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314 comments on DrumBeat: September 23, 2008
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314 comments on DrumBeat: September 23, 2008
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Re: U.S. regulators review huge NYMEX oil price surge
Yesterday's massive pop in the NMEX October oil contract only demonstrates that using one contract for setting oil prices at one location is a bad idea. The impact(s) of Hurricane Ike are just beginning to hit the market for crude, which has been relatively low due to the inability to refine oil after the refineries along the TX/LA coast were closed down.
Note this comment from MarketWatch this morning:
I think it's likely that oil will stay high after the refineries begin to process crude and as the short fall due to shut in Gulf production works thru the system.
E. Swanson
What I find odd is that the average gas price for the Gulf coast ($3.678/gal) is still below the national average ($3.718/gal) (source: EIA). Atlanta is running out of gas, but the prices aren't all that high. Yesterday I was talking to a buddy of mine and he said that in Nashville the gas is $5.00/gal, but they still have gas. Driving through North Georgia and Western NC this weekend, I didn't see any gas higher than $4/gal. Maybe the oil companies decided this time they wouldn't raise the prices to create all these hysterical calls about price gouging, but instead we have shortages.
And of course somebody in that article wanted to waive the fuel emissions standards, but Atlanta already has a problem with ozone on hot days where they tell us not to go outside but I can imagine that waiving fuel standards would make the city unlivable.
It's more than hysterical calls about price gouging. Gas station owners are being subpoenaed. They have to show their bill of sale proving that they aren't hiking up the price too much over wholesale.
That means they can't charge the customer what it costs to replace their stock...just what it cost them to buy it.
I can't help but find this funny! (In a black sort of way) Who would have ever thought that the U.S. would become communist under a republican president?* Nationalized insurance companies, re-nationalized mortgage companies, nationalized bad loans... and now they're dictating the price for which people can sell goods. I'll know we've truly arrived when the black market shows up. Why if I had libertarian leanings, I would be swearing I'd never vote for another republican again (I don't have libertarian leanings, but I can appreciate the viewpoint).
Incidentally, according to AAA the price in metro Atlanta is $4.01/gal, which is higher than the national average at least. In Nashville, the average price is higher, $4.06/gal.
*On consideration, maybe it's not so surprising. Look at what Schroeder did in Germany: he was a social democrat (on the left) and he destroyed more of the socialism in Germany than the conservatives have.
It's state law, not national law, that the subpoenas are being issued under.
However, these are all "red" states.
IMO, this is another facet of the "What's the Matter With Kansas?" problem. Most of the "red staters" actually hold views that are closer to the Democratic party than the Republican. They side with workers and consumers, not business. They are against taxes, but many are dependent on the government services and benefits that those taxes pay for. They've been peeled off by the GOP using social/religious issues. Which, oddly, doesn't really match well with the libertarian side of the party, which doesn't care who you are sleeping with, as long as they can make money off it.
For awhile, I thought the Democratic party would fade away, with the two wings of the GOP (Christian conservative and libertarian) becoming our two parties.
The problem with your Republican split is that it doesn't leave room for "big gov't social Republicans". The libertarians want small gov't and few rules, and Christian side wants a socially restrained gov't but also a less invasive one. The big-gov't side is in power right now, and that's the part that feels more like traditional democrat to me.
No, the problem with my Republican split is "imperial overreach." They screwed up. Newt got his chance for small government, and it was a disaster. That basically killed the small government faction in the GOP, aside from lip service.
Two political parties really isn't enough to reflect the entire spectrum of US politics, but that's what we're stuck with, because of the structure of our government. It's not changing unless the constitution changes.
I am plecked off about this bailout, but not at all surprised. I think Tainter is right. We can expect ever bigger and more intrusive government as resources get scarcer.
"imperial overreach" is exactly right. Republicans give lip service only to smaller government. Both Reagan and Bush are spend! Spend! Spend! leaders who try to appease the masses with more bread and circuses. I really wish we could give the Libertarian approach a try - but I think it's too late now. Sadly I agree it looks like more intrusive and bigger government.
Does anyone actually think that government will do a better job of running Freddie and Fannie or the rest of our growing portfolio of zombie companies?
Better job running Fannie and Freddie than who? The guys who turned those companies into zombies?
I don't think they could of done worse, at least they wouldn't have split the mortgages into tranches and sold them as bonds after bribing an underwriter to rate them all "AAA". Even the crooks in the government aren't that creative, it takes Wall St. to turn high finance into felonies.
Screw the libertarian approach. That's the approach that has been used with the financial market. That's why we are where we are now. Libertarian? C'mon. That means doing away with plant managers, ceos, oversight, auditing, traffic rules. Jeezus, you gotta have rules, and you gotta have enforcement of those rules, which require people to occupy a position of responsibility to ensure proper order in society are upheld. BUT, those folks must be held to account, and that's our problem, WE are not holding these people on wall street to account. Email you congress critters and tell them that you will do everything in your power to vote them out next term. Don't bother with telling them you're pissed. They could care less. At least I have Marcy Kaptur. She's the only one standing up to this FUBAR. Libertarianism is an excuse to screw yer neighbor.
Jeff
Yup - militarism and imperialism is an attempt by those at the top to keep the circus going as long as possible. As the news article up above points out - the US military is seeing its future as a 'resource acquisition and protection' business.
"Two political parties really isn't enough to reflect the entire spectrum of US politics.."
