<em>Guest Post</em>: The Squeeze in Middle America

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Sam Sherraden is a Program Associate with the New America Foundation’s Economic Growth Program and writes for Global Economic Snapshot.
As my cab approached Dulles Airport last week from my Washington home 45 minutes away, I looked up and was astonished to see the meter at only 45 dollars. After the driver paid for gas on a 60 mile ride (the 30 mile drive to the airport and 30 mile drive back to the district where he could get another fare), costs of vehicle maintenance, and one and half hours of time, I couldn’t believe he turned much of a profit. I leaned forward and asked him a question to that effect. “It’s not just gas, man!” he replied. “Milk and all those things I feed my kids. They are ALL more expensive.”
Oil prices peaked last weak at just under $140 a barrel and gas prices nationwide have risen above $4 per barrel. Middle income Americans and small business are struggling to find ways around higher food and energy prices. The Wall Street Journal offered some dismal advice last week on how small business can survive with higher prices by rerouting deliveries to save fuel, using energy efficient light bulbs, and holding meetings online instead of paying for airfare. But when compared the rising cost of inputs for business and families, these savings are limited in scope and impact. The cab driver and many other folks I’ve spoken with are not feeling any relief.
Nor does it appear relief is on the horizon. High prices of energy and food coincide with a deflating housing bubble and sinking consumer confidence. Much of the optimism about the economy has been torn apart and replaced by anxiety. The stimulus checks appear to have provided a bump to consumption, but it is unclear that once that shot in the arm wears off the economy will be on a path to recovery. Trouble in financial markets is spilling into the real economy with more financial institutions on loose footing and access to credit continually difficult. The Fed has aggressively cut interest rates, but this erodes the dollar, causes inflation, and forces international investors to look toward the euro. Put simply, the outlook for the remainder of 2008 looks grim.
To discuss these issues and a set of policy solutions to reorient the economy during the next administration, we booked two events at the New America Foundation this week.
On Wednesday, June 25 Leo Hindery, former Senior Economic Advisor to John Edwards and current unofficial advisor to Barack Obama, and Tom Gallagher, Senior Managing Director of International Strategy and Investment Group, Inc., will speak about structural changes we need to strengthen the economy.
On Friday, June 27 Los Angeles Times National Economics Correspondent Peter Gosselin will speak about his new book, High Wire: The Precarious Financial Lives of American Families.
— Sam Sherraden

Comments

36 comments on “<em>Guest Post</em>: The Squeeze in Middle America

  1. Carroll says:

    Posted by PissedOffAmerican Jun 26, 12:02AM – Link
    Carroll, such a program would penalize those of us that MUST have a truck to ply our trade.
    >>>>>>>>>>>>>>>>
    POA..I said impose the tax on gas guzzlers and SUV bought for “Personal” use…not on businesses.
    And cut down on all the phony tax break deals. I buy things from a Gourmet kitchen shop here now and then and know the owner. She has a huge Ford Expedition that she writes off as a busness vehicle for delvieries…except they don’t deliver or pick up anything for the shop, they bought it just to tow her husbands fishing boat.

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  2. pauline says:

    Ron Paul also warned us back in January 2007:
    “As the war in Iraq surges forward, and the administration ponders military action against Iran, it’s important to ask ourselves an overlooked question: Can we really afford it? If every American taxpayer had to submit an extra five or ten thousand dollars to the IRS this April to pay for the war, I’m quite certain it would end very quickly. The problem is that government finances war by borrowing and printing money, rather than presenting a bill directly in the form of higher taxes. When the costs are obscured, the question of whether any war is worth it becomes distorted.”
    What do you get when (1) the average American has to somehow survive the best way they know against the oil-futures-business robber barons and (2) the average American sees inflation week and week, month after month because of the totally phony fiat currency which congress and the WH easily turned over to the private fed reserve owners many decades ago and (3) an illegal war that zaps available programs and services for many decades to come??
    You get the current conditions on the average Main St. in America. And the DC political whores and their playmates could care less.
    Adding more and more water when you make soup is what the phony fiat currency does to the value of the phony dollar. Fiat currency “waters it down” so much, the d*mn dollar buy only pennies worth of food, education, medical care, housing, transportation the more the fed reserve prints their fiat money out of thin air. The copper metal in a real penney will someday be worth more.
    The money game is so fixed and so phony, one can only hope waterboarding becomes mandatory for those lobbyists and political and money whores who are on their way to ruining the best experiment this country once offered. Over a hundred years ago, my Celtic ancestors proudly came (legally) to this great experiment where they wanted to live, work honest work, rear their families and die fulfilled in this country. The Disney dream that has been “sold” to us in the last 30-40 years is all smoke-and-mirrors and is now a real nightmare.
    All the while the DC whores, the money whores and the energy whores continue to play, drink and laugh. . .

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  3. Kathleen says:

    ..pauline… thanxxxx. John H…I loved your dire scenario of Bush cronies with holding bags of burst bubbles… needed that smile. POA..neverrrr mind.. speaking of penis and cutting and pasting, Lorena Bobbitt was back in the news yesterday… something about working with sharp objects…..

