oil/food/oil/food - Page 2 - Tilted Forum Project Discussion Community

Cynthetiq · 06-13-2008, 07:23 PM

Quote:

Originally Posted by Leto

I still stand by my answer. Remember when Honda was a joke. And Toyota. And Hyundai. Now they are respectable. But I haved also switched out my car on most days in favour of my bicycle, and a 10 km ride to work. Like Charl said, intensification is a growing trend.

I don't doubt that. Volvo, Honda, Toyota, Hyundai all had humble cheap car beginnings.

But still run on gas, as far as 10KM ride, yeah that works in some climates, but won't do so good for others.

But your statement again the way I read it is that the gas companies are driving the customers away. Who's customers? GMAC's customer? then yes I agree, but if you're saying the gas companies.... then no I don't agree because Tata runs on gasonline.

Baraka_Guru · 06-13-2008, 09:03 PM

Quote:

Originally Posted by Charlatan

The other thing that needs to be explored is intensification of population density. The continued development of urban sprawl in low density suburbs creates a demand for cars. It also works against efficient public transportation systems.

I still need to read Jane Jacobs.

Charlatan · 06-13-2008, 10:50 PM

The thing to note about the cars coming out of China and India is that they are aiming for better fuel efficiency and are working on making cheaper hybrids. They could beat the other auto making nations to the punch.

My thought on the price of gas is that we should have a floor on the price that's somewhere around $4/gallon. It's at this price that other forms of energy become affordable. If the floor has to be kept by taxes so be it.

The higher prices can be met by an income tax break for the lower incomes.

Also, investments (either directly or via tax incentives) in alternative forms of fuel would come from the funds received from the taxes.

To me, it's more about making the West (read: US) less dependent on oil. Develop other forms of energy. Develop more efficient ways of living.

Leto · 06-14-2008, 02:47 AM

Quote:

Originally Posted by Cynthetiq

I don't doubt that. Volvo, Honda, Toyota, Hyundai all had humble cheap car beginnings.

But still run on gas, as far as 10KM ride, yeah that works in some climates, but won't do so good for others.

But your statement again the way I read it is that the gas companies are driving the customers away. Who's customers? GMAC's customer? then yes I agree, but if you're saying the gas companies.... then no I don't agree because Tata runs on gasonline.

Gas company customers. When I look for alternatives, I am looking for options that would involve me using less of the product, thereby driving me away. I become less dependant on it.
- Vehicles that use less gas (hybrids, efficiency)
- alternative vehicles (scooters, motorcycles, bicycles)
- creative options (carpooling, autoshare or zip car programmes)
- purchase behaviour (reduced quantity at a single purchase, feuling based on dollar amount versus litres or fillup)

These are all ways to drive people away from using gasoline. My overall consumption has dropped in just the last two months. I live in what I would call a varied climate, yet I can manage to ride my bike through almost all except the most extreme temps. There are times when it isn't convenient, which are the times that I rely on my car.

little_tippler · 06-14-2008, 04:19 AM

Quote:

Originally Posted by Tully Mars

How about this crazy idea- we start trying to making fuel efficient and alt. energy vehicles in the US. For freaking years now the US auto industries have focused on large fuel guzzling vehicles and have blown off the concept of anything else. Now they and their employees are paying for that strategy. Seems like after the gas lines of the late 70's they might have at least had a plan for this. No it's always "we have a prototype, it'll be out in 3-5 years." I've been reading this for 15 years now. They had, can't remember who made it, an electric car. People who leased them loved them. After all the leases were up they canceled them and took them out to the desert and crushed them. And they did this why?

Yeah I've read about this too. But not all the cars got destroyed...some people fought the car companies and got to keep theirs...bring back the electric car I say! I'm sure that originates problems all its own...nothing is perfect. Battery charging, volume capacity, autonomy...

Here is a link to an article on the documentary "Who Killed the Electric Car?"

Cynthetiq · 06-14-2008, 05:09 AM

Quote:

Originally Posted by Leto

Gas company customers. When I look for alternatives, I am looking for options that would involve me using less of the product, thereby driving me away. I become less dependant on it.
- Vehicles that use less gas (hybrids, efficiency)
- alternative vehicles (scooters, motorcycles, bicycles)
- creative options (carpooling, autoshare or zip car programmes)
- purchase behaviour (reduced quantity at a single purchase, feuling based on dollar amount versus litres or fillup)

These are all ways to drive people away from using gasoline. My overall consumption has dropped in just the last two months. I live in what I would call a varied climate, yet I can manage to ride my bike through almost all except the most extreme temps. There are times when it isn't convenient, which are the times that I rely on my car.

I don't see that still. Even if you don't use gas in your car, you still use lots of petroleum based and products that could not have been created without petroleum. Plastics and machinining all require some sort of petroleum. The keyboard you are typing on, the mouse you are clicking with all have varing amounts of plastic which is derived from petroleum.

Just because you use your phone less doesn't send a message to AT&T that you're unhappy with their rates, LEAVING them as a customer is. If talking as a whole industry and you change from POTS to Wireless or even to Internet based... you're talking about customers being driven away.

So you are saying more like stretching your dollar spent on gas. I don't see that as "driving" them away. It's more like making the user of gas stretch their gas mileage out. If you are being driven away as a customer you'll do much more radical things like biking and walking to work. That is something I'll agree to as customers who have been driven away.

But if you are still using the product being offered... sorry you're not driven away, you're being mindful of how much you spend on the product.

roachboy · 06-16-2008, 06:46 AM

note: i'm not sure but you may have to take one of the free subscriptions to the ft to see the video linked below.

Quote:

Oil hits new record near $140

By Carola Hoyos and Javier Blas in London and Andrew England in Abu Dhabi

Published: June 16 2008 09:45 | Last updated: June 16 2008 14:14

Crude oil prices jumped on Monday to a fresh record high of almost $140 a barrel after the US dollar fell and news about a possible Saudi Arabia’s oil output increase were overshadowed by fresh disruption in the North Sea oil production.

Daily View: Oil nears $140 despite Saudi move

Carola Hoyas on Saudi Arabia’s ‘high risk’ strategy to dampen oil prices

In early trading in New York, West Texas Intermediate crude oil jumped to $139.89 a barrel, above the previous record of $139.12 set in early June.

The dollar weakened after a bearish report on US manufacturing, reaching a low of $1.5496 against the euro. “The main factor of the price jump in early New York trading is the fresh weakening of the dollar,” a trader said.

In addition, traders said that a fresh disruption in the North Sea oil production of high quality oil was also supporting the market. StatoilHydro said it had shut down 150,000 b/d of production at its Oseberg high quality oil field after a fire in a platform.

Prices had earlier reacted cautiously to Saudi Arabia’s plans to boost its oil production to its highest level in more than 25 years in order to bring down record prices and ease political pressure from the US and other developed countries.

The increase in production would come as Saudi Arabia completes the development of its giant Khursaniyah field soon, industry executives and diplomats said, increasing its output capacity by up to 500,000 barrels a day, traders and analysts said.

Traders said Saudi Arabia was more likely to lift production to about 9.7m b/d in July, the highest level since 1981.

Ed Meir, of MF Global in New York, said that officially it seemed the Saudis had not made a decision on the final number, but added: “The ongoing speculation is succeeding in pressuring prices.”

Ban Ki-moon, United Nations secretary-general, who was visiting the country on Sunday, said that King Abdullah told him he viewed oil prices as “abnormally high”.

Mr Ban said the Saudi leader was “willing to do what he could to bring the oil price to adequate levels”. But by acting unilaterally Saudi Arabia could cause division within the Opec oil cartel, many of whose members are unable to boost production.

After a series of hints by Gulf and industry officials in the past few days, oil traders now expect Saudi Arabia to announce a substantial increase in supplies when oil ministers meet in Jeddah on Sunday, although the announcement could come beforehand. This has significantly upped the stakes of the hastily called summit, making it more likely prices will rise from current levels if Saudi Arabia’s actions fail to match expectations.

“The Saudis are working on a massive increase in output capability and could announce it at Jeddah,” an industry official said.

There is still a large degree of uncertainty about what exactly the world’s biggest oil exporter will do, meaning oil prices will likely be volatile this week.

Saudi Arabia may soon have the capacity to pump more oil. But how much the country will chose to bring to the market remains unclear.

As it brings the huge Khursaniyah field on line, the kingdom could ship all the extra barrels to market or perhaps reduce output from some fields that produce less desirable heavy crude.

Adam Sieminski, analyst at Deutsche Bank, said: “A disappointment would be that they say nothing other than ‘markets are well supplied and speculators are driving the price up’.

He added that “a substantive result” would be if the Saudis announced that the Abu Hadriya, Al Fadhili and Khursaniyah upstream projects that were due in late 2007 were on line and that they would like to see some build-up in inventories.