You didn't happen to catch the NPR interview with Amedinejad this morning did you? He was being grilled about restrictiveness in their democratic process, and he replied 'Well we have more freedom than you.. at least we have Eight Candidates to your Two!' At which point the NPR Interviewer sidelined it by saying we'd talk about American politics some other time..
Snap!
Bob
Question, if 7 of the candidates have a Ralph Naderesque chance of winning the presidency vs. the other candidate, does it matter how many candidates you have? Also, Mr. Amedinejad is incorrect in any case. There are atleast 5 candidates for president (Bob Barr, Cynthia McKinney, Chuck Baldwin, Barack Obama, and John McCain). Just because nobody pays attention to them doesn't mean they aren't running.
Yes, it matters. The two main parties control the entire discourse, which would be challenged with uncomfortable ideas by the 'upstarts' if inclusive debates were part of the program. Then there would be both exposure for the Ignored candidates, and either turnovers or changes in policy-position by the front runners. As it stands the system is stuck because there is no information flow, no active debate of important issues.. just Blah, Blah.
I don't doubt that Ahmedinejad made or makes some factual errors, but his point was clear enough, especially when it's the pot calling the kettle black, as our particular kettle (USA) paints itself as whiter than white at every opportunity.
Total agreement Bob.
Jeff
Please can somebody tell me why raising the price at the pump is illegal 'gouging', while raising the spot price of West Texas Intermediate isn't? Free markets? I don't think so!
Viewed from outside the USA it isn't clear to me why anybody would want to continue to invest in a country where the rules change adversely for investors without warning or consultation.
Because our elected officials decided to cater to the gibbering idiot community.
Imperial overreach is driven by AIPAC and they own both parties, except the most conservative parts of one party and the most liberal of the other.
That's why Paul and Kucinich get marginalized by the media.
While I would never vote for Kucinich, if he were voted in one would get on with life. It wouldn't be utterly unacceptable like the current character.
Hi Mus,
re: "While I would never vote for Kucinich..."
Could you possibly expand upon this?
i.e., how come?
Just curious.
Because I'm what many would call a paleo conservative, opposite end of the spectrum.
There is always some respect for an opponent that states his position clearly and honestly. Sometimes one can negotiate a deal with them.
Can you name any other candidate that was:
- a strong Constitutionalist
- willing to hold the scumbags in Washington accountable
- wants to end the occupation
- is PO aware
- is AGW aware
- has a true history of standing against the crowd and being right
- speaks openly about what we face
Kucinich not getting elected president now is one of the top five stupidest choices the US electorate has ever made. The other four are anything having to do with BuCheney.
Cheers
"Imperial overreach". What ever happened to the good old days when it was just a "lust for power"? As the late, great George Carlin might note, we moved from four syllables to seven, and have buried the human behavior behind jargon.
But, oh, to be in the halcyon days when we could refer to it in a single syllable, "greed". Simpler, happier times.
Like Sec. of the Treasury Paulson referring to "toxic debt" for bad loans. Semantic gymnastics.
"Lust for power" doesn't quite convey what I mean. Both parties lust for power. That's kind of the point of politics.
The Republicans, however, could probably have a lot more power than they currently have, if they hadn't been so arrogant.
Ridiculous.
They want government imposition of their 'Biblical' world view on the culture despite the fact that they have generally lost out in the free marketplace of cultural ideas since the 1950s. Jesus now. Jesus Forever. Or else.
See the Handmaid's Tale to get a glimpse of the the world Christian Conservatism would like to build.
I'll take the corporate thieves and militant imperialists any day over the the CCs - at least you can logically predict what they'll be for or against given pure, rational self-interest. Greed is predictable. Self-righteous religious radicalism is terrifying - never know what an irrational fanatic will hate and wish to see dead or destroyed on a given day - God has to inform them daily.
And what the hell is a 'paleocon' anyway? Aren't those the Pat Buchanan types who don't like Jews or Blacks?
I agree with you on everything but the militant imperialists. Every militant imperialist government eventually has waged irrational wars at a cost that ruined it. One more war will do it for us if we're not done already.
The Paleocons are not people I like, but at least they can count. They were among the most sensible critics of NAFTA, Bush's invasion of Iraq, America's insane debt and import binge, and the Christian takeover of the Right. But they demand that the benefits of small government be delivered directly to non-urban whites, perhaps more honestly than libertarians. They are utterly the opposite of most libertarians when it comes to immigration and free trade. Paul Craig Roberts, a former Reagan official, has become a most eloquent spokesman for the Paleos and the Constitution.
If I trusted that after the Collapse we modern types could live safely in the cities and trade manufactures for the crops produced by Paleocon farmers, I might consider that acceptable, but the farmers are likely to be theocons who will never rest until they've destroyed all the gays and minorities and gotten their hands on the remaining nukes. The Handmaiden's Tale shows that even 20 years ago an intelligent person could figure out where this movement was headed.
See, maybe we can live in peace after all. We really don't give a shit about what people want to do in the city, as long as they STFU and get on with the program.
Whose program?
I'm thinking more along the lines of the Greek city-states. They all spoke the same language, and in later times we would say they were all part of the Greek nation. Because cities did serve useful functions even in the Bronze Age, a city could control enough land around it to have a baseline economy. Athens, in particular, could trade for the rest. Sparta, notably, refused to have a city but ended up with a fantastically interventionist culture that defies current ideological labels.