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  4. pauline says:

    from TIM PARADIS, AP Business Writer, 6/26 —
    “OPEC President Chakib Khelil was quoted as telling a French television station that oil could rise to between $150 and $170 per barrel this summer before pulling back later in the year.”
    from Bloomberg 6/6 —
    “June 6 (Bloomberg) — Crude oil surged more than $10 a barrel to a record as the dollar weakened after the U.S. unemployment rate grew the most in two decades and Morgan Stanley said prices may reach $150 within a month.
    The dollar weakened against the euro after unemployment rose to 5.5 percent, signaling the Federal Reserve may be reluctant to increase interest rates. Oil also rose after an Israeli minister said an attack on Iran may be necessary.
    Oil is “being used as a hedge by speculative buyers for the weakened dollar,” said Gary Adams, vice chairman of oil and gas consulting at Deloitte & Touche LLP in Houston. “We are seeing that the price will continue to go up as investors look for alternatives.”
    ****************
    yea, plenty of gasoline and oil available here in Pennsyvania . . .most Americans have altered their drivng habits except those like POA and other independent truckers who must suffer the consequences directly or somehow creatively pass on a “fuel surcharge” to their customers.
    Who again is InterContinental Exchange (ICE)? Three of the largest oil companies in the world – Royal Dutch Shell, BP Amoco and Total Fina Elf, two of the top investment banks on Wall Street – Goldman Sachs and Morgan Stanley, two of Europe’s leading financial institutions – Deutsche Bank and Socit Generale, and six US energy companies – American Electric Power, Aquila Energy, Duke Energy, El Paso Energy, Reliant Energy and Mirant.
    Those bankers and oil companies have combined their robber baron oil-futures-business efforts into the BIGGEST cause of today’s economic mess, imo.
    Oh, has there been an increase in wordwide demand for oil? Yes, but, not to the sky-rocketing price effects of what the bankers and oil company robber barons have done to the price of oil. This is a fixed game this oil-futures-business crapola. And who watches out for us in formulating a sensable US Energy Policy when most in the dirty-money-soaked congress and the bushwacker cabal look the other way. . .look the other way and laugh?! These DC crooks’ gasoline bills and airplane tickets are paid for by us taxpayers. What they worry??
    POA, I know many small farmers and small business folks who are struggling big-time with the increase of fuel costs. With subsidized gasoline prices in Mexico and everday prices under $2.50/gallon, maybe, just maybe, many legal citizens here will start sneaking across the border to find a better, cheaper place to live.

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  5. JamesL says:

    POA: Isuzu NPR. Doesn’t have that looong American hood with all those throbbing cylinders with their gigantic thrusting pistons. Sips diesel, turns on a dime, well, quarter. If you think oil will go up in the future, and then keep going up more after that, then the task is how to re-write the economic equations of people who need to transport heavy things (those pesky people who build and maintain your home, for example, or all those farmers who feed us). Europe has long been on this path of figuring out how to to the same amount or more of work with less equipment. Americans are just starting and are prone wander in circles mumbling, while their leaders stand in front of microphones and mumble about stocks and forcasts. Politicians will be the last people who understand this.

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  6. Linda says:

    Strongly suggest that people listen to Leo Hindrey’s presentation at New America on Wed. as he had very interesting things to say about speculation and manipulation of the oil and gas markets.

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  7. PissedOffAmerican says:

    ROFLMAO!!!!
    Sorry for the double whammy on the “penis” thing. I had to do some cuttin’ and pasting, and obviously screwed up.
    And keep your freudian slip commments to yourself, people.

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  8. PissedOffAmerican says:

    Carroll, such a program would penalize those of us that MUST have a truck to ply our trade. When I moved to this area six years ago, I had a one ton dually with a very large V8 engine, that got horrible gas mileage, but was able to carry tools and materials efficiently. It was a necessary evil, and I lived with it. Your tax idea would not differentiate between those that buy large rigs for necessity, and those that buy them as a penis extender or a fashion statement.
    A better idea would be a tax relief for those of us that can prove that a utility vehicle is an imperitive to our livelyhoods. penis
    This last year and a half, I have had to park the dually, and make do with a half ton with a manual tranny and a V6. It gets far better mileage, but cannot haul what I used to. Now, my days must be planned better, so unecessary tools aren’t being schlepped around. And frankly, with the tools I am hauling, I’m beatin’ the shit out of the rig, it won’t live a long life.
    Sadly, no rig, no income. Some of us just HAVE TO rely on trucks. And unfortunately, gas prices are creating extreme hardships for us. My health insurance now gets put in my gas tank. And thats not a good idea for a guy in his fifties. But there is simply no other option.

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  9. Carroll says:

    Posted by Chris Brown Jun 25, 3:46PM – Link
    >>>>>>>>>>>>>>>>>
    My apoligizes for my snarky remark.
    And I agree with this:
    “My point is that if the price of gas is such that folks are able to waste fuel, and unnecessarily pollute, by driving gas guzzlers solely for the purpose of impressing other folks, then the price of gas is not high enough. ”
    But not with this:
    “The USA government should have long ago greatly raised the gas tax to a level which would have sent a price signal such that folks would have consumed as little as possible.”
    I don’t think that’s the way to do it…you would be burdening the business that rack up a lot of unavoidable milage in vans and tractor trailers..not to mention it would increase the prices they have to charge to make up for the gas price, so increasing inflation in everything else.
    A better way to do it would be to impose a “very hefy tax” at point of sale on “personal SUV’s” and on cars and trucks that fall below a certain MPG. A high enough tax, in the thousands, to be a deterrent to the average family and these people that drive huge trucks when they don’t need a truck for anything more than getting to their office and back. This would spur the auto makers to even more gas economical cars and hopefully start getting the gas guzzlers off the road as people trade or buy cars.