Copyright The Financial Times Limited 2008

http://www.ft.com/cms/s/0/5f4eb95e-3...0779fd2ac.html

the last two paragraphs are kinda interesting.

the problem of commodity future markets as the driver of this price spiral was at the center of the G8 meeting over the weekend. typical incoherence...

http://www.ft.com/cms/s/0/f6dddb5a-3...0779fd2ac.html

here's a little video clip featuring john damgard, president of the commodity futures association, who was interviewed late last week at the associations annual conference. it's interesting as well:

http://www.ft.com/cms/93ece7c0-07af-...4&fromSearch=n

his basic arguments are not terribly surprising:
he opposed any attempt to regulate the commodity futures market.
he invokes the spectre of american attempts to regulate being matched everywhere--at the same time, the underlying claim is that commodity futures circulate in an almost purely transnational context now and are in a sense beyond the reach of nation-state based regulatory moves.
the third main point: he claims, in that kinda wan manner, that what is driving prices up is the decision of institutional portfolio managers to shift into commodities markets, away from stock, etc., and the accompanying changes this move of very large players into this field have engendered. this he presents as "natural" as over against accusations of "manipulation"...

there is a scenario that one could build around this that would link up many factors unfolding in seemingly disparate areas over the past 8 years or so, including the neo-con rationale for the war in iraq--which i maintain was about attempting to alter the balance of power within globalizing capitalism in favor of the americans by establishing them as a military hegemon, the "lone remaining superpower"--which presumably would have enabled the americans to have a kind of political influence that would have protected them to some extent from the play of "market forces" that their economic ideology cannot but force them to understand as "natural"---well, that sure as hell didn't work, now did it? maybe this kind of scenario is, at the level of structure, what offended the neocon right about globalizing capitalism clinton-style: too multi-lateral, too much the americans as a player amongst players, not imperial enough.

if that's right, then structurally the americans are now in exactly the place that the neo-cons were worried about, but they arrived there because the neo-cons fucked up.

within this, there are the shorter-term problems/changes that i keep posting about to this thread---and it seems to me that the problem is becoming a bit clearer: this is *not* about supply-demand matters at the level of actual petroleum--this is a *political* problem. the politics are centered on the institutional consequences of neoliberalism itself.

there are probably intermediate steps to the above that should be filled in.

but let's say this scenario is accurate: that the primary driver of the prices spike in oil and by extension in food follows from activities in the transnational commodity futures market--that part of it is a function of the shift in institutional investment away from stock/binds etc and into futures--the index speculation that i've posted about above--these markets operate at a transnational level, so develping and imposing coherent regulation is going to be a problem for nation-states, even as the dominant political ideologies which inform decision-making are stuck, hopelessly it seems, with nation-states as their cognitive and operational center.

what happens now?

if this is the case, what relation is there between electric cars, say, and the actions of these futures markets?
seems to me that there is a disconnect between the responses folk have been talking about and what seems to be actually going on.
but what do you think?

hiredgun · 06-16-2008, 07:33 AM

Roach: I'm willing to look at data that suggests otherwise, but at the moment I really don't think that speculation is a primary factor in high oil prices.

You're talking about speculation in futures markets, but there is no intrinsic or necessary connection between futures and spot prices. Of course futures can have a significant impact - expectation of higher prices leads producers to hold off on selling, creating a short-term supply gap that is filled by higher spot prices than are justified by market fundamentals. BUT, opec countries have not cut back production, and I have seen no evidence that significant hoarding is happening anywhere in the supply chain - that is, there is so far no credible data indicating a rapid increase in oil inventories (although this is a difficult thing to tally and is not well-documented on a global scale). On the contrary, inventories so far as we can tell are at or near all-time lows. Krugman has talked about this in a number of recent columns.

This is one reason a bubble should be more visible in oil than it was in housing. It is very difficult to read the housing data and understand to what degree house purchases are driven by 'speculation' - consumers buying houses they can barely afford in the expectation that rising prices will leave them better off when they sell in a number of years - because it's not clear whether the home is an investment or, well, just a home. Those aren't even neat categories. In the meantime, you have large numbers of people living in homes that in their minds they intend to eventually sell [at profit], but these people's houses are obviously not counted as 'inventory' in the official numbers.

But in the case of oil, in the absence of excess inventory or reduced production, the story about demand seems to be the only one that makes sense with regard to the current rise in prices.

roachboy · 06-16-2008, 07:43 AM

i'm in the process of trying to work out how to think this, hiredgun---and i'm also following the logic of the op i put up, which included the initial warning from george soros about futures trading, institutional investors and the "hoarding" generated (in the eyes of some) by the tactics these funds seem to prefer.
because i'm curious about it, and because the futures market seems of a piece with the transnational currency markets as areas of economic activity beyond the control of the nation-state, i've been focussing a bit on it.

i was looking at some data about production levels, oil supply levels and such over the weekend, but i can't seem to find it at the moment. later perhaps.

i don't think that the futures market is *the* driver, but i think it is am important one, particularly given the influx of large-scale pension/hedge players into the game.

the point is more that these levels are all interconnected, and that this may be a way to see the problems neoliberalism has wrought.

====================================
btw: i dont think the analogy between futures in oil and/or food and real estate holds.
futures is an explicit game. if most of the analyses i have read so far are correct (i've put some links above) the problem is not the futures market per se, but the changes in the rules of the game de facto brought about by the entry of new types of players into it.
driven out of bonds, etc. by things like the subprime crisis and weakness of the dollar no doubt...

on the other hand, i'm trying to figure out when these players started really shifting into futures--i just finished a 2006 piece that seems to have been an important factor in making the futures market more widely available--->

Facts and Fantasies about Commodity Futures. By: Gorton, Gary; Rouwenhorst, K. Geert. Financial Analysts Journal, Mar/Apr2006, Vol. 62 Issue 2, p47-68, 22p

which is interesting in that the language soros (for example) was using seems to have been taken largely from this article's ways of framing futures markets, assimilating their characteristics and possibilities to a readership more accustomed to equities trading, etc etc etc.

but am still looking around for information...

Baraka_Guru · 06-16-2008, 08:20 AM

The piece below suggests that oil markets shouldn't be compared to the housing market, nor should they be compared to the tech bubble. Some interesting points below that outline the contrast....

Quote:

Don't mistake crude's froth for a bubble

ERIC REGULY
ereguly@globeandmail.com

June 16, 2008

ROME -- Ten years ago, when the investing world was enthralled with Internet stocks and oil was cheap, a young analyst called Henry Blodget predicted Amazon.com shares, then trading at about $240 (U.S.), would rise to $400 during the next 12 months.

The shares jumped the next day like a cocaine-charged rabbit and Amazon reached his price target within three weeks.

They did so with scant evidence the online book seller presented genuine value.

Oil, now at $135 a barrel, is investors' obsession. The price has doubled since early last year.

On some days the price hikes have been phenomenal. During a 36-hour period over June 5 and June 6, oil rose by more than $16 to a record of almost $140.

Why did it go up so quickly?

How could it keep climbing with the United States barrelling toward recession?

Maybe it's time to blame the analysts again.

No, Henry Blodget has not been reincarnated as an oil analyst.

But his spirit might be living within powerful men such as Arjun Murti and Jeffrey Currie, both of Goldman Sachs, and both, thanks to their exceedingly bullish calls, the most famous brand names in the global energy-research business.

While the duo (who rarely give interviews) would cringe at the association, there is no doubt they and other analysts are taking some of the blame for what may or may not be an oil bubble.

In a June 10 letter published in the Financial Times, Michael Gordon, Fidelity International's head of institutional investment, did not specifically single out the Goldman boys for the wild price hikes of the previous week.

But he did say the "oil and commodity markets are in the hands of the investment banks and hedge funds right now."

Goldman, the investment bank, is probably the biggest player in the oil markets. It is a proprietary oil trader and runs a commodities index fund.

It is also the employer of Messrs. Murti and Currie. Mr. Murti, 39, lives in New York and is a managing director. Mr. Currie, 41, is in London and is Goldman's head of commodities research.

Both have been great believers for three or four years in oil's fortunes.

Mr. Murti gained prominence in 2004, when he coined the term "super spike" - a massive price surge. A year later he said oil would go to $105. It was about half that price at the time. You could hear the laughter throughout the oil markets, but his prediction would prove accurate. No one laughed when, in early May, he said prices could hit $200 during the next two years. By then he had become something of a guru.

His May prediction raised both spot prices and long-term prices.

A few days later Mr. Currie went bullish on long-term futures, too. He said "long-term oil prices will need to continue to rise to bring trend oil demand growth in line with trend supply growth."

Prices rose again.

Goldman was not alone in its forecasts. Merrill Lynch and Barclays Capital have also been bullish on long-term prices. Merrill has predicted a price of $150 or more. Ditto Morgan Stanley. Prices that high no longer seem outrageous, or even bold. It's as if the herd mentality has set in among oil analysts.

While the rapid price increases are unprecedented, it would be wrong to equate the Internet bubble and the analysts who exploited it to today's oil markets.

The tech analysts were wrong far more often than they were right. The Goldman analysts have been right far more often than they have been wrong.

Unlike the tech stocks, high oil prices can still be justified by fundamental values.

But how, then, do you explain the wild price hikes of June 5 and June 6?

It looks like the short sellers got caught in a massive trap.

When prices shot through $120, the speculators gambled that the sinking U.S. economy, the slowdown in some of the Organization for Economic Co-operation and Development countries and the gradual removal of transportation-fuel subsidies in some Asian countries would conspire to force oil prices down.

What they didn't count on was falling U.S. oil inventories and a falling U.S. dollar (as the dollar declines, the oil price goes up). Then an Israeli cabinet minister said an attack on Iran was "unavoidable."

As the short-sellers realized their bet was wrong, they covered and the price climbed so fast that it set a single-day record.

But what about the institutional investors?

True, they have been plowing billions into the commodity markets. But Barclays Capital reported earlier this month that the net inflow into index assets during the first quarter was just $2-billion, hardly enough to explain the oil price rise in that period.

It looks like the Goldman analysts, and others, have latched on to a fundamental truth: The world needs more oil than it can produce.

Falling consumption in the United States and the other OECD countries is being more than offset by soaring demand in Asia.

British-based BP PLC's annual statistical review, published this week, said total oil supply fell last year by 130,000 barrels a day as some once-prolific fields in Norway, Mexico and elsewhere ran out of puff.

Oil inventories in the United States are well below their five-year averages.

Messrs. Murti and Currie are not bubble makers. It doesn't even look like there is a bubble.

Futures matter, sure, but the overall impact is likely to be minimal at most. I've thought this for a while now. I will maintain my position: Oil prices are up due to a lack of increased capacity (via new sources) and diminishing output (think Mexico), in conjunction with an overall global creeping demand. This will only get worse.

