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Money Talks

2007-06-29 - 1:10 p.m.

Day off today. Errands to be done.

But first...

In the We're From The Government And We're Here To Screw You Dept.:

Here's an article from BusinessWeek about oil and politics.

What I find interesting about this are the following quotes:

Right now, Venezuela is creating the biggest doubts. Its output has declined by about 25%, to 2.4 million barrels per day, since populist President Hugo Chávez came to power in 1999. The main reason: Chávez fired 75% of the managers at state oil company Petróleos de Venezuela (PDVSA) after a strike in 2003. That decision left PDVSA overstretched and ineffective. The plunge would have been disastrous had it not been for increased investment by foreigners. Yet Chávez is making life so difficult for the oil majors that two of them—Exxon Mobil Corp. (XOM) and ConocoPhillips (COP)—are now walking away.


Those questions matter for oil producers and users alike. Consumption is growing fast, and without investment in new fields the industry's output would fall by about 3% annually. So every year the world needs new capacity of almost 4 million bbl. per day just to keep up.

So if production is falling and demand is rising...prices are going to go up. Unfortunately, because of the environmental extremeists, we're not allowed to drill on US soil. So we're very dependant on foreign oil, and therefore we pay a lot.

We could reduce our need for the foreign oil teat if we could drill more here and offshore. It would also help if we could build more nuclear power plants.

Oh wait...I forgot. Bush controls everything about oil prices. Rising supply and dwindling demand have nothing to do with anything.


And over here is an article from Charles Krauthammer about how the government likes to hide the costs of their mandates.

Something that they keep failing to understand: you can't mandate technological advances. Fer instance, if you make a law saying "warp engines will exist by 2040", what if the tech breakthroughs that would be necessary for warp engines don't happen? It's all well and good to want alternative fuels, but right now they aren't as efficient.

And the costs are prohibitive. In a column in the OC Register, Dennis Avery reports that "China has just banned further expansion of its corn ethanol industry, after a radical 43 percent increase in pork prices over the past year". In Mexico, people are protesting the upswing in tortilla prices, because corn is going to ethanol production. If we divert more cropland to corn for ethanol production, our food prices will go up. And not just corn - anything made with corn or its byproducts will go up, all the way to your morning breakfast. After all, cornflakes have to come from somewhere.


And on that note, I need to get going. All this food talk is making me hungry. Fortunately, I can afford to grab something outside the apartment.

Because there ain't no free lunch.

Be seeing you.


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