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  10. David says:

    DonS,
    Regarding your brothers-in-law, it is amazing what people can choose to believe, isn’t it? Back in my community college teaching days, the faculty most like your brothers-in-law were the retired military double, and in some cases, triple dippers. Never ceased to amaze me.

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  11. Chris Brown says:

    Carroll,
    No, I never attended business school, I say proudly. In fact, I’m a college dropout. Going to business school obviously doesn’t necessarily make one any smarter or more well informed, does it? George Bush has an MBA, doesn’t he?
    I have owned businesses and understand that the rising price of gas impacts businesses and the consumers who buy the products and services from those businesses.
    My point is that if the price of gas is such that folks are able to waste fuel, and unnecessarily pollute, by driving gas guzzlers solely for the purpose of impressing other folks, then the price of gas is not high enough.
    The USA government should have long ago greatly raised the gas tax to a level which would have sent a price signal such that folks would have consumed as little as possible. Such would have reduced pollution, highway congestion, and also induced a more efficient pattern of housing development, rather than the extremely inefficient pattern of urban sprawl, with its attendant higher costs of providing governmental services (police, fire, water, sewer, and etc.)

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  12. DonS says:

    Yes, there are multiple causes for increase in oil prices, the dollar devaluation/denomination among them. Speculation rides the back of all these uptrending forces.
    WRT the “turning on a dime” issue, right you are JamesL, 30 years of plenty of blame to go around, not the least of which is a hyped up consumerism top to bottom in the US of A, in which bigger has always and still seems to equal better. Now to change the paradigm. And your conclusions about government actions being tied to corporate well being, as defined by those corporations, is a huge issue. See my comment on the new thread about redistribution of wealth.

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  13. JamesL says:

    Chris Brown: “If everyone in the USA…..moved to high mileage vehicles the price of gas would drop, and there would be more room on the highways.”
    Sorry, we’ve seen the new oil price floor, while deluding ourselves that it is a ceiling. Oil’s not going back down because Americans are fast being overtaken by other countries intent on consuming like Americans do.
    POA: “But these pieces of shit in Washington have actually, this last decade, gone in the OPPOSITE direction, encouraging SUV manufacture and ownership with economic incentives, and media campaigns selling these vehicles as “safer”.”
    A Great Turnover began in about 2004 when “stimulus” tax incentives for vehicles and equipment (why did we need stimulation then??) provided strong encouragement to buy new and buy big. For tradespeople (those who must run around carrying heavy, bulky tools, chasing work, rather than driving their Rio ten miles twice a day to work) it meant they could now get out of their failing ’99 Ford Ranger and into something SOLID. And because keeping up with the Joneses cahones are so important to Americans, a lot of people who never transport more than a bag of dogfood bought themselves a new truck too: a full bed, crew cab, 8000#, diesel powered (for efficiency) monster half the size of a civil war locomotive to intimidate or impress their neighbors who drove Rio’s. Wah La! A few year of a nation running to Walmart and back to buy self destructing crap and save 69 cents, and diesel doesn’t seem to be as cheap as it once was. In this sense, Chris Brown is correct: $2 costier gas would have been better for America than a $2000 guzzler rebate. The myth used to be that Americans were dangerous with their backs to the wall. Now media wordmeisters construct or deconstruct walls so fast Americans are led like sheep, and the cause of all problems is anyone other than America.
    Carroll: “People can buy all the gas they want, there is no “shortage” of gas. No lack of availibility.just higher prices.”
    Well, uh, yes. But the “speculation” is about what will happen NEXT. Next month, next war, next US attack, next year, when the Chinese or EU or India or Korea rolls their millionth car off the assembly line.
    Morton’s Best Friend said, “I seriously doubt Iran would take its oil off the market for very long, if at all.’
    Good point about Iraq. Oil lines there are being either blown up or pilfered at a rate that would make any American oil man giddy with envy. Iran won’t take its oil off the market if the US attacks. It will simply sell it to any nation other than America. With supply now equaling demand…..you should get the picture.
    Posted by DonS Jun 25, 7:19AM – DonS: re oil supply: “We CANNOT turn on a dime even if there was the will to do so or the government regulation to do so.
    Well, size-wise, the dime is now about 30 years long, dating from at least the last gas crisis. This forum is the internet, and it may well be that half the people reading this were not even born in the mid 1970’s, but I can tell you that good ol’ Americans got really testy when they found that gas stations didn’t simply have high prices, but that they were out of gas. Pick your favorite dream car and live in it for three days waiting in line to get gas and your love affair will pale. Apparently American’s could not break themselves away from having a good time to figure out how to not allow this to happen again. It is easy enough to blame the Repubs for this, because they stood against nearly every regulation and program which could have helped over the last 30 years. But the Dems weren’t the saints they want themselves to be seen as. Thirty years was long enough for the Europeans, and the Japanese, and the Koreans, none who were as well funded as Americans. America, and Americans simply blew it, and now want to blame someone else.
    There is one explanation that explains all US government actions: it does not make policy or changes for the good of the individual citizen. Rather, it supports the desires and profits of large corporations, and of the very rich. I don’t like to think this, but where we are now has not resulted from a government which acts for the people.

