Posted: April 8th, 2011 | Author: Joe | Filed under: Economy | Tags: causes, Gas prices, libya, Obama | No Comments »
I just came across this silly article from the Washington post about 5 myths about gas prices. Here are their myths, and why I think they’re mostly silly or not really myths at all.
Fighting in Libya causes higher gas prices.
Wapo’s line:
“Libya is not a big enough global oil supplier for the battles there to have a meaningful effect on gas prices”
The truth:
It’s Libya so much as general unrest in the middle east that causes wide swings in oil prices. If too many oil producing countries fall into the wrong hands (i.e. those who don’t like the U.S.) then supply becomes limited, and the price goes up. Speculators cause this effect at the mere suspicion of a disruption in the oil supply, hence the rise in price accompanying any rise in unrest.
Tapping Strategic Petroleum Reserve is a good way to reduce gas prices.
Here, Wapo correctly calls New York Democrat Senator Chuck Schumer out on his ridiculous position on the Strategic Petroleum Reserve (SPR):
“Sen. Charles Schumer (D-N.Y.), for instance, has been calling for oil releases from the SPR for more than a decade. In a letter to President Bill Clinton in 1999, he endorsed the release of several hundred thousand barrels a day from the SPR because, according to a news release about the letter, oil prices had made a “meteoric ascent to nearly $25 per barrel.””
Schumer’s short-sighted political game illustrates the general thought behind calls to tap the Strategic Petroleum Reserve any time prices rise.
The SPR exists for cases when there is no oil available, not for times when the price is not as low as we’d like. It’s to limit or prevent effects like the gas lines of the 1970′s when the OPEC Nations began to manipulate production.
All in all, this one seems like a pretty common belief and since using the SPR to lower prices at the pump is a bad idea, it clearly falls into the realm of myth.
Oil companies produce less in the spring to make prices rise.
Production does go down in the spring, but not because of conspiracy. It’s because heating oil is chemically different from gasoline, and refineries switch production from a majority of heating oil to a majority of gasoline at the end of winter.
Again, a pretty common myth.
Obama is driving up gas prices.
This one is silly because it’s only part myth – the part they presented.
Wapo calls out Sarah Palin and Mitch McConnell for saying that the Obama Administrations policies affect oil and gas prices in a negative way for the U.S..
Wapo’s line:
“Just one problem: Even if domestic supplies were developed, American presidents couldn’t really control oil prices. “
The real problem here is that neither Palin nor McConnell accuse Obama of “controlling oil prices.” They merely state that the administration’s energy policies have a negative effect on prices. It’s true that no U.S. President can set the price of gas, but it’s also true that denying permits to drill, enacting moratoriums on current drilling activity and importing less foreign oil without increasing domestic production all contribute to less supply than demand and will cause the price to rise.
Americans can’t live without cheap gas.
This one is just plain stupid.
Wapo’s line:
“Yes, Americans love to drive, and Americans love cheap gas. But across an ocean, there’s a continent filled with people a lot like us who’ve lived with high gas prices for years. They’re called Europeans.”
Of course American can live without cheap gas, but it’s not as easy as it may be for Europeans. For starters, America is much more diverse than most European countries, geographically speaking. Public mass transit simply isn’t a reality nor is it likely to become one anytime soon for much of the country.
The other fallacy here is that Europeans pay more for gas than Americans because it somehow costs more to get the oil to them. The reason they pay high gas prices is due to taxes. Just because Europeans are willing to pay high taxes doesn’t mean Americans should.
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Posted: February 15th, 2011 | Author: Joe | Filed under: Debt, Economy | Tags: Economy, Obama, U.S. Debt, U.S. Deficit | No Comments »
This is just plain crazy. I thought The President was all about cutting the deficit? I thought we were going to have to make “tough decisions”? This is a joke!
Only it’s not.
It’s real.
President Obama has submitted his $3.73 TRILLION budget to Congress on Monday. The President’s own budget is projecting $1.65 trillion in new debt for this fiscal year alone, but that’s not really being talked about. Instead, the media is focusing on the fantasy that this budget will reduce the deficit by $1.1 trillion – over 10 years!
First of all, every 10 -year budget projection is meaningless because there are just too many unknowns and when you’re dealing with a budget as big as that of the U.S., even small miscalculation or mistaken assumptions add up to billions.
Second, does the media (and the white house) think we’ve forgotten that President Obama and his party added nearly $5 trillion to the deficit in his first two years alone? Now we’re supposed to be happy that he’s going to add $1 trillion less after ten years than he wanted to?
He’s also projecting another $1.1 trillion deficit for 2012.
He keeps talking about making “tough choices and sacrifices” but I just don’t see it happening. does anyone see it happening? Does anyone out there see any seriousness on his part to reduce spending?
In fact, what we get is a budget that is loaded with gimmicks and tricks played on the American people:
1. Redefining Pell grants as mandatory spending. Stripped of this gimmick, discretionary spending jumps by $14 billion in 2012.[2]
2. Reclassifying $54 billion of surface transportation spending from discretionary spending to mandatory spending.[3]
3. Spending the peace dividend. The budget proposal includes spending for military operations in Iraq and Afghanistan, referred to as “overseas contingency operations,” as discretionary spending and reduces funding for these operations by $38.2 billion in 2012.[4]
The newly elected Republicans have shown some interest, but even they seem reluctant to make serious cuts.
