Gas Prices Fact or Fiction: A Primer on Supply and Demand
The recent upward spike in gasoline prices (particularly those following natural disasters) has unleashed a torrent of theories attempting to explain the pricing behavior in gasoline markets. From the Internet to television media pundits to the local newspaper editorial pages, and from political ideologues both left and right, it seems everyone has their pet theory about the rising price of petrol. FULL ARTICLE
Comments (79)
Professor Lehman's article is an excellent narrative of what has been happening in the gasoline and oil markets. Furthermore, it is made using Austrian analysis instead of the standard textbook neoclassical stuff.
One thing to keep in mind is that the U.S. Government has been discouraging domestic refining of gasoline for almost four decades, which is one reason that gasoline markets are so vulnerable to price spikes. Of course, politicians would rather demagogue over high prices than permit real market solutions.
Published: October 18, 2005 8:10 AM
Aggressive political and military intervention by US and Western governments in the Middle East over the last fifty years has significantly altered the supply side of the oil market. Taxes on oil are really the fee governments charge for that "service". Current oil price movements recognize the limits of this supply-fixing scheme. This scheme has also the sad side effect of preventing entrepreneurs from entering the energy industry and here we are stuck with our oil addiction. US voters may want to recognize that they sold their votes to Democrats and Republicans for cheap gas.
Published: October 18, 2005 9:03 AM
I patiently explain these concepts to people who are outraged about gas prices, to no avail. But now I will just send Professor Lehman's post to them - he has stated it far better and more comprehensively than I could!
Published: October 18, 2005 9:31 AM
Vince,
Let's face it, with many people utterly ignorant of economics patient explanations don't always work.
When someone starts complaining about the oil companies gouging consumers, I then ask "well if it's gouging when the price goes up does that mean the oil companies are being charitable when the price falls? This seems to dumbfound people enough that they at least shut-up and become more willing to discuss the topic rationally.
Published: October 18, 2005 10:57 AM
Excellent article: my two cents [added below]:
“…As such, the price of crude oil can and does influence the supply and [therefore, the] price of gasoline.�
[It influences the price of gasoline by influencing the supply of gasoline.]
“When the price of oil rises [due to a reduction in its supply] as it has, the (opportunity) cost of supplying gasoline increases for petrol suppliers, reducing [the production and supply of gasoline and simultaneously] the quantity of crude oil demanded in gasoline production and potentially [definitely, all else remaining equal] reducing the supply of gasoline. All else equal, we would expect a rise in the price of crude oil [due to a diminished supply of crude oil] to lead to a rise in the price of gasoline [due to a diminished supply of gasoline], and this is certainly consistent with the facts.
Published: October 18, 2005 11:08 AM
Do a quick search and you'll find that the government makes more profit off of gasoline than oil companies do.
Published: October 18, 2005 11:37 AM
Thank you for this very finely written article.
Published: October 18, 2005 12:10 PM
Any understanding of the relationship between oil prices and supply/demand will be incomplete unless one understands the role played by the psychological nature of the trading activity which takes place at the commodity exchanges like NYMEX where on any given day every barrel of oil consumed in the USA exchanges hands more than ten times in one trading pit alone. As a trader who was trading oil futures in 1998 when the price was below $10 per barrel, the increase in global oil consumption has not been significant enough to explain the sevenfold increase in prices since that time.
I submit that a more significant influence on oil prices (as well as many other commodities) than consumer demand is the artificial demand created when a single trader, with a $4,500 margin deposit, buys or sells one crude oil futures contract representing 1,000 barrels of oil. The impact is similar to what 2000 american drivers will consume in an entire week of driving. Trying to forecast or explain oil/gas price movement based on production and consumption statistics alone will only meet with partial success. There is much more to it. -Steve Pilotte
Published: October 18, 2005 12:48 PM
Nicely done by the author. I hope we will be seeing more of his writings on this blog in the future.
Published: October 18, 2005 12:49 PM
I am curious about the second-to-last paragraph about gas taxes versus tolls. Why would tolls be "a much more economically rational means of allocating scarce roadway use" than gas taxes? Except for use in chainsaws, snowmobiles, arson, etc., all gasoline is burned in vehicles on roadways, so isn't a gas tax a direct means of allocation of scarce roadways as much as tolls? From an economic perspective, what is the difference?
Published: October 18, 2005 1:00 PM
I agree with Alan R. Roadway tolls would mostly accomplish the same thing as a gasoline tax, but do it more inefficiently. In addition, it can be argued that a driver of a Cadillac uses the road more than the driver of an Escort for an equal number of miles- a gasoline tax captures this difference to some degree.
Published: October 18, 2005 1:08 PM
Alan,
Good question. From an economic perspective, tolls (as pricing signals) do a much better job of linking roadway use directly to demand. In other words, flexible tolls would tend to reflect the demand for roadway use much better than taxes on gasoline. When I am using roadway space, I'm not just burning fuel; I'm literally taking up scarce driving space, space that, especially on a congested interstate, cannot be used by someone else. And, if the roadway is congested enough, I am forcing someone else to bear a congestion externality by delaying them in getting to their destination. A simple gas tax does not do an adequate job of reflecting these additional costs imposed on other drivers, nor of reflecting my true demand for roadway use. Further, I can easily avoid the gasoline taxes by purchasing a more fuel efficient vehicle and driving an equal or greater number of miles on the roadway (in fact, this is exactly what I do, since my VW diesel gets 50 mpg). The tolls, on the other hand, are direct and straightforward, and reflect the true demand for roadway use. The point is not just to assess taxes to collect revenues to cover the costs of road repair. In my view, that is, at best, secondary. The main issue is to get the most efficient use of roadways. In order for this to happen, consumers must confront the direct costs of using them, and, in my view, tolls better reflect this relative to demand. Gasoline taxes are indirect, at best, and affect the supply and demand of gasoline, not the supply and demand for roadway use, per se.
Published: October 18, 2005 1:15 PM
Tom,
I agree, as tolls are simply user fees. I would add, however, that if the government didn't tax gasoline at all, but instead billed oil companies (rather than taxpayers) for the protection they provide in the Persian Gulf), the costs would be passed on to consumers, who would now be paying well over $5 a gallon for gas -- http://washingtontimes.com/commentary/20030722-093718-6082r.htm.
Published: October 18, 2005 1:32 PM
While private toll roads are being created (the US interstate highway system is crumbling), let there also be total economic deregulation of the railroads.
Harry Valentine
Published: October 18, 2005 1:36 PM
The exception is small towns, especially tourist towns where every gas station posts the same price.
Every brand station in Leavenworth, WA traditionally posted the same price, at least 10 cents higher than surrounding towns. A new Safeway with gas pumps was built that posted same prices as Wenatchee, the next big town down the road. The name brands lowered their prices for a few months and then raised them back up. Tourists must be to stupid to buy gas at Safeway.
Published: October 18, 2005 1:46 PM
Tom,
You are right, we are overlooking the time of use of the roads.
Published: October 18, 2005 1:56 PM
Sorry, but I could use another ECON 101 refresher.
Don't gasoline taxes, refinery regulations and increased money supply contribute to higher gas prices IN ADDITION TO the factors of supply and demand? In other words, when you talk about the intersection of supply and demand, are you talking about the base rate for gasoline BEFORE such surcharges?
With my limited knowledge of economic principles, it seems to my like the government is the real price gouger. Gax tax in Hawaii is over 57 cents a gallon.
Published: October 18, 2005 3:34 PM
Sorry, but I could use another ECON 101 refresher.
Don't gasoline taxes, refinery regulations and increased money supply contribute to higher gas prices IN ADDITION TO the factors of supply and demand? In other words, when you talk about the intersection of supply and demand, are you talking about the base rate for gasoline BEFORE such surcharges?
With my limited knowledge of economic principles, it seems to my like the government is the real price gouger. Gas tax in Hawaii is over 57 cents a gallon.
Published: October 18, 2005 3:34 PM
Private toll roads could use some form of demand pricing to try to shift marginal highway users away from peak travel times. Simply charging a higher gas tax completely ignores the value of people's time, therefore exacerbating congestion over what would occur in a demand-priced toll highway. And demand pricing would allow for a larger total vehicle load because it is more evenly spaced temporally.And gas taxes are always vulnerable to political manipulation.
Published: October 18, 2005 3:52 PM
Looks like gas wouldn't be cheaper...
Published: October 18, 2005 3:54 PM
I thoroughly enjoyed this article as it addressed some thorny issues and, best of all, provided links to some articles that are very encouraging about the future. However, I disagree with a few things.
As anyone with relatives in Baytown, Texas going back at least 2 generations who worked for Big Oil and others who owned or now own gas stations can attest, there is definitely collusion in the petroleum industry at all levels. There always has been, is now, and is unlikely in the present government/corporate economic system to stop being collusion in the industry.
Why isn’t gas selling for $10 or $20 per gallon? Because the economy would soon grind to a halt, that’s why? And what would happen to profits for Big Oil then? The professor discusses the fact that temporarily people might pay outrageous prices before finding alternatives. At this point, conservation is all there is for alternative for the most part. No, Big Oil pays some pretty smart people lots of money to make certain they know the optimum price that will be tolerated in the market.
As Steve Pilotte discusses above, there are many other influences in the industry that affect oil and gas prices. A very large and famous (infamous?) trading firm gained notoriety recently for just such practices. All in all, in my humble opinion, the LAW of supply and demand is more of a guideline for the oil industry and its stockholders/stakeholders; in fact, it might be considered somewhat of an unheeded SUGGESTION.
In a genuine free market I am against any interference as it seems are most Libertarians. But we don’t have such markets, especially in the oil industry. Big oil has no motivation to create conditions that would foster demand for alternative fuels, lubricants, and coolants. If prices were allowed to operate freely for the last hundred years, POSSIBLY maybe even PROBABLY we would be using predominantly non-petroleum products now. Prices will be dictated by Big Oil no matter what the government does. There is the tax system to milk, so rest assured, taxpayers will contribute to increased profits for the oil industry in one way or another.
A blogger above speaks of the need for domestic production, a concept I am abhorred by. Maybe the professor or someone else will address the comparison of return on capital employed in refining foreign crude pumped to a refinery from ships as opposed to the enormous costs and infrastructure maintenance to create new and operate old drilling sites and transportation. As we can all imagine, the ability to write off all these investments, real or imagined, are paid for by taxpayers. As long as taxes are required by the federal government, those who deduct for reduction of same will create the need for government to get them elsewhere. How many new fields and infrastructure would be built with oil industry dollars if the tax system wasn’t available?