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  14. JohnH says:

    I love it. “The official administration line is that speculation is not causing the rapid rise in oil prices.” Of course, the official administration line is that the Iraqi Occupation is about anything but oil. Given these criminals’ knee-jerk propensity to lie about everything, any sane person will conclude that the rapid rise in oil prices MUST be all about speculation. Follow the monies: are Bush’s cronies making out like bandits or not?

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  15. Sam Sherraden says:

    It does not seem clear that the increase in crude oil prices is not due to speculation. Rather, I believe it is due to a surge in demand from developing countries, a transfer of production from energy efficient producers (US, Japan, Germany) to energy inefficient producers such as China, and stagnant oil output in 2007.
    If you look at the price of oil futures contracts and the spot prices of crude they match one another nearly perfectly. If speculators were driving the price far beyond the spot price, there would be hording of oil.
    Furthermore, if you look at other commodities the prices have risen just as much. Rio Tinto, the mining company, said Chinese steel producers agreed to pay 96% more for iron ore. Is this due to speculators? No probably not, because iron ore futures contracts are not traded. Futures contracts for rice, cobalt, cadmium and other metals are not traded yet their prices have risen as much, if not more than crude oil.
    For an explination see Paul Krugman’s blog entry:
    http://krugman.blogs.nytimes.com/2008/06/23/speculative-nonsense-once-again/
    Also check out the Global Development Finance 2008 from the World Bank.
    Blaming wall street traders or the ICE will not get us very far. Instead, the US should focus on worldwide energy efficiency standards and investment in green technologies.

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  16. PissedOffAmerican says:

    Interesting, with all this furor about gas prices and drilling, refineries and such, the press is pretty much ignoring these no bid oil contracts finally getting big oil back in Iraq.
    Think that oil is gonna come here, or feed the growing market in China and India?? Kinda like when they sniveled and moaned to open the Lousianna natural gas fields, got the public to go along with it, only to ship the majority of the gas comning out of those fields to foreign markets.
    Its really quite humorous seeing these jackass mouthpieces presenting the oil companies as being somehow loyal to and altruistic towards the United States and its people. These entities play on a global scale, and are loyal only to profits. They’ll rape our resources and sell to the highest bidder, no matter the consequences to our environment, economy, or people.
    The new ads are something too, aren’t they? Presenting these companies as guardians of our environment, custodians of the earth. There are some bluffs above the north western oil fields in Bakersfield and Oildale where one can see for miles. The countryside is destroyed, polluted beyond comprehension, denuded of all vegetation, and planted smack dab under the most polluted air on the continent.
    I am currently doing the finish work on a massive remodel for one of the families that has a large oilfield construction business in Bakersfield. I won’t mention their names, as they are one of the powerhouse families on this end of Central Cal. And they are really non-pretentious wonderful people. But their wealth is unbelievable, and the daily travails experienced by the craftsman and tradespeople they currently employ are unimaginable to them. They simply live in a completely different world than I do, and cannot possibly imagine what it is like for me when I put $120.00 in my gas tank two or three times a week. For chrissakes, this guy gets in his jet to go trout fishing on a whim. How can he empathize on what effect his industry has on someone such as myself?
    I’m nattering, but we truly are becoming third world, with this ever widening gap between them and us. We’ve arrived, and it isn’t where we were supposed to go.

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  17. TokyoTom says:

    The run-up in oil prices and others is largely a simple reflection of the mismanagement (rapid growth) of the monetary supply, which makes dollars worth less.
    Yes, there is speculation on commodities, but speculators risk their capital, and they’ve been moving to commodities as a better store of value than other stocks that are taking a hit from economic woes – behind which again lies the Fed.
    There is also somewhat of a squeeze due to rapid economic growth elsewhere. We feel pain simply because our economy has stopped growing.
    Steve, as for your structural change panel, I imagine you understand that much of our problems are government born and bred, except of course issues relating to unowned commons (air and oceans) and lack of clear ownership (and great corruption) elsewhere.

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  18. DonS says:

    The official administration line is tht specualtio is not causing the rapid rise in oil prices, though the eveidence is clear that short term supply and demand factors could not possibly cause the kind of spike we’ve seen. And in the US demand is actually down for gas but still the price spiked, which is related to factors other tahn the price of a barrel of oil which have not yet worked their way throughthe supply chain..
    So, yes, its pretty obvious that specualator’s are driving the run up, with the iran questionmark being a big factor.
    I agree with the points implied above that the US has created an infrastructure based on cheap energy, petroleum based. We CANNOT turn on a dime even if there was the will to do so or the government regulation to do so.
    Hard times are here. Folks are angry and getting angrier. This factor makes Bush more dangerous. Pathetic that the country and the world is quavering over such a moron.