However, in practice these different societies did not get along or trade peacefully. They spent all their time trying to invade each other, overthrow their governments, and even collude with non-Greeks to harm Greeks. They also were colonizers, which ultimately means they had a growth economy that would run into limits of some form. Ultimately they were all overrun by their backwoodsy Macedonian cousins who just happened to have the most militarily talented dynasty of all time. Yet the Macedonians aspired to sophistication; Phillip hired Aristotle to tutor Alexander. Clearly whether one was rural or urban, expansionist ideology was always a seduction. Or to put it in Greek terms, theos and neos always defeat paleos.
Which means whether we consider slavery or homosexuality sickening, it's only a matter of time before a demagogue will convince enough of us to go on an armed crusade against its stronghold.
When I find a solution you all will be the first to know. I'm trying to contact Gort from The Day The Earth Stood Still.
Hi Prodigal,
re: "Christian side wants a socially restrained gov't but also a less invasive one."
"Ridiculous."
Based on my personal sample of two CC friends, I offer this quote:
"I'm against abortion and gay marriage, so I vote Republican."
Which revealed the extent of her interest in the issues (i.e., all the issues, including these two). Among other things.
I'd say your friends have correctly identified two major differences in the parties, a third one being Republicans generally favor the death penalty, while Dems oppose.
Care to name some others?
Two sides of the same coin.
As far as a socially restrained government goes, don't forget that Roe vs. Wade was a decision handed down by a small group of men.
American citizens never were able to exercise their right to vote on this most significant issue.
So what do you base this observation on?
The movie or the book?
In case you hadn't noticed they're FICTION!
Perhaps you are confusing fiction with reality again as I challenge you to provide some evidence of these outlandish claims. At least as it pertains to your prejudiced view of Christianity.
Honestly Leanan, how can you allow such tripe to remain posted?
You say this as if there is something inherently wrong with fiction. In case you hadn't noticed, most of our great literature is fiction.
I said that there is something wrong with ascribing the motives and actions of recognized, responsible group of society to something one saw in a movie or read in a novel.
If Prodigal had made his accusations based on verifiable events, a stated policy or in this case, biblical passages, we would not be having this discussion.
That's right. I was watching a documentary on Andrew Jackson a few nights ago, he and his colleagues created the modern democratic party as "the common people's party" and was opposed to the bank of the united states crowd. It strangely mirrors what's happening now, except instead of the bank of the united states, we've got the financial industry and "the economy" that dictates policy. The republicans have somehow managed to convince a lot of people that they can be the common people's party at the same time they stand up for the mercantilists or corporatists (similar interests to those of the bank of the united states).
It does look like the GOP is having some trouble, from what I could see yesterday Bush and Boehner looked like they weren't able to keep the libertarians in line. Maybe this will be the wedge issue that drives them apart? Doubtful, but the disagreements are in plain view now whereas in the past objections (if there were any, I don't know) were made behind closed doors and the image of a united GOP was presented.
The theme of modern conservatism is "knowing your place". Which is why modern conservatism comes from the South.
It means on bull**** issues you stand up for the prejudices of the little guy, who in turn accepts that your plantation owners have been endowed by God with the sole power to make wise decisions on issues that really affect physical reality.
Put into practical terms, I will never forget what William Tecumseh Sherman told his superiors about how the military occupation of the South should proceed, from his experiences in the South. He said that they should confront the plantation owners with straightforward dictatorship, for the owners would learn to work with it, but that they should rule the common Southerners in the manner of the French bureaucracy, by pretending to consult their prejudices and then doing whatever they pleased. As for the South's violent young men, "we must either kill them or employ them."
I think much of the history of the United States, not just the South, is contained in Sherman's cynical advice.
Fascinating. Sherman the best military mind of the entire Civil War. The first post-Roman Roman.
He was certainly not blinded by a love of democracy or equality. Luckily he recognized that someone with his views needed to stay out of American politics; he stated "if nominated I will not run, if elected I will not serve."
Ulysses Grant was his best friend in the Army. Years later Mark Twain was Grant's editor. I would certainly have loved to hear a conversation that included Twain and Sherman, because I am perverse and cynical but those two would have blown my mind.
Thanks Leanan! That got a big laugh out of me.
Asheville, NC
I'd say about 90% of gas stations in Asheville are out of gas and those that have gas have extremely long lines with the Police directing traffic (and preventing violence). Price is around $4/gal. Many reports of surrounding areas in the same condition with most stations out of gas. Only a few reports of fights so far, but expect there will be more in the future. There's a higher percentage of independent stations in this area, so it's more screwed than others. Stations are so afraid of getting turned in for "price gouging" (several stations were already turned in back when hurricane Ike first hit) that they're simply not charging enough to keep supplied and they're shutting down. IF you can get gas it's being rationed by the stations to $20 or $50 depending on the station - which is 5 to 7 gallons.
Some observations and lessons learned from the present mini-crisis:
1) The government at all levels has been largely silent, except to urge people not to panic buy. There has been NO information given to the public wrt the true supply situation and what might be available where and when. Best to count on this being SOP in the future, and plan accordingly.
2) There has been no official rationing scheme implemented. Some gas stations have implemented their own ad hoc rationing, mainly as a crowd control measure. Thus, don't assume that just because the government hasn't implemented rationing yet that there is no rationing.
3) The emphasis in the media and amongst government officials has not been on the supply disruption, but on "price gouging". This is due in large part due to lack of understanding of the situation and of basic economics, but is also probably intended to be a distraction. Scapegoat the petroleum industry and the service stations as a substitute for being honest with the public and dealing with the real problem. Expect similar behavior in the future.
