When the price of oil fell like a rock after all the hedge funds bid up prices to record highs last summer, everyone rejoiced. Americans returned to their proliferate ways and resumed buying and driving immense gas guzzlers. This happy situation is not going to last very long. Oil has risen by 50% from its low. The instability of the US dollar which is the oil fiat money, makes perceptions of oil prices fluctuate wildly. But if we look at it from far away, we can see that when prices were ‘high’ last summer, the dollar was much weaker against the euro. Today, the euro is weaker than last summer, so oil is ‘cheaper’ for us but more expensive for Europe. Unravelling all of this requires being clever, of course. Which means, the mainstream media has no clue.
American consumers aren’t buying many vehicles at all, let alone the small cars and hybrids that are clogging dealer lots and creating big inventories for the ailing industry. That S.U.V. in the garage isn’t the costly liability it was last year, when gas prices hit $4 a gallon.
But the American auto industry, under pressure, has invested heavily in the small-car and hybrid market. So it should probably not be a surprise that auto industry leaders like Alan Mulally of Ford have called for higher gas taxes, an idea Detroit once abhorred. Putting aside the political difficulties of raising gas taxes during a recession, should government act to give consumers strong incentives to drive less and accept fuel-efficient cars for the long haul?
Here is my reply:
All our trade rivals, every one of our industrial trade rivals, have much, much higher taxes on all energy use compared to Americans. All of them also have value-added taxes. All of them run trade surpluses with the US unless there is a total collapse of world trade.
The US is going deeper and deeper into debt with the entire planet earth due to our cheap taxes. We buy much more stuff, consume much more energy than any population on earth, by far.
This is destroying the entire nation which has slid deep into debt to all trade rivals. The consumption rate of world resources by the US must slow down. The complaints that we are ‘big’ and need big cars is pure insanity.
The reason we are ‘big’ is due entirely to the fact, we can over-consume on every level including eating ourselves into tremendous obesity. Cities where people use public transport such as NYC have a lower obesity level than places that depend entirely on automobiles for transport.
In 25 years, the US will have no choice about our obese lifestyle. We will be suddenly reduced to third world status and all the cheap energy flowing here will cease because we won’t have US fiat dollars to degrade to pay for foreign energy consumption.
Already, we are seeing epic debt levels in our government as our import deficit declines. This is not a good sign. It means, we are still locked into an over-consumptive system that needs our collective debts growing at least 6% a year, a unsustainable rate of growth that will lead to bankruptcy.
We have been running in the red ever since the first oil crisis of the early 1970’s. Today, even if oil is cheap, we accumulate international debts due to gorging on cheap oil. No other nation does this for obvious reasons. It is fatal.
Since no one is willing to educate the US public on the dangers of going into collective debt so we can suck down immense amounts of oil, driving around as we get more and more obese, this will continue.
The US MUST PAY MORE TAXES. The rich are tax evaders, using offshore banks as tax dodges and paying politicians to cut their taxes, the middle class refuses to vote for more taxes and the poor can’t pay taxes. Except for the huge cigarette and beer taxes, of course.
We have to pay our own way, not beg China for more money so we can suck down most world oil production. In the long run, the Chinese intend to use more than 25% of world resources. Right now, they use only 7% and are more than double that, in population ratios.
The US consumes 25% of world resources and we are less than 4% of the world population. THIS WILL REVERSE. And it is the Chinese intention that it will reverse.
— Elaine Supkis
Understanding how things interact is vital, of course. The world’s financial and especially, international trade, is always unstable due to it being based on the fiat floating dollar launched by Nixon and Burns in 1971. When the US abruptly and unilaterally ended the gold standard, after lying about intending to do this, the world has seen a series of sudden surges and collapses in oil prices and world trade. This is due to the US ‘inflating’ its way out of financial difficulties. The dollar may remain ‘strong’ vis a vis all our trade rivals. But it is not strong vis a vis history.
The value of the dollar against the costs of buying nearly anything has seen great destruction. A loaf of bread bought with just 10¢ 60 years ago, now goes for over $2. A 5¢ subway ride now costs well over $1. A huge mansion I bought in New Jersey for just $128,000 in 1984 sold for over $1.5 million in 2004. Inflation runs rampant because this is how we pay for energy imports.
This is why other powers are now openly discussing a return to the gold standard. I strongly suspect all the energy sellers like Russia and Saudi Arabia will join with China in this enterprise. The day that happens,the increasingly worthless dollar will cease being used for international ENERGY trade and will cease having any appeal for anyone doing major business.
The fact is, bad money chases out good money. Except when doing international trade. That is, people selling important things have incentive to accept only good money. For example, when everyone had to go to China and India for desirable trade goods like fine silks and porcelain wares, these countries demanded payment in gold and silver. But internally, the governments circulated paper money which lost value over time.