But it is political as well. This is a complex issue, which is why no one has any clear solutions. We tend to look for the silver-bullet solution (or magic pill, if you prefer) but this is oil. It isn't that simple. Throwing food into the mix only adds to the laundry list of pressures. It's hitting a critical mass. The question is, what are we going to see down the road that will make it worse?

Tully Mars · 06-16-2008, 08:36 AM

Quote:

Originally Posted by Baraka_Guru

The piece below suggests that oil markets shouldn't be compared to the housing market, nor should they be compared to the tech bubble. Some interesting points below that outline the contrast....

Futures matter, sure, but the overall impact is likely to be minimal at most. I've thought this for a while now. I will maintain my position: Oil prices are up due to a lack of increased capacity (via new sources) and diminishing output (think Mexico), in conjunction with an overall global creeping demand. This will only get worse.

But it is political as well. This is a complex issue, which is why no one has any clear solutions. We tend to look for the silver-bullet solution (or magic pill, if you prefer) but this is oil. It isn't that simple. Throwing food into the mix only adds to the laundry list of pressures. It's hitting a critical mass. The question is, what are we going to see down the road that will make it worse?

It makes sense to approach the problems from many angles at once. The problems are certainly coming at us from several directions. I think you're right trying to find a "silver bullet" isn't the right approach.

As for what are we going to see down the road? I think we're already seeing some weather that could have a noticeable effect. The US mid-west flooding isn't going to help with food prices. Then there are other natural events, the recent earthquake in China comes to mind. All we need now is a huge volcanic eruption. I read an article a while back about Krakatau and it's eruption back in the late 1800's. It effected crops almost everywhere, if I read it correctly. Could end up being an even bigger mess world wide.

roachboy · 06-16-2008, 08:56 AM

most issues that are of any interest are really many issues balled into one.
the only problem that complexity creates, really, is trying to figure out a way to think about it so that you don't simplify in the wrong direction.

there is a problem of supply.
there is a problem of falling-off of new oil potentials, so a sense of the finiteness of the resource as a whole.
there are a host of problems that all point to the degree(s) of dependence on petroleum and petroleum-based products. i look at my computer and see almost nothing but these products. i think about the fact i am on the internet and imagine how much of these technologies are petroleum-based. this is obviously way way bigger than gas prices.
but there is obviously a problem, a host of problems, of demand.
this seems far bigger than a matter of what car one drives, but maybe that's just me.

there is a problem of how prices for petroleum is set. this is obviously the space where the futures market comes in.

there is a problem of the collapse of the dollar, which impacts on prices independently of the futures market.

the problem of the dollar is an intersection between the transnational currency market and the political fall-out of the bush administration's actions and the assumptions made by currency traders as to the meanings of indices of economic activity in other areas as they impact on their sense of the dollar's prospects.

there is the problem of the increasing integration of markets for both oil and currency into a transnational space that provides at this point very little in the way of room to manoever for nation-states.

there is the strange matter of infotainment, televisual and otherwise, which seems to obscure as much as it informs about these matters.

there is the problem of neoliberal ideology, which is the frame of reference through which all this tends to be thought about, which is another matter.

there is a problem of the intertwining of petroleum dependency and agricultural production and distribution.
one way of thinking about this is the problem of scale---centralized corporate-style monocrop-based farming as the dominant paradigm for transnational agriculture may be starting to hit it's limits.
there are alternatives, but these are not matters of state policy at this point.
the transition from the present model to another may well suck for alot of people.

there is a problem of transnational logistics, the nature of food commodity flows, of food aid, of neocolonialism, which is also tied into all the above.

there are separate problems of how the prices for all these items are fixed. futures again.

there is also the problem of the dollar, again.

there is another, longer-term problem which has to do with the effects of fixing nitrogen, the revolution in fertilizer production this enabled, and the relation between that and global population and the relations between that and these other problems. this one freaks me out a bit when i think about it, because i take no particular solace in malthus, but it seems to push one toward that kind of thinking.

i'm sure there's more too.

it's pretty big.

Baraka_Guru · 06-16-2008, 09:07 AM

roachboy, this is exactly what I'm talking about (and then some). All things considered, oil and gas is necessarily more expensive. In other words, it's been cheap for far too long.

Should we not be focussed less on oil itself and more on how we use it?

Leto · 06-16-2008, 10:10 AM

Quote:

Originally Posted by Cynthetiq

I don't see that still. Even if you don't use gas in your car, you still use lots of petroleum based and products that could not have been created without petroleum. Plastics and machinining all require some sort of petroleum. The keyboard you are typing on, the mouse you are clicking with all have varing amounts of plastic which is derived from petroleum.

Just because you use your phone less doesn't send a message to AT&T that you're unhappy with their rates, LEAVING them as a customer is. If talking as a whole industry and you change from POTS to Wireless or even to Internet based... you're talking about customers being driven away.

So you are saying more like stretching your dollar spent on gas. I don't see that as "driving" them away. It's more like making the user of gas stretch their gas mileage out. If you are being driven away as a customer you'll do much more radical things like biking and walking to work. That is something I'll agree to as customers who have been driven away.

But if you are still using the product being offered... sorry you're not driven away, you're being mindful of how much you spend on the product.

I see that I've been caught out in a consumer oriented rant, which will never hold up to a well ordered logical argument. I suppose nothing will and your point drives home how much of the short hairs the oil industry has the consumer by. Yes, all your points are true, yet as an emotional consumer I am allowed my rant. And I stand by it.

Creativity to find alternatives are as much to driving away consumers in this case as are turnstile hoppers are to detracting from the bottom line of transit systems. As are the potential benefits of avoided costs compared to the concrete benefits of net FTE reductions or reduced O&M and/ or Capital costs in a financial budget.

And in keeping with the spirit of this discussion, I wish to retain what little satisfaction I can get when saying that Big Oil is driving me away from consuming their product in this manner (yea gods, and I, a gas man himself!).

I'd like to point out another creative method that consumers are using to get out from under the heavey thumb of big oil: Hypermiling. This rather timely article came out in the Saturday Star:

http://www.thestar.com/article/442839

http://www.thestar.com/article/440653

around squeezing every last drop of forward momentum out of your gallon or litre of gas as you possibly can. Some of the suggestions are downright dangerous, some inovative, but a lot remind me of my tactic during my univesity days of purchasing gas in 5 dollar lots, hoping to find that cheaper gas station just down the road (you know, at 35 cents/litre, instead of 37), and puting the car in neutral to coast down the hills etc.

Here is the website, and some more references.

http://www.cleanmpg.com/

http://www.hypermiling.com/

Cheers

Charlatan · 06-17-2008, 06:49 PM

An interesting article found here (LINK) about the potential end of Urban Sprawl. In other words, the intensification of population as a result of changing trends and high fuel costs.

Quote:

Originally Posted by The Wall Street Journal-Jonathan Carp

In recent years, a generation of young people, called the millennials, born between the late 1970s and mid-1990s, has combined with baby boomers to rekindle demand for urban living. Today, the subprime-mortgage crisis and $4-a-gallon gasoline are delivering further gut punches by blighting remote subdivisions nationwide and rendering long commutes untenable for middle-class Americans.

Just as low interest rates and aggressive mortgage financing accelerated expansion of the suburban fringe to the point of oversupply, "the spike in gasoline prices, layered with demographic changes, may accelerate the trend toward closer-in living," said Arthur C. Nelson, director of Virginia Tech's Metropolitan Institute in Alexandria, Va. "All these things are piling up, and there are fundamental changes occurring in demand for housing in most parts of the country."

Christopher Leinberger, a visiting fellow at the Brookings Institution and a developer of walkable areas that combine housing and commercial space, describes the structural shift as the "beginning of the end of sprawl." ...

Even families who sought the suburbs or were priced out of cities now have an economic imperative to find their way back closer to town. Transportation is the second-biggest household expense, after housing, and suburban families face a relatively greater gas burden. At the same time, distant suburbs, or exurbs, where housing growth was predicated on cheap gas, have experienced the biggest declines in home values in the past year, according to a May report by CEOs for Cities, a nonprofit group of public- and private-sector officials that seeks to promote urban areas. "The gas-price spike popped the housing bubble," said Joe Cortright, the report's author.

roachboy · 06-19-2008, 05:34 AM

the suburban model required considerable infrastructure (roads, highways) which were functions of decisions made at the state level concerning automobiles as the basis for the american transportation model. so it relied on automobile production, was a function of economies of scale...it also relied on the standardization of house construction. it also relied on the transformation of consumer credit right after world war 2, which enabled mortgages to be obtained by people whose socio-economic position would have prevented it before--the gi bill was a big part of this--so you have even at the most general level a combination of public and private, state and corporate actions---and if you push thinking about this into the 1950s, the other element which emerges is a kind of total advertising campaign to sell this model--which worked until it didn't.

from this only 2 points:

the suburban model as it developed after ww2 would not have happened without substantial policy choices entailing the directing of state resources to infrastructure development---it follows then that if the transportation model, and the housing model which is intertwined with it, are being challenged by the price of oil that nothing will necessarily come of it until there are policy-level decisions made to begin transforming infrastructures (like mass transit or rail)....in other words, these are not "market-driven"--that's backward. the other point is linked thereby: people want what they are told they want. we are nice like that. easily managed. so there'd also have to be a substantive marketing campaign, more or less on the order of much of 1950s pop culture, to sell the alternative "way of life"--which over time would become as inevitable and necessary as the current "ways of life" because we are pliable and nice like that as well. what's real is rational, hi de ho.

this is, btw, one of the reasons that the next presidential and congressional elections seem to me so important. whats a bit depressing is that i see obama as somewhat more likely to address these sorts of problems (a statement that makes me squirmy because it repeats this goofball ideology of All Logic Emanating from the Skull of the Leader), whereas mc-cain would in all likelihood try not to address them at all.

hiredgun · 06-25-2008, 05:32 AM

On speculation, which I continue to think plays only a minor role in current prices. Krugman explained it a few days ago almost exactly along the lines of my earlier post:

Quote:

First of all, I don’t have a political dog in this fight. I’m happy to believe that crazy speculation distorts markets. And I do think it’s likely that oil prices will come down, for a while, once consumers have a chance to respond more fully to high prices by changing their driving habits, switching to smaller cars, etc..