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  19. Dirk says:

    My view is that a combination of things is driving the price of oil to new heights:
    The primary force is the Treasury and Feds driving the dollar down. They do this because they couldn’t convince the Chinese to raise the value of the yuan enough. Because oil is priced in dollars, the inflationary effect is to force hedging strategies to compensate.
    The second largest force is the threat that Israel made on Iran. Because of the large unknowns regarding the aftermath of any such attack, the possible loss of a significant amount of oil on the market would dramatically increase the price.
    The Third force are the intermittent conflicts affecting various oil producing regions, primarily the Nigerian delta region.
    The Fourth force is the increased demand from growing economies such as China and India as they rise up and start consuming resources commensurate with their growing influence and affluence.
    I think the first two are having about 60-70% of the influence.

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  20. Carroll says:

    Just one more thing.
    How much oil could US taxpayers buy with the 3 billion a month we are spending in Iraq, a bill that sooner or later we are going to have to pay in the form of taxes?
    I have given up even trying to talk about domestic or foreign US policy as if it were made by rational or honest people because it isn’t.
    Consider invading a country at a cost of 10 trillion dollars…even to “secure” oil.
    That isn’t even cost effective. What business man would make that deal… only one that wasn’t paying for it himself and charging the cost to someone else.
    And it’s not as if we were being denied the ability to buy oil in the ME to begin with..were we? Even allowing for some increased prices from having to compete with growing economies in other countries where is the actual dollar benefit to the American people’s economy?
    Ask youselves this…if oil and reasonable prices and a stable US economy is the goal why are we deliberately screwing our own selves in the ME in ways that disrupt some oil production, threaten to disrupt others and cause wild speculation in the oil market?
    The answer is because our government is neither rational nor honest.
    I guess I could have saved muself a lot of typing if I had just made that my sole comment on the gas inflation.
    And if anyone wants to look at Iraq as a humanitarin issue lets run the numbers there too…how many people did Saddam kill and would have killed in the past 6 years vrs. how many have been killed in the past 6 years due to our invasion?

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  21. Carroll says:

    Let me throw this out also….don’t expect any alternative energy anytime soon….not until the oil companies figure out how they can control any future new energy industry.

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  22. JohnH says:

    Morton’s Best Friend said, “I seriously doubt Iran would take its oil off the market for very
    long, if at all.’
    Ummm-how long did it take Iraq to get oil production back to prewar levels? Years ago, the EIA called the production collapse in the Iraq the third greatest disruption of oil production since WWII, exceeded only by the Arab oil embargo of 1973 and the Iranian revolution.
    It’s totally naive to discount the strong possibility that Iranian energy production might suffer greatly as the result of a US attack, particularly when the US tries to occupy the oil fields.
    It would create a situation made in heaven for oil speculators.

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  23. Carroll says:

    I am definitely not an economist but reading around to try and understand the market I do think as Pauline noted, that oil futures speculation is part of the problem.
    I really don’t like the “demand’ excuse..one thing is that gas prices have almost doubled in a year…I find it hard to believe that demand has doubled in one year..even in China. So obviously “demand and consumption” is not the root problem.
    People can buy all the gas they want, there is no “shortage” of gas. No lack of availibility..just higher prices.
    The oil producing countries have not cut back on their production and have even upped it a bit…but the price of crude keeps climbing so you have to ask why.
    There have been numerous reasons given and a lot of them don’t hold water to me. Watching the pretend house hearings on oil prices not too long ago the oil execs were once again laying it on their “refinery” problems….this is exactly what they said 10 years ago. They have had 10 years and 300% profit increases and they haven’t put any money into upping their refinery capability? And since we don’t have any shortages obviously the refineries are putting out enough.
    I think a lot of things are going on from the low dollar abroad to speculators and market minipulation to the oil companies squeezing every dime they can get for pure profit.
    As for the guy above who said adding another $1 or $2 rise in the price of gas will be a good thing for USA consumerism….evidently he never went to business school or doesn’t run a business….energy and gas prices are having a terrible effect on business and consumer buying and contributing to inflation in everything. The uber rich spender class alone cannot support the US economy…we have to have a middle class and even lower class that can afford to spend.
    And I am going to throw this out in case some other poster is familiar with it…back in early 2000’s Paul Krugman wrote several times about the threat of ‘deflation” to the US. A deflationary economy being the thing that the Fed fears more than waterboarding.
    This seemed on target to me because in looking at the Fed policy then and still, nothing is making sense. There is such a thing (policy) as “managed inflation”..creating inflation to stave off deflation. The more bubbles the Fed has allowed and the more they lowered rates to encourage more spending to create more bubbles and inflated prices and demand, the more Krugman mades sense to me.
    The Fed considers Wall Street, not Main Street, to be “The Economy” and they can’t juggle their priority of taking care of Wall Street and maintaining a stable US economy for the majority population at the same time.
    Another thing struck me as so obvious when listening to our dear politicans, particulary the Anwar repubs…they are using the gas prices to try and blackmail the public into drilling Anwar…but as one dem pointed out the oil companies have 100’s of leases on oil fields they aren’t even using…I forget the exact number of acres involved but it was up in the millions. So why are they trying to blackmail us into drilling in Anwar,…would it be richer and cheaper for them extract oil there, thereby reaping more profit…than use the leases and oil fields they already have?

