Options on $200 Oil Have Tripled Reuters Open interest in December $200 crude oil call options CL2000L8 has surged from 5,533 contracts on Jan. 1 to 16,774 contracts as of May 5. Over the same period U.S. crude oil futures Clc1 have risen 25 percent to record highs near $120 a barrel.
Thailand Abandons Plan for Rice Cartel CBC News Thailand has dropped plans to create an OPEC-style rice cartel, saying it will focus on finding ways to improve productivity among rice-exporting nations.
Queen of Cadillacs Loves Them All CNN In a repair shop packed with Cadillacs -- the classic kind with fins, whitewall tires, curvy chrome bumpers and V-8 engines that get miles per gallon you can count on your fingers -- Elsa Nicodemus showed off a favorite.
British entrepreneur Richard Branson has built a huge business empire, had some rollicking adventures, and remained a likable bloke.
May 20, 2008
Who's to blame for $4 a gallon gasoline?
George Bush has a few ideas.
In a Rose Garden press conference, Bush said fuel prices are rising in the U.S. because the world's last superpower hasn't explored for oil at home (i.e. ANWR and the continental shelf); it hasn't built a new refinery in 30 years; and, it has shunned nuclear power while the rest of the world has embraced it.
That's one way to look at it.
Bush is certainly right that America hasn't explored for (some would say "exploited") all of its natural resources. According to the U.S. Geological Survey, "Technically recoverable oil within the ANWR 1002 area (excluding State and Native areas) is estimated to be between 4.3 and 11.8 billion barrels (95- and 5-percent probability range), with a mean value of 7.7 billion barrels."
That sounds like a lot until you realize that the U.S. consumes about 20 million barrels of oil a day. Using the high end of the ANWR estimates, there are roughly two years' of oil up there. Is it worth drilling in ANWR to slake our thirst for oil for two years?
Bush is also correct that the U.S. has not built a new refinery in 30 years. According to the Department of Energy, in 1981 the U.S. had 324 refineries with a total capacity of 18.6 million barrels per day. Today, there are just 132 oil refineries with a capacity of 16.8 million barrels per day, according to Oil and Gas Journal.
Bush and his friends on the right would tell you that the Democrats and their Greenpeace allies are mostly to blame. Through regulations and lawsuits, they've arguably made the cost of building a new refinery almost prohibitive. But I think old-fashioned supply and demand had a lot to do with it, too.
When oil was $12 a barrel, there was no incentive for the oil companies to explore for more oil or build new refineries. Especially when supplies and refined crude were meeting demand. The booming economies of India and China changed that dynamic.
What about nuclear power? It is true that while the rest of the world has gone nuke, the U.S. has mostly stood still. There are 104 nuclear power plants in the U.S., which supply about 20% of the country's power. In France, just 56 modern plants supply 80% of the electricity.
So what should the U.S. government - and others around the world - do about rising fuel prices? "Nothing" might be the best answer.
These crises tend to work themselves out, for better or worse.
Even before oil hit $120 a barrel there was renewed interest in exploring for more. Consumers are already starting to trade in their SUVs for smaller cars. That alone, over the long run, could reduce overall demand, which Econ 101 tells us should result in a decline in prices.
And who knows what mad scientist is at work in his garage, coming up with the formula or machine that will forever change how we drive our cars and light our homes.
Wasn't it Plato who said necessity is the mother of invention?
The best thing to come out of $120-a-barrel oil may be that we finally give it up. Or not.
What do you think?
Share the Eye:
We Are Being Sovereignly Screwed Huffington Post The price of oil has diverged from fundamentals in such a dramatic way that it is placing our economy at grave and immediate risk, not to speak of the consequences of the enormous, unprecedented transfer of wealth that is taking place.
Bush's 'R' Is for 'Right' Money & Politics blog President George W. Bush may turn out to be the top economic forecaster in the country. About a month ago he told reporters, “We’re not in a recession, we’re in a slowdown.â€
What Democrats Won't Tell You About Climate Change Capital and Commerce blog Has there ever been a more timely natural catastrophe than climate change? I mean, here we all are worrying about the future of the American economy—too much debt, jobs and industries moving overseas, new competitors in Asia and India—when what merrily comes along is a perceived civilizational challenge.
still thinking about today...
When it comes to oil, the world should...
18% 14% 41% 27%
My best guess is we'll explore or exploit whatever oil is under our country when the rest of the world runs out. We wait and we finally have what everyone else needs. Talk about "windfall profits!
Of course, the best approach is to develop whatever alternative sources we can, become energy sufficient, and tell OPEC adios. Will we? Not unless the government gets a large dose of reason and sanity.
