Every night I read through the news to decide on a topic to write. Tonight, I was almost depressed reading the news. There were so many stories about how bad the economy is and how much worse it could get. Almost every news story started with "the worst in X amount of years." Instead of contributing to the negativity, I decided to put some positives out there. A few bright spots so to speak.
First, oil prices fell below $50 today for the first time in almost two years. The average price of gas is down almost fifty percent to $2.02. With the dramatic drop in oil and gas prices, the consumer price index data for October was historic as well. October’s 1 percent drop in consumer prices was the largest monthly decrease in the 61-year record of comparable data.
In keeping with my positive theme, this is good news for those of us who have to buy anything right now. People may have a few extra dollars to spend on their kids for Christmas rather than putting it them in their gas tanks to get to work.
Second, due to the same drop in prices, a few of those countries that do not have our best interest at heart are falling on hard times. Iran continues to feel the pressure of the falling gas prices. With less income from their oil, they may be slowed in some of their evil ambitions. The strain could eventually push the people of Iran to question their leadership. We could hope that leadership gets tossed out on there butts. (I know it's wishful thinking, but this is a positive article.)
Finally, with the economic data not so bright, the illegal immigration into the country has dropped 46%. With the reduction in jobs and the elimination of some construction jobs, the opportunities for illegal immigrants is on the decline. This does not account for the number of illegal immigrants who have returned to their native countries for the same reasons.
My point to all of this is that for years we have been told how bad things were. Some justified. Others exaggerated. If you are a person who see things half empty, you most likely will find your life half empty. If you are a person who see things half full, you most likely will find that your life is in fact full. There are bright spots in everything we see in life. You just have to look for them.
Thursday, November 20, 2008
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23 comments:
Had a long talk with my broker today...depressing indeed.
Oil down is good, though. Have to jump on that wagon when OPEC as had enough of low prices...and they will.
I know, I know, you are looking at the half empty person here. While I think the cost of oil declining is a good thing, it is my sincere hope that this stops or impedes progress toward getting away from foreign fuel dependency.
Warmest Regards.
An American Liberal
Err that should read:
"it is my sincere hope that his DOES NOT stop or impede progress toward getting away from foreign fuel dependency."
Way too tired tonight it would seem.
-An American Liberal
Nice article, I believe the world needs positive thinking in these days. Falling oil prices can help to prevent bigger decline of world's economy.
On the other hand, falling prices of all products are not so excellent news. The role of deflation in the economy is not definitely proven (but what is proven?), but many economists believe it's even more dangerous than inflation...However, let's buy some things now, while we can :P
Take care
Jay
Stacy,
Interesting timing on this post. I just sent an email to an Internet buddy in your neck of the woods (Pennsylvania) about, among other things, how nice it is to fill up my car for under $30 for the first time in a long time.
Last spring the fuel cost to visit our daughter in Kansas was about $175 (and that's in a Toyota Camry that gets 30 mpg.) We're heading out there again next week for Thanksgiving, and, based on reports from the last couple days, we can expect gas to average $1.75 along I70 between Indiana and Kansas, dropping the cost for the trip to around $75. That savings of $100 will buy a few Christmas presents for my grandsons.
BTW, I'm one of those glass-half-full people. Life's too short to approach each day with a negative outlook.
It is always good to hear some good news. That is especially good to hear about the illegal immigration decrease. See and we didn't have to deport nary a one! Ah the joys of having a troubled economy!
I would talk with my broker, but I don't have the heart or stomach to hear what he has to say. Sorry, but my glass IS half empty (50% down in my portfolio). I live on my retirement funds and now I'm expected to live on 50% less than what I was before and to redistribute that to some free-loader sitting in front of his 45" flat screen TV while I start looking for a job in my golden years?
The gas will be back up to $4 and beyond as soon as Obama is inaugurated and OPEC realizes he and Nancy have no inclination to drill. The only way we can expediently get away from foreign energy influence is by drilling here and drilling now. We can address the windmills in liberals’ heads after we are free of OPEC.
Perhaps we are all expected to immediately switch to electric cars? I would be interested in suggestions to solve these problems:
- - How do we dispose of all the used batteries for these cars? Are we going to have to create special landfills for the hundreds of thousands of used and outdated batteries for those electric cars?
- - How much electricity is it going to take to get our cars on the road; where do we refill - - - and what source are we going to use to make all that electricity for the plug-ins? Fields of green?