4) People in general have been slow to become aware of the problem and slow to react to it. Most people seem to be driving as normal, very little noticeable curtailment in motoring activity. Most people don't realize there is a problem and start dealing with it until they are almost out of gas, and so is the service station they were going to refill at. I have had discussions with people at my workplace to discuss what they are going to do if they can't get enough gas to drive to work. Some are open to carpooling, but some have personal reasons why that won't work; they have NO backup plan, and just assume that they are going to find someway to drive themselves to a workplace that is 20+ miles away from where they live. Expect similar denial and lack of realistic contingency planning on the part of the majority of the population during future supply crises.
5) Fortunately, I have arranged my life so I do live reasonably close to my workplace. I do walk the 1.7 miles back and forth to work each day. It certainly does remove a lot of anxiety from one's life to not have to be so very dependent upon motor fuel and to not have to worry about refilling my car every week or two. I'm also noticing some more bicycles on the street now. It is definitely a good idea to have some way to get to work other than driving, and if one does not have such an alternative, then re-arranging one's life so that one does should be a high priority.
6) This Sunday, for the first time I noticed a significant impact to the local economy: most of the parking spaces in the business district of my small town were empty. We have lots of small shops catering to the tourist trade, and usually things are pretty busy here in the fall. Since downtown was almost empty, that must have hurt them a lot. I can only assume that people were finally cutting out the discretionary weekend trips in an effort to save gas (or because they were uncertain that they would be able to find enough gas to get back home). The lesson is that when there is a more protracted supply crisis, it won't take too many weeks before the retail/consumer economy starts hurting.
7) No signs of black market entrepreneurship yet. That may come soon if this goes on much longer. Expect such "alternative market channels" to take a few weeks to establish themselves when mainstream market supplies are disrupted.
Why aren't the Dems all over this gas shortage as another example of GOP incompetence? To distracted by that very unpopular bailout plan?
I see this gas shortages as a consequence of the "just in time" business strategy. There is a serious lack of warehousing of fuel at the local level. If every county had a rotating 30 day supply of fuel in reserve then the failure of a pumping station a thousand miles away wouldn't leave anybody without fuel. The same could be said of many other commodities including food.
Perhaps because the gas shortages are perceived to be because of panic buying. (link to a typical news article).
If it isn't happening on their way to work (in Washington DC), it just isn't happening. Maybe next week.
And it isn't happening in Washington DC because that is near the Colonial Pipeline terminus, and all the spigots in between have been shut off to maintain MOL so that the folks in the Imperial Capital get whatever there is to be gotten. Those of us who live in flyover land are unimportant and don't matter.
Getting closer?
Google Trends - "gas shortage"
1. Tennessee, United States
2. Georgia, United States
3. South Carolina, United States
4. Alabama, United States
5. North Carolina, United States
6. Kentucky, United States
7. Missouri, United States
8. Florida, United States
9. District of Columbia, United States
10. Ohio, United States
Don't call them "Black markets"... They are Anarcho-Capitalist markets :)
UFB.
The pain would be a lot less and a lot shorter if governments simply didn't do anything to *help*.
Hurricane damage is temporary and geographically limited - PO will be global and permanent. IMHO, government meddling is going to turn a difficult problem into a total disaster.
After reading reports like this, it amazes me that our energy and oil exploration and production companies aren't hot as blazes.
They are down. ( PSPFX, OEPIX ).
People think something else is more important?!?!!?
So, is there a shortage of product, or are the owners of the independent gas stations unable (or unwilling, IMHO) to pay for their next tank fillup because they won't break even or make a small profit from the next tank of gas?
If I am an astute observer, most retail gasoline stations don't make very much money on the gas anyway, they make the majority of their profits from tobacco, soft drinks, beer, and convenience items which are inside the store. Sheetz is a good example of this. Two years ago, they started building stores in North Carolina and they priced their gasoline up to 20 cents cheaper than those around them. This drew huge amounts of traffic into their stores, and more than offset their losses in the sale of gasoline. Well, competitors whined about their tactics because they sometimes went below the wholesale price of gas, and the great old State of NC told Sheetz to stop selling gasoline for less than they paid for it, or face fines and potential revocation of their licenses to operate. I dare anyone to find a Sheetz in NC, even one close to Asheville that is out of gas right now. Sheetz, like Wilco, is smart, and like WalMart, they own their own fleet of trucks to ensure their supplies of gas are adequate to keep their prices lower than their competitors, and keep the customers coming inside the store to buy the profit items.
So now, if it truly ISN'T a supply problem, then it's time for the independent stores to revamp their in-store offerings, and mark up the smokes and beer to help pay for the next tanker of fuel. If not, they may as well capitulate and go out of business. In case you didn't know, this is what competition and Capitalism are all about.
Here the left has been trying without success to get Socialism in the US for over a century, and the solution was under their noses the whole time: Stop calling themselves Socialists, and instead call themselves Republicans! So counterintuitive! Why didn't anyone think of it sooner?
Only Nixon could go to China.
Right-wing socialism is called fascism....
This is not what communists do. They do away with insurance, mortgages and loans and other indications of property. This is more in line with national socialism, especially the shifting of patriotic feeling to AIG as a great national asset or to the financial system.