But the mysticism over how speculation is supposed to drive prices drives me crazy, professionally.

So here’s my latest attempt to talk it through.

Imagine that Joe Shmoe and Harriet Who, neither of whom has any direct involvement in the production of oil, make a bet: Joe says oil is going to $150, Harriet says it won’t. What direct effect does this have on the spot price of oil — the actual price people pay to have a barrel of black gunk delivered?

The answer, surely, is none. Who cares what bets people not involved in buying or selling the stuff make? And if there are 10 million Joe Shmoes, it still doesn’t make any difference.

Well, a futures contract is a bet about the future price. It has no, zero, nada direct effect on the spot price. And that’s true no matter how many Joe Shmoes there are, that is, no matter how big the positions are.

Any effect on the spot market has to be indirect: someone who actually has oil to sell decides to sell a futures contract to Joe Shmoe, and holds oil off the market so he can honor that contract when it comes due; this is worth doing if the futures price is sufficiently above the current price to more than make up for the storage and interest costs.

As I’ve tried to point out, there just isn’t any evidence from the inventory data that this is happening.

And here’s one more fact: by and large, futures prices over the period of the big price runup have been slightly below spot prices. The figure below shows monthly data from the EIA; as the spot price shot up, the futures price (that’s contract 4, the furthest out) actually lagged a bit behind. In other words, there hasn’t been any incentive to hoard.

And for those who like theoretical models, there's a brief paper here:
http://www.princeton.edu/~pkrugman/S...Signatures.pdf

Roach: on the issue of infrastructural change and the need for policy direction, I am entirely in agreement. We are seeing some shifts in demand in the US - metro-rail systems are more frequently used than in many years, and bicycle shops are reporting that they are moving bikes so quickly that they can barely maintain their stock. Still, I am pessimistic that you can simply rely on the individual consumer pain of high prices to force really large-scale shifts in patterns of residence, distribution of businesses, etc.

I actually ride my bike to and from work now instead of taking the metro - a cool 7 miles each way, it is a wonderful way to start the day - and I am lucky that most of that distance is covered by a great bike trail, it feels a lot like a highway for bikes, complete with walls and guard rails on either side, on-ramps and off-ramps, exit signs, and a big yellow dividing stripe down the center of the path. I wonder what kind of investment it would take to ensure that all major urban areas are criss-crossed by a network of similar highway-quality bike trails. It doesn't seem any more infeasible than the equally impressive system of highways that we built in the 20th century.

Leto · 06-25-2008, 07:33 AM

Quote:

Originally Posted by hiredgun

I actually ride my bike to and from work now instead of taking the metro - a cool 7 miles each way, it is a wonderful way to start the day - and I am lucky that most of that distance is covered by a great bike trail, it feels a lot like a highway for bikes, complete with walls and guard rails on either side, on-ramps and off-ramps, exit signs, and a big yellow dividing stripe down the center of the path. I wonder what kind of investment it would take to ensure that all major urban areas are criss-crossed by a network of similar highway-quality bike trails. It doesn't seem any more infeasible than the equally impressive system of highways that we built in the 20th century.

Logistically, I would like to do this to (it's only 10 km to work) so tell me how you manage the clothing change, showering and carrying of your laptop, notes, lunch etc.

Actually for me to go along a quieter (less travelled by cars ) route, would extend the trip to 12 km. I would have to pack a change of clothes along with my work out stuff and an iron for my suit and shirt. Take a shower once I got there (luckily we have an internal gym).

I would need to get paniers that would hold a computer and briefcase. Are you managing in this manner?

Baraka_Guru · 06-25-2008, 08:23 AM

I would ride more to work, except the bike access in Toronto between my place and work is atrocious. This city needs to do more to make it bike friendly. But, at any rate, I'm rarely ever in a car these days. The most I use public transit is the subway, and it's always packed, so I'm sure it must be somewhat efficient.

I work in a small office that gets hot in the summer anyway, so showering isn't a big deal. I just freshen up in the bathroom with a towel and deodorant. Leto, just get yourself a nice backpack. I'm sure you could manage up to 10 lbs. of stuff no problem.

My trouble is reducing my environmental footprint in other ways. I'm sure I'm burning too much oil in the consumer choices I make.

hiredgun · 06-25-2008, 11:52 AM

Sorry for the off-topic, but simply to answer the question that was asked of me:

I have a gym membership at a gym across the street from my office (have had it for a long time). This has come in very handy for biking in, because I don't need to bring a towel, soap, shampoo, conditioner (these are all provided). The gym locker room even has a decent iron. All I have to do is toss my work clothes in my backpack and I am good to go.

roachboy · 06-27-2008, 04:48 AM

i've been commuting by bike for a few years---the place i am working now has a gym and locker room, which will be good--perhaps i'll wash off my daily dose of cash repellent in addition to sweat.

but it seems that maybe cash repellent is in the atmosphere.
yesterday oil went over 140 a barrel--the prediction below of 170 before "we" start to see a settling is kinda interesting.

Quote:

Oil hits fresh record above $142 a barrel

By Chris Flood

Published: June 27 2008 09:01 | Last updated: June 27 2008 13:08

Oil prices extended their record breaking run on Friday after pushing above the $140 a barrel level for the first time in the previous session, driven higher by a cocktail of supply concerns, dollar weakness, inflation fears and turmoil in equity markets.

Nymex August West Texas Intermediate hit a hit a record $142.26 a barrel before easing back to trade $2 higher at $141.64. ICE August Brent surged to a fresh record high of $142.13 a barrel, before edging back to stand $1.27 higher at $141.10 a barrel.

Oil prices rose by more than $5 a barrel on Thursday after Libya threatened to cut its oil production and Opec’s president warned that prices could surge as high as $170 a barrel this summer.

Shokri Ghanem, Libya’s top oil official, said the country was considering reducing oil production in response to a bill before the US Congress that would empower Washington to sue Opec members for cutting supplies.

“We are studying all the options,” Mr Ghanem told Reuters. “There are threats from the Congress and they are taking Opec to court, extending the jurisdiction of the US outside the US,” he said.

Earlier, Chakib Khelil, president of Opec, said oil prices could rise as high as $170 a barrel before easing back by the end of the year.

Traders took the warnings as a green light for buying with further encouragement for buying interest provided by dollar weakness and weakness in equity markets.

In late April, Mr Khelil warned that oil prices could reach $200 a barrel this year, but since then Saudi Arabia has promised to increase supplies to 9.7m barrels a day, the highest level in almost 30 years. At a conference last weekend, the kingdom said it planned to raise crude production capacity to 12.5m barrels a day by 2012 from 9.8m b/d currently.

“It is unlikely that global markets will see this additional crude in a hurry,” said Kona Haque, commodity strategist at Macquarie. “This is either because Saudi won’t be able to, due to delays and soaring project [cost] inflation, or won’t be willing to, due to the need to maintain reserves for future generations.”

Macquarie said that over the next five years, oil prices were likely to test the $200 a barrel level and were unlikely to sink below $100.

Adam Sieminski of Deutsche Bank said there was a tug of war in oil markets based on two distinct views of how the marginal price of crude was set.

One view was that “marginal cost of supply” should dominate and this might be near $75 to $100 a barrel. The other view was that prices were rising toward the level required to destroy demand, or to get it to slow dramatically, probably above $150 a barrel.

Mr Sieminski noted that oil producers were becoming more accustomed to higher prices and Deutsche Bank’s review of the extremes in oil valuations suggested that prices might have to remain at elevated levels to curb demand growth

“The oil market is in a state of confusion unable to believe that the forces that have driven prices higher over the past year, (namely Opec production cuts, non-OPEC supply problems, strong economic growth in emerging markets and a falling US dollar) may be moving in reverse or at least not moving in the direction of even higher oil prices,” said Mr Sieminski.

Oil’s strength inspired further gains for gold which rose to $920.10 a troy ounce from New York’s late quote of $912.60 on Thursday. Gold has seen renewed buying interest as the dollar retreated against the euro following the Federal Reserve’s statement on monetary policy on Wednesday which indicated that an imminent rise in US interest rates was unlikely

http://www.ft.com/cms/s/0/0c984a74-4...0779fd2ac.html

roachboy · 06-30-2008, 04:21 AM

today the cause is tension between israel and iran:

Quote:

Oil Near $143 on Israel - Iran Tensions
By REUTERS

Filed at 7:35 a.m. ET

LONDON (Reuters) - Oil rose more than $3 a barrel on Monday to a new record above $143, propelled by heightened market fears of conflict between Israel and Iran over Tehran's nuclear program.

A fall in the U.S. dollar to three-week lows versus the euro helped boost the market.

U.S. light crude was up $2.55 at $142.76 a barrel by 7:12 a.m. EDT, after a record high of $143.67 a barrel.

London Brent crude was up $2.76 at $143.07.

"The U.S. dollar is down and there are many high-level geopolitical news items, particularly in the Middle East, that are pushing prices up," said Mark Pervan, a senior commodities analyst at the Australian & New Zealand (ANZ) Bank in Melbourne.

Iran's Revolutionary Guards have said Iran would impose controls on shipping in the Persian Gulf and Strait of Hormuz if it were attacked.