So, the next best thing is "windfall profits". Invest in a couple of oil equipment manufacturers and drilling companies and wait for the dividends. The way the world is going we'll be spending the money soon.
In the end everything seems to go back to "normal". We learn to live with the consequences. Life goes on.
To; DreadPirateRoberts,
My first Flynn movie was "The Private Lives of Elizabeth and Essex" followed by "The Charge of The Light Brigade" By the time I got to "Captain Blood" I was too far gone to return to anything close to a desire for a "normal" life.
To: LaDonna,
Good Morning! I wrote a response to your "romantic" comment yesterday. If you get a chance, read it and give me your feedback.
I agree that there are technical solutions coming along. While working in California recently, I saw the Aptera, a hybrid vehicle that gets 120 mpg. The true challenge is delivering a solution that can be implemented quickly and economically to the millions of drivers in the US. 60+ years of an automotive culture instills habits which will be hard to change. Fuel efficiency often comes at the expense of safety, and I have no qualms about putting Lady Wife into an over-large, heavy, inefficient vehicle knowing that she is safer on the roads. (Her current driving choices are a Dodge Ram 3500 or a Hummer H2.)
Having spent a lot of time in France, I've seen the benefits of a well-managed nuclear power program. There was extensive use of energy-efficient lighting as well, so the message of not wasting power had sunk in. When I replaced my home lighting with Compact Fluorescent Light Bulbs, my monthly electric bill dropped by over $125. I'm sitting in a hotel room in Palo Alto now, and all the lighting is Compact Fluorescent. Obviously the corporations have gotten the message.
I'm willing to bet that more people will make the change to an energy-efficient lifestyle if they feel a bit more squeeze in the wallet. Who said oil had to be cheap and readily available?
To: One Doc,
I drive an SUV. I drive clients in my vehicle. I feel safer and i know my clients are safe. My SUV gets 20 miles to the gallon, much better than the Lincoln I used to drive. My SUV can go off-road so it serves me well.
I've read where a hybrid SUV is ready for production. I like the Hummer H2.
Several years ago, I used to manage a large residential property. I decided to go energy efficient and replaced the light bulbs with energy saving bulbs. They would disappear as soon as I'd install them. As you know the bulb is a curling tube-like bulb. I soon realized that the local crack-heads were stealing the bulbs to make a cheap (for them) crack pipe. It was cheaper for me to pay the utility bill and use the old bulbs, than to save money on the utilities and constantly replace the "crack pipes". The energy efficient bulbs were too expensive to be replaced so often.
I ride my bike everywhere it'll take me. My car is for rare occasions. Then there's the matter of that pesky French driver's test. Which I will be taking - very very soon!
I certainly agree that supply and demand have been taking their course. It's amazing to see how the idea of hybrid cars has gone from something only an eco-nut would drive to a choice many families consider. This is why they're starting to make hybrid SUVs, and I'm all for them. I, however, prefer my compact car. If I wanted to stay above the crowd in something that bulky, I'd stick to my deuce-and-a-half.
MACKDADDY1 said...
After yesterdays ill attempt at a little much-needed humor, I guess it is time to face reality. I am certainly feeling the economic squeeze as I am sure most of us are, however, I honestly find the money to deal with it. I complain...I half-heartedly try to economize but I too (back to One Doc), do not want to trade safety at any cost. I have three grandsons and feel much safer transporting them in my husbands SUV. I also drive a Toyota Avalon and it uses almost as much fuel as the SUV. My hope is that MY generalized acceptance of this economic hole isn't everyone's view and that someone will come up with an answer that will trigger the end of this depressing dynamic of supply and demand. I am, however, open to any and all reasonable and easily do-able suggestions. I am not sure when this situation will get so bad that I too start riding a bike, but I hope and pray it never comes to that. Me, riding a bike woudn't be a pretty site!
I have never owned a car and I have never missed one. Between the ages of 16 and 18, I was always able to borrow a parent's car or my brother's. Then, I moved to New York which has the most efficient public transportation system in the world. Our 4-track subway system keeps the trains running 24 hours and the express trains operate more in the interests of capacity than speed. And who wants to drive a car in a city with this many bars and pubs?
Recently there has been a lot of noise about hybrids and the electric car. But answer me this: Since electricity is generated from the burning of coal, has anyone considered how much pollution may come from the use of an electric car even though that pollution doesn't come directly from its tail pipe? I don't claim to know the answer but no one seems to even be raising the question.
To ExPat: My first Flynn movie was, predictably, "The Adventures of Robin Hood". Then came "The Sea Hawk". So, yes indeed, I was a goner too.