The cost to buy and operate electric cars is above my pay grade. I currently drive the last car I am most likely to have in my lifetime and it isn’t electric; public transportation is non-existent for me.
Andrew G: Thanks for letting it last a few hours. I agree with most of what you say, but I'm trying really hard to look at the positives for my kids. (while all the while be as realistic as possible.)
Andrew G.,
Personally, I feel for you, and the losses that you and I are both incuring to our portfolio. But "free loaders" watching a 42" LCD screen are not who took your money. The scags on Wall Street -through mismanagement, greed, and arrogance- ran our investments into the ground. Middle East oil suppliers and China with their vast hold on manufacturing all took a nice healthy cut too.
Please quit blaming the poor and realize that poor economic policies are to blame.
I would like to point a finger at the Republican machine for drumming up nightmares of lazy Americans robbing hard working Americans. It happens, but not in the trillions of dollars! You would have to be pretty thick to think that some lady sitting on the porch sipping Koolaid with her nine kids by nine fathers somehow took trillions from our economy. She may be morally dispicable, but she isn't the one robbing you blind.
Don't get me wrong, the Democrats hoping to expand loans to the poor sure didn't help. And conversely, Republicans thinking a pure free trade environment would be devoid of malice, greed and illegal activities did not help too terribly much either. It would seem they were both terribly wrong.
What about those liberal electric cars, wind mills and solar power? I am so sick of seeing that limited to liberal and republicans singing "drill baby drill" by the campfire. Only the ignorant think drilling for more oil is the answer. There I said it, the ugly truth. There isn't enough oil in any form of reserves capable of keeping up with our demand by anything more than a fraction of a percent.
Nor is their any inclination for an oil company drilling off the coast of California to sell it to us. If China is paying more, you can bet that American oil will head right on over there. That was one of the sticking points, "if you are going to drill on public lands, could we get some assurances that you are going to sell it to Americans (cheaply)?" The oil companies said no.
The first country to achieves energy independence will dominate world politics for the next 100 years. It is that big a deal. It will be worth trillions of dollars to our GNP and a reversal in political and economic attrition. In another rant I could explain that more thoroughtly, but seriously folks need to get with the program. Push for legislation that moves us toward solutions, and our future.
As to what to do with batteries, most batteries can be recycled, just like tires.
How do you recharge these types of cars? Please check out the GM Volt
(pretty slick/beautiful piece of American engineering). If GM can keep it together, that car will be a game changer. I don't know if you play golf, but the technology is pretty similar to a fancy golf cart.
BTW, check with your municipality, many of them offer licenses to older Americans to drive golf carts instead of cars. If your community is like mine, a golf cart will get you there and back, no problem.
Finally, we need the next four years to be four years of solutions, and an end to political manipulation. Will we get it? I don't know, but I sure hope so.
Warmest regards,
An American Liberal
The first country to achieves energy independence will dominate world politics for the next 100 years.
Am. Lib., say hello to the world's next super power.
Even though you and I come at things from opposite ends (well, maybe not ends, but sides) of the political spectrum, I agree with much of what you said. Sadly, though, I think the party that just won all the marbles is more interesting in solidifying it's power and getting even with Bush than in achieving energy independence. Even though the GOP had control of both the WH and both houses of Congress from 2000 to 2006, they never had "working" control, and yet they managed to borrow and spend records amounts of money. The Dems now have working control, so we'll see what their priorities are. My guess is that it will go something like bailing out the auto companies (unions), prosecuting as many Bush Administration officials as possible, card check and cap & trade/global warming initiatives, not necessarily in that order. IMHO, the next couple years are going to be painful to watch, and if you think your portfolio has taken a beating, you ain't seen nothin' yet.
Retired Spook: Actually, the Republicans only had control of both houses for two of those years, but you are correct that they did not have working control of either. They did not have control of the House until 2004. They had control of the Senate for much longer.
Stacy,
I'm sorry, but continued comments about how the Republicans didn't have enough power to improve American lives is a bunch of hogwash. They certainly had the power, but chose to go a different path with that power. Hence the reason they were thrown out of power at almost every level of government.
Republicans need to accept responsibility for their losses, clear their heads and focus on what is happening to our country.
Retired Spook.