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  24. PissedOffAmerican says:

    All the RW mouthpieces, Beck, Limbaugh, Hannity, Levin, etc, are really sounding the klaxons about ANWR, offshore Santa Barbara, etc.. They’re also still harping this bullshit about China drilling off of Cuba, although they’ve toned that one down from an out and out lie to a mere insinuation.
    I really think the “crisis” is being created, in no small part, to open up domestic fields, offshore and onshore.
    If you’ve been following this scumbag Johnson’s saga, (the EPA guy with his head firmly entrenched in Bush’s ass), theres some real irony to be found there. But the main message that comes through loud and clear is that these people, while screaming to open domestic oil fields and build refineries, have fought tooth and nail to avoid stricter mileage control legislation, both statewide and nationwide.
    With today’s technology, the auto makers could be producing automobilers and trucks that would enjoy far greater mileage, removing a huge portion of daily fuel consumption nationwide.
    But these pieces of shit in Washington have actually, this last decade, gone in the OPPOSITE direction, encouraging SUV manufacture and ownership with economic incentives, and media campaigns selling these vehicles as “safer”.
    Truth is, we’re fucked. Personally, I am now in the $800.00 a month range for fuel, just to get my truck and tools to the jobsites.
    With these treasonous sons of bitches busy killing Muslims, subsidizing Israel, giving no bid contracts to global corporate looters like KBR, Halliburton, and Bechtel, while cheerily shipping our jobs and manufacturing industry to China and India, I don’t hold out much hope they’ll be inclined to make it any easier on us workin’ stiffs anytime soon.
    One thing is for sure, there ain’t too damned many people seated in Washington that have even a slight understanding about what paying $800.00 a month in fuel costs does to my life. These people are so effin’ far removed and detached from their constituency that any sort of empathy is nigh on impossible. And that little embarrassing monkey at the head of the table hasn’t had to earn a hard fought for dollar in his life.
    The house of cards is going to fall over hard. Soon.

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  25. DonS says:

    I cannot disagree with David that “the lower middle class and working poor are yet again viewed as expendables by those for whom the system does work. Those with their hands on the levers have taken shortsightedness and denial to staggering new levels, the highest in my lifetime of 66 years.”
    Whether the poor are seen as expendable, which sounds like an active attitude, or are simply seen as having failed the test of radical individualism inherited at least a couple of centries ago via English political thought, the result is the same. It ameliorates the lingering thought that the system lacks fairness, and that social and economic fairness may be an obligation of a society that has enough wealth to lift all boats.
    Many of those for whom the system “works” (relatively anyway, i.e., they’re not rich, but comfortable) still extol the wonderful capitalistic system we have, don’t begrudge the super multi-millionaire rich their sinecures, and disparage the unfortunates for whom the system does not work, i.e., they’re “losers” because they lack moral fiber to succeed, if they think about them at all. Very Darwinian social and economic viewpoint.
    Of course I’m characterizing a type, but not all that far fetched.
    Two of my brother’s in law, for instance. One sucked at the public teat all his life and rose to polic chief, yet can’t say enough bad about Social Security and social programs, even though he adopted a child later in life and, comfy in his retirement from a Northeast government system, also collects and extra $1000+ per month SS for his “minor child”.
    Pretty much the same with my other brother in law who also collects the “minor child” bonus even though he is 66, has a private pension of some note, is back at work in the IT field at over $100 grand annualized, and scarfs up on VA medical services. He absolutely rails against Social Security, screaming that its his money and if the government had just left him alone to invest it all these hears he’d be much better off, etc.
    Neither one of these gentlemen appears at all moved by the knowledge that their mother, now deceased, relied on Social Security income to maintain a decent living in addition to her small teacher’s pension from decades ago, because she became tax poor living in a nice suburb that became super wealthy around her while her income remained the same.
    Very off topic this, perhaps, but without being too preachy, somehow the US appears to be mostly myth and mouth as far as enabling a quality of life that doesn’t leave out a lot of folks.

    Reply

  26. David says:

    Don S said:
    “There is no way they can absorb substantial increases in the cost of living…they as yet have no idea of just how screwed they are….
    So, while the middle class, with their mortgage exposure may well lose their houses and incur financial disaster, have to radically downsize, etc., the lower middle class and working poor will just implode.”
    Apparently, Don, the lower middle class and working poor are yet again viewed as expendables by those for whom the system does work. Those with their hands on the levers have taken shortsightedness and denial to staggering new levels, the highest in my lifetime of 66 years.
    I’ve almost finished Scott McClellan’s book. I highly recommend it. It is not a diatribe, it is not a score-settling, it is not a legal brief. It is an honest and insightful account of what went wrong and why, as seen through the eyes of someone who believed deeply in President Bush when he took office, and when he was governor of Texas. Scott speaks about what he saw and heard, and offers indirect but important references to what he was unable to see and hear, especially regarding Cheney, and the significance of that secrecy. Condi Rice is the other key figure who Scott portrays in very unflattering terms.
    He does hold some people in high personal regard that I do not, and he sees through the eyes of a pretty loyal Republican, but he sees some important things with commendable clarity, and he offers an insider’s verification for some very important points that anyone who was paying attention could guess at. This book is honest, useful, and in some important instances a powerful eyewitness account, and deserves a place in the permanent history of the Bush administration.
    For those who took exception to Steve’s initial thoughts on the book, I would suggest that a good starting point is the strong possibility that Steve knows what he’s talking about, and then go from there with critical analysis where needed.
    And no, I don’t have man crushes on anybody – never did, and really don’t think the phrase is of any analytic value. I just respect good minds, especially when they are intellectually honest, which Steve consistently is, and which Scott McClellan is in this book.

