The Other Perspective: A Gouging Market

From The Progressive:

..."But the free market is not exactly in a textbook place right now when it comes to oil. Rather than having a multitude of ice cream parlors to choose from, the consumer can select from only a few oil companies, and they own not only the parlor but the cows and the dairies, too.

Plus, there's another big difference between ice cream and oil. The choice of having an ice cream cone is a luxury. Driving a car, for many of us, is a necessity."

And later...

"The real problem is legal manipulation of prices, says Tyson Slocum, acting director of Public Citizens Critical Mass Energy and Environment Program. The oil companies have gotten so big they don't need to collude anymore. Advances in computer modeling have really aided the ability of the big companies to game the market."

Still later, there's a reference to Arizona Clean Fuels as an example of a small company able to get permits to build a refinery in the face of stringent environmental regulations that "Big Oil" says prevents them from doing. Here's a little story that demonstrates the "friendly" environment even Arizona Clean Fuels must navigate through - before they spend $2.5 Billion (if they can raise it)!

Let's all face reality. This is not a FREE market, anyway you look at it. Big US oil companies don't only compete against each other. There are global competitors which have as much of an impact on the price of oil and gasoline as the "Big 5" (TotalFinaElf, Yukos, Lukoil, etc). There are also corrupt and greedy governments that control large sources of oil - not just in the Middle East - Venezuela and Russia for instance. Environmental and governmental regulation and internationaltarifff and quotas limit the free market. Add the appeal of rising options in the futures markets where institutional investment dollars have increased five-fold since 1999 and you've added a whole new dimension.

Blaming and penalizing the "Big 5" oil companies will make some FEEL better, but it won't lower anyone's bill at the pump.

Energy Policy for Idiots - A test

Arnold Kling of TCS Daily has a short test:

"Let's go s-l-o-w-l-y. Start by asking yourselves these questions:

Should the goal of U.S. energy policy be to raise long-term domestic energy production, or to reduce long-term domestic energy production?

Should the goal of U.S. energy policy be to increase profits earned by Iran and other foreign producers, or to reduce their profits?

Should the goal of U.S. energy policy be to increase consumer demand for gasoline, to leave consumer demand alone, or to reduce consumer demand?

Did you answer 'raise long-term domestic energy production,' 'reduce profits of foreign suppliers,' and 'leave consumer demand alone' or 'reduce consumer demand'? Very good! Those are very sensible answers. Before reading further, go back and repeat the questions and the answers five times, to make sure that they stick in your mind."

Later in the article, he makes a point that some may find hard to swallow:

"Congress wants to treat American consumers like children, who should not have to deal with reality when it comes to the supply and demand for gasoline. It might be better to treat consumers as adults, and let us make grown-up decisions. These grown-up decisions probably will serve the country's interest more than the infantile energy policies now under consideration."

Maybe it's time for some to grow up.

Once again, Thomas Sowell to the rescue

Thomas Sowell does such a wonderful job communicating the REALITY of most issues that it is therapeutic to read him regularly:

"Is it rocket science that, when oil prices hit new highs, gasoline prices also hit new highs? Do you think the price of wheat could double without the price of bread going up? Would we have politicians running around spouting off about 'gouging' by Big Wheat? "

And later...

"Ironically, the people who are making the most noise about the high price of gasoline are the very people who have for years blocked every attempt to increase our own oil supply. They have opposed drilling for oil off the Atlantic coast, off the Pacific coast, or in Alaska. They have prevented the building of any new oil refineries anywhere for decades.

They have fought against the building of hydroelectric dams or nuclear power plants to generate electricity without the use of oil. They love to talk about their own pet "alternative energy sources," without the slightest attention to what these would cost in terms of money, jobs, or our national standard of living.

Even when one of their pet "alternative energy sources" -- windmills -- is proposed to be built near them, suddenly it is not right to spoil their view. Politicians have indulged these spoiled brats for generations. Now, when the chickens come home to roost, they are screaming about high prices and Big Oil. That is world class chutzpah."

The man is a master!

Blogging again

The recent polls and stories about why people blog have stated that many use it to track their thoughts and provide them cheap therapy. I fall into this category. Certain issues get to the point where I just need to vent, and the blog works for that.

The current "issue" is high gas/energy prices. (As you may see in future posts, I don't blame big oil for this "crisis" like most people and the MSM)

Other issues that bubble-up for me include politics/election (like many); global warming; and hypocrisy (a wide and ranging topic).

Oh, By The Way...

WSJ.com:

"U.S. Economy Grew at 4.8% Rate In First Quarter, Fastest Since 2003"

No media bias here

The Today Show - today. Three stories.

1. $1,000 commuters: the story of commuters in the D.C. area who spend $1,000 or more on gas per month. One gentleman spends 7 hours a day in his car, 5 days a week! Now forgive me, but the last time I checked, we don't live in a communist state where we are told we must live and work. This is an individual choice. Clearly, this person wants to live where he does - for probably personal, family related reasons. He also must enjoy his job and is willing to endure this (I didn't get the impression this commute just recently started. He seems to have been doing it for some time.). The story concluded - of coarse - with Matt Lauer discussing the oil companies 7-11% profits in the face of this crisis!
2. The sole survivor in this last winters mine collapse send a letter to the families of the deceased. In the letter, he details the last hours and how the accident happened. He also claims that four of the five oxygen tanks didn't work. NBC seemed intent on making this point clear. The company has claimed that they tested the equipment after the accident and that all five were operationally. It was also stated that the survivor has not been able to meet with company investigators to discuss the accident because he is still too weak. Apparently not weak enough to meet with Matt!
3. Finally, the Clooneys: I only caught the lead-in (fortunately I needed to leave for work - my 6 minute commute by bicycle!) but apparently George and his dad Nick have just returned from their dangerous trip to Darfur where they witnessed the atrocities firsthand. No doubt, this is all the fault of George Bush! Certainly not the UN (see previous posts) During my 6 minute ride, I considered a different problem with the Sudan: the dictator is too weak. Under Saddam, we didn't have left-leaning, Hollywood types traveling to Baghdad to witness the atrocities there. We also don't have appearances on morning shows discussing the human rights violations and atrocities under Castro in Cuba. Mau was a hero. Even Stalin had his moments for the left.

No, MSM is not biased. I must remember this.