America's tarnished icons are coming back to haunt us - Plus: Damned if he didn't do it again while I was writing this

As you know I have stated my belief that the two primary drivers of higher oil & gas prices are growing demand and the fact that oil is traded globally in US dollars. As the dollar falls against other currencies and it's global spending power wanes, we are obviously going to pay more, not just for gasoline, but for plastic lawn chairs at Wal-Mart, milk, and your whole market basket. You also know that I point a finger at the fed for printing money like there is no tomorrow as a primary reason for the inflation upon us. Of course, I have more then one finger, and though one or two of them are frequently occupied in a "salute" towards the Bush gang, there are enough left for pointing to some obvious other reasons for the inflationary forces in the world today. For example: growing demand, especially from emerging markets in China, SE Asia, Eastern Europe, and India. On this one we really have no moral ground to whine or complain. We have pounded the pulpit on the principals of free markets at every moment we got, and quite justifiably so in my opinion. So it is very much the time to start pounding on the pulpit of conservation as opposed to criticizing.

In a previous post I mention how Chinese drivers get a break in gasoline prices via government subsidies. While that isn't equitable, we should note too that China's spending power has been growing (7.5% vs. the USD over the last 12 months even as it is kept artificially low against the dollar). To add a little paradox to this whole unfolding drama, China drivers are emulating the U.S. consumer's "who cares" attitude about consumption.

"Apparently wealthy, hip Chinese urbanites want to own... Hummers. Beijing Auto rolled out its own version, called the Trojan. And SUV imports from traditional luxury carmakers BMW, Porsche, Lexus, and Cadillac hit record levels in 2007. Chinese demand for SUVs began to show serious momentum in 2003 – sales doubled to 200,000 that year. The industry has enjoyed double-digit growth every year since, with 370,000 of the behemoths sold in 2007. One of the iconic images of America for the last decade has been the big, glittery SUV. Now wealthy Chinese people want to live like Westerners. Demand for big cars fuels demand for oil – China's consumption grows about 8% per year. In addition, the government subsidizes gasoline, so prices are nearly 40% lower than here in the U.S. Of course, we hardly ever admit to our errors, especially our most egregious ones. Everybody wants to blame "greedy" oil companies for high gas prices... but the real reason is our TV shows. All that TV we exported for the past 10 years showed the world how we live and, more importantly, what we drive. So don't blame ExxonMobil for high oil prices, blame MTV."
- Stansberry Associates "S&A Digest", June 19th, 2008

Bush and the 9th inning "swing away":
I wonder how many more last reprehensible acts of greed, in lieu of leadership, Bush plans to commit like this one? The Big Pander to Big Oil

The president, seeking to put political pressure on the Democratic-run congress in an election year plagued by soaring gasoline prices, called Wednesday for lifting federal bans on offshore oil drilling and other measures to boost oil production.
I assume Bush is leaping on this one because 1) he has a curriculum vitae of succesfully exploiting fear...why not again? -- and -- 2) it plays well at home which is where he is headed.

I should stipulate that it is scary. If you want to gain an understanding of how scary it is you should read about "Peak Oil". The Association for the Study of Peak Oil and Gas (ASPO) predicted in their January 2008 newsletter that the peak in all oil (including non-conventional sources), would occur in 2010. Meanwhile, world demand for oil is projected to increase 37% over 2006 levels by 2030, according to the US-based Energy Information Administration's (EIA) annual report. But the administration's latest adventure is appalling.

Fear. I can dig it. Fear makes me do lots of things. To date however, those things have been self preserving, not suicidal or criminal.

That same report quoted above states that steps to reduce consumption and increase adoption of sustainable alternatives would take ten years. Elsewhere I've read credible opinions stating that it will take twenty years. China consumerism nothwithstanding, we are already seeing some hopeful signs of reduced demand.

I think that if I were president I would be leading the charge in that effort, or at least cheer-leading it. I would, for example, be working closely with lawmakers to up the ante on developing alternatives. I would also be moving to secure existing reserves within the Northern hemisphere and especially work with our neighbors to the North to assure access to the oil rich deposits there. we are doing that already by the way. Our relationships with Canada have never been more sound. I would also be commissioning a better understanding of the carbon account associated with that oil (the main reserves there are in oil sands with a larger cost of recovery, especially the cost in emissions. Greenhouse gas (GHG) emissions during production are 3-4 times the amount produced in a conventional oilfield. This is comparably true of America's own shale bound oil reserves in Colorado. However, estimates are such that we might be able to manage recovery at rates, and with methods that are less costly to the environment then originally thought. it bears close watching, but certainly by someone other then this adminstration. Just for an example, the amount of water required to produce a barrel of oil from the oil sands in Canada has been halved from 5 barrels to 2.4. Most of the tar/oil sands developments have been based on steam assisted recovery processes rather then mining. (That results in a footprint that is the same is a conventional oil field operation.) In addition, investment in carbon capture and sequestrian storage (CCS) technology has been dramatically stepped up and is based on proven technology which is not new.As much as 90% of greenhouse gases can be recovered in this way.

We do not need to unleash off-shore drilling. Eighty percent of off-shore reserves are already accessible to the oil drillers. This is absolutely nothing more then a ninth inning "swing away" to grab as much access for cronies as is possible before the fat lady sings. (God bless her).

I guess one good thing out of this is that we all had the chance to see how quickly McCain jumped on this idea. Any thinking person now understands where his heart (and sense of pocketbook) lies relative to our natural resources. Not that we didn't have plenty of clues before.

We are simply and imperatively driven to rush development of alternative fuels and reduced consumption. Please, go tell your representatives to tell Bush and his cronies to forget about it. No late night raids on the fridge.

Late bulletin: This just in: Deals With Iraq Are Set to Bring Oil Giants Back
The whole world will hold the U.S. in scorn for this travesty as well as so many more. I cannot recognize my country anymore, so profound are the changes in our spirits and our mores. From direct anecdotes I can tell you that the world laughed at us for making such a big deal out of Clinton's sexual peccadiloes and are absolutely stunned by our cavalier attitude towards Bush.