The Strait of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula, accounts for roughly 40 percent of the world's traded oil flows.

Iran's foreign minister said on Sunday he did not believe Israel was in a position to attack his country over its nuclear program.

SUPPLY CONSTRAINTS

Oil prices have jumped more than 40 percent this year, extending a six-year rally, in response to Middle East tensions, plus expectations that supply will struggle to keep pace with rising demand from emerging economies such as China and India.

Concern over long-term supply constraints have also pushed up the forward price of oil. Oil is currently priced between $135 and $139 a barrel out to December 2016.

The market, as a result, is sensitive to any supply disruptions.

A succession of militant attacks on Nigeria's oil facilities that have shut a fifth of the country's output since early 2006 has helped drive the market higher.

A flood of cash from investors seeking alternatives to sagging global equity markets and to hedge against inflation has also contributed to oil's rise.

"Demand from the investment side has been boosted by problems in the financial sector as well as a desire for diversification," said Frances Hudson, investment director, strategy at asset manager Standard Life Investments.

"Also, inflation concerns encourage investment in real assets such as oil and gold."

Some have blamed investor flows into oil or so-called speculative money for the market's rapid climb since the start of this year, others say it is more to do with the tighter balance between supply and demand.

Tony Hayward, chief executive of international oil company BP Plc <BP.L> said: "This is a fundamental signal, this is not about speculation."

The market will watch U.S. economic indicators due later on Monday as well as the European Central Bank's interest rates decision on Thursday for further guidance on the U.S. dollar.

(Additional reporting by Fayen Wong; editing by James Jukwey)

http://www.nytimes.com/reuters/busin...=1&oref=slogin

of course, and more than you may think, the bush people have been busy busy busy little bees in iran. this long piece from the new yorker.
it really should have its own thread, but it's long and works here too:

http://www.newyorker.com/reporting/2...7fa_fact_hersh

hiredgun · 07-02-2008, 05:49 AM

My feeling is that the short-term fluctuations in price do indeed reflect these sorts of temporary geopolitical murmurs - like increased tension between Israel and Iran. But these quick price moves are just the foam on top of a rising tide with altogether different causes.

On the Hersh piece: very interesting, although also not that surprising. StratFor had a bit of a unique take on it; they claimed that the administration deliberately leaked this information through Hersh (someone whom they knew would be credible) as a way of putting pressure on Tehran without the overt appearance of saber rattling. This in contrast to Rice's recent flirting with the idea of exchanging diplomatic personnel (though not embassies) with Iran could be a kind of good cop/bad cop or stick/carrot routine.

hiredgun · 07-03-2008, 05:17 AM

Crude is above $145 today, following ECB rate hikes. Dollar falls, oil rises, clock keeps ticking.

roachboy · 07-03-2008, 05:29 AM

yup.

but imputing motive to these price fluctuations is the new astrology, don't you think?

Quote:

Oil touches new high above $146

By Javier Blas in London

Published: July 3 2008 10:04 | Last updated: July 3 2008 10:54

Crude oil prices jumped above $146 a barrel on Thursday boosted by a drop in US stockpiles and concerns about the medium-term supply and demand balance. The rise brings the oil price surge since January to 55 per cent.

The weakness of the US dollar, at its lowest level in two months against the euro, also contributed to the price rise in early trading, traders said.

But the dollar strengthened later on Thursday as the European Central Bank, after rising interest rates by 25 basis points to 4.25 per cent, suggested it would not tighten its monetary policy any time soon.

In London, Brent crude oil for August jumped to an intraday record high of $146.69 a barrel. In afternoon trading after the ECB’s interest rate increase, it was 45 cents higher at $144.71 in afternoon trading. In New York, West Texas Intermediate crude oil rose to a record of $145.85 a barrel and was later trading 30 cents higher at $143.89 a barrel.

Wholesale gasoil prices in Europe surged sharply, in the latest sign of strong demand for diesel. ICE gasoil delivery jumped 2.5 per cent to a fresh record high of $1,321 a tonne. Other products, including petrol, posted smaller price gains.

Henry Paulson, the US Treasury secretary, said on Thursday that the “predominant factor” behind the rise in oil prices was supply and demand.

“[It] is the fact that global production and capacity has not increased appreciably over the last 10 years and the demand has continued to grow and inventories are at low levels,” Mr Paulson said in London.

The concerns about supply and demand imbalances were exacerbated earlier this week when the International Energy Agency, the western countries’ oil watchdog, said that non-Opec supply will barely grow in the next five years.

In addition, the oil market was watching weather developments in the Atlantic, with up to three areas with potential to develop a tropical storm. But the traders said the risk of a storm heading to the oil-rich US Gulf of Mexico was very low.

Some traders said that the price increase was overdone and the market was ripe for a correction. Ed Meir, of MF Global in New York, said: “We think we are close to a top here, and all that is needed to trigger the selling in energy is for the euro to crack.”

But others pointed to continued tightness as illustrated by another fall in crude oil stocks. The US Department of Energy reported on Wednesday that the country’s crude stockpiles fell much more than expected last week.

Commercial inventories of crude oil fell by 2m barrels to 299.8m barrels last week, down 15 per cent from 353.9m barrels a year ago, as imports slowed and refinery demand rose. However, petrol supplies rose more than expected, up 2.1m barrels to 210.9m barrels, suggesting consumer demand was weakening.

Ali Naimi, the Saudi oil minister, said on Thursday in Madrid that a number of factors were driving oil prices higher, including a large flow of financial money, the weakness of the US dollar, geopolitics and fears that the world is running out of oil.

Saudi Arabia this month increased its production to 9.7m barrels a day, the highest level since mid-1981, in an attempt to lower prices. But its efforts have been dwarfed by supply falls elsewhere, particularly in Nigeria, but also in Mexico, the North Sea and, to a lesser extent, Russia.

Also pressing on energy investors’ minds was the intensifying war of words between Iran and the West over its nuclear programme. Opec general secretary Abdallan el-Badri said on Thursday that Iran’s crude output would be difficult to replace if the country was attacked.

http://www.ft.com/cms/s/0/f2bf5b14-4...077b07658.html

Baraka_Guru · 07-03-2008, 10:03 AM

Quote:

Originally Posted by roachboy

yup.

but imputing motive to these price fluctuations is the new astrology, don't you think?

Going after speculators more harm than good?

Quote:

The oil price
Don’t blame the speculators

Jul 3rd 2008
From The Economist print edition
Politicians who try to make oil cheaper by restraining speculation will just make things worse

ALTHOUGH the price of oil continues to hit new records, it has in one respect been a quiet week on the oil markets. America’s lawmakers are celebrating Independence Day by taking a few days off. That has led to a brief interruption in the torrent of proposals aimed at curbing speculation.

Ten different bills on the subject are in the works in Congress. Before the House of Representatives shut up shop, it approved one by a vote of 402-19. America’s politicians are not the only ones to have fingered speculators for the feverish rise in the price of oil and other raw materials. Italy’s finance minister believes that there is a “magnum of speculative champagne” included in the price of each barrel. Austria wants the European Union to impose a tax on speculation. Saudi Arabia and other big oil producers routinely blame the price on frothy markets, rather than idle wells.

The accusers point to the link between the volume of transactions on the futures markets and the price of oil. Since 2004 the near tripling of trading in oil on the New York Mercantile Exchange (NYMEX), the world’s biggest market for the stuff, has neatly coincided with a tripling in the price.

What is more, investing in oil has become something of a fad. Commodities traders and hedge funds with long experience have been joined by less expert sorts, including pension funds and individuals. All this, the theory runs, is contributing to a bubble in commodities. The rush of punters betting on higher prices is begetting a self-fulfilling prophecy: it is the tide of new investment, rather than inadequate supply or irrepressible demand, that is pushing the price of oil ever higher.

Follow the oil, not the futures

This reasoning holds obvious appeal for those looking for a scapegoat. But there is little evidence to support it. For one thing, the surge in investment in oil futures is not that large relative to the global trade in oil. Barclays Capital, an investment bank, calculates that “index funds”, which have especially exercised the politicians because they always bet on rising prices, account for only 12% of the outstanding contracts on NYMEX and have a value equivalent to just 2% of the world’s yearly oil consumption.

More importantly, neither index funds nor other speculators ever buy any physical oil. Instead, they buy futures and options which they settle with a cash payment when they fall due. In essence, these are bets on which way the oil price will move. Since the real currency of such contracts is cash, rather than barrels of crude, there is no limit to the number of bets that can be made. And since no oil is ever held back from the market, these bets do not affect the price of oil any more than bets on a football match affect the result.

The market for nickel provides a good illustration of this. Speculative investment in the metal has been growing steadily over the past year, yet its price has fallen by half. By the same token, the prices of several commodities that are not traded on any exchanges, such as iron ore and rice, have been rising almost as fast as that of oil.

Speculators do play an important role in setting the price of oil and other raw materials. But they do so based on their expectations of future trends in supply and demand, not on whims. If they had somehow managed to push prices to unjustified heights, then demand would contract, leaving unsold pools of oil.

The futures market does sometimes signal that prices are likely to rise, which might prompt speculators to hoard oil in anticipation. But it is not signalling that at the moment, and there is no sign of hoarding. In the absence of rising stocks, it is hard to argue that the oil markets have lost their grip on reality.

Some claim that oil producers are in effect hoarding oil below the ground. But there is also little sign of that, either among companies or countries: all big exporters bar Saudi Arabia are pumping as fast as they can.