I am not sure that Brazil has the political will to utilize their good fortune, nor would others on pace to achieve independence such as Greenland. So, with that stated, let me modify my comment to state that a country with the political will that achieves energy independence will have an opportunity to dominate an emerging market(s), and change the geopolitical climate for the next fifty to one hundred years.
While I have serious issues with the car companies: their management, our handling of them, and their unions; they can not be allowed to fail. We need to draw the line in the sand on some of our manufacturing capacity, and understand that energy independence requires participation by the Big 3.
BTW, I now believe that we should allow them to slide into bankruptcy but provide guarantees to help them emerge a leaner more efficient business. I think Mitt Romney's comments on the issue were well stated and illuminating.
On another issue, we are in an economic war with the Chinese and others. We need to encourage innovation and use our government to level the playing field in the world markets. Anyone who thinks that "free market" elements are in play is a complete moron. We are being "out-hustled" while American politicians play sound bites. We need to understand our enemies, drop the arrogance, and attack them with the same tenacity that we once used on the former USSR. Or at least, that is my opinion on the matter.
If we take the economic fight to them, then our portfolios will do well. If we keep sticking our heads in the sand (trying to be polite here) then it will simply be one economic crisis after another (all of which have the ear marks of a manipulated market).
As to whether the Democrats will do something positive with the power that they have been given. I don't know to be honest. There are a large number of items that need to be rectified, and thus far they seem to be busy rewarding the faithful and providing payback to former enemies.
Time will tell if they understood the message of the American people or whether they need to be sent packing next election cycle.
Warmest regards,
An American Liberal
I think the cost of oil declining is a good thing.
you can discuss on buzzerhut
forum by free registration .
Count me in with the half full crowd! Even after this election, I remain optimistic.
"it is my sincere hope that this DOES NOT stop or impede progress toward getting away from foreign fuel dependency."
Am. Lib., I would have more confidence in Larry the Cable Guy (just git 'er done) than I do in our current crop of politicians on this issue. Discussions on drilling in ANWR first started in 19-frickin'-88, and Clinton finally vetoed the measure in 1995. All the while the Left's opposition was (and still is) "it's going to take a decade before ANWR oil shows up at the pump." Had we begun drilling in 1995, we would have been reaping the benefits of that increased supply and resulting lower cost (and yes, oil is a fungible commodity, the price of which is largely determined by global supply, regardless of where it's sold) for the last 3 years, possibly negating the effects of the oil bubble of the last 18 months. I've seen oil industry estimates of as little as a year or two to dramatically increase off-shore production, yet one of the first orders of business of the new administration is going to be to reverse Bush's lifting of the ban on off-shore drilling. I'm sorry, that's just nuts.
OTOH, the Left has been touting technologies such as bio-fuels, hybrids, plug-in hybrids, hydrogen fuel cell and CNG, all of which either won't exist in any meaningful quantities for at LEAST another decade or make up a miniscule percentage of current passenger and freight fuel infrastructure. Do you see a bit of a disconnect here?
What affordable (without huge government subsidies) alternatives to gasoline powered vehicles do you see on the horizon in the near future? Keep in mind that we're faced with at least one and possibly two American car manufacturers going under, exacerbated by a credit crunch that's making it difficult for anyone but the wealthy to even buy a new car -- any car, and there are over 250 million gasoline-powered passenger vehicles in the U.S. that are eventually going to end up in a landfill somewhere. More than likely we're talking about a transition of 20 or 30 years, not 2 or 3.
I'm not saying we shouldn't be moving toward a new generation of transportation fuels, and I think T. Boone Pickens' idea of converting to CNG has a great deal of merit as a bridge technology, but even that isn't going to happen overnight. At least, with CNG, current vehicles can be modified to run on it for a fairly reasonable cost, and the current delivery infrastructure could be easily converted to accommodate it. I could see a program much like the TV converter box being used to adapt current analog TVs to the new digital signal commencing in February being applied to conversion kits for cars and trucks to run on CNG, but I haven't heard anyone in Washington D.C. suggest such a common sense solution.
What we need is a commitment by both private industry and government to a comprehensive approach that puts everything on the table. Unfortunately, this current crop of pols is more interested in mandating what kinds of vehicles manufacturers build and limiting choices to consumers, while the automotive industry is simply trying to stay in business. Add to that Obama's statement that, if the price of gasoline remains low, he'll just petition Congress to increase the price artificially by raising the federal excise tax.