It is important to recognize this difference because it is a long held tactic of national socialists to use red baiting to gain power. There is a long association between national socialist sympathizers such as white power organizations and the republican party. The current president's father made quite a play for them when he was getting started in Texas and his grandfather was a straight out Nazi collaborator. So, we need to be cautious about claims that what is going on is similar to communism. It is not.
The national socialists generally don't want to eliminate profits, they want to assure them. This seems very much where our present track is leading.
Chris
Excellent observation! You're spot on.
Eternal vigilance is possible if we all pitch in I think.
Chris
...sounds like one of them thar conspaaracy tharries I read about on that there inner-tube
No, no... it is like a series of tubes. It is not a tube. The tube is where you go to get stupider. http://www.youtube.com/watch?v=EtOoQFa5ug8
Chris
The united states has had allot of things similar to the old ussr. intact there is one thing we improved on. while their senate was powerless, it had a lower retention rate compared to us. 98% vs their 92%
I think there are laws on the book that limit price increases to a timeframe too, but im not sure. One thing is sure, the shortages are the result of prices not being high enough... If we had been charged an appropriate price then there wouldnt be shortages.
Some stations (here in the Atlanta area) are putting per person/per visit maximum on the pumps in effect rationing the supply.
Delivery trucks are doing "splash and dash" trips, instead of filling up the underground tanks, they half load and move on to another station - wholesale rationing in other words.
Very interesting stuff.
Under those circumstances, it seems like the economically rational thing for a gas station to do in a sudden emergency is to turn off their pumps and refuse to sell gas until the emergency is over...
So if you owned a gas station and shutdown until the next delivery to ensure that YOU (and others) have gas, does that fall under "price gouging"?
Would be the logical thing to do if there is an actual shortage, ensure supply for you and yours since the government is so interested in taking care of their own.
There's little doubt in my mind that gas station owners already save the bottom of the tank for their friends and family. Why not? I doubt this is illegal, and if they cannot charge market rates for the gas anyway, they may as well sell to people they like...
I am aware of a local station that is officially "out of gas", but still has a little in the tank and turns on the pump when a local law enforcement patrol car needs a refill.
Exactly how it works in the UK when supply gets low - only its official policy. Police, doctors and nurses only.
Get a group of people one trusts together and buy a load of gas and never open the station to the public. Dispense it out the back door at night.
Some years ago we had a problem with a local pipeline and it was very difficult to get gas because they controlled prices. No problem to buy unleaded race gas in 55 gallon drums, other then at the time it was like 6$/gal.
I definitly would if there is a shortage, hell its yours since you paid for it. If things break down I wonder what the local management will do at the chains stores. Save it for yourself and just quietly hang the "out of service" sign on?
And more importantly, it doesn't allow a price that would balance supply and demand.
Gwydion,
Perhaps you should consider not ascribing human emotion to the refinery industry. Some states have laws which prevent price gouging. In other states the marketing folks set the prices as best maximizes cash flow. With dropping crude prices the last 2 months or so the refiner profit margins (the spread) have increased significantly. They had actually reached very low levels but the refiners couldn’t adjust upwards for fear of dampening demand too much. Even without bumping prices up the refiners are seeing much better profits right now.
The refiners are not public utilities. They don't exist to make fuel affordable for everyone. They are corporations which have a legal mandate to maximize returns on behalf of their stock owners. I've worked in the oil patch for 33 years. I can assure you that such decisions are made on basic economic principles....and not on anyone's naive idea of right or wrong.
I can see how refiners might be shy of reducing demand, that makes sense. But opposingly, isn't there the "law" of supply and demand. If supply is short and demand is outstripping supply, shouldn't price of the refined product go up? It seems like the refiners are overshooting presently.
BTW, I found an article about what Leanan was talking about:
Gas Price Gouging Complaints Flood Georgia Investigators
The law of S&D is just one in a book of many laws. Competion in the market place is another law. Years ago I hung out with gas marketing guys. They never spoke about the profit per gallon...it was alweays the sales volume that drove them. Selling millions of gallons for a few pennies less per gallon generated the profit...not selling their gas for a few pennies more than their competitors but selling a smaller volume. Despite all the conspiricy theories out there, there are few businesses as competative as retail fuel sales. Have you ever driven buy any type of store and saw all their prices hanging on a sign so you could just drive down the road and decide where you were going to make that next purchase? It may be hard to beleive but the gas marketing guys don't give a damn what profit the refiner makes. Their entire goal is to maximize cash flow. This means $/gallon X gallons sold. Alienating customers with even the appearence of price gouging doesn't balance well the many millions of $'s they spend trying to generate customer loyalty.
I agree with your characterization of corporations. The words "right" and "wrong" do not exist in corporate lexicon except when paired with "legal" or "illegal." An action is "right" if it results in profit and is legal. An action is "wrong" if it is legal and results in a loss. An illegal action may be "right" if the action results in a profit and the corporation does not get caught or "wrong" if the action results in a loss and the corporation does not get caught. It would be "wrong" in the case of profit or loss if the corporation gets caught.
I think your basic idea is correct, but simplifying what you're saying, a corporation will see an action as "right" ("wrong") if and only if it is profitable (unprofitable, respectively) in terms of NPV (net present value). Legality is completely irrelevant, except inasmuch as it may affect profitability.
(Note that NPV is significantly different than "the long run". If a corporation can make a million dollars by an action that will result in the end of humanity in 100 generations, they will do so, because the value of humanity in 100 generations is too small to consider.)
And the cool part is, stockholders actually get to sue if the corporation chooses morality over short-term dividends!