Big Oil and other industries have plans for the next 7 years that will be aided and abetted by the regime in power now (and that desperately needs the 2008-2012 time period). Don’t count on there being zero collusion any time soon. If government was interested in doing something good for America’s citizens, investigating collusion should be right up there near the top of the list.
Here’s a question maybe someone could address: Because we have a corrupt government and a corrupt economic system, and considering that Libertarians and Austrian economics are strongly opposed to interferences, what should be done in our PRESENT circumstances to counter manipulations? In other words, telling government to refrain from price interference doesn’t do a thing for all the other problems including the collusion between the oil industry and government.
As a second part to that question: Does anyone honestly believe that taking a hands-off approach to pricing of oil and gas in OUR PRESENT ECONOMIC SYSTEM is going to accomplish anything positive except dramatically increase the profits of those participating in the oil industry? Will the higher prices when factored into costs for all other industries produce benefits for citizens who are generally experiencing ever-decreasing income levels throughout the work force?
There is a very big difference in what is most effective in genuine free markets we dream about and the dramatically distorted and controlled markets we actually have. How about starting with a new tax law that requires producers, wholesale suppliers, and retailers to use the blended costs of inventories rather than the higher (in the present case) REPLACEMENT costs that give them reductions in taxes that then have to be made up for by taxpayers someplace else. As long as we are unable to do away with the tax system, it’s time for the mega-corporations to pay up and stop the corporate welfare—beginning with Big Oil.
Published: October 18, 2005 9:29 PM
"When prices remain too low relative to supply and demand conditions, a shortage must result. This is in fact what happened. Gasoline shortages in the Gulf Coast region stranded numerous people along the Texas and Louisiana freeways in the baking sun, directly in the path of an oncoming hurricane."
What happened was very predictable. The first cars in line, figuring that gas was going to be hard to find, filled their tanks with 15-30 gallons. The gas stations were very quickly emptied. Had the price been rasied to a level high enough so that everyone just bought the minimum amount they needed, (to drive to Dallas), the problem of cars running out of gas on the highway would have been less acute.
Published: October 18, 2005 11:14 PM
According to this chart, the value of the U.S. dollar has fallen relative to gas since 1918.
http://inflationdata.com/Inflation/images/charts/InfAdjGas1918_2005.gif
Surprise! Gas is still a bargain.
Published: October 19, 2005 12:04 AM
Special Report
The world in the palm of their hands: Bilderberg 2005, Part II
http://tinyurl.com/d7kj9
By Daniel Estulin
Online Journal Contributing Writer
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June 7, 2005—Because of the near total blackout of this year's Bilderberg conference in the mass media, knowledge of what transpired behind the heavy guarded walls of Dorint Sofitel Seehotel Überfahrt in Rottach-Egern, Bavaria, Munich, Germany, May 5–8 is limited to the readers of Internet publications willing to challenge the veracity of the US mainstream media and the corrupt Bush administration.
The discussions Bilderberg participants engaged in, and the consensus they reached, will influence the course of Western civilization and the future of the entire planet. This meeting took place behind closed doors in total secrecy, protected by a phalanx of armed assassins.
And speaking of human nature, power corrupts. It corrupts those who wield it. And it corrupts those who seek to influence those who wield it. Media have long been part of the world of elites. The free press is a myth when powerful people own it. Only when many small people own it will it be a truly free press, and will on our "right to know" be possible.
In the Orwellian world of modern day journalism, where a new form of political correctness frames their every utterance, the language is contracting. Because the goal of totalitarian thought control is to make the expression of political incorrectness impossible, words are used, not to make debating points, but to end all discussion.
In Bilderberg politics, life is compressed into a small number of people who spend a short period of time in a circle with a stunted radius.
UN Tax
Someone asked how global taxation can be sold to the American public. One European commissioner suggested using the rhetoric of helping countries build peaceful, stable societies once conflict subsides as the battering ram. Someone asked for the timing of the appeal. Another former commissioner mentioned that the best time to ask for cash is once the conflict subsided and the world is subjected to brutal images of destruction. A Norwegian Bilderberger disagreed. What looked to be Bjorn T. Grydeland, Norwegian Ambassador to the European Union, said that on the contrary, it's much easier to get world attention and money for a region when a conflict rages.
So much was confirmed a posteriori when Denmark's Foreign Minister Per Stig Moller, during a recent debate in the United Nations, stated on the record that "If the international community is not able to act swiftly, the fragile peace is at risk, with loss of more lives as a consequence." Until July 1, 2005 Denmark holds the council presidency when it will be replaced by the British.
Bilderbergers are planning to use what they denominated as a UN Peacebuilding Commission apparently to help win the peace in post-conflict countries as one of the tools in secretly imposing the UN tax on an unsuspecting world population.
Jim Tucker said as much in his Bilderberg report in the American Free Press when he wrote, "There was some informal discussion of timing for a vote in the United Nations on establishing a direct global tax by imposing a 10-cents-a-barrel levy on oil at the well-head. This is important to the Bilderberg goal of establishing the UN as a formal world government. Such a direct tax on individuals is symbolically important. Bilderberg's global tax proposal has been pending before the UN for three years but the issue has been blacked out by the Bilderberg-controlled U.S. media."
Mark R. Warner, governor of Virginia and a first time Bilderberg invitee, expressed concern about how much additional financial responsibility the United States would take on as a result. At this point José M. Durao Barroso, president of the European Commission, expressed a view held by many within Bilderberg that the United States does not provide a fair share of economic aid to poor countries. My sources confirm Jim Tucker´s report that "Kissinger and David Rockefeller, among other Americans, beamed and nodded approval." Although the United States pays more into the foreign aid piggy bank than any country in the world, the Bilderbergers and the United Nations are poised to demand much more funding from them to meet the peacebuilding proposal.
Peak Oil
An American Bilderberger wondered what it would take for the oil prices to go back to $25 a barrel. Another American Bilderberger, believed to be Allan E. Hubbard, assistant to the president for Economic Policy, laconically stated that the general public does not realize that the price for cheap oil can be the bursting of the debt bubble. Cheap oil slows economic growth because it depresses commodity prices and reduces world liquidity. There is a strong indication, based on the information reported from the Bilderberg 2005 meeting in Rottach-Egern, that the Federal Reserve is extremely concerned about the debt bubble. An American Bilderberger reported that if the price of oil is to go down to its previous low of $25 a barrel, the debt-driven asset bubble will explode.
Martin S. Feldstein, president of National Bureau of Economic Research, added that $50 a barrel involves greater cash flow. According to publicly available information, the United States consumes daily approximately 20 million barrels of oil out of a total world consumption of 84 million barrels. At $50 a barrel, the aggregate oil bill for the US comes to $1 billion a day, $365 billion a year, about 3 percent of the 2004 US gross domestic product (GDP). About 60 percent of US consumption is imported at a cost of $600 million a day, or $219 billion a year.
A short, stout man asked if the surging oil price would influence economic growth. Someone sitting in the front row noted that higher energy prices do not take money out of the economy, they merely shift profit allocation from one business sector to another. An American Bilderberger wondered what an oil price increase can mean for the general public. A tall, skinny gentleman reportedly mused that expensive oil means reduced consumption in other sectors, unless higher income can be generated from the increased cash flow. A French Bilderberger noted that in western society, higher income translates into longer working hours, which often results in lower standard of living.
Someone raised a question about the impact of a sharp rise of energy prices on asset values. A German Bilderberger responded that the net effect is a de facto depreciation of money, misidentified as growth.
A US general noted that war spending helps jump start the economy, noting that the trick to keeping the opposition at bay is to limit collateral damage to foreign soil.
A British Bilderberger noted that oil at $120 a barrel will greatly benefit Britain and the US, but that Russia and China would be the biggest winners. An expert in International relations and policy studies noted that for the Chinese this would be a real bonanza. The Chinese import energy not for domestic consumption, but rather to fuel its growing cheap exports, a cost that would duly be passed on to foreign buyers. A European banker pointed out that Russia could effectively devalue the dollar by re-denominating its energy trade with Europe from dollars into euros, forcing Europe's central banks to rebalance their foreign exchange reserves in favour of the euro. Jean-Claude Trichet, governor of the European Central Bank was present during the debate.
US Airlines and Pension Funds
An American Bilderberger inquired about the effect of $50 oil on the crisis in government pension insurance. High oil prices threaten the economic viability of airlines and motor vehicles sectors. The employees' pensions at US Airways were recently terminated by the bankruptcy court. United Airlines and others are on the list as well. An American Bilderberger noted that the US Social Security is going through its worst accounting crisis in years. The spectre was raised of companies defaulting on their financial obligations to the workers. Someone commented that government-run pension funds will not be able to shoulder an industry wide default on their obligations without a federal bailout.
Nobel Peace Prize
Appearance at Bilderberg 2005 of a Nobel Peace Prize Committee Chairman Geir Lundestad is likely to mean, according to sources familiar with the discussion, a full-court press by the American, British and Israeli delegation on the Nobel committee in preventing an Israeli nuclear technician, Mordechai Vanunu, from winning the coveted award. Vanunu spent 18 years in an Israeli prison—11 and a half of them in solitary confinement—for providing evidence of Israel's nuclear arsenal to a British newspaper in 1986. Should Vanunu win the Nobel for Peace, it would bring uncomfortable attention to the Israeli nuclear arsenal, especially in the face of growing evidence that Israel and the United States are about to punish Iran for trying to develop their own nuclear weapons. Strong pressure was applied on Lundestad not to choose Hans Blix, UN weapons inspector in Iraq, nor Mohamed El Baradei, the director general of the International Atomic Energy Agency, a man President Bush tried to remove for not being tough enough on Iran.
Some of this year's other nominees are George Bush and British Prime Minister Tony Blair for supposedly protecting world peace; the European Union; French President Jacques Chirac, former Czech President Vaclav Havel; Pope John Paul II; Cuban dissident Oswaldo Paya; and U.S. Senator Richard Lugar and former Senator Sam Nunn for their Cooperative Threat Reduction Program, which is intended to dismantle nuclear weapons left over from the Soviet Union.
Journalistic Whores
One of the best kept secrets is the degree to which a handful of giant conglomerates all belonging to the secret Bilderberg Group, Council on Foreign Relations, NATO, the Club of Rome and the Trilateral Commission control the flow of information in the world and determine what we see on television, hear on the radio and read in newspapers, magazines, or books.