It takes two to contango

Despite their dismal reputation, the oil speculators provide a vital service. They help airlines and other big oil consumers to hedge against rising prices, and so to reduce risk—a massive boon amid the economic turmoil. By the same token, they provide oil producers with more predictable future revenues, and so allow them to expand more confidently and borrow more cheaply. That, in turn, should help to lower the price of oil in the long run. Any attempt to curtail speculation, by contrast, is likely to make life harder for firms and oil more expensive.

http://www.economist.com/opinion/dis...ry_id=11670357

roachboy · 07-04-2008, 06:02 AM

this is interesting--from today's guardian.
the claim is straightforward.
what surprises me in it is simply that the world bank hasn't published these results:

Quote:

Secret report: biofuel caused food crisis

Internal World Bank study delivers blow to plant energy drive

* Aditya Chakrabortty

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.

"It would put the World Bank in a political hot-spot with the White House," said one yesterday.

The news comes at a critical point in the world's negotiations on biofuels policy. Leaders of the G8 industrialised countries meet next week in Hokkaido, Japan, where they will discuss the food crisis and come under intense lobbying from campaigners calling for a moratorium on the use of plant-derived fuels.

It will also put pressure on the British government, which is due to release its own report on the impact of biofuels, the Gallagher Report. The Guardian has previously reported that the British study will state that plant fuels have played a "significant" part in pushing up food prices to record levels. Although it was expected last week, the report has still not been released.

"Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises," said Robert Bailey, policy adviser at Oxfam. "It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat."

Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as "the first real economic crisis of globalisation".

President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that: "Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases."

Even successive droughts in Australia, calculates the report, have had a marginal impact. Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.

Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.

"Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate," says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.

It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.

Other reviews of the food crisis looked at it over a much longer period, or have not linked these three factors, and so arrived at smaller estimates of the impact from biofuels. But the report author, Don Mitchell, is a senior economist at the Bank and has done a detailed, month-by-month analysis of the surge in food prices, which allows much closer examination of the link between biofuels and food supply.

The report points out biofuels derived from sugarcane, which Brazil specializes in, have not had such a dramatic impact.

Supporters of biofuels argue that they are a greener alternative to relying on oil and other fossil fuels, but even that claim has been disputed by some experts, who argue that it does not apply to US production of ethanol from plants.

"It is clear that some biofuels have huge impacts on food prices," said Dr David King, the government's former chief scientific adviser, last night. "All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."

http://www.guardian.co.uk/environmen...enewableenergy

here is another article in the guardian--if you follow the link, you can in turn link to last week's oxfam report on this same linkage, which is largely confirmed by the world bank report. it is useful to read because it presents the above claims in more detail:

http://www.guardian.co.uk/commentisf...arbonemissions

or you can go directly to the report (full text as pdf) here:

http://www.oxfam.org.uk/resources/po...ent_truth.html

this is interesting for a number of reasons--one of which is it uncouples the food price spike from a direct relation to oil prices, but strengthens an indirect linkage.

here is a link to the world bank's main page, a feature and a report on the oil/foodprice crises:

http://web.worldbank.org/WBSITE/EXTE...K:4607,00.html

which does not include information cited in the guardian piece, but which does echo it....

what do you make of all this?

--trying to keep the different questions separated within the same thread. maybe we can get steered around by new information as it surfaces--so the matter of futures trading, which is interesting...but this is newer, so there we are....

pai mei · 07-04-2008, 06:27 AM

The oil we eat

Quote:

Iowa is almost all fields now. Little prairie remains, and if you can find what Iowans call a “postage stamp” remnant of some, it most likely will abut a cornfield. This allows an observation. Walk from the prairie to the field, and you probably will step down about six feet, as if the land had been stolen from beneath you. Settlers' accounts of the prairie conquest mention a sound, a series of pops, like pistol shots, the sound of stout grass roots breaking before a moldboard plow. A robbery was in progress.

When we say the soil is rich, it is not a metaphor. It is as rich in energy as an oil well. A prairie converts that energy to flowers and roots and stems, which in turn pass back into the ground as dead organic matter. The layers of topsoil build up into a rich repository of energy, a bank. A farm field appropriates that energy, puts it into seeds we can eat. Much of the energy moves from the earth to the rings of fat around our necks and waists. And much of the energy is simply wasted, a trail of dollars billowing from the burglar's satchel.

Quote:

Today we do the same, only now when the vault is empty we fill it again with new energy in the form of oil-rich fertilizers. Oil is annual primary productivity stored as hydrocarbons, a trust fund of sorts, built up over many thousands of years. On average, it takes 5.5 gallons of fossil energy to restore a year's worth of lost fertility to an acre of eroded land

Leto · 07-04-2008, 06:29 AM

Remove the need for bio fuels. Obviously the chaotic implications of the overly complicated system is beneficial for a few only. Corn is also a very harsh crop on soil. I believe that the central Soviet republics exeperienced environmental break down due to corn and the need for excessive fertalizer repleneshment. Now it is the crop used for almost everything from bio fuels to candy.

Allow market forces to run with the cost of normal fuel, and finance alternative R&D. There is lots of oil. The world will get warmer or colder. live with it. The effect of canada or US on global warming pales in comparison to China or India, so let's be prudent but also lets ditch the enviro-McCarthyism.

hiredgun · 07-07-2008, 08:34 AM

Between this and high fructose corn syrup, can we now safely call corn the root of all evil?

In seriousness - it has been commonly held by a lot of economists for a while now that biofuels were doing more harm than good. But I am surprised that the WB would hold this report confidential, and it would do us all some good to have some hard analysis see the light of day. Are there plans to release it now that it is out of the bag anyhow?

hiredgun · 07-08-2008, 05:04 AM

Hope this isn't too off-topic, now that we are talking about economic policy in general and all its various implications...

From economist Joseph Stiglitz, on 'The End of Neo-Liberalism' [a bit dramatic, no?

]

Quote:

The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation.

For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top.

Though neo-liberals do not want to admit it, their ideology also failed another test. No one can claim that financial markets did a stellar job in allocating resources in the late 1990’s, with 97% of investments in fiber optics taking years to see any light. But at least that mistake had an unintended benefit: as costs of communication were driven down, India and China became more integrated into the global economy.

But it is hard to see such benefits to the massive misallocation of resources to housing. The newly constructed homes built for families that could not afford them get trashed and gutted as millions of families are forced out of their homes, in some communities, government has finally stepped in – to remove the remains. In others, the blight spreads. So even those who have been model citizens, borrowing prudently and maintaining their homes, now find that markets have driven down the value of their homes beyond their worst nightmares.

To be sure, there were some short-term benefits from the excess investment in real estate: some Americans (perhaps only for a few months) enjoyed the pleasures of home ownership and living in a bigger home than they otherwise would have. But at what a cost to themselves and the world economy!

Millions will lose their life savings as they lose their homes. And the housing foreclosures have precipitated a global slowdown. There is an increasing consensus on the prognosis: this downturn will be prolonged and widespread.

Nor did markets prepare us well for soaring oil and food prices. Of course, neither sector is an example of free-market economics, but that is partly the point: free-market rhetoric has been used selectively – embraced when it serves special interests and discarded when it does not.

Perhaps one of the few virtues of George W. Bush’s administration is that the gap between rhetoric and reality is narrower than it was under Ronald Reagan. For all Reagan’s free-trade rhetoric, he freely imposed trade restrictions, including the notorious “voluntary” export restraints on automobiles.

Bush’s policies have been worse, but the extent to which he has openly served America’s military-industrial complex has been more naked. The only time that the Bush administration turned green was when it came to ethanol subsidies, whose environmental benefits are dubious. Distortions in the energy market (especially through the tax system) continue, and if Bush could have gotten away with it, matters would have been worse.

This mixture of free-market rhetoric and government intervention has worked particularly badly for developing countries. They were told to stop intervening in agriculture, thereby exposing their farmers to devastating competition from the United States and Europe. Their farmers might have been able to compete with American and European farmers, but they could not compete with US and European Union subsidies. Not surprisingly, investments in agriculture in developing countries faded, and a food gap widened.

Those who promulgated this mistaken advice do not have to worry about carrying malpractice insurance. The costs will be borne by those in developing countries, especially the poor. This year will see a large rise in poverty, especially if we measure it correctly.

Simply put, in a world of plenty, millions in the developing world still cannot afford the minimum nutritional requirements. In many countries, increases in food and energy prices will have a particularly devastating effect on the poor, because these items constitute a larger share of their expenditures.

The anger around the world is palpable. Speculators, not surprisingly, have borne more than a little of the wrath. The speculators argue: we are not the cause of the problem; we are simply engaged in “price discovery” – in other words, discovering – a little late to do much about the problem this year – that there is scarcity.

But that answer is disingenuous. Expectations of rising and volatile prices encourage hundreds of millions of farmers to take precautions. They might make more money if they hoard a little of their grain today and sell it later; and if they do not, they won’t be able to afford it if next year’s crop is smaller than hoped. A little grain taken off the market by hundreds of millions of farmers around the world adds up.

Defenders of market fundamentalism want to shift the blame from market failure to government failure. One senior Chinese official was quoted as saying that the problem was that the US government should have done more to help low-income Americans with their housing. I agree. But that does not change the facts: US banks mismanaged risk on a colossal scale, with global consequences, while those running these institutions have walked away with billions of dollars in compensation.

Today, there is a mismatch between social and private returns. Unless they are closely aligned, the market system cannot work well.

Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.