Exactly. Corporations are not people. They do not feel. They have no emotions. As one famous wag once said, they have no soul to save, no body to imprison.
Of course all institutions are like this - but the pure profit motive of the corporation puts greed above everything else whereas other institutions must at least pay lip service and sometimes more to other concerns.
We treat nat gas and electricity as regulated utilities so why not liquid fuels. There is no difference in fuel characteristics between the majors. On the one hand regulation would smooth out seasonal variations in price and on the other hand ensure a share of the market by way of regional monopolies. All interested parties (financial sector, oil companies, retailers, government, consumers, fleet owners, independent truckers, etc) would negotiate terms of trade on an annual basis. It ain't free market but it could set the foundation for equitable rationing as supplies shrink in the future.
I'm not sure about the "legal" mandate to maximize returns on the behalf of their stock owners. All accounting books I've read typically say something like "the primary purpose of a corporation is to maximize profits for shareholders." It is not described as being a law.
But that is not the point I want to make. Either way, a law or a primary purpose, this fundamental concept is at the core of what is wrong with our economic system. A corporation has been given the legal status of a person. As a person, a corporation has the same responsibilities any of us do; to do business in an ethical and balanced manner. By putting profits ahead of all other considerations, you open the door for a slow, but steady, disintegration of the accuracy of the financial statements of the corporation.
I don't want to imply all corporations suffer equally from this often fatal flaw. However, if we look back in time, it is obvious how often profits for shareholders become profits for executives instead. Executive bonuses become based on fudged balance sheets and income statements. In the worst cases, the abuse kills the company leaving the shareholders with nothing; an ironic twist to the original mandate:(
I don't have a solution, although doing real jail time, not country club jail time for financial fraud, would be a good start for the worst offenders. Sharing a cell with "Big Bubba" might get the word out:)
That's what you get from price controls. No one is going to sell for under the spot market price for physical delivery.
these are the only facts I can find on any news or government sites, it seems this is being supressed by the MSM.
The Colonial Pipeline mentioned below, runs from Houston, TX to NJ. This is the primary pipeline servicing Atlanta, Asheville NC, as well as Tennessee, and Alabama. Widespread Gasoline shortages have been noticed and reported in Atlanta, Nashville, Asheville, Huntsville and Tallahassee.
Larry Shirley, director of the N.C. State Energy Office noted today that Western North Carolina seems to be particularly hard hit by the fuel shortage. He issued the following statement:
The aftereffects of Hurricanes Ike and Gustav appear to now be hitting the state with more force than last week. Many stations in the western part of the state are out of fuel, with the vast majority being independent stations who are the first to be closed out of the terminals during short supplies. The outages appear to be centered around the Asheville area and points to the south and west. Supplies in Charlotte and Greensboro appear to be tightening. Other points of note:
– At least two terminals in Charlotte are out of fuel but one is expecting more gasoline tonight; diesel supplies are very spotty and unsure
– One terminal in Greensboro is getting about one-third its normal supply and is very low but operating; strict and tight allocations for branded companies are in place
– One terminal in Selma is low but has some diesel and gasoline on hand; receiving small batches; expect to continue to receive product for 3-4 days and then things will go “slack.”
– Plantation pipeline appears to be operating at a decent rate but Colonial, our largest, is very erratic and spotty; Colonial isn’t sure how long the pipeline will continue to operate because of lack of refined product to put into it.
– One of the primary refineries for low sulphur diesel is down in TX and this is affecting Colonial’s transport.
– Nine refineries are down in Texas, accounting for 2.3 million barrels/day; another ten or eleven refineries are in start-up mode or operating at reduced runs; this amounts to about an equal amount of capacity that is impacted to an unknown degree; start-up times for refineries, once repairs are made and power restored, can be a week to ten days in length.
–School systems seem to be in fairly good condition; however, Charlotte/Mecklenburg had to obtain its last three loads from Virginia, not a good sign given the location of terminals in Charlotte.
– Crude oil production in the Gulf is showing 89.2% shut-in.
– Natural gas production in the Gulf is 75.4% shut-in
– Eleven of 26 natural gas pipelines are not operating.
– Information will hopefully be available tomorrow on what is happening with the Spartanburg terminals which supply the western part of the state.
– When considering how long it takes for new product to come up the pipeline at 2-5 mph, supplies could be tight for a lengthy period while we are still waiting for much of the refinery capacity to get up and running, supplying refined product to the pipelines.
Don't worry the regulators are making sure nobody gouges you! After all that's their job, and boy how they've done it. But never mind you can just look away and read all about the latest adventures of Britney Spears, Paris Hilton, Hannah Montana and O.J. Simpson, keep looking at the celebs and you might just end up looking like this:
http://www.roadkillbill.com/fatguy.jpeg
after all why worry?
http://www.roadkillbill.com/NEC.jpeg
media consolidation
http://www.roadkillbill.com/kenzombie.html
Rome had the coliseum to entertain the masses with spectacles while the Roman Empire fell. Today, we have the internet, HDTV's and satellite radio for 'spectacles'.
But, it doesn't change the fact that the empire is falling.
Too bad we import every bit of equipment for the internet, digital TV and satellite radio. I guess as the dollar loses value, we will find whether people first cross off electronics or oil as something they can no longer afford to import. Rationally, you'd give up oil last, but I can't help but think of the movie "Free Enterprise", where the guy buys laserdiscs instead of paying his power bill, thus ends up with no electricity to run his laserdisc player.
