Yes, those are real words meaning
to talk meaninglessly or inarticulately. Ben Bernanke told
Congress on April 27 that the Fed’s policy-making committee
might pause temporarily in its two-year campaign to raise
interest rates. Mr. Bernanke said, “At some point in
the future, the committee may decide to take no action at
one or more meetings in the interest of allowing more time
to receive information relevant to the outlook.” He
then went on to say, “Of course, a decision to take
no action at a particular meeting does not preclude actions
at subsequent meetings.” what?
More gibber jabber. It must be an election year. Congressmen
and women are falling all over themselves bemoaning high gasoline
prices. Solutions range from giving a $100 rebate (like using
a squirt gun on a raging fire), to applying a windfall profits
tax on oil companies (which would remove money that would
be used to explore and drill for new oil), or to suspending
the 18.4 cents per gallon federal gasoline tax (but only through
September 30). As to investigating price gouging by the oil
companies, well that’s been done before to no avail.
It’s simply supply and demand. If you are looking for
a scapegoat, look to China. They have been buying oil left
and right for their booming economy (12% growth a year so
they say), but don’t blame the Chinese too much as their
economy is keeping prices of manufactured goods low. Our economy
is not exactly in the doldrums either. OPEC (Organization
of Petroleum Exporting Countries) can share some of the blame
as can consumers worldwide driving gas guzzling autos.
Loved the picture on the front page of the San Francisco
Chronicle, Friday, April 28 - the first photo showed House
Speaker Dennis Hastert departing from a news conference on
gasoline prices in a hydrogen powered car. The second photo
shows him later emerging from this car and getting into a
gasoline powered SUV.
As for obscene profits, Exxon Mobil reported first quarter
earnings of $8.4 billion. This news made big headlines. What
didn’t make headlines was that they paid $7 billion
in taxes the first quarter. Furthermore, Exxon Mobil, Chevron
and Conoco Phillips combined earned 8 cents on every dollar
of sales last quarter. High-tech firms earn more than twice
that much.
The American consumer will make adjustments like they did
in the 1970s to bring supply and demand back in line. In the
meantime, look at Brazil. They allow offshore drilling and
80% of their oil supply comes from that source. It is estimated
that in six months, offshore drilling will produce 1.9 million
barrels of oil a day while they consume 1.85 million barrels.
They may even start exporting some oil. They are not only
helping themselves but also the rest of the oil consuming
world. Now we love the environment as well as the next person,
but Katrina made it clear that modern technology has a very
good safety record.
A further problem is in Latin America. Hugo Chavez is in
the process of nationalizing the oil industry in Venezuela,
and now Evo Morales is doing the same in Bolivia. They are
basically holding a gun to our heads.
Fortunately, private enterprise is doing something about
the problem. Ethanol based fuel is catching on as more companies
are entering this field. The cost of ethanol is 38 cents a
gallon below that of gasoline and will become even cheaper.
Ford Motor is now building cars that can run on a mix of 85%
ethanol/15% gasoline (called E85). They are working with some
firms to convert fuel pumps to handle this mixture. Watch
for this to catch on big time.
Random thought for May 2006:
Gasoline - $3.00 a gallon
Milk - $3.00 a gallon
Starbucks 16 oz double latte - $3.00
Beer six-pack - $6.50
Coke six-pack - $4.00
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