 7 million b/d total. The US , by contrast, consumes around 20.7 million b/d.
That means the key oil consuming nation, the USA , is experiencing a significant drop in demand. China, which consumes only a third of the oil the US does, will see a minor rise in import demand compared with the total daily world oil output of some 84 million barrels, less than half of a percent of the total demand.
The Organization of the Petroleum Exporting Countries (OPEC) has its 2008 global oil demand growth forecast unchanged at 1.2 mm bpd, as slowing economic growth in the industrialised world is offset by slightly growing consumption in developing nations. OPEC predicts global oil demand in 2008 will average 87 million bpd -- largely unchanged from its previous estimate. Demand from China , the Middle East , India , and Latin America -- is forecast to be stronger but the EU and North American demand will be lower.
So the world's largest oil consumer faces a sharp decline in consumption, a decline that will worsen as the housing and related economic effects of the US securitization crisis in finance de-leverages. The price in normal open or transparent markets would presumably be falling not rising. No supply crisis justifies the way the world's oil is being priced today.
That would make for a pretty interesting soundbite and video clip on the evening news, wouldn't it? The next time these pompous asses haul the oil execs in front of them, and ask what the problem is, the exec should just hold up the mirror, or tell them to look in the mirror.
The politicians would be pissed, and exposed for the frauds that they are. And still at least 40% of the American people would crawl over broken glass to vote for them.
“People don’t get it. Demand is not crazy. Why are prices going crazy?”
Hate to agree with a Democrap, but I think he is right! I think this is all just a shell game by fund managers trying to recoop losses from bad real estate investments by artificially keeping prices high through overspeculation.
“Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87 million,” he said. “It’s just that simple. It doesn’t have anything to do with the value of the dollar.”
He expects the price of a barrel of oil to reach $150 this year, and he insists speculation has nothing to do with it. Buying oil is draining an enormous amount of money from the United States, he says.
“We are now paying out...an estimated $600 billion a year for oil,” he said. “It’s four times the cost of the Iraqi war, and not one of the politicians running for president has anything to say about it. I don’t know whether they don’t know it, or they don’t want to mention it.”
Pickens says natural gas is the only American resource that can reduce oil imports. He claims the effective use of natural gas could reduce oil imports by 40 percent. He dismissed ethanol as an alternative. He added that what reduced demand there has been in the United States has immediately been picked up by China.
“The only way I see that oil doesn’t continue to rise if we had a global recession.” he said. “That will happen at some point, but I don’t see the Chinese stumbling until after the Olympics.”
http://www.cnbc.com/id/24723260
I am really sorry to say that we will never see the MSM putting that on the news.
and you can expect prices to continue to rise until after Labor Day weekend...
Thanks for the link. I want that book!
“an abysmal level of ignorance about all this pervades congress.”
nonsense. they know exactly what they’re doing.
if they win in november, get ready for a socialist onslaught. with a democrat congress and president, watchout!
“Obama will kill the economy..”
Just like Jimma Carter did!
Thanks for your thoughts. I agree.
“hey dickie durbin, wanna see a picture of who is responsible for the outrageous price of oil....take a good long look in the mirror, buttface!!!!”
rotflmao
(totally obnoxious and oily beings these democrats.)
Voodoo technology, tooth fairy economics.
The cheapest place in Eugene is fairly close to where I live so that's where I get my gas. Thursday it was a huge circus there because media was reporting the imminent surge and the line went down the street with folks wanting to get filled up at "only" $3.71 per gallon. Friday it was still the same price and the line was just as long. The price of gas isn't a huge deal for me as my driving is usually less than 10 miles a day, so I'll wait until the line shortens even if the price has to be a little more. I only need to fill up about once a month or so.
For the company I work for fuel cost is a bigger factor. We have a fleet of hundreds of cars, pickups and service trucks. Last year we spent $16 million on motor fuel and we will have a 20% increase this year.
Now, the capital equipment business is linked somewhat to economic growth, so we are struggling. So far we have avoided layoffs at most of our locations in this region because of a huge landslide blocking the Union Pacific main line just a few miles out of town. The big push on that job is over now with just one contractor remaining to do cleanup and stabilization for the next several months.
So we'll have to be very creative for the remainder of the year to capture enough business from the limited growth there will be in the market to keep everybody working and make a profit. We have had ambitious goals this decade and have always met them through a lot of hard work and dedication.
This year will probably be the biggest challenge. The corp. executives could take the easy route (for them, personally) and just direct a 20% cutback in all expenses, including workers, and ride it out - but they are reluctant to do that. They place a lot of trust in the middle management at the regional level, and we have every intention of making our way through this.
That the Democrats (and Republicans as well) can project such a simplistic view of our economic situation and what people do to keep it moving is a shame.
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