Back in the UK our very own Gordon Clown has done his bit of distraction today by offering between GBP 100 and 700 (means tested) for people to buy a computer for their children. Last time i looked there were plenty of computers in the schools and libraries. But maybe it's just one more broken promise? Among the pledges broken by Gordon Brown this last year are:
• Ensuring low inflation and stable growth
• Five-year sentences for all gun crimes
• Using new powers to ban alcohol in trouble spots
• Introducing individual budgets for personal care
• Abolishing child poverty
• Empowering Parliament to make the final decisions about peace and war
• Five hours of sport a week for all pupils
• Increasing house-building
• Counting people in and out of Britain
• Building ten new eco towns
Also they are going to give away a million theatre tickets. Never mind that the New Economics Foundation has issued a report saying the world has slid into "ecological debt", having used up all the natural resources the planet can provide this year and we have been increasingly "overshooting" nature's budget each year since the 1980s.
Buying them an abacus might have been better, since it seems that we will not have electricity.
Still, at least Gordon has ended the boom and bust cycle decisively.
Not much chance of any cycling now, save to see if the soup kitchen is open.
Not true. All the markets influence the prices at the other markets.
All yesterday's massive pop in the expiring October contract shows is that speculators were very stupid to pile so massively into shorts and drive the price down to $90 after two hurricanes.
That move affected nobody except the idiots who got squeezed.
I disagree with your claim that "That move affected nobody except the idiots who got squeezed."
First off, there's the public perception based on the declining futures price. As the price went down, the pundits began to say things like: "See there, the price is going down...Looks like the oil problem is over folks...Time to go out and buy those remaining gas guzzler SUV's and PU's...". I think lots of folks went back to BAU until the hurricanes hit, thinking that the "crisis" of high oil prices had passed. The trouble is, the market was not giving the proper signal to the consumer, which is (as those of us who have studied Peak Oil understand) that oil has become expensive and is likely to continue to increase in price over the longer term.
Then there's the an ongoing effort in Congress to extend the tax credits for renewable energy systems. With the decline in oil prices, that effort has been pushed to the back burner several times. The latest was what happened to H.R. 3221, which began as a bill to extend the renewable tax credits, but was then hijacked to bail out the real estate mortgages of the banks and the S & L's. The language to extend the tax credits was dumped twice along the way. This week's scramble to bail out the financial world will push the pending bills to extend these credits off the table until after the elections. So, we will get no reading on who is in favor of those solar credits and who isn't before the election.
Is that all due to a few idiots who got squeezed by shorting oil futures? Or, is it part of the overall failure of the people working within the financial system to understand the real world outside of NYC, London and Washington? Once Peak Oil is obvious, all those suburban mortgages will become nearly worthless until other sources of transport energy have had a chance to reach significant levels of use, i.e., until a large fraction of the vehicles on the road are no longer running on oil products.
All the financial manipulations and scams on Wall Street can do nothing to actually put more oil into the market, once the depletion of existing wells exceeds new supply. This has been a rather obvious fact of geology for more than 35 years. Maybe the Government should be nationalizing the remaining assets of Big Oil, instead of bailing out the banks, so that the U.S. Government could have a say in oil production and imports, instead of allowing the short term fluctuations in the market. For example, it may be necessary to set a floor price on transportation fuel, so that the consumer will get the longer term message. Better yet, maybe it's finally time for direct allocation (can you say, rationing?), which would allow lower prices while providing at least some fuel to every consumer.
E. Swanson
That was a consequence of the speculative pile-on into shorts, not the price pop when the shorts got squeezed.
If the market can't punish the idiot shorts with a squeeze like the one we saw yesterday, the entire country will see the problems the Southeast is now seeing with gasoline supply.
Losing money is how idiots learn, and if they don't learn, they're removed from the markets because they lose all their money.
A pretty good chance that these idiots are also the same ones protected by the anti-shorting laws in securities.
The short squeeze stung but it looks like they where able to cover. So these are some very deep pocketed shorts and I'm personally doubtful that profit is the motive for the extreme shorting in the oil markets.
I am glad you said it-I get tired of continually hearing that purposeful manipulation is not happening-it has been pretty blatant recently. Yesterday's short squeeze was the wildest ever, and I wouldn't be surprised if they are back today making the same bet with OPM (perhaps taxpayers'?).
Too bad this formula isn't going to be applied to Wall Street. I say nationalize ALL of Wall Street, ALL insurers, ALL Banks--the WHOLE financial system--and operate it as a non-profit for the benefit of the entire country. It would be good to do the same for ALL energy industries.
If we are to survive the future, the greedquest must be eliminated now.
In this case, how would you avoid corruption, or the development of a crippling bureaucracy, or some sort of federalist oligarchy? My understanding is that the only point to having for-profit companies was that the competition from other for-profit companies would lead to gains in efficiency that out-weighed their profits. (Or else, what motive is there to make a profit when a non-profit ought to have lower costs since it isn't required to make money for it's stakeholders?)
That said, for me personally, I've always felt that using credit unions was more attractive than for-profit banks because they give less fees and the interest rates I've found to be comparable. Right now I use a for-profit for my checking account and ATM access and a remote non-profit for savings and investment. It seems okay now, but how would you ensure that it stays that way?
Seems like the corruption in the financial industry is already endemic, as is the crippling bureaucracy. Might as well have it all federalized anyway.
