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August 31st, 2005

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11:18 am - Seventies redux . . .

gas prices

I just bought some gas today.

It cost $3.27 per gallon.

Yesterday it was $2.76.

The gas station attendant told me when I paid that the price was going up again tonight -- possibly by as much as a dollar a gallon.

When I bought my car in 1999, gas was around $1.20. I could fill an empty tank for $10 -- now that won't even pay for a quarter-tank.

I don't have a gas guzzler -- I have a station wagon that gets pretty decent mileage. Not an SUV. A station wagon.

The immediate cause of this price rise is being blamed on Hurricane Katrina, but that is merely a convenient excuse.

Given the length of time it takes for crude oil to be turned into gasoline and sold at the pump, there is no LOGICAL reason for these huge overnight jumps in price. Speculative fever in the oil markets and the futures exchanges is the REAL reason for the hikes -- traders are anticipating FUTURE problems with shortages -- problems that may not in fact materialize -- or may be less severe if they do indeed occur.

Unlike the 1970s, OPEC is not cutting supply -- in fact many producers are pumping as much as they can, at near full capacity. The issue here is more one of refining the crude into gasoline, diesel and other petroleum byproducts. Quite a few refineries in the world have had to shut down for varying reasons, thereby creating a bottleneck in the gasoline production line and fueling speculative fever about gasoline shortages. Certain developing countries, namely India and China, are also more of a consumer of oil than they were in the 70s, thereby increasing world demand. The US is often blamed for sucking up most of the world's oil supply, but that is not longer the case -- there are other culprits as well.

Currently, crude oil prices are hovering around $70 a barrel -- when adjusted for inflation, they are higher than at the time of the Arab oil embargo, but not yet at the inflation-adjusted peak of $90 a barrel that occurred in 1980. Not YET.

At around this time last year, oil was approximately half its current price. On fears of a severe winter, the price of crude began to climb. It has been climbing ever since -- occasionally leveling off or even dropping (for brief periods of time), but still on an upward trend -- one that shows no sign of stopping. The reasons given for the rise changed constantly in press reports -- anticipated weather conditions, a strike here, a refinery shut down there, the start of the summer vacation driving season -- at times, it seemed like the reporters in the financial press looked for a reason -- ANY REASON -- to give for the inexorable rise in the price of crude.

With winter coming, and Gulf area refineries both on- and off-shore damaged by the hurricane, I would not be at ALL surprised to see the all-time high for a barrel of oil met -- or even exceeded. Even with oil being released from the strategic reserves -- that only cushions the blow somewhat and slows the rise -- temporarily. Already there are reports of gasoline being rationed by wholesalers.

And this is where stuff starts to get scary -- really scary.

I am afraid -- terribly, terribly afraid -- that the US is about to relive the "stag-flation" of the 70s again. There are certain similarities between then and now -- the cost of oil, rising inflation, wages that have stagnated. The economy was in bad shape then -- and it is in bad shape now. And things are likely to get worse -- much, much worse -- before they get better. Americans are more heavily indebted and have less saved (on average) than in the 70s. More people have been relying on the rising value of their homes and pulling equity out of them to pay for various tchotchkas. With interest rates rising, the housing market is already beginning to cool. "Flipping" a piece of property for a profit is becoming harder, if it can even be done at all. Real estate is being financed increasingly with rather shaky financial instruments -- interest-only and adjustable rate mortages that are fine in a low-inflation-rate environment, but which are a recipe for disaster as interest rates rise and loans turn "upside down". The financial stability of many people in the US is shaky at best in a high inflation environment -- and that is what is approaching, as the increased cost of oil trickles down through the economy like acid rain, eating away at everything it touches, raising the cost of producing goods and transporting them to the consumer -- a consumer who has less to spend, given the increased cost of heating a home and driving to work. And upon the consumer is the entire American economy built -- the retail consumer is responsible for approximately two-thirds of ALL economic activity in this country.