Interesting times we live in.
Spook,
There are a couple of gaps in your logic, but overall we are not that far from having a very similar opinion.
The first gap has to do with Ronald Reagan pulling the plug on research funding for alternative fuels in early '80s. Remember that little problem under Carter with OPEC?
There had been efforts to reduce or eliminate our dependency on foreign oil after that. But the price of oil went down and the research was declared not economically viable to continue.
Huh? This decision was made even after a pretty famous report produced by Shell (I believe, but can't find a link to it) that projected consumer demand versus domestic production (domestic production would not be able to keep up with the level of demand - specifically stated that in the '70s and every year afterwards, our dependency on foreign oil would increase). It was made abundantly clear that this was a finite resource that had the possibility to impact our national well being. Imagine where we would be if Reagan had not believed that "free market" would fix the issue in the future?
Even though I am suspicious of Picken's motives, he generally has it right. But as many in the oil industry have stated they are ready and willing to work with the government to reduce emissions, protect the environment and most of all, reduce or eliminate oil dependency. Bush, who is an oil man, has paid lip service to alternative fuels in his energy plan, but mostly his policy has always been about increasing access to areas for exploration and drilling.
Giving Big Oil access to our public lands is tantamount to giving BILLIONS of dollars to an industry that is recording history making profits. I'm sorry Spook, but it doesn't make sense.
Tying the recent car issues with our discussion, why should we support an expansion of drilling rights with no guarantees that: 1) costs will decline; and 2) efforts to pursue energy independence would continue? Why should we allow more drilling and perpetuate more of the same? It does't make sense, it is like tossing money after bad money.
Better to take our remaining money and put serious efforts into energy independence.
Warmest regards,
An American Liberal
PS Pickens said drilling for more oil was not a good idea. Of course he had his mind changed, but even he thinks it is not in our best interests.
Yeah, Am. LIb., I'm familiar with Pickins right-of-way to get water down to Dallas/Ft. Worth, and how he plans to put heavily subsidized windmills on that right-of-way. I'd call that an ulterior motive, but I still think there is a great deal of merit to switching from primarily gasoline or gasoline/ethanol mix to CNG as a bridge technology to get us to something, better, cleaner and renewable. I don't know if hydrogen fuel cells are the long-term answer, but, whatever that long-term answer is, it's not here yet, and likely won't be for a couple decades. A lot of people are banking on plug-in hybrids as the bridge. That remains to be seen. If they do catch on in a big way, we're looking at recycling an awful lot of batteries 10 years or so down the road, and the manufacture of nickel metal hydride batteries is not exactly an environmentally friendly process. The future of electric or gas/electric cars, to a great extent, depends on some breakthroughs in battery technology, something that's actually more likely to occur before a breakthrough in fuel technology.
Clearly current generation biofuels, particularly grain ethanol, have been pretty much of a disaster. We've already got ethanol plants closing down in the midwest because the cost of corn tripled overnight. And now, with the price of gas down by 60%, ethanol isn't a viable alternative. Even when Gas was $4.00 and ethanol was 15% less at $3.40, it still wasn't an attractive alternative, because E-85 in a flex-fuel vehicle gets about 15% worse mileage than gas, which meant you didn't save any money, and you had to fill up more often.
BTW, I concur that the Reagan Administration dropped the ball back in the 80's. Auto manufacturers, however, did produce a lot of fuel efficient vehicles back in the late 70's and early 80's. Then the Reagan tax cuts kicked in, inflation, unemployment and interest rates all dropped precipitously, and the economy kicked into high gear. As you note, the price of gas stabilized at a reasonable level, and a lot of people decided they could afford and wanted to drive something a bit bigger and more comfortable than a motorized skateboard.
I'm kind of rambling on here, and, on this issue, I don't really disagree with you on any significant level other than I think we should produce as much domestic oil in as environmentally friendly a way as possible as part of an overall comprehensive energy plan. Now, does that mean drilling in the middle of Yellowstone Park? Of course not.
I just have a hard time laying my finger on that article of the U.S. Constitution that gives the Federal Government the power to mandate the level of efficiency of products produced by private industry -- safety, yes, but not efficiency.
Retired Spook,
I absolutely agree with your comment about grain based ethanol. It is my belief that people got overly enthusiastic about providing another market for farmers, and glossed over some pretty significant drawbacks.