All paper money loses value over time. Our distant ancestors figured this out about 300 years ago or more. This is why they tried to keep a sound base by having governments hold reserves in gold and silver coins and bars which could be let out to create more activity or withheld when things expanded too much. For the terror of all governments is a financial bubble. These things are deadly, as we plainly see today.
Fuel economy standards are about to go up for the first time in more than 25 years, the Detroit Free Press reports.
The newspaper says the Obama administration today will announce a combined car and light-truck fuel economy standard for the 2011 model year of 27.3 mpg., an increase of about 2%.
Under the plan, new cars will need to meet a 30.2 mpg standard, while light trucks, including SUVs, must hit 24.1 mpg. It reports that automakers say they can meet them easily.
The entire CAFE standards has been a total joke. All my life, since I got my first Volkswagen, except for my work trucks which are used ONLY for work, never for commuting or driving about for fun, I have had vehicles that get much better than 35 mpg. Often, up to 55 mpg. I like small cars that hug the road, are swift on turns and that are easy to park.
Secondly, there is a sad fact in life, we fill empty spaces. The bigger the cars, the fatter the people driving them. When things are small, people notice fat faster and take measures to stop. When things get bigger and bigger, we get bigger and bigger. This is a sad fact of life.
It is totally stupid to set CAFE standards at a level that even my one ton diesel work truck gets! I go to auto showrooms and see that the average SUV gets miserable mileage. Two years ago, some were at only 9 mpg, for example! This is ridiculous. All other nations are suffering because the US is unable to buy stuff like crazy right now.
But they all know that if they consume oil like the US does, they will go BANKRUPT. The only reason we don’t go bankrupt is simple: we destroy the dollar if oil prices rise. So the same dollar buys less and less and the oil exporters need more and more just to keep in place.
This graph shows clearly that oil and inflation are in this race against time. From 1979-2004, the price of oil gradually became stable with the dollar. If we look at the red line, we see the price of oil dropping to match the dollar’s inflation rate. Suddenly, in 2004, the price of oil ceased being stable and began to rapidly climb. It has fallen but not to the ‘stable’ levels of $20 a barrel which lasted from 1986-2003.
Purchases advanced 0.2 percent after climbing 1 percent in January, the Commerce Department said today in Washington. Much of the February gain was due to an increase in prices, leaving so-called real spending with a decline for the month….
Incomes fell 0.2 percent, after a 0.2 percent increase in January. The survey median projected a 0.1 percent decrease….
This is the dread beast, Stagflation. We can get the worst of both possible worlds! Inflation and Depression merge and become the grinning goddess of Stagflation.
Still, the inflation-adjusted spending so far this quarter is higher than the fourth-quarter average, setting the stage for a gain after plunging late last year.
The pumping of fiat money into the system will create inflation! Remember the wonderful $600 bonus mailed to all of us starting last spring and going until July? Prices of everything we need to survive, shot upwards. I used every penny of it, paying for high fuel prices.
The economy shrank in the fourth quarter at a 6.3 percent annual pace, the worst performance since 1982, in what may be the depths of the recession. Consumer spending fell at a 4.3 percent rate, marking the first back-to-back declines in excess of 3 percent since records began in 1947.
This is turning into the worst recession since the Great Depression. And the only way our government can ‘save housing’ is to degrade the dollar so it is near worthless. Then, the hope is, we can pay very high house prices while pretending, this is making us richer. It isn’t.
“We’re seeing a minimal amount of consumption, as people are just spending on bare necessities,” Lindsey Piegza, an economic analyst at FTN Financial in New York, said before the report. “You can’t have stable consumer spending until you have stable incomes or wealth accumulation.”
Stable incomes connected to a degrading dollar equals a depression with inflation. This is the definition of stagflation. During the 1970’s, unions were strong and forced many corporations to keep up with inflation which is why Nixon had to suddenly impose wage/price controls!
We don’t need that now! Today, industry and employers are encouraged to force wages down via offshoring or outsourcing work. This wrecks our trade balance and is destroying our nation but it sure keeps down wages! A flood of illegal immigrants were also unleashed on us so they could compete for jobs and thus, kill any ability for us to demand higher wages. Legal aliens are also brought in under the fiction, the US can’t find computer experts, for example.
Of course, this is due to all our children fleeing the industry due to lack of pay and job security! Who on earth, wants a degree in computer tech fields today? It is expensive and suicidal.
The slowdown in investment in oil and gas production could lop off nearly eight million barrels a day of future oil supply growth, setting the stage for another big crude price surge in years to come, according to a new study.
In other words, we might even leave a little bit of oil for our great grandchildren! Isn’t this sweet? The global credit crisis and falling oil prices have squeezed oil companies’ finances and forced many to cut capital spending and postpone projects. That could have big implications for supply when the global recession ends and demand for energy recovers, the report by Cambridge Energy Research Associates says….