Bilderberg has, at one time or another, had representatives of all major US and European newspapers and network news outlets attend. The inadequately named international free press attends on their solemn promise to report nothing. This is how Bilderberg keeps its news blackout virtually complete in the United States and in Europe.
This year´s invitees included Nicolas Beytout, editor-in-chief, Figaro; Oscar Bronner, publisher and editor, Der Standard; Donald Graham, chairman of The Washington Post; Matthias Nass, deputy editor, Die Zeit; Norman Pearlstine, editor-in-chief, Time; Cuneyt Ulsevere, columnist for the Hurriyet; John Vinocur, senior correspondent, International Herald Tribune; Martin Wolf, associate editor, Financial Times; Fareed Zakaria, editor, Newsweek International; Klaus Zumwinkel, chairman, Deutsche Post; John Micklethwait, U.S. editor, The Economist and Adrian Wooldridge, foreign correspondent, The Economist. Micklethwait and Wooldridge acted as the meeting´s rapporteurs.
China and Textiles
The discussion was led off with a series of rhetorical questions from the speaker. Is China really abusing its competitive advantage, or is it being victimized by the US and the EU? Is a trade war imminent? Should China revalue the yuan, (its currency), and if so, how should it do this?
An American Bilderberger noted that China in 2005 is one of the leading world economic powers whose actions influence the world economy. Another American believed to be, but not positively identified as, Michael A. Ledeen of the American Enterprise Institute said that if China doesn't revalue the yuan it would cause the entire world trade system to go out of whack. Someone mentioned that the current situation can be dangerous for the Chinese economy due to the creation of excess liquidity.
Elena Nemirovskaya, founder of the Moscow School of Political Studies, asked what would happen if the yuan was allowed to float freely. An economist responded that that could bring about serious consequences to the world's financial markets. China's foreign exchange reserves are to a large extent made up of US Treasury bills. An appreciation of the yuan would cause its dollar reserves to depreciate. A German Bilderberger pointed out that this could force the Federal Reserve to have to raise interest rates, thus causing the current housing boom in the US to come to a screeching halt.
An over-sized Dutchman pointed out that the International Monetary Fund needs to play an active role in helping the yuan.
"Is there a real danger, then" asked an Italian Bilderberger "of this dispute deteriorating into an all out trade war?" "Not likely," according to an unidentified blond from Northern Europe, believed to be a Swede, because China has totally integrated itself into the market economy." An American Bilderberger and a member of the US government noted that all the posturing is part of the act to keep the voters back home happy.
China's move into the Mekong region did not go unnoticed at the conference. William J. Luti, US Deputy Under Secretary of Defence for Near Eastern and South Asian Affairs, explained that China's rapid expansion into the Mekong region, comprising Cambodia, Laos, Myanmar, Thailand and Vietnam could threaten US interests in the area. Such moves by China would give it an enhanced role in Southeast Asia. Over the last several years, China has invested heavily in transport infrastructure development linking China's southwestern Yunan Province and the Mekong region.
A European Bilderberger pointed out that China is heavily dependent on oil imports. Someone asked for a figure. A tall, lanky man with glasses, believed to be Jeroen van der Veer, chairman of Royal Dutch Shell, responded that some 40 percent of China´s supply is imported.
In fact, China´s move into the Mekong region is the result of acute awareness that the country´s energy supplies are vulnerable to interference. Overall, 32 percent of energy supplies, China´s lifeblood, pass through the narrow and easily blocked Strait of Malacca.
Iran-Russia-China
A French Bilderberger pointedly asked Henry Kissinger if the US government's sabre- rattling against Iran means the beginning of new hostilities. Richard Haass, president of the Council on Foreign Relations (CFR), asking for his turn to speak, dismissed the notion of an Iran invasion as unrealistic due to the sheer physical size of the country and its population size, not to mention billions involved in getting the operation off the ground. Up to the eyeballs in the Iraq quagmire, the United States military is wary of any new adventures in the hostile terrain against a much healthier enemy, both better prepared and organised. A Swiss Bilderberger asked if a hypothetical attack on Iran would involve a preemptive strike against its nuclear sites. Richard Haass replied that such an attack would prove to be counterproductive because Teheran's counterattack options could range from "unleashing terrorism and promoting instability in Iraq, Afghanistan and Saudi Arabia, to triggering oil price increases that could trigger a global economic crisis".
During dinner, according to several sources, Richard Perle criticised Haass´ position and explained his opposition to his view.
A woman believed to be Heather Munroe-Blum, vice-chancellor of McGill University in Quebec, Canada, asked a rhetorical question about what would happen if Iran were to continue building its nuclear arsenal? Haass replied that in this case scenario, the United States would have no choice but to grant Iran the same status as it does to Pakistan and India.
A US general commented that the China-Iran-Russia alliance is changing the geopolitical situation in the area. Rapprochement between Russia and China is viewed by the Bilderbergers as a significant event not to be taken lightly, even though it has received little media attention in the west. A secret US government report was cited wherein, according to sources, the Chinese have spent upwards of several billion dollars in acquiring Russia's latest and most sophisticated weapons technology. Someone pointed out that the Sino-Russian alliance is not limited to military trade and that the non-military exchange of goods has grown 100 percent since the beginning of the Bush presidency. A delegate at the conference, believed to be, but not positively identified by the secret service sources, Anatoliy Sharansky, Israeli former minister for Jerusalem & Diaspora Affairs, stated categorically during a Friday night cocktail party that the counterweight to the Moscow-Beijing-Teheran axis is the US-Israeli-Turkey alliance.
A financial expert from a European nation intervened by stating that Russia financially is much better off today than four years ago because tax revenues, generated by fuel and arms production and exports as a result of heavy emphasis on military production, have financed strong growth of wages and pension incomes, boosting private consumption. A German Bilderberger pointedly asked Richard Perle if the "war on terrorism" will intensify over the second term of the Bush presidency.
The feeling of enough-is-enough wasn't limited to the European Bilderbergers wary of Bush's Hitler-like delirious proclamations of regime changes worldwide. Haass had pointedly told Richard Perle during a Saturday night cocktail party that the Bush administration has over-estimated its ability to change the world. Haass, according to several sources at the conference is reported to have stated that regime change can be attractive because it "is less distasteful than diplomacy and less dangerous than living with new nuclear states." However, he noted, "There is only one problem, it is highly unlikely to have the desired effect soon enough."
Iran
The presence of a top US general, James L. Jones, Supreme Allied Commander Europe, and retired US Army General John M. Keane at the Bilderberg meeting in Germany suggested to us that the next stage of the conquest is about to begin.
An American neocon at an afternoon drink-fest said he was convinced that the "Iranian opposition movement" will unseat the mullahs. Nicholas Beytout, editor-in chief of the French periodical Le Figaro, exclaimed "You don't really believe that!" A tall, bold, well-dressed Swiss gentleman, believed to be Pascal Couchepin, head of the powerful Department of Home Affairs, replied reflexively that it will only succeed in having the Iranians rally behind their government. He ended by saying "You don't know Iranians."
Tempers boiled over momentarily when a French Bilderberger raising his voice told Kissinger that "an attack on Iran will escalate out of control." According to sources working for the CIA and the special unit of the US Army charged with protecting the US delegation at Rottach-Egern, both the CIA and the FBI are in open revolt against the Bush White House.
A member of the Greek Parliament asked Eival Gilady, strategic adviser to Israeli Prime Minister Ariel Sharon "What would happen if Iran were to retaliate?" Someone pointed out that even if the United States or Israel were to show restraint in their use of tactical nuclear weapons, an attack on Iran's nuclear facilities would surely not only engulf neighbour state,s raising the likelihood of a broader war, but also would succeed in creating a nuclear disaster through nuclear radiation spilling over a wide area. As a follow up question, someone asked, "How much of this war has to do with America doing its utmost to prevent Iran from becoming a regional power?"
A French Bilderberger wished to know if the impending attack on Iran would involve the United States and Israel working in tandem or "would it be a NATO operation?" The question was directed at NATO´s Secretary General Jaap G. de Hoop Scheffer. Another European Bilderberger wanted to know how the US was planning to cope with three wars simultaneously, referring to Iraq, Afghanistan and now Iran. The reader should be reminded that there are now 150,000 US troops deployed in Iraq who are unable to move to another theatre of operations because of effective resistance tactics.
The Israeli delegation was pressed to answer if they were prepared to use nuclear weapons against Iran. The answer was incoherent.
What is so terrifying about the Iran theatre of operations is that according to our deep sources, both of whom belong to the Bilderberg Group, there are two alternative dates set for the invasion. The earliest possible date would be the "deadest of summer" sometime in August and the other alternative is the late fall campaign. It substantially confirms the information provided by Scott Ritter, the ex-Marine turned UNSCOM weapons inspector, who stated that "George W. Bush has `signed off´ on plans to bomb Iran in June 2005." Ritter goes on to say that the June date suggests that the US and Israel are "in a state of readiness."
Russia
The discussion began with a European expert on international relations pointing out that over the next several years Russia is poised to assert itself and to increasingly challenge the Bush administration's foreign policy goals. Someone openly asked the committee if the world is safer today than in 2001 and will it be safer in four years time? A Dutchman responded by saying there is little doubt that the hand of international terrorism has been substantially strengthened by the US and its heavy-handed policy in the Middle East. A Danish Bilderberger wondered out loud what happened to the US promise to take a lower key approach in Iraq, referring to the heavy-handed tactics employed by the American troops in the siege of Fallujah, which played an important role in alienating a large cross-section of moderate Arab states. Additionally, pointed out the Dutchman, terrorism hasn't been confined to the Iraq theatre of operations, but has escalated across Asia, Africa and most of the Middle East.
A blond woman believed to be Thérèse Delpech, director for Strategic Affairs for the Atomic Energy Commission, said that unilateralist policy actions by the US will only succeed in alienating friendly nations and emboldening enemy combatants. "US is not all-powerful. It must coordinate its policy with other great powers to achieve its ends."
An oil expert believed to be from Britain, possibly John Kerr, a director for Royal Dutch Shell, focused on the oil pipeline from Siberia to northern China. The Bilderbergers openly wondered at the medium-term repercussions of this deal. An American investment banker asked just how much oil is expected to flow through this pipeline. Another member of the oil cartel offered a 65–80 million barrels per year as a ballpark figure.