Dred Pirate:
The use of an electric car does in fact only transfer the pollution. However, there are two points to consider. The first is that power plants produce less pollution per watt than does a lowly car engine. The second is that, through regenerative breaking, the electric car uses fewer watts input per watt output. Are they perfect? No, but they have their advantages.
Tony D said...
If we went nuclear, solar, used wave and tidal generators, windmills and geothermal powers sources then burning fossil fuels would be a thing of the past. It will happen, there is no choice. Oil will run out eventually, that is certain.
We are country born of revolution and yet we seemingly must rely on evolution to implement an effective, long-term solution to the issues of energy conservation and our dependency on fossil fuel. Why? . . . Does it boil down to the point of saying that change is hard and painful? … Yes I think so. Do these changes have to occur? Of course they do!
We may have been well down the path to the long-term solution by now if not for the short-term problems, which indeed are almost beyond comprehension when you look at the enormous capital investments in legacy technologies, the automobile industry, and the sheer numbers of those who’s employment depend on them, all of which may be just the tip of the iceberg.
We’ve had thirty years since the oil crisis of the’70s gave us a wake up call. With the intellectual and technical horsepower (no pun intended) we had/have at our disposal, why has there not been more accomplished to implement solutions that may have put us that much closer to achieving our rediscovered lofty goals while at the same time weaning us away from the short-term employment issues by creating new jobs in the process.
Color me jaded with heavy strokes of cynicism and skepticism, but I can’t help but point the finger at a system that allows lobbyist and narrow-minded politicians to wield so much power to protect their own interests, to stand in the way and thwart such needed solutions. You know them, the same power brokers that god only knows how long they delayed the process of putting the surgeon generals warning on packs of cigarettes and probably still, decades later, push to subsidize tobacco growers.
I am a firm believer of the laws of supply and demand being the best way to deal with the energy crises. It’s just all of the roadblocks that we have allowed to be put in place that are defeating these laws, delaying their consequences, and not doing too much to diffuse the negative consequences. Meanwhile there are two big and burly guys with baseball bats waiting around the corner waiting to collect ‘cos as they say “you pays me now or you pays me later†and it’s getting later all the time.
I need more coffee!!
Spinner said...
To South Side John:
Here! Here! SSJ for President! He has hit it exactly on the head. Get that man a cup of expresso!
Spinner, thanks for your cheer, and especially for the espresso. I doubled it, added a drop of foamed milk, and now I'm going to conquer the back yard.
"The future is here. It's just not widely distributed yet."
William Gibson
US science fiction novelist in Canada (1948 - )
To: ExPat,
I have to think of the right words, concerning your comment yesterday, as Spinner is on line, and most likely Agent 666 is not far behind : )
ExPat,
I will say this much, your thoughts and words are refreshing.
zenvelo said...
We are such a self centered people here in the U.S. to think that the rise in oil prices is worldwide. We forget that the dollar has declined so much against the euro that the euro price of oil has been relatively flat.
I agree, though, that the chance to reform our transportation structure is long overdue. Instead of debating a possible gas tax holiday, we should consider what was proposed on NPR's Car Talk when gas first went to $3/gallon: add a 50 cent /gallon tax increase every year until there is an additional $3/gal tax which can be used for mass transit and oil alternatives.
To LaDonna,
Whatever you say will start the gossip again.......I can't wait....it'll be fun! Seriously, I like the idea that you have to think of the right words, it shows thoughtfulness.
To: South-Side John and Spinner,
What do you think of a "Manhattan-style Project" to take us off oil dependency?
We could make it comprehensive. It could be a joint effort with private enterprise and the government (with a minimum of government cronies and lots of private enterprise minds and creativity). Make it a ten year project. If OPEC gets upset, then lets start drilling for the oil under our own country and sell it to ourselves cheap, cutting out OPEC.
ExPat, a "Manhattan-style Project" or "First Man on the Moon" but let's keep the government's hands out of our pockets so we can be free from their "no-value-added decision processes and bureaucracies" (did I already mention that I'm a tad jaded yet?)
Their role should be to knock down geopolitical barriers and eliminate roadblocks and leave it to private enterprise do what it should be able to do the best i.e.; set far reaching, meaningful goals, motivate employees, proficiently manage costs and resources, partner with the best technologies and get the job done.
Whew, I'm glad we solved that one! Now back to the garden.
Spinner, We need you to be the CEO/CFO of this venture. Doing anything better the next decade or so?
To: LaDonna,
Thanks for your kind response. I do believe that when you're on a date the other person must feel that she is the only one present, even in a crowded room. Don't ask her out if you plan on looking around and being distracted. I think that is the only way, whether it's a first time non-romantic casual lunch date or the 20th date with the only woman in your life. I still believe in standing when your date comes to the table to sit down, and not eating till she starts to eat, opening doors, asking her questions and listening to the answers. I even had a friend tell me once that we're living in the 21st century and that equal rights meant I didn't have to do those things......well some things belong in the 21st century and some common courtesies from the 18th century still have meaning. Call me old-fashioned, if you want.