Frankly, I think we are all up shit creek without a paddle.

There is one thing in this whole situation I find incredibly ironic. Incredibly, terribly ironic.

At the beginning of the Iraq invasion, there was a lot of rhetoric about how the war was being waged so that the US would have cheap oil. Yet now, two years later, prices are the highest they've been in a quarter-century -- and rising.

I therefore offer to you the words of the song "Falscher Heiland" by the German group Subway to Sally:

Falscher Heiland

Wir haben die Tage mit Beten verbracht,
wir flehten zu dir in jeder Nacht,
dein Wort vor den Augen, dein Bild an der Wand,
gedruckt und verbreitet im ganzen Land.

Du hast uns verraten, verkauft und verlacht,
hast niemals ein Wunder für uns vollbracht.
Es gibt nur noch Rache für deinen Betrug.
Es gibt kein Erbarmen - genug ist genug.

Du bist der falsche Heiland.
Dein ist der jüngste Tag.
Wir singen und wir tanzen
und pinkeln auf dein Grab.

Halleluja falscher Heiland!

Du hast uns gepredigt und Lehren erteilt,
hast niemals die Lahmen und Blinden geheilt,
hast Reichtum versprochen, hast Lügen erzählt
und hast uns mit heiligen Liedern gequält.

Im Glauben an dich zogen wir in den Krieg,
dort sind wir gefallen, es gab keinen Sieg.
Es gibt nur noch Rache, für deinen Betrug
es gibt kein Erbarmen, genug ist genug.

Du bist der falsche Heiland.
Dein ist der jüngste Tag ...

Halleluja falscher Heiland!

Wir werden dich suchen mit Engelsgeduld.
Wir werden dich finden. Du zahlst die Schuld.
Es gibt nur noch Rache für deinen Betrug.
Es gibt kein Erbarmen - genug ist genug.

Halleluja falscher Heiland!

False saviour

We've spent our days in prayer,
we plead to you every night,
your word before our eyes, your picture on the wall,
printed and prevalent all over the country.

You have betrayed us, sold us out und mocked us,
have never performed a miracle for us.
There is now but revenge, against your fraud.
There is no mercy - enough is enough.

You are the false saviour.
It is your judgement day.
We sing and we dance
and piss on your grave.

Halleluja false saviour!

You preached to us, gave us lessons,
never healed the lame or blind,
promised us affluence, told us lies.
and tortured us with holy songs.

In belief in you, we went to war,
there we fell, there was no victory.
There is now but revenge, against your fraud.
There is no mercy - enough is enough.

You are the false saviour.
It is your judgement day...

Halleluja false saviour!

We will search for you, with the patience of Angels.
We will find you. You count the crimes.
There is now but revenge, against your fraud.
There is no mercy - enough is enough.

Halleluja false saviour!

Current Mood: angryangry
Current Music: "Falscher Heiland" by Subway to Sally

(5 seeds eaten | Eat a pomegranate)


[User Picture]
Date:September 3rd, 2005 02:50 pm (UTC)
I just hope the winter isn't too cold -- a LOT of Americans might be faced with a choice of deciding which is worse -- going hungry or being cold. I feel particularly bad for the elderly, who are often on fixed incomes and may be unable to absorb the increased cost of heating their homes.

I'm also concerned that many working people -- even middle class ones -- will have to pay so much for gas to get to work that they have little left over to pay their heating bills and any increased costs of food and other supplies that have been passed along to consumers by companies dealing with higher transportation and production costs from higher pump prices.

Your concerns are right on the mark. So many Americans, poor and middle class, have been living paycheck to pay check or have, at most, only a couple of paychecks worth of savings. These developments could be devastating to so many people and families. It's very sad, frustrating, and angering.

I'm incredibly grateful for having a nearby job, living on the bus route, and being able to use our fireplace for heat, but I know that many are not so fortunate.

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