    Reply

  27. pauline says:

    You’re welcome arthurdecco.
    Here’s more —
    The Oil Price Conspiracy Pawns & Kings
    By Jordan Christopher, Ivy Hollow Media
    Dated: Mar 06, 2008
    An overview of the intricate ownership structure of the oil futures market and questions about why the federal government is not investigating conflicts of interest.
    No doubt about the pawns in this international game of chess. The general public, the six pack majority, the middle class, the poor, come to think of it about anyone without a major financial interest in oil fits the Webster’s definition of a pawn; “a person used to advance another’s purposes.”
    So if most of us are pawns who are the kings? Think about it. If you believe Congress, the news media (at least the broadcast news media), the administration and the analysts you can pick between the major international oil companies, oil producers, China, or the gas guzzling Americans. There is no agreement and it is almost as if there is no thought about it.
    The oil companies and oil producers are making record shattering profits. Are they the only ones
    benefiting from the astronomical profits being made in the oil industry? Hardly! No, the river of greed flows in many directions including the financial houses underwriting the oil business and managing their money who also provide the depressing analysis that seems to drive the price up every day.
    So why aren’t the network news people or our elected representatives in our nation’s capitol asking questions about it? Americans have reduced their use of oil. The inventories in America are the highest in years. Future demand is certain to go down with the 40% increase in hybrid cars and reduced driving. Weather has been warmer than normal thus reducing heating oil demand. Every economic indicator says the price should be dropping, not rising to record highs.
    Where are the outraged congressmen, senators, presidential candidates, governors and media, the so-called protectors of the people? Are they for real? Or are they simply in the pocket of the kings of the oil profits, the oil barons of the 21st century? Well the campaign contributions seem to indicate they have been bought off. So do the millions of dollars being spent on advertising by oil related industries.
    The price of oil is set by two things primarily, the policies of OPEC, the Organization of Producing Countries, and the oil futures markets of which one of the largest is the London futures exchange. Saudi Arabia controls OPEC and Saudi Arabia has just said it will do nothing to reduce the price of oil. Thank you and goodbye.
    Of course Saudi Arabia is one of the prime beneficiaries of the war in Iraq financed by the USA at a cost to date of about $500 billion, yes 500 billion dollars according to the Congressional Budget Office. The same
    Al-Qaeda terrorists who are after us hate the Saudis even though Osama Bin Laden is from Saudi Arabia. He says the Saudi kings sold out to us. More likely they sold out to the oil and finance companies.
    Then there are the oil futures markets. The International Petroleum Exchange of London was one of the largest in the world but in 2001 a company that had been formed just a year earlier, a company called InterContinental Exchange (ICE), purchased it. How could one of the largest futures exchanges in the world be taken over by a relatively unknown company?
    The company was taken over by 13 equity investors when it began and the gang of 13 has made ICE into
    one of the most profitable operations in the world buying and selling oil and other commodity futures.
    Who were the 13? Three of the largest oil companies in the world – Royal Dutch Shell, BP Amoco and Total Fina Elf, two of the top investment banks on Wall Street – Goldman Sachs and Morgan Stanley, two of Europe’s leading financial institutions – Deutsche Bank and Socit Generale, and six US energy companies – American Electric Power, Aquila Energy, Duke Energy, El Paso Energy, Reliant Energy and Mirant. Now ICE claims over 300 companies are equity owners.
    ICE is doing what it is intended to do, making a lot of people and companies very, very rich and ICE has no responsibility for what happens to the pawns at the other end of the energy network. No one should be denied the right to make profits, even outrageous profits, as long as they were made using fair business practices.
    So what about the investment banks and financial institutions owning part of ICE? Could that cause any problem? It depends on whether these institutions use their own analysts to try and manipulate the oil futures market and elevate the price of crude oil. When an analyst specializing in oil goes on TV and says the weather or war or the unstable economy in America is driving up the price of oil and we should brace ourselves for $4 a gallon gasoline, the oil price goes up.
    If that analyst is from one of the many investment banks or financial institutions owning equity in ICE, and their analysis sends the oil price in an upward spiral, then one wonders if a conflict of interest may be present. What is Congress or the FTC or SEC doing to check on the potential for conflicts of interestbetween oil producers, financial institutions and the futures market? Does anyone even care?
    Well hopefully when the presidential candidates are accepting the millions of campaign dollars from these industries they are not making promises to continue to ignore what is devastating to the Pawns across America and the world.

    Reply

  28. Morton's Best Friend says:

    “If this scenario is correct, you still have to wonder what the
    speculators would do after an attack on Iran takes Iranian crude off
    the market (and maybe a lot of additional Persian Gulf crude as
    well). Then the situation would really be ripe for speculation and
    market manipulation, enormous profits by Bush’s cronies, and
    severe damage to the world’s industrial economies.”
    I seriously doubt Iran would take its oil off the market for very
    long, if at all. What would they live on? Oil is the mainstay of a
    very shaky economy, and A is in the doghouse as it is. Speculation
    does work if you know the future–speculation lives on fear of the
    unknown but possible.