I think what he gets at towards the very end - about the mismatch between 'social' and private returns - is absolutely crucial. It is outrageous that those who engineered this problem - the lenders and shadow banks that issued, packaged and repackaged mortgages, among many others - inhabit a realm where this kind of colossal failure is met with multi-million dollar severance followed by retirement. I want to emphasize that this has nothing to do with moral outrage on my part, or any kind of class envy/hatred - 'how can they walk away rich when millions are suffering?' or anything like that - but is a simple matter of pragmatism. I believe strongly that people respond in regular and predictable ways to economic incentives, and in this case we have a systemic problem, where the entire edifice of banking and finance was rigged to incentivize what turned out to be horrendously risky behavior. I am arguing that the financial crisis we're seeing now was more or less an inevitable outcome of the set of incentives in place for top financial management, who by dint of their contracts could not lose by the actions they took, which have resulted in the complete erasure of the homeownership gains of the 2000s and at least a ten-year setback for equities, never mind the USD -> oil price spiral.

hiredgun · 07-09-2008, 05:56 AM

A counterpoint to my bullishness on oil prices. The distinction between his view and mine - which gets kind of buried, but is there - relates to confidence in the inventory data. He argues that producers are indeed holding on to more product to sell futures rather than for immediate delivery, and that eventually when a lot of these futures clear (with the 'speculators' holding the contracts uninterested in the black stuff itself) we will see a glut of supply driving spot prices way down.

http://www.nakedcapitalism.com/2008/...of-60-oil.html

Quote:

Any discussion of inflation should begin by noting that the bulk of recent inflation has been restricted to food and energy. Outside of those groups, the year-over-year change in the CRB commodity price index is already negative.

The main factors influencing the outlook for broad inflation are that the U.S. economy is most likely in a recession, consumers are unusually strapped because of both mortgage debt and tight budget constraints, international economies are beginning to weaken, and credit concerns remain endemic. We should not exclude China from the risk of economic weakness, particularly given that the Shanghai index is already down by well over half since last year's highs. Stock markets typically don't drop in half without economic repercussions. Meanwhile, U.S. government spending, while still undisciplined, is relatively stable and not expanding rapidly.

Given this context, we have a combination of weakening demand for most goods and services as a result of consumer restraint, accompanied by a generally firm demand for currency and Treasury securities (particularly short-dated bills) as safe havens from credit risk. That combination is disinflationary, and it is likely that we'll observe further downward pressure on inflation outside of the food and energy groups over the coming quarters.

On the subject of oil prices, it's clear that elevated gas prices have been a factor in the terrible consumer confidence numbers recently. Still, my view remains that broadening economic weakness and an unwinding of speculative pressures will combine to produce steep declines in commodities prices, most probably by the end of the summer season.

It's sometimes suggested that hedge funds, commodity pools and speculators don't actually drive up the price of oil, because they don't actually take delivery of the physical product – instead rolling their futures contracts over indefinitely or until they close out their positions. From an equilibrium standpoint, however, this argument ignores the zero-sum nature of the futures market. Producers have an interest in selling their output forward to lock in a predictable price. Similarly, bona-fide hedgers (such as transportation and industrial companies) have an interest in buying their oil forward so they can plan without concern about future fluctuations.

To the extent that the speculators begin to take one-sided trend-following positions, their purchase of a futures contract crowds out the purchase that a hedger would otherwise be able to make from a producer.

It doesn't matter that the speculator has no intent to take delivery. What matters is that if the speculators are unbalanced on one side, the producers will have satisfied their need to pledge future delivery. Moreover, because they can lock in a high price, they will be inclined to sell more for future delivery than they otherwise would. Meanwhile bona-fide hedgers will be inclined to buy less on the forward market than they otherwise would. You can see this combination of effects in the commitments data, as a tendency for commercials as a group to become net short following significant price increases in oil.

When it comes time for the speculators to roll the contracts forward, they have to sell their existing contracts either to someone who is willing to take delivery, or to a producer who sold the oil forward and can now clear that liability without actually producing the stuff. Given relatively high spot demand and tight supply, these rolling transactions have worked fine to this point, without driving prices lower.

In my view, the problem will emerge a few months from now, as a) economic demand softens further, b) planned production hikes actually emerge, and c) weakening price momentum encourages speculators to close long positions instead of rolling them forward. At that point, I expect that net speculative positions will plunge by 10-15% of open interest and we'll see a sudden glut on the market for spot delivery. It should not be surprising if this speculative unwinding takes the price of crude below $60 a barrel by early next year.

None of this means that prices can't move even higher over the short term. As I've noted repeatedly, once prices go into a vertical spike, very small changes in the date of the final peak imply significant uncertainty about the ultimate high. Still, I continue to believe that the often extreme cyclicality of commodities has not suddenly become a thing of the past.

[Geek's Rule o' Thumb: When you have to fit a sixth-order polynomial to capture price history because exponential growth is too conservative, you're probably close to a peak.]

In over 25 years in the financial markets, starting at the Chicago Board of Trade, I've heard a lot of talk about holding onto one asset class or another as a “long-term diversification,” and a lot of reasons why this factor or that has permanently changed the investment landscape (I have a Pets.com sock puppet in the office as a reminder of one of those times). Believe me – nothing shakes people out of their “long-term investments” faster than steeply declining prices. In commodity markets in particular, price trends feed on themselves in both directions, so we see pronounced cyclicality, and much more persistent trends – once set in motion – than we typically do in the equity and bond markets. It may be difficult to identify a peak in oil when it occurs, but most likely, the fallout from that peak will be spectacular.

roachboy · 07-10-2008, 10:52 AM

i haven't had a chance to read this yet, but the guardian just released a copy of the world bank report on biofuels that was to be--um..suppressed:

http://image.guardian.co.uk/sys-file...0/Biofuels.PDF

i'll get back to this...

later:

hiredgun: i don't think that the steiglitz claim about a fundamental crisis unfolding for neoliberalism is at all melodramatic. we're already in it. but unlike the retrospective constructions of crisis so dear to historians and other analysts, who necessarily based their modelling practices on the past, a crisis in real time seems marked largely by incoherence and/or a certain randomness of actions, which are functions of instabilities of meaning. retroactively, crisis is typically modelled as transition--they aren't the same thing. it's a kind of pollyanna view, in fact, to see in crisis a version of "it all works out in the end"---which is what crisis models generally demonstrate. teleological fallacy and all that.

the world bank piece is interesting--it's claims are quite strong, quite clear and pretty well demonstrated by the data--but i'll defer setting about a debate, figuring that anything i say is a spoiler and it's better for you to read it and post stuff in response.

suffice it to say that if this report is right at all, what the bush people have been saying is yet another instance of ideology conservative-style, which is delusional claims supplemented with footnotes which reference information shaped by those same claims.

roachboy · 07-14-2008, 03:27 AM

http://www.earthtrends.wri.org/searc...ex.php?theme=6

a couple posts ago, i mentioned the earthtrends database on energy---the site is back up, and this page is the index for the data.

06-13-2008, 10:50 PM	#43 (permalink)
Charlatan Getting it. Super Moderator Location: Lion City	The thing to note about the cars coming out of China and India is that they are aiming for better fuel efficiency and are working on making cheaper hybrids. They could beat the other auto making nations to the punch. My thought on the price of gas is that we should have a floor on the price that's somewhere around $4/gallon. It's at this price that other forms of energy become affordable. If the floor has to be kept by taxes so be it. The higher prices can be met by an income tax break for the lower incomes. Also, investments (either directly or via tax incentives) in alternative forms of fuel would come from the funds received from the taxes. To me, it's more about making the West (read: US) less dependent on oil. Develop other forms of energy. Develop more efficient ways of living. __________________ "My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars." - Old Man Luedecke

06-16-2008, 07:43 AM	#49 (permalink)
roachboy Super Moderator Location: essex ma	i'm in the process of trying to work out how to think this, hiredgun---and i'm also following the logic of the op i put up, which included the initial warning from george soros about futures trading, institutional investors and the "hoarding" generated (in the eyes of some) by the tactics these funds seem to prefer. because i'm curious about it, and because the futures market seems of a piece with the transnational currency markets as areas of economic activity beyond the control of the nation-state, i've been focussing a bit on it. i was looking at some data about production levels, oil supply levels and such over the weekend, but i can't seem to find it at the moment. later perhaps. i don't think that the futures market is the driver, but i think it is am important one, particularly given the influx of large-scale pension/hedge players into the game. the point is more that these levels are all interconnected, and that this may be a way to see the problems neoliberalism has wrought. ==================================== btw: i dont think the analogy between futures in oil and/or food and real estate holds. futures is an explicit game. if most of the analyses i have read so far are correct (i've put some links above) the problem is not the futures market per se, but the changes in the rules of the game de facto brought about by the entry of new types of players into it. driven out of bonds, etc. by things like the subprime crisis and weakness of the dollar no doubt... on the other hand, i'm trying to figure out when these players started really shifting into futures--i just finished a 2006 piece that seems to have been an important factor in making the futures market more widely available---> Facts and Fantasies about Commodity Futures. By: Gorton, Gary; Rouwenhorst, K. Geert. Financial Analysts Journal, Mar/Apr2006, Vol. 62 Issue 2, p47-68, 22p which is interesting in that the language soros (for example) was using seems to have been taken largely from this article's ways of framing futures markets, assimilating their characteristics and possibilities to a readership more accustomed to equities trading, etc etc etc. but am still looking around for information... __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite Last edited by roachboy; 06-16-2008 at 07:49 AM..

