Replies to post #318594 on Zeev's Turnips Talk Politics (ZTTP)

[tlc]

William F. Buckley

August 12, 2005, 2:47 p.m.

Looking Ahead — Oil
What could happen if we continue to go as we are going.



Raymond J. Learsy has written a book memorable in the special sense that nightmares can be memorable, but also useful. If the nightmare is that you died of an overdose of drugs, and the memory of it causes you when in command to draw back from the marginal dose, then the nightmare has served a purpose. Raymond Learsy writes (his book is called Over a Barrel: Breaking the Middle East Oil Cartel) about what could happen if we continue to go as we are going. The price of gasoline as I write is 60 percent higher than it was a year ago. Such data require extrapolation.




After 200 pages of history and analysis, telling the story of the founding of OPEC (Organization of Petroleum Exporting Countries), of manipulations and broken promises and extortion and opportunism, Learsy acknowledges OPEC’s success. Sixty-dollar-a-barrel-oil is certainly a success, but the body on which it feeds does not expand, pari passu, with the successes of OPEC. It does not matter how much you consume, if the supplies are inexhaustible and your capacity, insatiable. But here is what we might be facing if oil rose to $100 per barrel.

I quote from the author. Commuters suddenly forced to pay $2.50 or more for a gallon of gas began to brown-bag their lunches, inching away from restaurants and sandwich shops. Americans who could still afford a vacation went on shorter trips, putting a major dent in the tourist industry. Trucking companies hauling everything from wines and spirits to furniture to automobile parts imposed a hefty surcharge on shippers, who passed it on to their customers, who then passed it further down the line to the retail buyer if they could.

The crunch forced many independent truckers to sell their rigs, playing havoc with both cross-country and local shipping. Higher fuel costs sent the U.S. Postal Service deeper into the red and threatened the survival of rival package shippers FedEx and UPS. With the break-even point for airlines a distant memory at $31 a barrel and carriers already operating with skeleton staffs, sharp fare boosts were the only option. Traffic spiraled into a tailspin, and one airline after another declared bankruptcy.

But of course, oil is vital to everything from plastic picnic forks to printer’s ink to asphalt. Manufacturers raised prices across the board, and potholes went unfilled in city streets around the nation. At first, municipal and factory employees lost overtime, then they were laid off or fired outright. Foodstuffs of every kind — from beef in the butcher case to fresh fruits and vegetables in the produce aisle to milk and cheese in the dairy section — reflected the higher costs incurred by growers and shoppers.

Runaway prices on just about everything took the Federal Reserve Board by surprise. Determined to keep interest rates low and dulled by their own assurances that inflation was somnolent, the Federal Reserve’s governors were ill-prepared for the economic crisis. The Fed belatedly boosted interest rates a full 2 percentage points. The heretofore unheard-of move jammed on the economic brakes so swiftly and so sharply that you could almost smell the stink of burning rubber. Higher mortgage rates stopped would-be home buyers dead in their tracks and cast a pall over the building industry. The real-estate market crashed almost overnight, wiping out billions of dollars of paper profits and putting holders of adjustable-rate mortgages and home-equity loans in peril. Foreclosures and tax-default auctions became common, consumer spending dried up, and soon the entire world was in a recession.

The rise in oil prices is not a fancy of Ray Learsy, and the unpredictability of that rise manifestly requires self-protection. How?

Again, quoting from the author.

First, we must cut back energy usage by taking steps to control demand (just as OPEC works to control supply).

Second, we must become energy self-reliant.

We should use the Strategic Petroleum Reserve (700 million barrels) to douse incendiary shoots of inflationary fire. Those uses of national oil would be loans, not grants; repayable in kind, when the price of oil had stabilized.

We will need to encourage alternative energy sources while adopting a voucher-based gas-distribution program.

For the duration of the emergency, gas users would have access to magnetic debit cards in which were embedded a national quarterly target of per-consumer gasoline. Drivers whose allotted amount of gas didn’t meet their needs could buy part or all of someone else’s allotment. For the average driver, this distribution plan would not increase gasoline costs. A consumer would pay the same out-of-pocket cash per gallon, and the government wouldn’t get its hands on any more of the taxpayers’ dollars. It is a more efficient way of distributing energy because it employs market incentives to allow heavier gasoline users to get what they need without increasing overall consumption of energy.

It was twenty years ago that the Saudis and the U.S. arrived at a deal. The Saudis would set prices so as to protect the U.S. oil industry. And the U.S. would protect the Saudis’ independence. We regret that, and should make the Saudis regret it also.
http://www.nationalreview.com/buckley/wfb200508121447.asp

[mlsoft]

wall...

With that, I agree. The guy made some good points and echoed the statements of a small but growing number of black leaders who call for blacks to reject the victim mentality fostered upon them by liberalism as represented by not only obama, but hillary as well, and learn to stand on their own two feet. Very many blacks are doing exactly that, but their leadership still wants the state to nurture them throughout thier lives.

As a minister of God, however, the guy was a total failure.

mlsoft