Miscellaneous News
During a Saturday night session at the bar, neocon Richard N. Perle was seen and heard talking to a group of Bilderbergers, amongst them Philippe Camus, president of the European Space Agency, EADS; Donald Graham, chairman of the Washington Post and James L. Jones, Supreme Allied Commander Europe, about the near-future test-firing of India´s Agni 3 intermediate-range ballistic missile capable of carrying nuclear warheads. James Jones said that such a weapon would greatly increase India's capabilities because, according to the four-star general, India's strategic deterrence will be able to strike targets deep inside neighbouring China. In fact, Dr M Natarajan, head of the prestigious Defence Research and Development Organisation (DRDO), said as much two weeks later in New Delhi on 17 May.
Additionally, the Bilderbergers discussed how to dust off a "boring" image of Angela Merkel, Germany's future leader. A short, over-sized male Bilderberger offered an opinion that in order for the widest cross-section of the German public to accept Merkel, the leader of the opposition Christian Democratic Union, as chancellor, it would be important to give a new definition to the term "family values." German Bilderbergers well-versed in conservative Bavarian collective psyche believe that Merkel´s image, a divorcee with a doctorate degree in physics, isn't considered "reliable" to attract sufficient votes in this staunchly conservative area of the country. The idea, according to people within ear shot of the discussion "in the up-coming campaign would be to stress the importance of families rather than marriage as an institution."
Bilderbergers pushing Schroeder aside in favour of a new candidate could very well signify that after three years of strife between American and European Bilderbergers over the war in Iraq, the secret society is ready to move forward with a much revised and cohesive policy. It must be remembered that Schroeder, along with French President Chirac, was one of the most vociferous European critics of the US-led Iraq intervention. Both Schroeder, representing the left and Merkel, representing the right, are owned by the Bilderbergers. It has been the group's policy since its inception in 1954 to own both horses in the race. For the record, every US president belongs to the Bilderberg Group or its interlocked sister organization, The Council on Foreign Relations. Although Bush junior didn't personally attend the secret meeting in Rottach-Egern, the US government was well-represented by William Luti, Richard Perle and Dennis Ross of the Washington Institute for Near East Policy.
Conclusion
History teaches by analogy, not identity. The historical experience is not one of staying in the present and looking back. Rather it is one of going back into the past and returning to the present with a wider and more intense consciousness of the restrictions of our former outlook.
If democracy is the rule of the people, secret government agendas and influence-peddling sinister cliques, which stand for cunning selfishness, are incompatible with it. The whole idea of clandestine spheres of influence waging secret campaigns is therefore foreign to the notion of democracy and must be fought with zealous determination.
Through lies and obfuscations, Bilderbergers are desperately trying to foist onto the unwilling world population a totalitarian, one-world government, a single global currency and a syncretic universal religion.
Those of us who care deeply about the future of politics, domestic and international, cannot afford to ignore the fact that the grimly political One World Government is no longer merely a shadow subculture. It has, in fact, emerged as the dominant force in world affairs.
Click here for Part I
http://www.onlinejournal.com/Special_Reports/052405Estulin/052405estulin.html
Daniel Estulin is an award-winning investigative journalist who has been researching the Bilderbergers for over 13 years. Estulin was one of only two journalists in the world who witnessed and reported (from beyond the heavily guarded perimeter) the super secret meeting at the Dorint Sofitel Seehotel in Rottach-Egern, Munich, Bavaria, Germany, on May 5–8, 2005. He can be reached at d.estulin@ctconsultoria.com.
Published: October 19, 2005 2:52 AM
Marco, it's really quite rude to post a multiple page essay in the comments section of a blog. I suggest the above be deleted as spam.
Published: October 19, 2005 7:47 AM
Yeah, really. A quote from the "Peak Oil" section might have had some tangential relationship to the topic.
Published: October 19, 2005 8:00 AM
The laws of supply and demand is not somehow different at small towns--but supply and demand themselves are different. It generally costs more per unit to ship gasoline to small towns, so it generally does cost more than in larger cities. Add reckless, free-spending tourists to the mix, and it could be significantly higher. Nonetheless, the general trends in small towns should still reflect the overall industry, even if the specific prices may differ.
Published: October 20, 2005 12:08 PM
Bob A. - you raise a good question, but not any good answers. since the oil companies are in "collusion" with the government, how do you propose that we pass any specific laws against said oil companies? Furthermore, in spite of any collusion, the economics of the situation may be distorted, but still works, as you yourself point out when explaining why we aren't paying $20/gallon gasoline.
Besides the ability of explaining and understanding the situation among ourselves, the libertarian/Austrian discourse may hopefully persuade other people of the need for changes. If not, there's nothing that says you can't engage in political persuasion *and* other, ahem, more drastic action at the same time. Just be sure to use a psuedonym... ;-)
Published: October 20, 2005 12:15 PM
Larry Martin,
You wrote: “. . . since the oil companies are in ‘collusion‘ with the government, how do you propose that we pass any specific laws against said oil companies?�
I don’t propose any; I asked the question of the group: “Because we have a corrupt government and a corrupt economic system, and considering that Libertarians and Austrian economics are strongly opposed to interferences, what should be done in our PRESENT circumstances to counter manipulations?�
Because we have not yet removed the tax system that is so abused, I made the comment that a change in tax law should be made so that replacement costs cannot be used to reduce tax on profits, as it is an artificial cost not representative of true inventory costs, and is used only to manipulate the system.
I understand the principles of getting governmental interferences out of economics, but the author is making recommendations regarding today’s world, not the world of Libertarianism. Some of the principles of Austrian economics, what little I know of so far, and of Libertarian attitudes, when used in the present government/corporate oligarchy, play right into the hands of said regime and are misused as “political persuasion.�
You wrote: “Besides the ability of explaining and understanding the situation among ourselves, the libertarian/Austrian discourse may hopefully persuade other people of the need for changes.�
Absolutely! I am a huge fan of this site and recommend it every chance I get. In fact, this has become my favorite site because of the quality of the discussions and the reasoned thinkers who participate in them. However, I try to imagine methods for making changes and operating in the present while planning for the future, so I find some of the discussions to be unrealistic when applied to the scenarios of today.
For example, this morning I read an article about an oil industry mega-corporation that registered in the Cayman Islands to avoid US taxes. Sounds great, huh? That is if all the other considerations are ignored such as the fact that all of its personnel and stakeholders are still subject to the tax system. But forget about all that, because this company got a grant FROM TAXPAYER COLLECTIONS for $849,670. So, here is an example of the contradictions of applying some good ideas into a bad system.
I suppose the main point of my original post is that conservation now and forever as well as putting maximum emphasis on production of non-petroleum products is crucial. Bush isn’t calling for conservation because the regime believes in it—they’re from the use-use-and-use-more school of thought; his handlers see the image of the regime slipping in the electorate and 2006 is just around the corner. But conservation is the answer because the law of supply and demand has been suspended. However, just in case it has some affect, conservation means a reduction in demand, and theoretically this should bring about lower prices.
“On current trends, CHINA will by 2031 be consuming 99 million barrels of oil per day. Total WORLD production today is only 84 million bpd.� (Capitals used for emphasis by me)
From the Independent Online Edition (UK), viewed at: http://news.independent.co.uk/world/asia/article320565.ece
Professor Lehman discusses the buying patterns of gas users and mentions that short-term they are willing to pay higher prices and suggests that they will adjust later if the higher prices persist. We all know this and he refreshes our memories.
In the world we’d like to have:
A gas retailer in response to Katrina: “Well, I’ve got 100,000 gallons I could sell for $3.00/gallon. Who knows what’s in the pipeline, so I’ll stretch this out so that more of my customers will get some of the inventory by selling it at $5.00/gallon to discourage panic buying.�
And customers who see the sign with prices: “Yeah, I figured the price would go up. I’ll just get half a tank and get home, hunker down and eliminate as many vehicular trips as possible. That’ll help my neighbors out as well because I’ll be leaving more to go around at the station.�
In the REAL world:
A gas retailer in response to Katrina: “Well, I’ve got 100,000 gallons I could sell for $3.00/gallon. I know there’s a lot in the pipeline because Big Oil is already prepared with reserves. My costs might go up some, but there’ll be plenty of inventory to go around. I’ll sell it for $6.00/gallon. All the other guys are already there. It’ll go in a hurry because of panic buying, so I’ll get the extra profit from the tanks while I can.�
And customers who see the sign with prices: “Yeah, I figured the price would go up. And there won’t be a station for 2 counties that’ll be any cheaper. No way am I going to be inconvenienced or miss work. No doubt the price will be $6.25/gallon tomorrow. In fact, I’ll come back with some gas cans and get some more.�
The word “collusion� never enters the mind of the retailer or the consumer. The retailer knows what’s going on and always has. The consumer knows this is the way things go in life when choices are limited.
The retailer gouged the customer. It isn’t even profiteering because the shortage is only imagined in the minds of the consumers, a fact with which the retailer is acutely aware.
The consumer acted out of self-preservation.
I could be way off base here, but I don’t see any use of ethics or laws of supply and demand in the latter scenario, the reality of today’s economic environment. So, I ask again: What good does a “hands-off� pricing policy do for anyone in our present circumstances? How does it achieve any Misesean goals? How does it advance any Libertarian ideals? Neocons will want the entire population of America to adopt the “hands-off� pricing attitude, but they have no intention of creating any genuine free markets in which there would actually be natural forces of supply and demand interfaced with free-thinking, free-living citizens.
Published: October 20, 2005 3:05 PM
Bob A.,
Your point about the use of the libertarian view by the statists when it suits their purposes is very true, but we must be careful not to let it discourage us from promoting the correct things or lead us to promote the wrong ones. Support of "anti-gouging" regulations, while resulting in some moderation of retail prices, also results in shortages and monetary losses to the retailers. Over time, no one benefits, and everyone is hurt. See the post about the Hawaii wholesale price cap fiasco on the Mises blog or here; http://www.libertyguys.org/articles/detail.asp?ArtID=1028 In this case, the wholesale price cap did not lead to price "gouging" as it should have - instead of raising their prices to the stratosphere, the retailers kept their prices moderate, running out of gasoline and running into the red. Why? State pressure, maybe, but possibly because no one wants to be remembered for all time as the a****** dealer that tried to gouge everybody.Put more simply, "gouging" people too much is bad for business in the long run, so bad in fact that these dealers are willing to lose thousands of dollars in the short run to keep their customers in the long run.