I have a minute to respond at this time, so I will just say that the structure of the federal government must change to allow for more democracy and further checkas and balances. I will post something more detailed later.
Madisonian Federalism has three branches and three levels, which we all should have learned in High School Civics or not been allowed to graduate. Anyway, there are a few other countries who have taken the number of branches and expanded them to four and five, while some have added another level. (Okay refresher time: Branches--Legislative, Executive, Judicial; Levels--Local, State, Federal/National.) Madison's theory of Checks and Balances included another actor that was amended out of the Constitution in an act I belive ensured the system would become corrupted: The losing candidate for President became Vice-President in an attempt to mimic the Roman Republic's dual Counsels who could veto each other's decisions. What myself and others have discussed is the need for additional branches to provide more checks and balances at the national level (provided one wants to retain a national government). Most important is that officers for the new branch(es) be elected, not appointed. And because US history proves the greatest abuses of power arise in the Executive branch, the Executive will have its powers pared and duties reformulated.
Clearly, the biggest failure of the Executive is its role as regulator and law enforcer. The Departments and agencies that do this work, like the Justice Department, will be removed from the Executive and become another branch, with the Departmental heads being elected to two-year terms and their chief aides subject to congressional approval for two-year terms (the same will apply in the other executive departments, too). The same treatment will be provided for the Treasury Department and its new bank--the FEDs replacement. And if we make ourselves collectively responsible for ourselves' wellbeing through singlepayer-universal heathcare, I would also suggest we do this for all other usual insurance--home, life, vehicle--while allowing private insurance to provide esoteric policies like special liability applied to franchise sports players, for example; and I would place this new Department alongside the new Treasury Department.
The above changes leave the President to manage defense and veterens affairs, energy and transportation, commerce and labor, interior and agriculture, and state, while one--homeland security--and parts of others will be eliminated, all will lose their regulatory agencies as noted above, and others will be merged together--Heath and Human Services, Housing and Urban Development and Education would be merged into the new Treasury complex. Implied by these moves is repeal of the 1946 Full Employemt Act which gave the president responsibility for maintianing full employment and thus the health of the economy and other similar statutes.
Tainter probably wouldn't like this solution as it makes the federal government more complex, but it also makes it more democratic and accountible, and greatly reduces the opportunities for corruption. Likewise, the Legislative side also needs to be modified by adding a third house which would be totally resposible for oversight of all aspects of the federal government. It would be limited to introducing only legislation related to its oversight capacity, but it would also vote on all other legislation and be subject to the supermajority rule for over-ridding vetoes.
Aside from the new legislative branch, the overall size of the federal government should remain about the same, and in some respects it should become much more efficient and accountible. It merely expands upon Madison's mechanisms for balancing power within government, which are now quite clearly out-of-whack. It removes a considerable amount of power from the president and makes him/her subject to greater accountibility. It would be nice to design a new government from scratch, but I think a reformulation is easier for people to accept as most of the institutions remain. My point personally is to reformulate government so it can fulfill its rationale as made clear in the Preamble:
Please note how little of the above is taking place currently or has over the past 28 years. Much of what's occurring now is actually a crisis of governmental structure as its design wasn't made for these times or for political parties or for the amount of corruption corporations and their amorality can inject into government. That no discipline of corporations has occured for their excesses is also a crisis related to the structure of government. The great majority of the structural problems and related corruption exists in the Executive. In most states, the main executive officers are elected; the same must happen at the federal level as Congress has proven unable to disapprove of a plethora of bad nominees over the years, with the most recent bunch being the worst I can recall. I would also make the Justices of the Supreme Court subject to direct election for terms of 6 years. I believe we need more democracy, and we need it in a hurry.
"If we are to survive the future, the greedquest must be eliminated now."
I second the E-motion.
Truely sorry to hear of your misfortune re Shorts. That explains alot, but this comment of yours is main point I was and continue to make.
Cheers!
I still want to have some of your soup and chat. What's the name of your establishment in Corvallis?
SOUP SHOP
CORNER 16TH
MONROE
Thanks!
How about we just buy them outright? 700 billion would go a really long ways, help GM, Ford Chrysler retool, buy the American Oil companies, and build a train system worthy of 1st world country.
Giving it to wall Street, hell you might as well flush it down the toilet.
It would also buy aboutt 3.5 trillion rounds of ammo.
Yep, that will work too. Might even buy the factory, 100years of raw materials and enough left over to keep the generations of chemists happy. :-) If our congress critters are going to be passing out money, it might as well be spent on something useful like the last surplus check was.
Near the end of the 1989 movie "Slacker", a strange young man drives through the early morning streets of Austin in a Ford Falcon with megaphones on its roof, ranting about his idea for a government weapons giveaway program. He lists every kind of gun and edged weapon he can think of, and then he says, "I know it's coming."
I must admit, that's one of my favorite parts. All the bad things I thought were going to happen back in those days are happening now, and when I watch that movie it's like a prophecy of a face-to-face version of the Internet that will survive the collapse. The overarching but obscure theme of the movie involved Bob Black, author of "The Abolition of Work", who argued that we should all do our jobs as badly as possible and rip off our bosses at every opportunity until the system collapses. "Workers of the World Relax!" I lived nearby in Montrose in Houston back then, with empty houses and savings & loans on every corner, ruins all about, and it seemed for a dreamy moment that it all could happen.
http://www.youtube.com/watch?v=xnBNT53WqXA&feature=related
Starts at about 1:13, ends about 2:22