Senator McCain, Respctfully, STFU!

Well, now here's an intriguing little political performance art piece:

The Ad: (Narrator) Gas prices -- $4, $5, no end in sight, because some in Washington are still saying no to drilling in America. No to independence from foreign oil. Who can you thank for rising prices at the pump?

(Chant) Obama! Obama!

(Narrator) One man knows we must now drill more in America and rescue our family budgets. Don't hope for more energy, vote for it. McCain.

(transcription of John McCain ad, via the WaPo)

Now, John McCain himself has opposed off-shore drilling and some of his Republican gubernatorial friends oppose it, like Arnold Schwarzenegger. It has only been recently that McCain has called for drilling offshore. He still supports a ban on drilling in ANWR.

You've all heard the reasons to debunk this trope: it will take no less than ten years for that oil offshore to reach American consumers, by then gas will be $15 a gallon anyway, and no one will be driving cars, and that means there will be windfall profits for oil...oh. Yea. That.

Hm. Offshore oil exploration, hell, ANY oil exploration, is a near-losing proposition when oil is cheap. You milk, errr, pump, the cash cow you have for all its worth when oil is around $20 a barrel, which means you have shortfalls when prices rise rapidly, as they have over the past ten years.

This is why, in 1998, you actually started to see advertisements on TV from ExxonMobil talking about how hard it is to find new oil, but they'll expend the money now to bring you more in the future. Their long-range forecasts had clearly shown that gas and heating oil prices would start a precipitous climb.

As early as 2001, I recall reading market analysts' reports that showed gasoline selling at $5 a barrel by 2009 (we're close), and $15 a gallon by 2015.

This was back when gas was $2 a gallon and that was consider inflationary. A barrel of oil in 2001 sold for $23 (in 2001 dollars). Now, it's $100 more expensive.

Forget that this is about oil companies continuing an unbroken string of profits that make Donald Trump green with envy. This is Big Oil's last hurrah in the US: "cheap" oil that will be a ready source when oil becomes almost as valuable as silver, ounce for ounce.

In other words, oil will be selling in "precious metal" commodities territory.

Naturally, none of this would help you today, tomorrow, this week, this month, this year, or this lifetime. To suggest otherwise is ludicrous. By the time this oil is extracted and refined, most of us will be riding bicycles to work like the Chinese, who will have our oil anyway!

Not a bad thing, in my opinion, since I just bought this little honey yesterday... :-)

Normally, I Might Agree With Him, But...

From the AP:

Democrat Barack Obama dismissed his rivals' calls for national gas tax holiday as a political ploy that won't help struggling consumers. Hillary Rodham Clinton said his stance shows he's out of touch with the economic realities faced by ordinary citizens.

Clinton and certain Republican presidential nominee John McCain are calling for a holiday on collecting the federal gas tax "to get them through an election," Obama said at a campaign rally before more than 2,000 cheering backers a week before crucial primaries in Indiana and North Carolina. "The easiest thing in the world for a politician to do is tell you exactly what you want to hear."

I could go off in a direction that attacks Obama and point out how ludicrous it is for the "agent of change" who has voted for the Iraq invasion each and every time he's had the chance to vote on it,and "unifier" who has spent all campaign smearing arguably the most qualified candidate for President to talk about pandering, but that's not what I want to focus on.

No. Substance. Normally, I'm all for the gas tax, and indeed, have often thought it should be raised to cover infrastructure repairs and to encourage folks to buy smaller cars.

But here's a gas that impacts directly poorer Americans. Any increase that I've ever proposed has always included measures to try to get a rebate of the increase to those Americans who can afford it the least: the rural working class, who absolutely need their cars and can't afford an immediate purchase to trade up in mileage.

The idea behind progressive taxation is to shift the burden of taxes onto those who can best afford them. Taxes like the gaas tax are regressive: rich people don't drive anymore or less than poor people do.

And it's not like a sin tax, which while regressive, is avoidable with minimal expense to the person it impacts.

Too, Clinton attempts to balance the tax cut with a windfall profits tax, and you'll note the distinct silence from Congress as gas prices have skyrocketed and oil company profits have broken through the ceiling.

And this is the Democratic Congress we're talking about!

Obama is wrong here in that this is not pandering, but a recognition of reality: it's going to be hard enough to get farm workers to their jobs in the field, but this tax suspension will also help keep a lid on food prices, and how is that hurting America?

Once we've gotten past this summer, when sticker shock will have settled in and we can clear-eyed talk about what to do long term, then Senator Obama can introduce legislation to provide both environmental and economic relief to the American people.

In the meantime, he should let the lady speak.

Soon, The Fun Begins....

Not much to say about this event, except I told you so...

LONDON (Reuters) - Oil sped above $98 a barrel for the first time on Wednesday, closing in on the landmark $100 level, driven by a slumping dollar and worries over a winter fuel supply crunch.

Analysts said it was only a matter of time before oil hit triple digits, with evidence of tightening stocks aiding a nearly 8 percent rise over the past two weeks alone.

"We're going to get $100 before too long," said Kevin Norrish of Barclays Capital.

The only surprise in this story for me is that it's happening about two months earlier than I anticipated. I assumed that OPEC would keep the price down until after the Christmas shopping season, in one of their usual gestures to the Bush presidency.

Little did I imagine that China would become such an influential player so quickly this year, and that the Iran crisis would piss off even the Saudis so much.

The peak per barrel price (adjusting for inflation) came during the 1979-1980 oil crisis. Today, that per barrel price was $101.70. We ain't far away, and that crisis helped topple a President and helped create stagflation, the twin punch of inflation without economic growth, and interest rates at record highs (the prime ended up at 20%!).

Now, of course, our oilmen in the White House have this all figured out, right? I mean, these guys are the experienced pros in this area and they ought to be able to formulate some policy that will help lower prices.

Right?

"Oil prices are too high," said spokeswoman Dana Perino. Oil sped above $98 a barrel for the first time on Wednesday, driven by a slumping dollar and worries over a winter fuel supply crunch.

...as she turned slightly sideways to reveal her perky breasts to the press gaggle, while she plotted to get away from the Three Bears. She sounds like Dumb Blonde Barbie here.

It's not like this was an uncertainty, $100 a barrel. In fact, it was inevitable based on the laws of supply and demand. On The McLaughlin Group, Mort Zuckerman, a fairly astute businessman, all but said we are heading for a depression the likes of which this country has never seen.

Let me repeat that last bit: the likes of which this country has never seen. That says a lot. Zuckerman is no raving maniac in the desert of finance. He owns US News and World Report and the NY Daily News. I think we can assume he's somewhat conservative in his thinking.

And it's starting to be seen at the pump. Gas is up 16 cents over the past two weeks, averaging just under $3.00 for a gallon of regular. Just in time for the holiday season, the time when retailers make their profit margins for the entire year.

This is not going to be pretty. The lag time between oil spikes and gasoline spikes is now in motion. $3.75 a gallon is a nasty Christmas present.

Go Figure

The more things change, the more they stay the same:

Fuel thirst deepens despite more mass transit

NEW YORK (Reuters) - Lofty gasoline prices have helped push public transit ridership to the highest level since the country spawned its highway system in the 1950s -- but the growth is not enough to drive down demand for motor fuel any time soon.

U.S. public transportation use rose to 10.1 billion rides last year, the most since 1957, when President Dwight Eisenhower signed the interstate highway bill into law, according to the American Public Transportation Association, an industry group.

The trend toward public transit has been driven in part by high retail gasoline prices, which have hit levels above $3 per gallon each summer since hurricanes damaged oil production and refineries along the Gulf of Mexico in 2005.

Now, you gotta figure, with more people riding trains and buses, there might be fewer car trips taken, right?

Um. No.

Even so, the increase in transit use won't put the brakes on rising U.S. gasoline demand, mainly because only about 5 percent of workers who commute in a motorized vehicle use public transport, said Pisarski.

This year gasoline demand is running more than double 1957 levels, according to the Energy Information Administration. U.S. gasoline demand was more than 292 million barrels in May, the last month for which data was available, up from nearly 118 million barrels in May 1957.

Fuel demand is rising as car owners increase personal and business trips, said Pisarski. And people are increasingly both living and working in suburbs, a trend that is hard to service with public transport, he said.

Which may be true, of course. The traffic in suburban areas is noticeably higher than even five years ago. Here in New York, there's been a huge debate in Nassau and Suffolk counties about what to do to improve the load-bearing capacity of highways that don't come anywhere near the city.

The problem? Residents of these counties around the nation moved to the suburbs specifically to get away from the smells, the smoke and the asphalt of the city, so they are foursquare against any kind of improvements. Factor in that many if not most of these exurban areas are already fully developed, leaving precious little land that the county can seize and use to expand the road system anyway, and you begin to see the scope of the problem.

This exodus of jobs from the cities to the suburbs is a pretty recent phenomenon. Although the trend was in place before 2001, the terror attacks of September 11, coupled with the subsequent deliberate manipulation of information by the Bush administration to paint a picture that urban centers were constantly under the imminent threat of attack, created an environment that pushed employers to leave the cities in droves.

This is also reflected in housing prices. For example, a recent study showed that the type of rise in real estate values normally experienced in Manhattan had been occuring in Queens, Brooklyn, Nassau and Suffolk counties, too. Why commute by bus or rail across half the city to your job, when if you move off the island, you can buy a car and drive yourself to work?

And there's a big part of the problem, right there: the fact that, given a choice, more people prefer to be alone on their way to work than to be subject to the whims of a public transit system. In the city, it may be the most efficient and fastest way to get from point A to point B, but that's because it has a budget big enough from a large enough tax base to provide continual and frequent service particularly at rush hours, but also frequent enough away from rush hours that putting in overtime at your job isn't a tragic inconvenience.

Suburban systems would have to rely on a rider base that is far less densely packed together than its city counterpart and the buses (presumably) would have to cover a far bigger area in order to pick up the same number of people that a city bus does. Those two factors alone would make it impossible to achieve the level of service that a city transit system has.

Right now, suburban mass transit is mainly focused on getting people to the city. It would be hard to justify altering many routes to include intrasuburan commutes, but in saying that, it's also important to recognize that many of the suburban office centers themselves are near rail stations or in towns that are feeders to the big city, so it theoretically could be done.

Me, I love the subways. I also love my (dear departed) car, as well. I don't mind taking a train to work (it's only a twenty minute commute) since it afford me a chance to read a little, or even think about what I'm going to yammer on this blog. Driving into Manhattan would only leave me scarred emotionally.

I do understand the appeal, however.

This is a tough nut to crack, to be sure, but it's important. In an era when it's become patently clear that we must wean ourselves off the fossil fuel bottle, we find ourselves using more and more of it.

Humans is funny peoples.