Published: October 20, 2005 3:41 PM
In Re Marco's lengthy post above;
I read the part about Peak Oil, and it is so full of logical fallacies supposedly held by influential people that one shudders to think what we are in for. I mean, come on;
"An American Bilderberger wondered what it would take for the oil prices to go back to $25 a barrel. Another American Bilderberger, believed to be Allan E. Hubbard, assistant to the president for Economic Policy, laconically stated that the general public does not realize that the price for cheap oil can be the bursting of the debt bubble. Cheap oil slows economic growth because it depresses commodity prices and reduces world liquidity. There is a strong indication, based on the information reported from the Bilderberg 2005 meeting in Rottach-Egern, that the Federal Reserve is extremely concerned about the debt bubble. An American Bilderberger reported that if the price of oil is to go down to its previous low of $25 a barrel, the debt-driven asset bubble will explode."
Can you say "post hoc" and "begging the question"?
Published: October 20, 2005 3:47 PM
In Re Marco's lengthy post above;
I read the part about Peak Oil, and it is so full of logical fallacies supposedly held by influential people that one shudders to think what we are in for. I mean, come on;
"An American Bilderberger wondered what it would take for the oil prices to go back to $25 a barrel. Another American Bilderberger, believed to be Allan E. Hubbard, assistant to the president for Economic Policy, laconically stated that the general public does not realize that the price for cheap oil can be the bursting of the debt bubble. Cheap oil slows economic growth because it depresses commodity prices and reduces world liquidity...An American Bilderberger reported that if the price of oil is to go down to its previous low of $25 a barrel, the debt-driven asset bubble will explode."
Can you say "post hoc" and "begging the question"?
Published: October 20, 2005 3:48 PM
Vince Daliessio,
I agree with you about price controls, sort of. However, I don't believe the stations would have made the gas last any longer by charging outrageous prices. Short-term, emotional decisions are going to be made and fuel is going to be purchased in higher quantities, not less.
Re-supply in Hawaii is more logistically difficult. How much inventory is available if all storage systems are full in Hawaii? What’s the average “long-haul� for trucks? It would be interesting to compare the gallons/person inventory available in all of Hawaii to the gallons/person inventory available in say King County Washington. Even then, however, the numbers would be dramatically skewed because the difference in trucking activity between the two has to be enormous. Hawaii is not a good example and problems of this sort need solutions different from elsewhere.
The world we all hope to get to, if I understand correctly, is one in which people have more choices and the likelihood that reasonable gas retailers would not dramatically overprice their products would be much more prevalent an attitude. But that isn't the case in the present. I don't want controls, I want a different government, and a minimal one at that, and I want genuine free markets in which to operate. I want a Libertarian world full of reasonable attitudes. But, in the meantime, how do we operate and make changes to a system that does not obey supply and demand concepts?
You mention that people will remember the retailer who prices outrageously, but they all will follow each other, so which one will be remembered?
How would a Libertarian in our present system operate a gas retail outlet—somewhat higher prices along with rationing to discourage hoarding? Big signs that proclaimed “There is no major shortage! It’s only temporary! Relax! Or would he or she throw in with the rest of the area’s retailers and get it while the getting is good?
Published: October 20, 2005 5:21 PM
I live in Memphis, TN. We have a large oil refinery here that is running full bore all the time . Its ownership has changed from Williams Cos. to Valero and finally to Primcor. Our gasoline prices at the pump are within 5 to 10 cents (higher or lower) than those in rural north-central Arkansas where we have a lake house. There are few good roads into these areas for tanker trucks to easily traverse. In the aftermath of Katrina and Rita, the prices went up everywhere, even in the remotest parts of Arkansas. I have just returned from this part of the country and to my astonishment found that prices are 15 to 20 cents LOWER than in Memphis. (October 15 -18). The supply /demand equation isn't working to well. My feeling, after years of watching these things is as follows:
The CIA is intimately involved in the Middle East. They use covert operatives inserted at every level of the negotiations process in the OPEC countries. They are primarily interested in preserving the free flow of oil at a price point that is fair . Fair is defined as: not too high as to have a deleterious affect on any country's economy. From this position, all else follows. The oil companies are smart enough to see an inflationary periosd on the horizon, caused in prt by the artificially low interest rates, and they use the early hurricane season's untimely romp through the Gulf of Mex. as part of the excuse to gain pricing power. They surely wont invest any more in refining capacity than is economically necessary to run the show. But having off-line capacity would sure seem to be a smart investment. The speculators and hedgefunds, no doubt know all these facts and more. In fact it is naive to assume that they don't. In fact these funds are comprised of the most well heeled and influential investors money in the world. Include congressmen, senators, sheiks, oil men, and even a few folks who trade information with wealty family money. That's the REAL WORLD we live in. Sorry to burst peoples bubble. I believe that supply creats its own level of demand. But I also belive that influence is peddled at all levels of the world stage. The "tipping point" is a phrase that gets over used but nevertheless is quite appropriate. Whenever supply and demand need price guidance, that guidance will come from the supply side.
By the way, one of my class mates recently retired from the CIA and was sent on many many missions to the Mid/East posing as an oil executive- foir over 15 years. He has told me all about it.
Published: October 21, 2005 9:28 AM
Hi Larry Martin,
You wrote: “Furthermore, in spite of any collusion, the economics of the situation may be distorted, but still works, as you yourself point out when explaining why we aren't paying $20/gallon gasoline.�
In my long post to you of yesterday (sorry about that!), I forgot to address the above statement.
In my original post to which you refer, I was not clear. My point was the Law of Supply and Demand was NOT working. The fact that we aren’t paying $20/gallon for gasoline is because of controls by Big Oil and its legislative arm Big Government. You may refer to it as supply and demand, but I refer to it as economic traffic control. If you think this is acceptable, then I must be misunderstanding Libertarianism. I don’t think I am, and I doubt this is what you meant by your statement, but I wanted to be clear about my original statement that the LAW is suspended for the oil industry.
Don't get me wrong; I'm glad I'm not paying $20/gallon for gas at my income level. But it has nothing to do with natural actions of supply and demand.
Published: October 21, 2005 11:35 AM
Tom,
I’ve heard about these things from my relatives in SE Texas; it’s good to see them reinforced with your comments.
Yes, the supply is metered. And Big Oil probably shudders when reports come in of price spikes; encouraging consumers to find alternatives to petroleum isn’t a smart move.
There are lots of rightists who put their heads in the sand regarding global warming and its affect on the hurricane around the world. As I mentioned in another thread about a different article, satellite imagery and instrumentation, state-of-the-art depth gauges, and that ultra-high-tech device known as the thermometer are not left-wing conspiracies. The warmer the ocean water, the more likelihood there is that Category-4 and -5 storms will become more frequent. And, the warmer the water, the longer the hurricane season may last. Big Oil does NOT have its head in the sand on this one. Nor do its partners the insurance industry and chemical industry. There won’t be any disastrous shortages permitted that will disrupt the ability of the consumer drones to spend.
What will cause American business and the citizenry in general to begin an accelerated move toward alternative fuels, lubricants, and coolants, and to develop the cutting-edge technology in equipment related to this new industry?
Published: October 21, 2005 12:04 PM
Another boring explanation of why we are getting raped by outlandish gasoline prices. This may have had some relevance 30 years ago. But come on who do you think you are fooling. Or do you actually believe what you say? Good luck is all I can tell you. I definitely would not want to live in the world as defined by lehman.........regards dl
Published: October 22, 2005 1:57 PM
Oil is a relatively centralized source of energy and a relatively monopolized capital good when compared to air, the sun, water, and food. If every home sat on an oil well and every home pumped their own oil, refined their own oil, and dispensed their own gasoline, then, oil would be almost as independently controlled as air, almost as independently controlled as the sun, almost as independently controlled as water, and almost as independently controlled as food. Capital goods that are not independently controlled are subjected to the control of the people who do control these less independently controlled capital goods.
For example it is outrageous to consider taxing and subsidizing the air. It is less outrageous to consider taxing and subsidizing the sun. It is common practice to tax and subsidize water. Food is also taxed and subsidized. The oil market is free?
If every home had a water well producing independently controlled water, then, taxing and subsidizing water would be as outrageous a concept as taxing and subsidizing air. If every home had a farm producing independently controlled food, then, taxing and subsidizing food would be almost as outrageous as taxing and subsidizing air.
If every home had a wind and solar generator producing twice the electric current needed to supply the house, then, taxing and subsidizing electric energy would be laughable.
A person controlling the sun and wind using a home windmill and solar electric generator could tax and subsidize whatever he wished rather than being dependent upon oil.
Taxing and subsidizing oil production would be foolish. Energy would be a free market.
Published: October 22, 2005 4:52 PM
David J. Livingston,
"This may have had some relevance 30 years ago."
Why would it not have relevance today?
"I definitely would not want to live in the world as defined by lehman........."
Will you give us a generalized description of the world you would want to live in?
Published: October 23, 2005 11:03 AM
Mr. Kelley,
You state, Capital goods that are not independently controlled are subjected to the control of the people who do control these less independently controlled capital goods.
This is a logically null statement. "That which is controlled is subject to the control of the people who control." Might I suggest also that that which is not controlled is not subject to the control of the people who are not in control?
The only reason air is not taxed and regulated is because the bureaucrats have not figured out how to nail it down. Waterways are all regulated, from the smallest stream, because the bureaucrats know where they are. Even when someone does indeed grow their own food the bureaucrats reach out their hands to meddle, as was learned so well in Wickard vs. Filburn (1942).
It is also a fact that no matter how distributed land ownership is, the simple ownership of land is taxed.
You ask, The oil market is free?
This is an astounding question, since the essence of the "energy" articles is to point out how it is the meddling by bureaucrats in the market for oil that directly causes so many of the problems later used by those same bureaucrats to justify more meddling.
If you really meant to ask why the article writer seems to want the oil market to be free, since you spend time trying to point out the idea that oil is not distributed as widely as air, then you have not been reading the articles on Mises.org very closely. All the articles base themselves on the greater efficiency of a "free" market in whatever it is that is being discussed. Oil, radio spectrum, human organs, whatever.
Did you fail to notice this pattern?
Published: October 23, 2005 1:28 PM
Curt (my personal hound dog),
First you claim to not understand me and then you claim to have the ability to rewrite my words. Liars are easy to spot. They lie and then lie again to cover their lies. Soon enough they lie so much that their lies are embraced as true by themselves as their lies are a true cover for their own lies.
You lie and there is no possible way to expose your lies to you. Either you know it or you don’t. If your agenda is clear to you then you won’t admit it. If your agenda is confusing even to your own delusional conscience, then, you will protect your ignorance with false logic and fanatical intolerance.
My agenda has not wavered once. It is liberty.
I can waste only so much time with you in defense of my integrity.
I have things to write:
Example: (If anyone fails to see the following relevance to this topic, then, excuse my intrusion)
I have this nagging inspiration and thanks to your words I am energized to act upon it. Rather than doing other important things my present duty is to write to you and hope that you can also be inspired to continue acting toward a common interest. My present chore concerns a topic title: Regime Change.
Inevitability is indisputable. Who will be the new boss? How about us? Interested?
If liberty can be embraced as a special interest, then, a case can be made to illustrate the need to inspire popular wisdom. Is it better to be self-sufficient or dependent? Which path is the wiser path? Is it better to gain personal power or give it up? Is it better to seize obvious power now or hope that a more powerful neighbor will be generous? Is it wise to leave the decision up to your neighbor or decide for yourself?
Do you see a clear and obvious answer to all those nagging questions? I do. I have a proposition for you and any curiously concerned individual who is now wondering just who will be the next boss and wondering exactly what the hubbub is concerning: Regime Change.
A powerful popular fear is founded upon good reason; the loss of personal power. They fear you because the obvious path ahead removes their power and allows you to gain it back. The power of wisdom has always been yours to command. The power of communication has already been reclaimed by you. That battle has been won. That regime has already changed hands. The end is most certainly written on the wall for the current regime.
Unfortunately the current regime will become desperate in their fear of you and they will use any means in their power to hold onto their power. They have already lost the most vital battle. They have lost the control of information. The present battle for control is now being fought over the control of energy. Who will be the new boss? Will centralized power remain centrally controlled or will information lead to knowledge leading to wisdom popularly understood and will power be seized by each individual wise enough to grasp the opportunity?
It can happen. The next regime can be Liberty. Imagine a new fashion appearing and gaining popularity like a snow ball rolling down hill ultimately reaching critical mass like a number one pop song. That new fashion can be independent power. That new fashion can take one common form quickly or that new fashion can take many similar forms less quickly.
You may need to stretch your imagination slightly before grasping the concept. Imagine that the new fashion takes the form of a money tree. It requires an individual to design the new money tree. It then takes a whole lot of communication and negotiation to make an initial production run for the initial public offering. The product is then advertised, perhaps, on the shopping channel or EBAY or both. You may laugh at this point. The wise will see the wisdom.
The money tree does not produce fiat currency. Not at all - goes the sales pitch. But the money tree will pay off your mortgage, pay your heating and cooling bills, pay your gas bills, fuel your car, and have enough money left over to save at an alarming rate. The product builds and generates a personal fortune that can be passed onto your own future generations to come. The money tree compounds your own personal special interests.
Did you have a good laugh?
That money tree already exists in disconnected disinterested forms. The initial product would be expensive, at first, and as popular wisdom grows, then, the costs of production reduce in direct proportion to mass and velocity. The snow ball literally gains power as it rolls.
That product is the change that the current regime fears. They fear independence. That product can start out as a very simple windmill hooked up to the electric power grid. Do you think that you are reading the words of some obscure reincarnation of Don Quixote?
Who will get the last laugh? Regime change is on the horizon. Power must be seized. It can be a peaceful industry to change regime. It can also be a most horrible and desperate folly. Wisdom will either defeat falsehood or not. Most likely the road ahead is somewhere down the middle dependent upon each individual choice.
Published: October 23, 2005 2:06 PM
Joe Kelley,
For once (other than your denigration of Curt Howland), you actually made some sense, albeit, in a grossly indirect way. Why do you always beat around the bush when trying to make a point? Though, I do agree with the point you make in your last comment.
Published: October 24, 2005 9:17 AM
Yancey Ward,
Liars get right to the point for sure. They don’t beat around the bush at all. When they attack they go right for the throat. When they retreat they cover their tracks with effective propaganda. It really doesn’t take much effort to see the game and recognize the contradiction.
Example:
You have trouble understanding simple concepts that are obvious to me. You twist your inadequacies into words that project your inadequacies unto me like this:
“For once…� (i.e. never before in history) “you actually� (All the blame is on the writer and this time, unlike every other time, the writer actually did something – for once) “made some sense� (WOW look at this writer, for once in his poor pathetic life, he once wrote something that made SOME sense, he finally stepped up to MY GRADE of GRAND WISDOM for all ETERNITY and made “SOME� sense, congratulations stupid, wonders never cease, and they can train monkeys too.) Blah blah blah…more hyperbolic attack - on offense mind you and then…
“Though, (even though you are an incredibly stupid incomprehensible, ignorant, and senseless fool), I do agree with the point you make…�
So what is your response going to be to my defensive words?
Need I go back and find examples of the routine or has history been conveniently wiped out. Are we back to the brave new world?
Nonsense, PURE NONSENSE! Totally incomprehensible nonsense! Grossly indirect! Ooops. Denigrator of the innocent! Pointless nonsense always! Except once… OOOOPs
No one can ever understand your always incomprehensible butchery of language so why do you beat around the bush! OOOPs.
Contradiction is not hard to spot. An attack followed by justification for the attack where the blame is projected upon the victim. This is not beating around a bush. An outright attack on my integrity is followed by the attacker’s projection of blame onto the victim.
There is a reason for the routine. It starts with my words. You read my words. Then you attack – why - defend poor innocent Curt Howland?
Curt admits his reason for attacking me, albeit, when he thinks it is private (secret) communication. His reason is covered less in propaganda. You might say that the gloves come off.
What is your reason for attacking me Yancey Ward?
Have you twisted your attack of me to appear in your own mind to somehow justify your attack as being constructive criticism? If so then prove it. Construct a better way to sell Liberty. I’ll quote you on my web page right there with Solzhenitsyn. Meanwhile the not so empty rhetoric serves one obvious purpose.
Published: October 24, 2005 10:37 AM
Mr. Kelley,
You state, My agenda has not wavered once. It is liberty.
Yet, in the posting prior, you state, It is less outrageous to consider taxing and subsidizing the sun. It is common practice to tax and subsidize water. Food is also taxed and subsidized.
Must I assume, then, that you mean that even though it is "less outrageous" and "common practice" to tax and subsidize, that you object to the taxation and subsidizing at all?
That would be a GoodThing(tm), since it would at last give us both common ground.
While I agree that the next regime *could* be Liberty, I don't see that happening because, in agreement with the reason you seem to state, people indeed have been trained to give in to fear of others. When I bring up liberty in "regular" forums, the common reaction is fear that nothing will be built, nothing will be accomplished, individuals will quickly become feral animals eating each other without a coercive and intrusive government to prevent it. The equation of anarchy with chaos is impossible to refute because those who espouse it do so with violent rejection of any other thesis.
The next regime will, I believe, bring overt violence in their effort to retain control. All the desensitizing has been completed, people have not voted out of office those who erected "Free Speech Zones" during the last election cycle. If such an utterly despicable act didn't awaken the majority, nothing will.
Published: October 24, 2005 10:49 AM
Bob,
I think the gas retailers should be free to sell (or not) their gasoline at whatever price they want. I believe this solution is the only libertarian one, and leads to the best outcome whether the rest of the rotten merchantilist system is rationalized or not. Gasoline at $20 per gallon would never occur in a rationalized US anyway because any number of substitutes become economic well before that price. Only layer upon layer of regulation by (collusion with) government will prevent a transition to alternatives from occurring smoothly and seamlessly.
Published: October 24, 2005 10:55 AM
Mr. Kelley, I called you an insulting little prick, in private email, only after you had been insulting to many people who were asking you to clarify what you were talking about and you had said for me to take off-topic subjects to email. Your response was, "don't email me."
If you wish, I can post the email I sent. No "brave new world", nor Enron. It's all there.
I do not attack you, Mr. Kelley. I cannot control how you feel when asked for clarifications of your postings. One thing you have communicated is that you believe you write with the utmost clarity. With that in mind, it is understandable why you feel challenged when others question that clarity. Challenging you is not an attack.
Published: October 24, 2005 11:01 AM
Vince Daliessio,
I, too, believe gas retailers should be free to sell at prices established by them. I hope that people who are gouged by outrageous prices will find a way to repay the retailer for such practices by taking their business elsewhere. That, however, is the dilemma; if all retailers in the area follow the highest price model, where are the citizens’ choices? In a Libertarian world it seems to me highly likely that such practices would rarely occur, after the initial shock of true freedom dissipated, and that, best of all, more choices would be available for all citizens including alternatives to petroleum products.
Again I ask, how does the “hands off� approach in a NON-Libertarian world, in a strictly controlled marketplace such as we have now, achieve any Libertarian goals? It will not show the world that Libertarian principles achieved any victory because no victory will have been achieved.
I have to repeat my remarks by stating my opinion that $20/gallon gas won’t occur because Big Oil won’t let it for quite some time. In a Libertarian world, as you suggested, alternatives might be found should gas achieve such lofty retail prices as the norm, and the alternatives would be found long before we got to $20/gallon. But in the world of today, the only way to give choices to citizens other than petroleum is to somehow create that desire NOW to find alternatives.
Gasoline will not rise in price to that which will cause a dramatic decrease in profits for Big Oil/Federal Gov’t. If Big Oil finds a way through its gov’t arm to replace lost profits, a way that will not stop consumers from spending their money, then and only then will prices create the motivation to accelerate the development of alternatives.
While we sit and wait and wonder about prices for gas, time is passing by without the strong push to create massive investment in alternatives to petroleum. While the neocons continue to fool the people into believing that idiotic tax schemes such as drilling in the ANWR will help gas prices, time is passing by. Any operation that will not get petroleum for production for 20 years is an astronomical waste of astronomical amounts of funds that could instead be used to jump-start the alternative fuel industry among many other industries that need jump-starting.
Supply and demand in Austrian economics in a Libertarian world would work as Professor Lehman describes, I am convinced of this. And it’s a great shame that such a world could not have been achieved during the period of about ’65-’75 when many great new ideas were discussed. Maybe we’d be using alternatives to such an extent that petroleum would last so long it would be renewed before it could be used up. Maybe farmers wouldn’t have been subsidized because agribusiness/gov’t couldn’t have prevented them from growing biofuels for their regions; farmers would actually have controlled their own prices and profits.
The law of supply and demand will not produce the results it should in our present situation because it is not permitted to operate naturally. How will we start the process of change? Will we let another vitally important opportunity in time to pass by without achieving all the best goals?
Published: October 24, 2005 12:14 PM
Sigh....
Joe Kelley, perhaps I should have written, "For once, you made sense to me. I have little patience for those who are long-winded, which you are according to more people than just my limited self, when far clearer methods of communication are available. It has been my experience that liars are more likely to cloak themselves in lofty diffuse language than those who deal in truth. I don't know which you are, but I am beginning to suspect that you don't wish the readers to know, and you amuse yourself by being deliberately obtuse in order to convince yourself that you are superior to the readers. Why go for the five paragraph statement of an idea, when a couple of sentences accomplish the same thing, and more effectively? As a previous commenter wrote about you, we want to know you ideas and thoughts, but you make it as painful as possible, and I suspect that your comments are increasingly being passed over by other readers on this blog. This may or may not be a shame- but I usually cannot tell which it is, and I am someone that actually can read at an advanced level.
Published: October 24, 2005 12:34 PM
Bob A., you ask, how does the “hands off� approach in a NON-Libertarian world, in a strictly controlled marketplace such as we have now, achieve any Libertarian goals?
It achieves the goal of "hands off" in something. That is a goal all by itself.
I do agree with you about the danger of a California Electric style twist in regulations that are touted as de-regulations. Only in a truly "free" market in oil, to produce, refine, transport and sell, can prices approach a rational level.
And if it were so, even if $20/gallon turned out to be the price, I would not object any more than I "object" to the price of a new multi-core CPU just because it's higher than I would like it to be.
How will we start the process of change?
How about, one small step at a time anywhere that the opportunity presents itself. Such as, a hands-off approach to anything, no matter how small.
Published: October 24, 2005 12:45 PM
BobA,
I really don't see how Big Oil and the Government can "keep" the price of gasoline from reaching $20/gallon should the supply/demand dictate that the price rise to that level. Any attempt to cap the price in such a situation will simply result in a shortage.
I am sure the oil companies don't want to see the advent of alternatives to oil, but if the supply of oil is limited, then there is nothing the oil industry can really do about it- the price for oil and gasoline will rise. If the oil is not limited versus the demand, then the alternatives themselves will have to drop in price to reach competitive levels with petroleum. The alternatives to fossil fuels are not actively inhibited by Big Oil/Government, but only not heavily subsidized by them. A libertarian position would be that all subsidies by the government should be removed; and even if it is not a perfect libertarian world in which we live, you remove them where you can, even you leave others in place.
It appears to me that you are bothered by collusion of all types within an industry. A pure libertarian is only bothered when the industry colludes with the coercive power of the state. No one but the state can force me to deal with the oil industry- nor you.
Published: October 24, 2005 12:59 PM
Curt Howland,
“It achieves the goal of ‘hands off’ in something. That is a goal all by itself.�
But it isn’t hands off, and that is my point. No change in economic system has taken place and no moves have been made to permit natural supply and demand to take affect in the industry. It is a show for which Libertarians will not gain an audience. Nobody will know. There was no significant or long-term shortage, in fact, from what I’ve read and heard, there was no more than a minor suggestion of a controlled shortage. And retailers knew this, or at least many of those who have been in the business for awhile.
You are a reasoned thinker it appears to me from your discussions, so I believe you’ll recognize the problem that $20/gallon gas will create if it became widespread in a short time in this economic system. You may be able to afford $20/gallon at your income level. I’m self-employed and my business is mostly done from my home, but I make many deliveries and pickups from local suppliers because it is less expensive than using mainstream delivery services. But when gas went up to $3.00/gallon around here, I began planning trips more carefully and found new efficiencies. However, $20.00/gallon will have a drastic negative affect on my business. I will not be able to compete with larger businesses that have more ability to milk the tax system to free up capital to take my market share while they gradually increase prices over time to account for increased input costs related to petroleum products. If neither of us could milk a tax system, it would be the level-playing-field scenario in which small and large businesses can function and the winner is the American citizen.
How much of America could withstand such a jump in price if established in the short term? The growing multitude of people in the lowest income brackets would be devastated. And the $20.00/gallon price will NOT achieve any genuine free markets with this regime.
�How about, one small step at a time anywhere that the opportunity presents itself. Such as, a hands-off approach to anything, no matter how small.�
That isn’t “one small step� that will be recognized by anyone outside of this forum. People on both “sides� by the tens of millions see the government as the only tool available. Some see it as the only right way to do things—herd the people for their own good. Others see it as the only way to fight back at that which is oppressing them. But NONE of them will believe that Libertarians scored any victory for “free markets� if the perception of price gouging isn’t addressed.
Libertarians should never advocate price controls and should always promote GENUINE free markets. But to claim that a hands-off approach in this particular situation (hurricane effects) is a move toward free markets without any accompanying change in economic system is ludicrous.
What you suggest will not begin the process of change, nor will it advance any Austrian economic theory or Libertarian philosophy.
Published: October 24, 2005 1:54 PM
Yancey and Curt,
The past instructs me to improve my writing. Your help is appreciated in that regard. You do not offer instruction beyond a painfully obvious fact. When I asked Curt to be my editor he declined the offer. I sure could use one as you two continue to insist but fail to assist.
So I move to drawing pictures here:
http://austrianforum.com/index.php?showtopic=364
I move to other avenues of exchange - here:
http://forums.newspeakdictionary.com/viewtopic.php?p=13870#13870
The message remains the same – in other words. Which words and which charts work?
What works depends upon the reader as well as the writer
Here is one writer:
http://www.terradaily.com/news/energy-tech-05zzzzzzzg.html
I can read the above open source and offer my version of the meaning behind the words, pictures, and I can offer my version of the value of having 150 watts of capital production from now until the sun stops shinning and the wind stops blowing. You can interpret the data on that page as you are able.
Send them a letter if you please and ask for clarification or simply blame them for their lack of clarity.
I prefer to avoid dealing with someone supposedly financed by the CIA.
http://michaelbluejay.com/electricity/howmuch.html
http://www.picoturbine.com/home.htm
300 to 500 watts of power
http://www.otherpower.com/otherpower_solar.html
$4.25 a watt
We all have our own special interests driving our energies toward realizing specific ends.
Sure; I lack the talent needed to communicate my special interest. Now watt?
Published: October 24, 2005 2:22 PM
Alright, Joe, I am through with you. I and others have pointed out your shortcomings as a writer, and I have done it in a sincere effort to understand your thoughts. Since you insist on taking it as an personal affront rather than using the criticism as a prod for self-reflection on your style of discourse, I can do nothing else than what I have done. One of the primary goals of a writer of anything, if not the most important, is to be understood by his audience. Should one choose not to be understood, then he is wasting his time in the writing, and the readers are wasting their time in the reading.
Published: October 24, 2005 2:39 PM
Yancey Ward,
I noticed in another post that you have no patience for long-winded types. I hope you’ll not run out of patience with me. I’ve battled this tendency all my life. I edit all my comments many times before posting them. Some of my posts are HALF as long because of all my editing! Appalling, isn’t it?
“I really don't see how Big Oil and the Government can "keep" the price of gasoline from reaching $20/gallon should the supply/demand dictate that the price rise to that level. Any attempt to cap the price in such a situation will simply result in a shortage.�
It could be that you don’t know the system that well. The price has always been “capped� and there is no shortage. Because of growing demand all over the world, but especially in China, there WILL BE a shortage but the price will still be controlled. The upcoming shortage is unrecognized by the controlled supply and demand scenario. But oil is a non-renewable resource and therefore is in short supply. The continuing growth in the number of consumers will ensure that pressure will continue to be put on all resources, renewable and non-. What’s most important to those in charge is that people continue emptying their pockets.
“I am sure the oil companies don't want to see the advent of alternatives to oil, but if the supply of oil is limited, then there is nothing the oil industry can really do about it- the price for oil and gasoline will rise.�
Yes, the oil industry can and will influence prices. Prices will gradually increase over time as supplies become dried up. This is what makes schemes such as enormous expenditures in new drilling right now truly wasteful: If we keep using at the rate we’re using, no pricing advantage will be achieved in 20 years when supplies hit the street. If we find alternatives and finally begin using alternatives, there won’t be any need to spend the money for more oil; what we have will last “forever� if we find alternatives fast enough.
“The alternatives to fossil fuels are not actively inhibited by Big Oil/Government, but only not heavily subsidized by them. A libertarian position would be that all subsidies by the government should be removed; and even if it is not a perfect libertarian world in which we live, you remove them where you can, even you leave others in place.�
Well, I suppose it’s how you look at the problem. If you believe that giving tax incentives and huge chunks of “pork� to oil industry campaign contributors and continually passing favorable legislation promoted by lobbyists is not inhibiting the alternative-to-fossil-fuel industry, then I guess you’re right.
Isn’t this what you’d call a Catch-22? It’s wrong to subsidize, so providing incentives similar to what the oil (and LOTS of other industries) get to the massive industry-in-waiting represented by alternative energy is wrong. But it’s acceptable to applaud the oil industry and various retailers in it for profiteering from imagined or suggested shortages in short-term supply in a controlled market?
Yes, I’m against collusion in industries with government. But you aren’t promoting any ideas to stop the collusion and yet you claim that the state cannot force you to deal with the oil industry. Where do you buy your fuel, lubricants, coolants, and other petroleum-based products?
I don’t advocate price controls. I would much rather see Libertarians discussing and getting to the mainstream the ideas and estimates of what could happen in GENUINE free markets instead of siding with gasoline price gougers and then claiming that it is in accordance with the Law of Supply and Demand.
Published: October 24, 2005 2:45 PM
Bob A.
I wrote that only the state can force me to deal with the oil industry. I do so of my free will since they offer the lowest-priced fuel for transport and warmth in winter.
In the purest sense, oil is always in a shortage, since there is always more desire for it than can be supplied. It is price that regulates the balance of supply and demand. It is true that government subsidies to oil help keep the supply higher than it might otherwise be, and thus, keeps the price at the retail level lower than it would be in their absence, but the point is this- the subsidies increase the supply, not just cap the price- at least in the United States, since I can go out and buy gas anytime I wish. When I wrote of a shortage born of price controls or "caps", I mean the position of not being able to purchase at any price due to no inventory.
The amounts spent on additional drilling may be wasted. However, it is in the oil companies interest not to waste money in a meritless pursuit of additional supplies. If they are unable to find addititional resources, then no amount of subsidy will stop the rising price, and only direct outlawing of alternatives will prevent their ascendency.
I don't mind reading long-winded essays as long as they are clearly written. Yours really isn't long-winded since it makes multiple points. I just don't agree with all them.
Published: October 24, 2005 3:43 PM
Bob:
Sometimes I find myself not getting someone's drift. But still i like to know if we're in fundamental agreement or not so I'm going to ask and answer two questions and let's see if we agree or how close we come:
If the energy market were entirely unhampered by government, and
1. the price of gasoline went to an astronomical $20/gal, would it reflect immoral price gouging and other bad things, or would it just be optimal market clearing forces at work?
2. the price of gasoline went to an affordably low price of $0.50/gal, would it result in an immorally excessive overuse of a scarce and limited resource and other bad things, or would it just be optimal market clearing forces at work.
My answer for both scenarios: the latter: it’s just optimal market clearing forces at work. How close are we?
Published: October 24, 2005 3:46 PM
Bob A,
I tried writing a reply a few minutes ago, but it has not appeared yet so I will rewrite it.
The price of oil/gas has only been capped in the sense that subsidies to the oil industry have kept the supply higher than it would have been otherwise, and, thus, kept the prices at all levels lower than they may have been. There is only a true shortage when the price at a given level of production is kept artificially lower than the supply/ demand would dictate (see Hawaii, for example). What you seem to mean is that oil companies have capped the price and will continue to cap the price in future, regardless of the actual availability of oil and demand for it- this is impossible. If there is more demand than there is possible supply, as you postulate for the future, then the price will rise, or rationing by state decree will ensue- there is no third alternative. Either way, the alternatives to petroleum will begin to assert themselves. Of course, we could continue for some time with the present situation- state subsidies that make uneconomic petroleum resources economically viable, with the corresponding lower retail prices. I don't support that, as will no real libertarian, but I don't like the idea of competing subsidies for the alternatives since it is ultimately self-defeating and leads to an ever bigger state.
Published: October 24, 2005 4:13 PM
Yancey Ward or anyone having the will to decipher my incoherent verbosity,
The electric meter attached to my house spins in one direction. If I invest in a device that spins it the other way then I gain independence from the people controlling oil. I can receive a check from the electric company. My house becomes a reverse mortgage generator. If I don’t invest in the independent renewable energy source and if the electric meter spins faster due to a decrease in the supply of oil then the independent energy making machine increases in capital value. Once the machine is plugged in during raising energy cost, then, the meter spins faster in the opposite direction so long as energy remains valuable and so long as the tax credit remains in force.
I could explain how the independent renewable energy creating machine effects real estate but that would be assuming that I have a talent that I obviously do not posses; here.
Published: October 24, 2005 6:00 PM
Paul Edwards,
“If the energy market were entirely unhampered by government . . . “
IF this happens, then prices will begin reacting to supply and demand naturally and whatever prices do they do. If someone charges $20/gallon in this type of environment, that person intends to decrease demand for that person’s inventory. That person will NOT be charging exorbitant prices using the false pretense that there is a shortage in the market, and Big Oil/Big Gov’t will not be metering and influencing pricing. In such an environment, IF citizens have choices, they will react to false pretenses accordingly with their economic and verbal actions. Such is not the case now—we have no free markets and retailers use false pretenses to achieve increased profits.
Still, I’m against price controls but don’t know what to do about the situation. It is a dilemma. It would be best to convince people to make changes to cure the disease rather than put up with or treat sores. This particular sore will fester and rubbing salt in the wound by applauding price gouging will not make it better.
Published: October 24, 2005 6:45 PM
Yancey Ward,
Again we are not comparing apples to apples. You are forced to deal with the oil industry because of the relationship between Big Oil and Big Government. Alternatives to petroleum are not widely and readily available because of this relationship. When choices are removed, coercion is present.
“. . . it is in the oil companies interest not to waste money in a meritless pursuit of additional supplies.�
I strongly disagree. In a tax system such as ours and in an economic environment legislated in much the same way as traffic direction, it is not necessary for Big Oil to find any additional supplies. In fact, in our system, they don’t even have to actually spend any real company money or show any substantial investment or effort. In a genuine free market devoid of government interference, Big Oil would have to spend dollars, or not spend dollars, based on criteria much different than they do now—or go out of business. No chance of that with taxpayers footing the bills for the most part.
If fuel suddenly went to $20/gallon, and if I could survive and continue my business, I’d be happy as a clam because people would be jumping into production of alternative fuels in a big hurry. FINALLY we’d get the emphasis on this great new industry that we should have had decades ago. But it’s plain to see that this isn’t going to happen because the economy and the habits of people are not able to compensate. I believe subsidies are wrong and should be abolished, but there has to be some motivation for entrepreneurs to jump into this emerging field, motivation that would cause them to put out maximum effort while Big Oil and its associates are getting favorable legislation and pork.
When alternatives become readily available, we might see something vaguely resembling natural supply and demand.
Published: October 24, 2005 7:13 PM
If it could be realized that home electric generation will manage to create economic independence than one such plan of attack could be made real in the following manner:
City municipalities could offer a welcome and voluntary investment portfolio. Contributors pay a voluntary tax investment to purchase a spot on the list. The list contains the names of contributors and the amount of each contribution. Larger contributions move an individual up the list. The largest contributor is on the top of the list.
The municipality advertises and seeks from potential producers a product having specific design capabilities. The product utilizes solar panels to convert the energy from the sun into electric energy. The product utilizes a wind turbine to convert the power of moving air into electric power. The product stores electric energy in batteries and or the product converts excess electric energy into hydrogen. The product stores hydrogen into a tank which can be dispensed into hydrogen powered appliances and vehicles.
The product will be designed to produce at least twice the power required to power the house and two cars based upon an average demand. The product can drop into a specific sized location having specific dimensions subject to availability and current technology.
Subscribers who receive the product first are the first ones to eliminate their energy bills so long as the unit continues to generate enough energy to run the house and the two cars.
Subscribers who receive the product first begin to pay off the remaining cost of their unit. Once they pay off the unit, then, all the excess energy produced and sold back to the electric company is credited to the owner of the unit.
While the mortgage on the unit remains un-paid, then, the excess power generated by that unit is credited to the municipality account for the purchase of new units and municipal insurance to be used to fight legal battles concerning the tax credit status of independent home electric generation.
Municipalities may find reason and cause to combine interests with other municipalities in the effort to maintain legalized independent home electric generation credit. Oil, nuclear, and other power companies may lobby to defeat the independent home electric generation credit union.
As the snow ball rolls down hill it can gain mass and velocity. A person who is way down on the list may see his neighbor who already has a home unit. The neighbor may be reaping the rewards of independent home power generation. The person low on the list may wish to contribute more and move his or her name up on the list.
As more neighbors receive their units and begin generating more power, then, the municipal bank account grows. Total power grows. Oil becomes less valuable. Nuclear power becomes less valuable. More units are made. Unit costs diminish. Development capital increases. Design efficiency increases. The independent home energy generation market creates jobs. The demand for hydrogen powered cars and appliances increase. The hydrogen powered car and appliance market gains momentum.
More people receive their units.
More renewable energy is made.
Total available energy increases. Energy costs lower. All the costs associate with producing things with high cost energy lower.
People gain independence.
People stop sending their kids to Iraq for oil.
Published: October 24, 2005 7:19 PM
Bob A., But it isn’t hands off, and that is my point.
It isn't "hands off" _now_, I agree. That is why "hands off" is a goal. I think I understand what you mean, let me try this:
By repealing "anti price-gouging" laws and achieving some measure of liberty thereby, there will be discussion involved. It is that discussion where the principles in the repeal are spelled out. "When in the course of human events it becomes necessary for one people to sever the political and social bonds that bind them to another..." etc.
Certainly there is no lack of pontificating on the part of the control freaks in rationalizing the passage and enforcement of these laws. That's why people know about them at all, understand their rational, and such.
If the only truck-load of gasoline is brought in by a speculator who charges $5/gallon when no one else has any gas, what will the newswriters who cover the story do? Will they call him a hero for doing what no one else could do, saving lives and giving people hope? Will they say that $5 was a bargain and he was well rewarded? I don't know. But I do know what they newswriters and politicians would say now.
I also do understand what $20/gallon would "do to us" in present circumstances. It would inspire innovation. Maybe there would be some temporary pain, just like the whale oil users felt when whale oil was made illegal.
I brought up $20/gallon in the context of what the real price of gasoline might very well be if "hands off" were achieved over the entire oil industry. I'm sorry you didn't understand that. I did not nor do I now believe that such a price would happen under any circumstances other than if government imposes rationing.
Published: October 25, 2005 10:37 AM
Mr. Kelley, you might find http://www.homepower.com/ interesting. I'm a long-time subscriber.
Published: October 25, 2005 10:38 AM
House A has a new home energy unit. House B does not have a new home energy unit. House A and B are model homes having the same square footage, garage door opener, lawn, comps, etc. From every angle of view both houses appear to be exactly the same with a few obvious exceptions. House A has a solar paneled roof and a tall windmill with unsightly large blades. House B is priced at 100,000 dollars. House A is priced at 100,000 dollars plus 50,000 dollars for the energy unit.
House A = $150,000.00
House B = $100,000.00
Which house is more valuable?
House B is a debt house. House A is a credit house. House B will generate 200 dollars a month in energy debt. House A will earn 200 dollars a month in energy credit. House B will accumulate 2,400 dollars of energy debt in one year. House A will earn 2,400 dollars of energy credit in one year.
Owner of house B after 30 years pays 72,000 dollars worth of energy debt. Owner of house A after 30 years does not pay 72,000 dollars worth of energy debt. Owner of house A receives 72,000 dollars of energy credit in 30 years.
The difference in energy value between house A and house B is 144,000 dollars in 30 years.
If the potential buyer of house B cannot qualify for a loan on house B priced at 100,000 dollars – can the potential buyer qualify for a loan on house A priced at 150,000 dollars? No?
House A requires 400 dollars a month more credit relative to the costs of running house B. Potential owner of house A will not have to pay 200 dollars a month in energy costs. Owner of house A will receive a pay check of 200 dollars a month. Owner of house B will pay 200 dollars a month in energy costs – so long as energy costs remain the same.
If energy costs go up – way up, then, owner of house A can run a cable over to house B.
The owner of house B can cut out the middle men and pay the owner of house A directly at a discount. The unsightly windmill, then