Amid new concerns in the Middle East, the less than spectacular Home Sales Report, and the Fed Chairman's comments that things would remain the same in the loan interest markets, oil prices have increased yet again. Of course, there are those still sitting around thinking this is a good thing, that the larger prices will produce more jobs and the economy will not only survive with the higher prices, but will in fact excel.
And these guys get paid a large amount to blow smoke up your fourth point of contact (your rear for those non-military).
While, as I stated in previous posts, there are those who are finally starting to show concern that the increase in oil prices will deflate the struggling global economies, it is only a mild concern, and most think that we will weather this just fine. But here are some figures, about a year ago we were paying about two and a half bucks, now we are paying nearly four per gallon. This is a 60% increase in gasoline prices in just over a year. Considering that our economy is based partly on the transport of the consumables, the truckers must charge more to move the items, which means the stores must charge more. While the increase in fuel prices in relation to the transport of goods would spread out, the rate of inflation would increase at unhealthy leaps.
Of course, I am not telling anyone anything they haven't already noticed. Anyone who has shopped for groceries in the last six months can see the difference in the amount of bags they bring home. Two hundred dollars does not buy nearly as much as it did a year ago. The military was awarded a 1.5% pay raise this last year, yet their pay goes only about 70% as far considering the fuel prices and the increase in food. So if my purchasing power decreased by around 30% in just over a year then how is this unjust increase in oil something that is GOOD for the economy?
Remember, before all you naysayers take my numbers above and try to discredit them, First I am using generalizations, but I am also including such things as the increase in utilities cost due to the increase in fuel prices. You didn't think these companies who make entirely TOO MUCH money from us consumers would actually absorb the costs did you? Look at what your check gets you today. I guarantee other companies are beginning to feel the pinch yet again as consumers must choose necessity over pleasure. One of the first things to go in this household is the cable. Ironically, I have more channels (shows) available online than with cable, so the only thing I am missing is the high prices.
Eventually, these price boosters are going to realize they are hurting themselves and the prices will drop to more manageable rates, or we will definitely be deep into another recession and whether you believe it or not, there is little political ramifications that would be honest.
The only way to prevent this is to actually decrease our dependence to the point that the amounts in reserve make it not nearly as profitable, of course this would mean that we would have to start using alternative means of transport, so while the thought is nice, the reality is, we are slave to the jackasses trading the commodity and using price gouging techniques to cripple the world.
Monday, March 26, 2012
Saturday, March 24, 2012
Economists say Gas may drive us into another recession
As the rhetoric changes on all the economists about the gas prices and the likelihood we will end up back in a recession, I say, you guys are two years too late. I have been saying it for quite some time, and have been posting about it here for nearly a month. The thought is ridiculous that NOW the high prices are going to effect the economy. Other economists are wondering why demand is down.
Duh!
Americans can't afford to drive!
This is going to kill the economy because they can't get out and get a job to pay for the food on the table, let alone vacation.
What you will see is more local economies actually surviving, not really thriving, but surviving because people will realize that $2 loaf of bread and the sorts winds up being cheaper than driving 20 miles to the local big chain store, or even five miles for some. This means that those local grocers that have been struggling for years may actually benefit. However, they must in turn pay more for fuel and ultimately raise their prices, so it will be a short lived honeymoon. I also believe you will see more people growing at least a portion of their food, this will decrease a little of their overall grocery expense. Hell, one tomato plant at 7 bucks and a lot of patience will ultimately yield at least thirty bucks of tomato if the person does even halfway good at it.
Might effect the economy? Might put us in a recession? Please, we are already heading there again, the only thing keeping the fancy numbers going up is the prices of gas and new electronics. Apple is still going strong.
All anyone has to really do is look at the bulk stores and see how much their sales increase or decrease, and you will get an idea of the recession likelihood.
The fact is, with gas going up, our spending power goes down, the economy will tank unless something changes, and there is nothing anyone can say about it otherwise. If you decrease the amount gas costs you will promote tourism and increase jobs as the rich folk feel they can dive a little more into their pockets to hire some out-of-work guy or gal.
I would love to meet these economists so I can let them know how SLOW they are to come to terms. I am all for the uppity keep it cheerful outlook, but reality should have set in with these folks a long time ago.
Duh!
Americans can't afford to drive!
This is going to kill the economy because they can't get out and get a job to pay for the food on the table, let alone vacation.
What you will see is more local economies actually surviving, not really thriving, but surviving because people will realize that $2 loaf of bread and the sorts winds up being cheaper than driving 20 miles to the local big chain store, or even five miles for some. This means that those local grocers that have been struggling for years may actually benefit. However, they must in turn pay more for fuel and ultimately raise their prices, so it will be a short lived honeymoon. I also believe you will see more people growing at least a portion of their food, this will decrease a little of their overall grocery expense. Hell, one tomato plant at 7 bucks and a lot of patience will ultimately yield at least thirty bucks of tomato if the person does even halfway good at it.
Might effect the economy? Might put us in a recession? Please, we are already heading there again, the only thing keeping the fancy numbers going up is the prices of gas and new electronics. Apple is still going strong.
All anyone has to really do is look at the bulk stores and see how much their sales increase or decrease, and you will get an idea of the recession likelihood.
The fact is, with gas going up, our spending power goes down, the economy will tank unless something changes, and there is nothing anyone can say about it otherwise. If you decrease the amount gas costs you will promote tourism and increase jobs as the rich folk feel they can dive a little more into their pockets to hire some out-of-work guy or gal.
I would love to meet these economists so I can let them know how SLOW they are to come to terms. I am all for the uppity keep it cheerful outlook, but reality should have set in with these folks a long time ago.
Friday, March 23, 2012
China, Saudi, Iran etc.
So oil is being jockeyed by folks who are doing nothing by speculating about what might be instead of what will be or what is. All the while it is lining the pockets of the rich, feeding those middle class citizens fortunate to have bought in at the right time and disabling the rest of us. I mean, 90 bucks to fill my tank four times a month adds up, and that is just to work. I have another means of transport but can't ride in the rain. I am fortunate that as the weather gets better I can use my electric scooter, but many folks cannot or do not have the means to do this. While I will feel alleviated by the lesser expense, it makes it difficult to do any extracurricular activities, which is part of what drives the economy, vacations.
With my boat dry-docked and my truck tank empty, which is most likely similar scenarios to much of the US, I must seek local means to vacation, such as back-yard play. A time when most people are trying to get out and do things, a time when many businesses are waiting for to make their months go by in the black, will undoubtedly be soiled by a bunch of greedy speculators.
Yet the news points out that China's economy IS slowing, Saudi has said that they will increase their production to 12.5 Mill barrels to cover Iran, and Kuwait has stated that Iran WILL NOT block the waterways. This should alleviate the panic over oil, yet it hasn't. And CNNMoney has the audacity to state that Index traders have nothing to do with the oil prices being elevated, citing that if they were, the stockpiles would increase. The author of the article (which can be found here http://finance.yahoo.com/news/speculators-not-behind-rising-oil-152600223.html) Craig Pirrong, used several points in commodities history where groups elevated prices, stating that those individuals wound up with large quantities of those commodities, from tin to grain and milk, that no one would buy. But his comparison is about as relevant to oil as my desk is to his computer, no real connection.
Oil, as a commodity, much like natural gas, enjoys a unique advantage over all other commodities, it will always be bought and sold, no matter the price. It is the lifeblood of the world and is what makes our modern luxuries possible. While we are making efforts to create a world where oil is not this riches producing substance, that time is far off.
No matter what happens to the oil, we must go to work, which means we must buy gas. We must heat our homes, which means we either buy heating oil/natural gas, or we use electricity, which burns oil, or coal, or natural gas. The complexity of oil, the amount of products we get from it and use daily, means it doesn't follow the same guidelines as wheat and tin. The fact that the author of that article is working as a monetary "expert" shows the lack of knowledge his employers have in his true ability. I will tell you these are all my opinions; he will tell you they are fact.
Fact is, the items posted in the article, the comparisons he uses, display incoherent thought when it comes to financial matters.
The speculators are one of several DIRECT causes of the oil prices sky-rocketing, just one of a few, another being the OPEC and their drive to increase the oil so they get even richer. People stated that the War in Iraq was about oil, yet, where are the oil prices at? Perhaps it was about oil; perhaps it was about something else entirely. Who knows, maybe there really are WMDs that just haven't been located. What I know is that if it was about oil like so many were saying, we wouldn't be paying nearly four bucks a gallon right now.
The world needs to get the oil under control before we enter into another recession, or before the average Joe just says F* it and we enter another GREAT depression.
With my boat dry-docked and my truck tank empty, which is most likely similar scenarios to much of the US, I must seek local means to vacation, such as back-yard play. A time when most people are trying to get out and do things, a time when many businesses are waiting for to make their months go by in the black, will undoubtedly be soiled by a bunch of greedy speculators.
Yet the news points out that China's economy IS slowing, Saudi has said that they will increase their production to 12.5 Mill barrels to cover Iran, and Kuwait has stated that Iran WILL NOT block the waterways. This should alleviate the panic over oil, yet it hasn't. And CNNMoney has the audacity to state that Index traders have nothing to do with the oil prices being elevated, citing that if they were, the stockpiles would increase. The author of the article (which can be found here http://finance.yahoo.com/news/speculators-not-behind-rising-oil-152600223.html) Craig Pirrong, used several points in commodities history where groups elevated prices, stating that those individuals wound up with large quantities of those commodities, from tin to grain and milk, that no one would buy. But his comparison is about as relevant to oil as my desk is to his computer, no real connection.
Oil, as a commodity, much like natural gas, enjoys a unique advantage over all other commodities, it will always be bought and sold, no matter the price. It is the lifeblood of the world and is what makes our modern luxuries possible. While we are making efforts to create a world where oil is not this riches producing substance, that time is far off.
No matter what happens to the oil, we must go to work, which means we must buy gas. We must heat our homes, which means we either buy heating oil/natural gas, or we use electricity, which burns oil, or coal, or natural gas. The complexity of oil, the amount of products we get from it and use daily, means it doesn't follow the same guidelines as wheat and tin. The fact that the author of that article is working as a monetary "expert" shows the lack of knowledge his employers have in his true ability. I will tell you these are all my opinions; he will tell you they are fact.
Fact is, the items posted in the article, the comparisons he uses, display incoherent thought when it comes to financial matters.
The speculators are one of several DIRECT causes of the oil prices sky-rocketing, just one of a few, another being the OPEC and their drive to increase the oil so they get even richer. People stated that the War in Iraq was about oil, yet, where are the oil prices at? Perhaps it was about oil; perhaps it was about something else entirely. Who knows, maybe there really are WMDs that just haven't been located. What I know is that if it was about oil like so many were saying, we wouldn't be paying nearly four bucks a gallon right now.
The world needs to get the oil under control before we enter into another recession, or before the average Joe just says F* it and we enter another GREAT depression.
Friday, March 16, 2012
Perfect Plan for Oil
I have it, right here, the perfect plan to fix the world's economy.
Stop trading oil like it was the Dollar or Yen. Set a price and keep it there, but a reasonable price for everyone. Obviously $40 a barrel isn't going to work, but neither is 90 or $100. However, I think $65 a barrel should suffice. It would dramatically lower the cost of fuel, help to stave off inflation, make it so persons could get back and forth to work, create an environment where those who needed work could actually go to interviews, make the rich moguls not so quick to fire people and make it so more people could buy goods. Not just here in the good old USofA, but worldwide. Greece could pay their debts, Spain, Italy and Portugal would be able to use their cuts to stave off further Euro issues. All in all it would create a much better environment for people to live in.
But wait, that would mean keeping the greedy bastards from getting richer from the suffering that we all must endure. This would mean that no longer could some jackass sell his commodity share at an inflated price simply because he anticipates increase in demand (price gouging, ahem).
This would mean that the world would have to stand up to OPEC and say "look, this is what we are going to give you, with the allowance for a potential annual increase at inflation".
I'm ready to stand, Are you?
Stop trading oil like it was the Dollar or Yen. Set a price and keep it there, but a reasonable price for everyone. Obviously $40 a barrel isn't going to work, but neither is 90 or $100. However, I think $65 a barrel should suffice. It would dramatically lower the cost of fuel, help to stave off inflation, make it so persons could get back and forth to work, create an environment where those who needed work could actually go to interviews, make the rich moguls not so quick to fire people and make it so more people could buy goods. Not just here in the good old USofA, but worldwide. Greece could pay their debts, Spain, Italy and Portugal would be able to use their cuts to stave off further Euro issues. All in all it would create a much better environment for people to live in.
But wait, that would mean keeping the greedy bastards from getting richer from the suffering that we all must endure. This would mean that no longer could some jackass sell his commodity share at an inflated price simply because he anticipates increase in demand (price gouging, ahem).
This would mean that the world would have to stand up to OPEC and say "look, this is what we are going to give you, with the allowance for a potential annual increase at inflation".
I'm ready to stand, Are you?
Thursday, March 15, 2012
Governments are Beginning to Realize the Dangers of High Fuel Prices
In a move which seems to point towards key governments realizing that continued oil price increases will deflate the minimal improvement and perhaps derail the entire global recovery. MSNBC posted an article this morning pointing out that it is expected the US will request that Great Britain release strategic reserves of oil in tandem with the US to stem the incredible increase. It is also expected the US will request the same from other countries, although it is pointed out that many countries disagree with the release and site it should only be used in conjunction with a severe supply disruption.
Ok, while this seems like a good thing, we must understand that the increase in price is based on greedy speculators. These folks assume the summer months will increase demand in the US and around the northern hemisphere. They also assume that the Iranian embargo will greatly cut supplies. Again I point towards price gouging, but economists repeatedly state their is none. I think the big oil has the economists in their back pocket.
Regardless of their reasoning, be it political or just because they are good guys, The release of strategic reserves will ultimately drop the prices for a minute or two. As there is only so much in reserve, it will only hasten continued increase in prices based around greed. I think it is time we consider price control and punishment for those who use greed tactics.
The amazing thing is, all of these companies, Chevron, BP, etc. all try to deflate the anger by publishing documents which show us how the price of gasoline is affected and why it is costing so much. Yet they never say how much profit they bring in annually. If oil costs more, they can disguise their greed by inching the prices up, and then when the oil price falls they can lower the price of gasoline per gallon at a much slower rate, ensuring their increase in profits regardless of the situation. It is ridiculous for a fuel company to bring in Billions of dollars in PROFIT annually. Oh sure, they are going to say that they put it back into research and the sort, but when their CEO makes $2 Million in cash and another $20 Million in stocks and bonuses (this is 2008 by the way) it begs to question how much of that profit is steered into executives? We know these numbers are inaccurate and blurred as well so that the public can't quite get a grip on the reality of the situation.
Bottom line is this, we can release the strategic reserves to give us a temporary relief at the pump, but if we don't start regulating what these companies can charge, and do something as Radical as taking oil off the open trading market, then we will always be subject to this insane price for oil.
Hell, maybe I should start using fermented seaweed instead.
Ok, while this seems like a good thing, we must understand that the increase in price is based on greedy speculators. These folks assume the summer months will increase demand in the US and around the northern hemisphere. They also assume that the Iranian embargo will greatly cut supplies. Again I point towards price gouging, but economists repeatedly state their is none. I think the big oil has the economists in their back pocket.
Regardless of their reasoning, be it political or just because they are good guys, The release of strategic reserves will ultimately drop the prices for a minute or two. As there is only so much in reserve, it will only hasten continued increase in prices based around greed. I think it is time we consider price control and punishment for those who use greed tactics.
The amazing thing is, all of these companies, Chevron, BP, etc. all try to deflate the anger by publishing documents which show us how the price of gasoline is affected and why it is costing so much. Yet they never say how much profit they bring in annually. If oil costs more, they can disguise their greed by inching the prices up, and then when the oil price falls they can lower the price of gasoline per gallon at a much slower rate, ensuring their increase in profits regardless of the situation. It is ridiculous for a fuel company to bring in Billions of dollars in PROFIT annually. Oh sure, they are going to say that they put it back into research and the sort, but when their CEO makes $2 Million in cash and another $20 Million in stocks and bonuses (this is 2008 by the way) it begs to question how much of that profit is steered into executives? We know these numbers are inaccurate and blurred as well so that the public can't quite get a grip on the reality of the situation.
Bottom line is this, we can release the strategic reserves to give us a temporary relief at the pump, but if we don't start regulating what these companies can charge, and do something as Radical as taking oil off the open trading market, then we will always be subject to this insane price for oil.
Hell, maybe I should start using fermented seaweed instead.
Wednesday, March 14, 2012
Kuwaiti Oil Minister is Concerned
In an article published on UPI.com, it states how the Kuwaiti oil minister is concerned about the price of oil. His statements go on to say essentially, there is more than enough oil to meet demands and that the tensions in the Middle East (Iran) were partly to blame, but that $100 per barrel was more reasonable.
While I disagree with the amount he states, (I think more like $70 tops) the article goes on further to state that analysts are concerned that oil prices threaten the global recovery.
Duh!
I have been saying this for the last few years, and a the entire blog here is about that fact. With the rising greed associated with oil, we cannot bring ourselves out of this recession completely, and may in fact put ourselves back into it. While the oil prices might not have caused the recession, it damn sure made it worse and has harkened longer than expected recovery times. These times with persons out of work and seeking new employment hampered with the inability to put gas in their vehicles to go to interviews. That, or they could forgo the food needed to keep their families healthy.
And then the other issue, is it the Rich who are bearing the brunt of this increased amount of help that is required by these persons? No.
President Obama has touted this simple fact. The rich need to pay their fair share. Something brought up by Warren Buffett. It isn't a monetary issue, it is a percentage. If the normal wage earners are expected to pay this percent, then so be it the rich should pay the same percent, scaled to represent their wages. It comes down to why does an Oil Barren only pay a certain amount of taxes and then can breathe amongst is millions of annual income, while the person who makes 60K has to sweat it out because their pay was cut by 20%? Hell, that is only federal, most have to pay state taxes as well.
The fact remains, drop the oil prices, stop being greedy bastards, or the economy is going to tank yet again.
While I disagree with the amount he states, (I think more like $70 tops) the article goes on further to state that analysts are concerned that oil prices threaten the global recovery.
Duh!
I have been saying this for the last few years, and a the entire blog here is about that fact. With the rising greed associated with oil, we cannot bring ourselves out of this recession completely, and may in fact put ourselves back into it. While the oil prices might not have caused the recession, it damn sure made it worse and has harkened longer than expected recovery times. These times with persons out of work and seeking new employment hampered with the inability to put gas in their vehicles to go to interviews. That, or they could forgo the food needed to keep their families healthy.
And then the other issue, is it the Rich who are bearing the brunt of this increased amount of help that is required by these persons? No.
President Obama has touted this simple fact. The rich need to pay their fair share. Something brought up by Warren Buffett. It isn't a monetary issue, it is a percentage. If the normal wage earners are expected to pay this percent, then so be it the rich should pay the same percent, scaled to represent their wages. It comes down to why does an Oil Barren only pay a certain amount of taxes and then can breathe amongst is millions of annual income, while the person who makes 60K has to sweat it out because their pay was cut by 20%? Hell, that is only federal, most have to pay state taxes as well.
The fact remains, drop the oil prices, stop being greedy bastards, or the economy is going to tank yet again.
Monday, March 12, 2012
Central Bank has an odd decision to make
The federal dinanciers will be meeting to decide how they are going to work with the current recovery of the economy. http://money.msn.com/market-news/post.aspx?post=ead68a86-b853-4caa-a1ea-5541db065c2c reads that they will likely then decide how to work with the inflation rate that (what they don't say) is likely to be explosive yet again based on gas prices.
So how can the Central Bank do anything when lowering the interest rates hurts the government yet raising the interest rates hurts the economy because greedy ba*terds will take it as a dign to sell sell sell, of course the whole time oil prices will likely skyrocket, because, if Greece is any consideration, when in trouble, raise the price of the one thing everyone needs...Again with price gouging, but that was a previous post.
So here is what I would do in their position. exactly what they intend to do, nothing. The interest rates will remain unchanged and they will propose the next quarterly meeting results ahead of time to ease worries and frustration, then they will most likely issue a warning statement to the highers that continued increase in oil prices will lead to greater inflation and lower value of the American Dollar. Ahh, yes, if we tank, prices go even higher, the one thing everyone seems to be avoiding.
So how can the Central Bank do anything when lowering the interest rates hurts the government yet raising the interest rates hurts the economy because greedy ba*terds will take it as a dign to sell sell sell, of course the whole time oil prices will likely skyrocket, because, if Greece is any consideration, when in trouble, raise the price of the one thing everyone needs...Again with price gouging, but that was a previous post.
So here is what I would do in their position. exactly what they intend to do, nothing. The interest rates will remain unchanged and they will propose the next quarterly meeting results ahead of time to ease worries and frustration, then they will most likely issue a warning statement to the highers that continued increase in oil prices will lead to greater inflation and lower value of the American Dollar. Ahh, yes, if we tank, prices go even higher, the one thing everyone seems to be avoiding.
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