06-16-2008, 08:56 AM	#52 (permalink)
roachboy Super Moderator Location: essex ma	most issues that are of any interest are really many issues balled into one. the only problem that complexity creates, really, is trying to figure out a way to think about it so that you don't simplify in the wrong direction. there is a problem of supply. there is a problem of falling-off of new oil potentials, so a sense of the finiteness of the resource as a whole. there are a host of problems that all point to the degree(s) of dependence on petroleum and petroleum-based products. i look at my computer and see almost nothing but these products. i think about the fact i am on the internet and imagine how much of these technologies are petroleum-based. this is obviously way way bigger than gas prices. but there is obviously a problem, a host of problems, of demand. this seems far bigger than a matter of what car one drives, but maybe that's just me. there is a problem of how prices for petroleum is set. this is obviously the space where the futures market comes in. there is a problem of the collapse of the dollar, which impacts on prices independently of the futures market. the problem of the dollar is an intersection between the transnational currency market and the political fall-out of the bush administration's actions and the assumptions made by currency traders as to the meanings of indices of economic activity in other areas as they impact on their sense of the dollar's prospects. there is the problem of the increasing integration of markets for both oil and currency into a transnational space that provides at this point very little in the way of room to manoever for nation-states. there is the strange matter of infotainment, televisual and otherwise, which seems to obscure as much as it informs about these matters. there is the problem of neoliberal ideology, which is the frame of reference through which all this tends to be thought about, which is another matter. there is a problem of the intertwining of petroleum dependency and agricultural production and distribution. one way of thinking about this is the problem of scale---centralized corporate-style monocrop-based farming as the dominant paradigm for transnational agriculture may be starting to hit it's limits. there are alternatives, but these are not matters of state policy at this point. the transition from the present model to another may well suck for alot of people. there is a problem of transnational logistics, the nature of food commodity flows, of food aid, of neocolonialism, which is also tied into all the above. there are separate problems of how the prices for all these items are fixed. futures again. there is also the problem of the dollar, again. there is another, longer-term problem which has to do with the effects of fixing nitrogen, the revolution in fertilizer production this enabled, and the relation between that and global population and the relations between that and these other problems. this one freaks me out a bit when i think about it, because i take no particular solace in malthus, but it seems to push one toward that kind of thinking. i'm sure there's more too. it's pretty big. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

06-16-2008, 09:07 AM	#53 (permalink)
Baraka_Guru warrior bodhisattva Super Moderator Location: East-central Canada	roachboy, this is exactly what I'm talking about (and then some). All things considered, oil and gas is necessarily more expensive. In other words, it's been cheap for far too long. Should we not be focussed less on oil itself and more on how we use it? __________________ Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot

06-19-2008, 05:34 AM	#56 (permalink)
roachboy Super Moderator Location: essex ma	the suburban model required considerable infrastructure (roads, highways) which were functions of decisions made at the state level concerning automobiles as the basis for the american transportation model. so it relied on automobile production, was a function of economies of scale...it also relied on the standardization of house construction. it also relied on the transformation of consumer credit right after world war 2, which enabled mortgages to be obtained by people whose socio-economic position would have prevented it before--the gi bill was a big part of this--so you have even at the most general level a combination of public and private, state and corporate actions---and if you push thinking about this into the 1950s, the other element which emerges is a kind of total advertising campaign to sell this model--which worked until it didn't. from this only 2 points: the suburban model as it developed after ww2 would not have happened without substantial policy choices entailing the directing of state resources to infrastructure development---it follows then that if the transportation model, and the housing model which is intertwined with it, are being challenged by the price of oil that nothing will necessarily come of it until there are policy-level decisions made to begin transforming infrastructures (like mass transit or rail)....in other words, these are not "market-driven"--that's backward. the other point is linked thereby: people want what they are told they want. we are nice like that. easily managed. so there'd also have to be a substantive marketing campaign, more or less on the order of much of 1950s pop culture, to sell the alternative "way of life"--which over time would become as inevitable and necessary as the current "ways of life" because we are pliable and nice like that as well. what's real is rational, hi de ho. this is, btw, one of the reasons that the next presidential and congressional elections seem to me so important. whats a bit depressing is that i see obama as somewhat more likely to address these sorts of problems (a statement that makes me squirmy because it repeats this goofball ideology of All Logic Emanating from the Skull of the Leader), whereas mc-cain would in all likelihood try not to address them at all. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

06-16-2008, 07:33 AM	#48 (permalink)
hiredgun Addict	Roach: I'm willing to look at data that suggests otherwise, but at the moment I really don't think that speculation is a primary factor in high oil prices. You're talking about speculation in futures markets, but there is no intrinsic or necessary connection between futures and spot prices. Of course futures can have a significant impact - expectation of higher prices leads producers to hold off on selling, creating a short-term supply gap that is filled by higher spot prices than are justified by market fundamentals. BUT, opec countries have not cut back production, and I have seen no evidence that significant hoarding is happening anywhere in the supply chain - that is, there is so far no credible data indicating a rapid increase in oil inventories (although this is a difficult thing to tally and is not well-documented on a global scale). On the contrary, inventories so far as we can tell are at or near all-time lows. Krugman has talked about this in a number of recent columns. This is one reason a bubble should be more visible in oil than it was in housing. It is very difficult to read the housing data and understand to what degree house purchases are driven by 'speculation' - consumers buying houses they can barely afford in the expectation that rising prices will leave them better off when they sell in a number of years - because it's not clear whether the home is an investment or, well, just a home. Those aren't even neat categories. In the meantime, you have large numbers of people living in homes that in their minds they intend to eventually sell [at profit], but these people's houses are obviously not counted as 'inventory' in the official numbers. But in the case of oil, in the absence of excess inventory or reduced production, the story about demand seems to be the only one that makes sense with regard to the current rise in prices.

06-25-2008, 08:23 AM	#59 (permalink)
Baraka_Guru warrior bodhisattva Super Moderator Location: East-central Canada	I would ride more to work, except the bike access in Toronto between my place and work is atrocious. This city needs to do more to make it bike friendly. But, at any rate, I'm rarely ever in a car these days. The most I use public transit is the subway, and it's always packed, so I'm sure it must be somewhat efficient. I work in a small office that gets hot in the summer anyway, so showering isn't a big deal. I just freshen up in the bathroom with a towel and deodorant. Leto, just get yourself a nice backpack. I'm sure you could manage up to 10 lbs. of stuff no problem. My trouble is reducing my environmental footprint in other ways. I'm sure I'm burning too much oil in the consumer choices I make. __________________ Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot

06-25-2008, 11:52 AM	#60 (permalink)
hiredgun Addict	Sorry for the off-topic, but simply to answer the question that was asked of me: I have a gym membership at a gym across the street from my office (have had it for a long time). This has come in very handy for biking in, because I don't need to bring a towel, soap, shampoo, conditioner (these are all provided). The gym locker room even has a decent iron. All I have to do is toss my work clothes in my backpack and I am good to go.

07-02-2008, 05:49 AM	#63 (permalink)
hiredgun Addict	My feeling is that the short-term fluctuations in price do indeed reflect these sorts of temporary geopolitical murmurs - like increased tension between Israel and Iran. But these quick price moves are just the foam on top of a rising tide with altogether different causes. On the Hersh piece: very interesting, although also not that surprising. StratFor had a bit of a unique take on it; they claimed that the administration deliberately leaked this information through Hersh (someone whom they knew would be credible) as a way of putting pressure on Tehran without the overt appearance of saber rattling. This in contrast to Rice's recent flirting with the idea of exchanging diplomatic personnel (though not embassies) with Iran could be a kind of good cop/bad cop or stick/carrot routine.

07-03-2008, 05:17 AM	#64 (permalink)
hiredgun Addict	Crude is above $145 today, following ECB rate hikes. Dollar falls, oil rises, clock keeps ticking.

07-04-2008, 06:29 AM	#69 (permalink)
Leto Junkie Location: The Danforth	Remove the need for bio fuels. Obviously the chaotic implications of the overly complicated system is beneficial for a few only. Corn is also a very harsh crop on soil. I believe that the central Soviet republics exeperienced environmental break down due to corn and the need for excessive fertalizer repleneshment. Now it is the crop used for almost everything from bio fuels to candy. Allow market forces to run with the cost of normal fuel, and finance alternative R&D. There is lots of oil. The world will get warmer or colder. live with it. The effect of canada or US on global warming pales in comparison to China or India, so let's be prudent but also lets ditch the enviro-McCarthyism. Last edited by Leto; 07-07-2008 at 09:53 AM..

07-07-2008, 08:34 AM	#70 (permalink)
hiredgun Addict	Between this and high fructose corn syrup, can we now safely call corn the root of all evil? In seriousness - it has been commonly held by a lot of economists for a while now that biofuels were doing more harm than good. But I am surprised that the WB would hold this report confidential, and it would do us all some good to have some hard analysis see the light of day. Are there plans to release it now that it is out of the bag anyhow?

07-10-2008, 10:52 AM	#73 (permalink)
roachboy Super Moderator Location: essex ma	i haven't had a chance to read this yet, but the guardian just released a copy of the world bank report on biofuels that was to be--um..suppressed: http://image.guardian.co.uk/sys-file...0/Biofuels.PDF i'll get back to this... later: hiredgun: i don't think that the steiglitz claim about a fundamental crisis unfolding for neoliberalism is at all melodramatic. we're already in it. but unlike the retrospective constructions of crisis so dear to historians and other analysts, who necessarily based their modelling practices on the past, a crisis in real time seems marked largely by incoherence and/or a certain randomness of actions, which are functions of instabilities of meaning. retroactively, crisis is typically modelled as transition--they aren't the same thing. it's a kind of pollyanna view, in fact, to see in crisis a version of "it all works out in the end"---which is what crisis models generally demonstrate. teleological fallacy and all that. the world bank piece is interesting--it's claims are quite strong, quite clear and pretty well demonstrated by the data--but i'll defer setting about a debate, figuring that anything i say is a spoiler and it's better for you to read it and post stuff in response. suffice it to say that if this report is right at all, what the bush people have been saying is yet another instance of ideology conservative-style, which is delusional claims supplemented with footnotes which reference information shaped by those same claims. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite Last edited by roachboy; 07-10-2008 at 02:24 PM.. Reason: Automerged Doublepost

07-14-2008, 03:27 AM	#74 (permalink)
roachboy Super Moderator Location: essex ma	http://www.earthtrends.wri.org/searc...ex.php?theme=6 a couple posts ago, i mentioned the earthtrends database on energy---the site is back up, and this page is the index for the data. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite