Mad Max Nailed It

Care for a breath mint, Hal?

Double Dip

Rising Oil Prices Raise the Specter of a Double Dip

Sustained and significant rise in oil prices WILL derail the U.S. economic recovery by stirring inflation and putting the brakes on spending.

Oil futures touched $100 a barrel at the New York Mercantile Exchange — the highest since before the financial crisis hit in late 2008 — before pulling back. Note, this is WHY there was a financial crisis in 2008.

Pricier oil drives up the costs of everything from gas at the pump to the raw materials used to make nylon and food packaging, because we make everything out of oil. That could mean higher inflation and prompt consumers, who lately have shown more willingness to spend, to cut back their purchases. Duh.

Oil prices have risen 7.35% since the beginning of the year, while gasoline futures have risen 10.67%.

The question now is whether turmoil in the Middle East and Northern Africa could lead to a sustained cutback in production or delivery disruptions that could drive those prices much higher and push the U.S. as well as other countries back into recession. Supply-driven oil shocks, like the ones that came with the 1973 oil embargo and the 1979 Iranian revolution, were factors in past recessions. See, some people do read history books around here. Too bad we don't learn from them.

Most economists reckon that the price of oil would have to rise to at least $120 a barrel, and stay there, to threaten the recovery. Let's see where those economists are when it's close to $200, and ask them some useless questions then.

Savior or Fraud?

This is either another Cold Fusion - or it's the Manhattan Project

UK-based Cella Energy has developed a synthetic fuel that could lead to US$1.50 per gallon gasoline. Apart from promising a future transportation fuel with a stable price regardless of oil prices, the fuel is hydrogen based and produces no carbon emissions when burned. The technology is based on complex hydrides, and has been developed over a four year top secret program at the prestigious Rutherford Appleton Laboratory near Oxford. Early indications are that the fuel can be used in existing internal combustion engined vehicles without engine modification.

According to Stephen Voller CEO at Cella Energy, the technology was developed using advanced materials science, taking high energy materials and encapsulating them using a nanostructuring technique called coaxial electrospraying.

“We have developed new micro-beads that can be used in an existing gasoline or petrol vehicle to replace oil-based fuels,” said Voller. “Early indications are that the micro-beads can be used in existing vehicles without engine modification.”

“The materials are hydrogen-based, and so when used produce no carbon emissions at the point of use, in a similar way to electric vehicles”, said Voller.

The technology has been developed over a four-year top secret programme at the prestigious Rutherford Appleton Laboratory near Oxford, UK.

The development team is led by Professor Stephen Bennington in collaboration with scientists from University College London and Oxford University.

Professor Bennington, Chief Scientific Officer at Cella Energy said, “our technology is based on materials called complex hydrides that contain hydrogen. When encapsulated using our unique patented process, they are safer to handle than regular gasoline.”

Of course I'm skeptical. That's my nature. And as excited as I am about shutting down all dollars and reason for humanity to stay in the desert that we call the Middle East - that $1.50 gasoline will still be hovering close to $5.00 a gallon when the politicians get their taxing hands on it. Europe and in the US.

And upon further review - the company's website; their claims are not nearly so optimistic as the ones in this article. Here

Still, this really could be a game changer for humanity.

Little Electric Lie

It seems that GM wasn't exactly truthy about the 'all electric' Jesus Car that was being called, well, the Jesus Car.

According to JALOPNIK.com...

The Chevy Volt has been hailed as General Motors’ electric savior. Now, as GM officially rolls out the Volt this week for public consumption, we’re told the much-touted fuel economy was misstated and GM “lied” about the car being all-electric.

In the past, and based on GM’s claims, we’ve gone so far as to call the Volt GM’s “Jesus Car.” And why wouldn’t we call it that? We were told the Volt would achieve 230 MPG fuel economy and would always use the electric drivetrain to motivate the wheels — only using the onboard gasoline engine as a “range extender” for charging the batteries. It now turns out that not only were those fuel economy claims misleading, but the gasoline engine is actually used to motivate the wheels — making the Volt potentially nothing more than a very advanced hybrid car and pushing some automotive journalists like Scott Oldham at Edmunds.com to claim “GM lied to the world” about it.

Of course General Motors has made a response to these revelations... which can be found here.

But it begs the question - can it be called the Jesus Car anymore? How about we call it John the Baptist car?

The only real solution to get off the electric car is obvious - nuclear. Okay, it's a joke, but I'm not kidding... what, like bicycles and trolleys or a robust rail option aren't just as preposterous a suggestion?

Gas Tax Increase

Democratic Senate and House 'leaders' have agreed on a 300 percent increase in the oil excise tax. Get off your chair. It means, 32 cents a barrel from the current 8 cents.

The hike is as part of the tax and spending bill likely to be approved this week. So you can expect gasoline prices to rise down the road. Very Chicago.

The tax pays for the Oil Spill Liability Trust Fund, which now totals about $1.6 billion. The fund will likely be decimated by the economic damages arising from the BP oil spill. But, but, wasn't BP going to be solely responsible for... the... spill?

The new rate would be effective in the first quarter that begins 60 days after the bill is enacted, which could mean this October. It would last through the end of 2020.

The tax increase, which was included as part of a broader package that also extends jobless benefits, would be effective through the end of 2020. There is no way it won't get passed, in other words.

Ironically, some oil industry executives actually want a tax increase, hoping it will forestall efforts to raise the liability cap on companies responsible for offshore disasters. Joke's on them. Congress will tax and then hit the oil companies with the liability cap. But not until they take a couple 'meetings' and fundraisers from oil barons.

As for gasoline prices, the recent 20 percent drop in crude oil provides a positive note for consumers near-term.

"We expect retail gasoline prices to fall even as Memorial Day approaches," Tancred Lidderdale, a senior economist at the federal Energy Information Administration.

My recommendation would be to stock up on that gasoline - but it doesn't store too well. So instead buy a bike.

Efficient Car Rope-a-Dope

How do you save a dying auto industry in the Obama administration? Step 1, Create federal regulations virtually eliminating the production of the models people most want to buy. (linko)

No, I don't mean Honda, Toyota and VW, snarky.

It looks, simply, that he's applying California standards to the nation. I had always assumed that this would be the case some day. The new national fleet mileage rule for cars and light trucks of 35.5 miles per gallon by 2016. In the odd chance you're wondering, the current national standard is about 25 miles per gallon.

This is a political rope-a-dope. Rather than institute a $2.00 Federal Gas increase - which would have accomplished this goal in the marketplace rather than through government intervention - will put the initial burden on the car manufactures. [Those car manufacturers that are around] In 2016 will happily slide the costs to implement these Federal standards onto your MSRP. So you'll see at least an additional $1,300 added on your next vehicle - but we'll feel good about not paying more tax on gas. That's one tax increase that Obama has dodged, but still gets what he wants. 

A nice maneuver. Smoke and mirrors, and there is no real change.

Chavez seizes oil service firms

In an attempt to recreate the opening chapter of Atlas Shrugged, and to show America the next step in 'real' socialism - Venezuelan President Hugo Chavez has sent the troops in to take over companies that provide services for his oil industry.

"This is a revolutionary offensive," he told workers near Lake Maracaibo, Venezuela's main oil-producing area.

Military vehicles were used as the state oil company [You'll remember that Mr. Chavez nationalized his country's main oil assets two whole years ago] seized supply boats and two US-owned gas facilities. It seems the dip in oil prices put his finances under pressure?

The move places hundreds of boats, several ports and an estimated 8,000 oil workers under state control.

My thought on is that on the surface he'll save some money - at first. However, no one with half a brain will invest or build infrastructure in Venezuela - if such a person still existed? The revenues eventually lost by the lack of service providers to Venezuela in extraction, support, and transport will eventually cost him more than he's gaining on this take over move. The Oil companies will simply wait out the rest of Mr. Chavez's political life - they are very patient people. And seeing as how (in my useless opinion) he will eventually drain the pocketbook quicker - his political life is now significantly shorter.

If you would like to help end Mr. Chavez's reign of terror on his people, I recommend that you stop filling up at Citgo stations. Citgo is incorporated in the US, but is owned by Venezuela.

Vote with your pocketbook.

"Illinois Workers Suck"

PEORIA, IL. -- U.S. Transportation Secretary Ray LaHood is disputing claims by the president of an energy company that the former Illinois congressman (of Peoria, a UAW compound) is the source of comments claiming Illinois workers have an "awful" work ethic.

Globe Energy LLC president David Jones said LaHood told him a few years ago that Illinois has a bad reputation when it comes to work ethic. Jones said he has found it true that Illinoisans' have a questionable work ethic.

LaHood said Wednesday that Jones' claim he made the comment was "baloney."

LaHood said he met with Jones several years ago when Jones was attempting to establish Globe Energy, an English company, in Peoria. The company provides energy saving technology to commercial firms.

The controversy comes as Jones tries to expand Globe Energy's staff in Peoria by 50 people.

You'll also remember that last time LaHood made national news was when he wanted to tax everyone by the mile, not the gallon of fuel consumed.

My immediate reaction to this comment is that Obama is following Warren G Harding's Presidency over Lincoln or Cater. Remember, Harding is reputed to have said: “I have no trouble with my enemies, but my damn friends, my God-damned friends… they’re the ones that keep me walking the floor nights!”

Allow me to translate...

As I was looking for interesting articles and happenings of the day, I came across this article. I was a bit puzzled by the language. So I deconstructed it with the power of my feeble mind. Allow me to share this information with you in (special italic Cap'n text!)

Ford Finally Shifts Focus to Offer More Fuel Efficient Vehicles In the U.S.
(The word 'Finally - this is an unnecessary word. Finally shows writer's bias. I now know that the writer is a Kool Aid Slurping ClimateFaith thumper)

Ford Motor Company's two-decade obsession with selling Americans millions of gas-guzzling SUVs and pickup trucks is finally waning.
(No. Ford Motor Comany sold millions of products that millions of Americans wanted. They no longer want 'gas-guzzling' products since 'gas-guzzling' is not as affordable. Plus, the word finally is used again. As if Ford was forcing only these products onto their customers.)

The company announced plans to drastically shift its focus to building more fuel-efficient cars. Ford plans to convert three of its North American assembly plants from producing trucks to cars, and to realign its factories to manufacture more fuel-efficient engines. Ford will also begin domestic production and sales of six of the car models it currently sells only in Europe.
(Simple meaning, supply and demand is forcing a business re-alignment. And according to the information, Ford has been focused on selling fuel efficient cars, has been building them, but can only SELL them to their European customers.)

Many Americans are reacting to high gas prices by purchasing smaller, more fuel-efficient vehicles, and since Detroit had little to offer to meet those priorities, Japanese automakers have capitalized on surging consumer demand for their more fuel-friendly cars and hybrids.
(Yes, this information is true. However, Ford OWNED the SUV and especially the American Truck markets, which has a much higher profit margin than sedans and small vehicles. Why would Ford build unwanted sedans and small cars when they can sell more trucks, and more importantly at much higher profit levels than sedans or small cars? They didn't. But they are now.)

Ford posted the worst quarterly performance in its history this week, losing $8.67 billion in the second quarter. The company lost $15.3 billion in 2006 and 2007 combined. Ford slashed more than 40,000 jobs in the past three years, and sold off three of its European luxury brands to raise money to cover the losses from declining SUV and truck sales.
(This paragraph illustrates my point exactly. There's less profit because there are fewer SUV and truck sales. There is less profit for two reasons, the insane amount they were making on the SUV and truck sales, and when that market dried up, they had less product in the sedan and small lines, and the Japanese automakers do. Double whammy. Perhaps they expected gas prices to level off?)

The company is faring only slightly better than General Motors, which is facing the possibility of bankruptcy thanks to Detroit's collective gamble that Americans would keep buying big trucks and that gas would remain cheap. Honda announced record profits for the quarter, and Toyota beat General Motors in worldwide sales in the first half of the year, setting a pace to strip GM of its long-standing title as worldwide auto sales leader.
(The language here is a bit harsh - collective gamble? The writer is comparing one of the largest American corporations to my degenerate Uncle Vick? It is not false information though, but the wording leaves an aftertaste. And in the final paragraph, there is a little hint of recognition of supply and demand and economic forces at play. However, it does not redeem the writer for insinuating that Ford forced Americans to buy Stupid Useless Vehicles... They did that on their own. And Ford was there to sell 'em what they wanted.)

(Omissions? How long does it take a battleship of a corporation like GM or Ford to turn around their organization to deal with changing market forces or fads? I'm going to guess about 3 years? Maybe 5? That might have been helpful in this article.

Look, I don't like Ford. Haven't since I was a kid... in Detroit! It still doesn't make the author of the original article less of a biased jerk-off who should probably be writing commentary, not business articles. And shame to the editor who let this language pass. If I want biased crap I'll listen to talk radio or watch the CBS Nightly News.

Perhaps the article should have read: Ford changes gears to shift Focus on fuel efficient fleet Fusion. Oh, then it's just an ad for Ford? I disagree, as I think this evokes the standard AP copywriter's equivocation and witticism. The debate continues in the comments bar.)

Assume the Gas Tax Position

How about those gas prices? They hittin' you yet? Yeah? Me too.

But our friends, the Congressional Democrats, think gas taxes are too low, and four-dollar-a-gallon gas is too cheap. A story in the AP headlined: "No gas tax holiday: Congress considers raising pump tax to help repair crumbling highways."

Reporter Jim Abrams found that "Now, lawmakers quietly are talking about raising fuel taxes by a dime from the current 18.4 cents a gallon on gasoline and 24.3 cents on diesel fuel." But the lawmakers he cited were Reps. James Oberstar and Peter DeFazio, both Democrats.

The AP story gives no indication of how many current highway dollars are spent on earmarks, pet projects (pork) or the fact that the highway budget is simply increased every year without so much as the batting of an eyelash.