Republicans want to cut $61 billion, but that’s a drop in the bucket and doesn’t address any of the real problems inherent in the structure of the budget – namely the “non-discretionary” spending… the unfunded entitlement programs that are due to bankrupt the country in the next few decades unless some major changes are made.
I’m not seeing the change anywhere, are you?
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Posted: February 4th, 2009 | Author: Joe | Filed under: Economy | Tags: Economy, Obama, Stimulus | 1 Comment »
I found it ironic that the 2008 elections were the longest in history, and gave us a president we know less about than perhaps any other in history. Not surprisingly, we don’t know much about Obama’s economic stimulus plan, or the American Recovery and Reinvestment Plan as it is named.
I was curious what exactly he has planned for our economy. I know he’s an eloquent speaker, but what will his actions be?
Well, I went digging for the details of the American Recovery and Reinvestment Plan, and found that there are very few. So, I turned to some recent articles and the President’s own weekly radio address. Here’s what I found, and some thoughts along the way…
Environmental Policy.
From a recent Yahoo! finance article:
“What’s more surprising: Even with gas prices dropping, the Obama team will likely get started this year on an extremely aggressive energy agenda. The decision to replace Rep. John Dingell, a Michigan Democrat loath to challenge Detroit, with environmentally minded Rep. Henry Waxman (D-Calif.) as head of the House Energy and Commerce Committee, means that body is likely to consider aggressive cap and trade legislation-which tries to lower greenhouse gas emissions by charging companies for the pollution they pump into the air-for the first time ever”
Yikes! Carbon emissions are now a pollutant? Cap and trade legislation and carbon offset scams will not only kill capitalism, they will cripple the already reeling economy. Small town farms that can’t afford the methane tax on cow flatulence (A.K.A. the “fart tax”), to mom and pop bakeries and delis, small businesses will go out of business. Even large corporations will feel the hit, and likely increase layoffs to reduce overhead costs. How is this going to help the economy recover?
Creating or “saving” jobs.
From the Washington post:
“…recovery package aimed at saving or creating as many as 4 million jobs.”
How do we measure how many jobs are saved? How can we know why an employee was not laid off?
“”Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four,” Obama said yesterday. “And we could lose a generation of potential, as more young Americans are forced to forgo college dreams or the chance to train for the jobs of the future.
Can somebody tell me what this means? Does the “..economy could fall $1 trillion short of its full capacity..” mean that the GDP will drop by $1 trillion dollars? Regardless, how does that translate into “..more than $12,000 in lost income for a family of four” ? I can see how a family can lose much more, by way of a provider losing his job or asset values in their investments plummeting, but is that part of the economic “capacity”? And why will a generation be forced to forgo college dreams? Recessionary times are tremendously good for college enrollment as laid off workers go back to school to ride out the poor job market.
“In short, if we do not act boldly and swiftly, a bad situation could become dramatically worse.” “
This is the sort of thing that bothers me most. It’s more panic and fear to get the public to go along with whatever the government proposes.
Energy Policy
And lastly, from the man himself:
“To accelerate the creation of a clean energy economy, we will double our capacity to generate alternative sources of energy like wind, solar, and biofuels over the next three years.”
Alternative energy is not scaleable and not profitable at current energy prices. This means one of two things: 1) alternative energy subsidies (i.e. the tax payer is on the hook , yet again to support an unprofitable business model) or 2) Higher energy prices, possibly by way of taxes or further restrictions on oil and gas producers. How is any of this going to help our economy recover?
“We’ll begin to build a new electricity grid that lay down more than 3,000 miles of transmission lines to convey this new energy from coast to coast. We’ll save taxpayers $2 billion a year by making 75% of federal buildings more energy efficient, and save the average working family $350 on their energy bills by weatherizing 2.5 million homes.”
I suspect we could save the tax payers a lot more by reducing needles bureaucrats than just the energy they consume. As for weatherizing 2.5 million homes, haven’t we been getting tax incentives to do this already? I can’t read a personal finance blog these days without tripping over some article about a tax deduction for a programmable thermostat, increased insulation and the like.
Education.
“We’ll invest more in Pell Grants to make college affordable for seven million more students, provide a $2,500 college tax credit to four million students…”
That just increased tuition prices by $2,500. If the government really wanted to lower the cost of tuition, they’d pass legislation to move education towards a free market. The amount of government grants has skyrocketed since the 80′s, and so has the cost of tuition. It’s partially because the grants and low cost loans are baked into the price. Colleges know that the students will get an extra $2k, so they add that to the tuition cost, and nobody gets hurt. It’s like a victimless crime, except the tax payer gets victimized once again.
Infrastructure.
“That means repairing and modernizing thousands of miles of America’s roadways and providing new mass transit options for millions of Americans. It means protecting America by securing 90 major ports and creating a better communications network for local law enforcement and public safety officials in the event of an emergency. And it means expanding broadband access to millions of Americans, so business can compete on a level-playing field, wherever they’re located.”
Again, how is any of this creating private sector jobs? This will be great for out of work construction workers, but I don’t know how many of them are dragging the economy down.
Don’t get me wrong, much of this sounds great, but government spending for the sake of spending is not going to improve the economy. It seems more like a grand pork bill, than economic stimulus. Public sector jobs will only increase state and federal deficits by siphoning more tax payer dollars to pay for them. Growing public sector jobs while private sector jobs decrease will only lead to an unsustainable situation where each private sector worker is taxed to support multiple public sector employees. Come to think of it, it sounds like social security for the job market!
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