    Reply

  29. ... says:

    chris brown quote >>Another $1 or $2 rise in the price of gas will be a good thing for USA consumerism.<< it won’t be for the auto industry in the usa which operates like a dinosaur in its last days… bigger is better right? lol… bigger houses, bigger vehicles, and more ‘consumption’ is supposed to be good for the economy, until it isn’t anymore…
    pauline – speculation is what many financial markets operate on, some more or less then others at different times… oil is a part of this, as are currencies and commodities and a whack of financial derivatives… that is the nature of finances circa 2008 thanks to private organizations like the federal reserve.. folks are going to wake up to how manipulated everything is, when it is too late in the game to do anything about any of it…

    Reply

  30. JohnH says:

    If oil prices are driven by speculation, what is driving the speculation? Is it just a supply situation ripe for market manipulation? Or have “those in the know” have been led to believe that Bush will bomb Iran? That event would certainly trigger a dramatic price rise, which could already be factored into today’s futures pricing.
    I have yet to see this explanation explored anywhere, but from where I sit, it looks totally reasonable. But, as I said earlier, some things are just not open to discussion in a “democracy.”
    One of the major “unknowns” for the Bush administration is determining how high the price of oil might go in the event of an attack and then, assessing how much damage it might do to the economy. If the current speculation addresses both issues to the satisfaction of the Bushies, they might well determine that the economic collateral damage is not be so bad after all.
    In fact, the more dire scenario–from the view of Bush’s cronies–would be to not attack Iran, which would lead to a burting of the bubble, leaving those beloved cronies holding the bag.
    If this scenario is correct, you still have to wonder what the speculators would do after an attack on Iran takes Iranian crude off the market (and maybe a lot of additional Persian Gulf crude as well). Then the situation would really be ripe for speculation and market manipulation, enormous profits by Bush’s cronies, and severe damage to the world’s industrial economies.
    Does Bush give a rat’s a**? If so, where is he putting his bets?

    Reply

  31. arthurdecco says:

    Thanks for the link, Pauline.
    I wonder when I’ll be reading something like this article in my newspaper…

    Reply

  32. Chris Brown says:

    If everyone in the USA (which uses like 40% of the world’s oil)who needlessly drive SUVs and compensator pickup trucks (such as is shown in the picture accompanying your post) moved to high mileage vehicles the price of gas would drop, and there would be more room on the highways.
    It amazes me to hear folks driving gas hogs to bitch about the price of gas. Another $1 or $2 rise in the price of gas will be a good thing for USA consumerism.

    Reply

  33. pauline says:

    Perhaps 60 percent of today’s oil price is pure speculation
    By F. William Engdahl
    Online Journal Contributing Writer
    May 5, 2008
    The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60 percent of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?
    First, the crucial role of the international oil exchanges in London and New York is crucial to the game. NYMEX in New York and the ICE Futures in London today control global benchmark oil prices which, in turn, set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil: West Texas Intermediate and North Sea Brent.
    A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of NYMEX, with NYMEX President James Newsome sitting on the board of DME and most key personnel British or American citizens.
    Brent is used in spot and long-term contracts to value as much of crude oil produced in global oil markets each day. The Brent price is published by a private oil industry publication, Platt’s. Major oil producers including Russia and Nigeria use Brent as a benchmark for pricing the crude they produce. Brent is a key crude blend for the European market and, to some extent, for Asia.
    WTI has historically been more of a US crude oil basket. Not only is it used as the basis for US-traded oil futures, but it’s also a key benchmark for US production.
    ‘The tail that wags the dog’
    All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”
    With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.
    more at —
    http://onlinejournal.com/artman/publish/printer_3252.shtml

    Reply

  34. DonS says:

    Yes sir, the gas prices, and the direct effect on drivers, are just the leading edge of the avalache of increased costs based on the cost of transportation, heating oil, etc.
    Where I live there are a lot of folks with minimum wage jobs or slightly better), driving old gas guzzzling clunkers, driving 20 to 30 miles each way to work, without the option of mass transit or flexible scheduling (e.g., to accomodate car pooling). There is no way they can absorb substantial increases in the cost of living. They complain about the cost of gas but they as yet have no idea of just how screwed they are.
    I see today that Mr. Greespan has now figured its the right moment for him to use the “R” word that the rest of the sentient world has already recgonized. Pretty soon Bush and his cohorts are going to be wringing their hands about it and exhorting us to blame someone else, anyone else.
    Talking to another client who can weather the economic storm a bit better, he was suprised that I was so definite that the government has no plan to “fix” the gas price situation as he assumed was in the offing. I opined that the haves and have not are becoming ever more disparate and that’s just the way it is. I don’t think he believed me.
    So, while the middle class, with their mortgage exposure may well lose their houses and incur financial disaster, have to radically downsize, etc., the lower middle class and working poor will just implode.

    Reply

  35. JohnH says:

    And what was Bush’s stategy for energy security? Occupy Iraq, a dismal failure by most accounts, excluding Bush’s own.
    And what is Bush’s straegy for energy security now?
    Bomb Iran.
    Hang onto your hats. Yes, the outlook for 2008 (and beyond) looks grim.
    But will anyone bother to discuss Iraq, Iran, and the WH’s energy strategy? I doubt it. Some things are just not open to discussion in a “democracy!”

    Reply

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