Just three years ago, that trust fund enjoyed a surplus of $10 billion. Even without a tax freeze, the fund is projected to finish 2009 with a deficit of $3 billion. That that could grow as Americans drive less and buy less gas because of higher pump prices.

The consequence is that only about $27 billion in federal money will be available next year to states and local governments for new infrastructure investment even though the current highway act calls for spending $41 billion a year. For many, the solution is to raise rather than suspend or cut federal fuel taxes, which haven't changed since 1993.

Now, gentle readers, it has taken a LONG time for me to get used to the idea of a usage tax. But I have. I use the Interstates, and some toll ways and for that I should be taxed for the use and maintenance of those roads. I do not agree that gas taxes should be used for anything except roads, because I've bought into the premise that gas is what pays for the Interstate. In other words, don't touch that cash for rail - and fix the goddamned roads. And do it quickly!

However, the story just listed some goals:

Oberstar, D-Minn., said his committee is working on the next long-term highway bill. He estimated it will take between $450 billion and $500 billion over six years to address safety and congestion issues with highways, bridges and transit systems.

"We'll put all things on the table," Oberstar said, but the gas tax "is the cornerstone. Nothing else will work without the underpinning of the higher user fee gas tax."

At the very least, the gas tax should be indexed to construction cost inflation, DeFazio said.

The rest of the article explained how Americans pay hardly anything for roads compared to the Europeans in Europe. Typical. So in order to offset those differences they will...

...gradually increase the current federal fuel taxes to 40 cents a gallon.

The American Road & Transportation Builders Association is calling for a 10-cent-a-gallon raise and indexing the tax to inflation. With construction costs soaring because of competition for building materials from China and other developing nations, the tax rate would have to be about 29 cents a gallon to achieve the same purchasing power as the 18.4-cent rate imposed in 1993, the association says.

And then there was this little stinger at the bottom, almost an afterthought:

Other ideas that will be on the table when lawmakers write a bill next year including more toll roads and public-private partnerships, congestion pricing and user fees where drivers pay a tax based on how many miles they drive.

Uh, how is that not insane? When they also allow people to take a deduction based on how many miles they drive? That offsets, doesn't it? Like I said, I'm for usage fees... not NEW usage fees. If there is less money coming in because people are (gasp!) not driving as much then logic dictates that there's less usage for those roads? Sure they're still crumbling into dust. Sure the Interstates were nothing more than Ike's guarantee that the Nation wouldn't plunge into another Depression.

But, shouldn't Congress have a system in place to anticipate less usage, or slash silly pork barrel projects... WHO AM I KIDDING?!!?

Perhaps it's just time we broom out all these idiots? I like that idea much more.
Problem is, with Congress, everyone hates Congress, but loves THEIR guy.
That's the uphill battle that needs to be fought.

Vote 'em ALL out, and that starts in your home district.
Perhaps I'll steal an environmental slogan...

Change the Nation, Vote local.

Not very catchy, is it? Maybe it needs to be more bold? More radical?

Hey Ho! Status Quo! Incumbent is the Way to Go!

$7 Gas - Soon

Wired is reporting that Gas will be $7.00 per gallon in the US by the end of the year.
That means that a drum of oil will be about $200.00.

I have often thought that it would take a very quick spike in gas prices to make 'Mericans change their gas-use habits. In fact, I even wrote about it already (surprise) If it was too gradual, people would still bitch and grumble - but would take it easier. If we hit 7 before the end of the year - you're going to see some minor changes, and eventual shifts in culture. If it goes higher, and quicker, then you'll see bigger changes - however, I don't know how permanent they will be.

First, thought though, is the price of Diesel fuel - and I really wish Killre could illuminate this to the readers as he has a front line perspective of this issue. Baring his point of view - a typical truck filled with crap from China or Oranges from California costs about $1000.00 to fill-er-up. If you don't think that matters to you, I will recommend you eat an orange or a pineapple now on the first of May, because while you may still see them at your local grocery store, it'll probably cost $8 bucks. If you're bitchin' about $3.75 gas, no way you're buying an $8.00 pineapple.

So food prices will increase - because of the cost to make and transport it. And the US is plowing over rye and wheat to make more corn to make fuel...
Fuel is going up - Because it's a commodity that is traded back and forth based on speculation -or guesses based on other people's guesses. A very large bluff at a poker game.

But when will people actually sell their Lincoln Navigators and sell their homes to live closer to their place of employment? At what price is the tipping point for the box stores and the far-away suburbs turn into ghost towns? No really, I want to know!



It is possible that some folks will just go out and buy another car. They'll get that Prius and park it next to their Hummer2. That's what happened in the 70's. Some might even tele-commute. Perhaps it won't be as bad as they're making it out to be? Or we'll be plunged into a depression that we'll only be able to climb out of once we start WW5.... or aliens.

Something like that.