The report says that reduction in capacity is a “potentially powerful and long-lasting aftershock” following the oil-price slide of 2008, when within a few months crude fell from a record high of $147 a barrel. Crude-oil futures rose $1.57, or 3%, to settle at $54.34 a barrel Thursday.
The last thing this planet needs is for us to consume vast amounts of oil, hauling our overweight bodies all over kingdom come. The report comes amid ample evidence companies are scaling back on investment in costly projects that require a high oil price to be profitable, such as the oil sands of Canada or the ultra-deep waters off west Africa. Middle East oil producers, hit by falling export revenue, have reined in spending plans. The Organization of Petroleum Exporting Countries says as many as 35 new projects in OPEC countries could now be delayed past 2013. Most Western oil companies say they are sticking to their investment plans but are slowing down some developments.
The collapse of Mideast economies is now going to enter a new stage: the reemergence of revolutionaries of all sorts seeking to hunt down and destroy the fat little kings and other creatures. This will happen. The kings all forbade any form of contraceptives for women and the right to work or do anything at all except have children. Now, there is a huge army of unemployed youth who are bored, angry and they can see fat kings waddling about like so many plump quail, just aching to be swooped upon by hungry hawks.
The US/UK wars against the last secular rulers raised the price of oil and the fat little kings could hide behind the US/UK military and ignore their own people. But now, this is collapsing as the US goes bankrupt. And the revolutionaries are now religious fanatics. Who are much more dangerous than secular revolutionaries.
Ministry officials confirmed this week that Iraq would raise the ceiling for foreign ownership in oil projects to 75 per cent from 49 per cent in the first of two licensing rounds currently in the bidding stage. Investor interest was already constrained by the fact that the deals on offer in the licensing rounds were service contracts which gave investors no ownership of the oil. International oil companies prefer production-sharing agreements that give them rights to include the resources on their books.
In Vienna, Dr al Shahristani said he was under pressure to boost oil production to counter falling national revenues. The country’s oil output could be raised to 6 million barrels per day within five or six years, up from 2.5 million now, with a US$35 billion (Dh128.55bn) investment, he said.
To attract that investment, and the technical expertise of international partners, Iraq now appears to be moving ahead with a two-pronged approach towards oilfield development which employs competitive bidding rounds and bilateral deals with foreign companies.
The big oil companies have the high hand right now and Iraq’s US puppet rulers need lots of oil to support their populations who are very aware of how much power they have to overturn the rulers. Indeed, all of the Muslim world can clearly see how to destroy US power. High oil prices keep the peace so long as the fat little kings hand out welfare in huge amounts.
But this is now in reverse due to the fluctuations in the dollar’s value and the winds of inflation/depression sweeping out of the desert, ripping off roofs.
Oil fell from the highest close in four months as a stronger dollar reduced the appeal of commodities to investors.
Oil dropped as much as 3.4 percent after the U.S. currency rebounded against the euro on evidence the recession is deepening in Europe. A stronger dollar makes commodities less attractive as an alternative investment. The Federal Reserve said this week it will buy more than $1 trillion in government and mortgage debt to help end the recession and credit crisis.
“The stronger dollar is bringing all of the commodities down,” said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. “The Federal Reserve’s policies have become the major driver of the commodities.”
HAHAHA. Yes, the ‘stronger dollar’ will do this due to the fact, it is still the world’s trade currency. But the instability of the dollar is destroying world trade. See how it collapsed when the euro became much stronger! All our trade rivals are intent as hell on making the dollar ‘strong’ so they can resume destroying our industrial base. So the strong dollar is deadly for us, not a boon.
And it encourages us to over consume, which is bad for us in many ways.
The need to create new energy systems depends on artificially raising the costs of using oil. The urgency of changing the way we use energy is obvious: when the Hubbert Oil Peak finally exposes us to an eternity of much less oil, it will be increasingly hard to retrofit societies that are based on cheap oil.
Vladimir Putin, Russia’s prime minister, has reacted angrily after the European Union signed a deal to help Ukraine upgrade its ageing network of gas pipelines.
Putin described the plans put forward by Kiev to improve the management and capacity of Ukraine’s gas pipelines as “ill-considered and unprofessional”….
A fifth of gas consumed in the EU comes from Russia through the Ukraine….
The EU has not said how much money it will commit to the upgrade, but Yulia Tymoshenko, Ukraine’s prime minister, has said the project would need $7.5bn. The EU estimated the cost at $3.4bn.
Europe is taking advantage of the drop in energy use. But this is very temporary. They will pay for this in the long run, as Russia will continue to exist no matter how hard, Europe tries to destroy Russia. This predates energy sales, of course. We are talking a thousand years of Europe wanting desperately to control Russia. To the point, of violent incursions, killing millions of Russians.
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