To: South-Side John,
If we get such a project off the ground, and we can get Spinner to be CEO/CFO, I'll get us a great deal on a building or two. I'll do it for less than my usual commission (as painful as that would be).
To South-Side John:
Your plea for more coffee makes you sound like ExPat and LaDonna. And I can't imagine anyone I would rather sound like.
By the way, coffee is second only to oil as the most heavily traded commodity in the world.
So, if you are president, and Spinner is CEO, and ExPat provides the venue, we must ask J. Peterman to provide the clothes for any public press conferences.
... or was that a given?
thecatalyst said...
I can understand why additional federal taxes on gasoline "to be used for mass transit and oil alternatives" as mentioned in a post above sounds like a decent idea. I must say though that I am quite leary of our government in this regard. I wonder--would these additional funds be placed in a "lock box" just like social security?
"Every time we remember to say "thank you," we experience nothing less than heaven on earth."
Sarah Ban Breathnach
ExPat, Thank You
Spinner said...
This sounds great! I would LOVE the challenge of a work-it-out, do-it-now, and do-it-right sort of project. I will definitely be your CEO. But I think my husband (I'll call him Anti-Spinner) should be the CFO. Remember my posting on the entrepreneurial spirit? He would definitely keep us within budget and on time. I do definitely agree with the idea of keeping the gov. from having much of a say so as well as the lobbyists, PACs and special interest groups. Just give us free rein.
Anybody read the columnist Leonard Pitts today? He pointed out that the salaries of congress as well as that of the president are a pittance compared to corporate America. He was making another point, but maybe that data is a good point as to why this group can't seem to get any sort of economic act together. The better people that could really understand just how things work economically are out there in the real world making those big salaries and the ones we elect to regulate and oversee all this haven't a clue. So lets keep them at arm's length and we could really come up with some workable, progressive answers.
What do we call this project?
Call it the Laboulaye project.
Edouard du Laboulaye, the lawyer, professor, and head of the French Anti-Slavery Society, was the first person to propose the monument that would eventually become the Statue of Liberty.
What's the connection? Laboulaye was seeking a symbol for the fight against corrupt politicians who were draining the lives of their people; in his case, Napoleon III. When he proposed the idea of the statue, he insisted that no government funds be used, but that it come entirely from private, voluntary donations. And he succeeded.
So, in honor of one of the greatest American symbols being done with the express exclusion of government funds, I propose the name: The Laboulaye Project.
Spinner said...
What a wonderful inspiration! The Laboulaye Project it is!
First order of business... A coffee room.
Let’s do a quick recap ….
We’re going to develop a product/technology that will benefit the entire globe and they will all love us for it. The world’s population both wants it and urgently needs it (except for big oil guys but tough darts to them!), and government will actually be serving a useful role of eliminating road blocks and staying out of the way.
We have, in place, a name “The Laboulaye Project†(DPR, you’ll have to help some of us (well me at least) with the proper pronunciation), a CEO and CFO, a qualified source for inexpensive real estate, and an unparalleled purveyor of high-quality, statement-making attire.
“Hey gang, let’s put on a showâ€! Can I just be know as “Dr. Evil†on the organization chart?
Now let’s get going on that coffee room Spinner suggested so we can have a meeting. Your suggestion Spinner qualifies you as being the first “Partner of the Monthâ€
Spinner said...
Mr. Peterman, see what thou hath wrot with your wonderful venue bringing together all the greatest minds of the 21st century? The start of the new age of energy technology! We have banded together and are on a quest! And boy, will we be looking good in our distinctive dress when we face the media..
I will set up a photo op first chance I get. And I'll pick up a frame for the pic of the Partner of the Month to be placed above the coffee maker.
We are on our way!
South-Side John has the org design sheet out.....(Why doesn't "Dr. Evil" surprise me)!?!
Spinner, Love your first order of business, I'll make some of Nigella's "Rosebud Madeleines" to go with the coffee!
ExPat, I see in Nigella's new cookbook, a recipe for "Mincemeat Parcels with Bourbon Butter"!
Anyway, count me in as part of The Laboulaye Project!
B.Y.O.B. ... Bring Your Own Biscotti. Last person to arrive at the meeting has to pull espresso shots for the day.
I would like to apply for the position of Cultural Attache. I will happily help South-Side John with the pronunciations. If only there had been someone to do that for George Bush!
Strategery anyone?
DreadPirateRoberts, Welcome aboard!