Forgive me a bit here, but I sense that you are starting to wear down with regards to the "Drill Baby Drill" policy put forth by the Repubs. Gifting away public property with no stipulations is tantamount to giving away billions in free money to an industy that already has record profits.
There is however an even better reason to avoid drilling. If you believe, like me, that the recent "bubble" was not a case of supply/demand economics but unfettered hedging in the futures markets; then I would submit to you, the psychological impact of a country moving off of oil will drive prices down. The element of the cost associated with out of control speculation should drop to roughly nothing versus the 60-80% that we saw during the bubble. I am too tired to provide the link to that information. My guess is that you are already aware of this data, but if not please let me know and I will dig up some excellent links on the matter.
In conclusion (sorry Stacy, I am going to double post tonight) moving away from additional drilling would actually send the cost of gasoline per gallon down immediately. Of course OPEC could reduce capacity, but hopefully by the time they realize what we are doing, we will blow right past them.
Your thoughts?
An American Liberal
PS Hopefully this Administration will repeal the ability to patent seeds. That's for another discussion but crossed my mind when we were talking about farmers.
Retired Spook.
Here is my take on an Energy Plan going forward, and would love to hear your thoughts.
First of all, let me break down our oil consumption into three distinct groups. The most commonly thought of group when thinking of products derived from oil are fuels. The second most commonly discussed are those used by energy plants for the creation of electricity. The third, oft overlooked group are the products created from oil. Materials such as plastics, asphalt, lubricants, and many textiles (etc.) are all good examples.
Let's talk about the first group in this blog entry only. You, Pickens and I all agree that CNG is an easy "bridge" solution to help us get to where we are going.
The Federal Government should decalre that this is our "fuel" going foward.
The Federal Government should provide low cost loans for businesses to create and expand the infrastructure to support this move. In my opinion this money should be provided to local governments to doll out as required.
Additionally, the Government should provide low cost loans and tax credit benefits to consummers in an effort to have them modify their vehicles (or provide tax relief for the purchase of a new car with CNG capabilities). This is a BIG government giveaway, and most people hate that.
But let's spin the reasons why the government needs to be involved here. First of all, we need for this change to happen quickly. Second, there are significant security and economic issues if we do not get our dependence on foreign oil under control. Third, we need to jump start the economy, and put people back to work; this investment does both.
In an effort to expedite this process, the Federal Government should begin an incremental tax on the sale of gasoline beginning two years from the implementation of this policy. Fifty cent Federal Tax increase, with a maximum two dollar per gallon tax starting six years from the implementation of this process. The tax revenue generated will be used to fund additional research and retooling efforts.
By 2015 we could have the majority of vehicles on the road CNG or electric powered.
We should also push to set 2025 as the date when we begin the process to push the Hydrogen revolution.
Your thoughts?
An American Liberal
Stacy: How bout checking into the oil supply in Saudi Arabia. I know you must have read the same article as I have with regard to their reserve supply being a fraction of what we were led to believe with the eventual elevation in oil prices even higher than just past.
And why doesn't American Liberal and Retired Spook get a room so they can communicate without interruption from the rest of us.
And why doesn't American Liberal and Retired Spook get a room so they can communicate without interruption from the rest of us.
Sorry, rbt, I wasn't aware that the discussion between me and Am. Lib, was preventing you from posting.
RBT,
First of all, you are more than welcome to join in the conversation. As a matter of fact, you are encouraged to do so, and do so OFTEN. But please, don't snipe at those who are posting here. It discourages others from joining in the conversation.
As to your comment about Saudi Arabia's oil reserves, my guess is that you are referring to this article in Fortune. Of course to be fair this information was disseminated some time ago by the EIA, and it certainly is not the only bellwether of impending doom out there. The Saudis, as an example, have actually been very forthcoming on this issue (despite the fact that oil related topics are considered a state secret).
You are correct that we are heading into a real crunch, where supply will not be able to keep up with demand, and resultantly prices will climb dramatically. This information was, in part, reviewed when I created the timeline in a previous post. Our time to mull this over is gone, and like it or not, we are going to have to do something and do it quickly.
Warmest Regards,
An American Liberal
Stacy,
Other than the links to your partner sites, this template looks GOOD! If you could make that background something other than black, I think you will have a winner!!!!!
Warmest Regards,
An American Liberal
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