The cost of crude has been creeping up of late due mostly to demand in the Asian world. That and the much ballyhoo'd yet nearly nonexistent American economic recovery.
The owner of a gas station near my home told my brother yesterday that he is being told by his suppliers to expect regular gas to be in the $4.00 to $4.50 range by Fourth of July. Rumor? Crazy talk? I don't know. But, if he's right, the economy will stop. The ripple effect of high oil prices will cause the cost of everything to rise, not just the cost of gas. Diesel fuel is the blood that keeps the heart of our system pumping, moving goods from one end of the country to the other. And that doesn't even scratch the surface of how much oil we use as an ingredient in nearly everything we produce and use.
The local environmental damage of this oil spill in the Gulf may be the least part of the damage it does.
"Oil prices extended gains above $86 a barrel Monday as traders eyed whether a massive crude spill in the Gulf of Mexico would slow imports to the U.S.
By early afternoon in Europe, benchmark crude for June delivery was up 32 cents to $86.47 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 98 cents to settle at $86.15 on Friday.
Some analysts expect the 30-mile (48-kilometer) oil slick caused by as much as 210,000 gallons (795,000 liters) of crude gushing into the Gulf each day could undermine imports to key Louisiana terminals, helping to lower crude inventories and boost prices.
U.S. authorities have said imports have not yet been affected.
"The potential disruption of oil tanker traffic in the Gulf of Mexico is already having an impact on oil prices." Goldman Sachs said in a report. "Traffic of oil service boats and oil tankers through the Gulf will likely be slowed."
Oil is near an 18-month high of $87, last touched in early April." NPR
"Most people fail to comprehend the full implications of affordable energy on the world economy. Gasoline prices are the most visible symptom of the problem, but are far from the most important aspect of peak cheap oil. The global economy is dependent on cost-effective worldwide transportation of products. The United States in particular is extremely dependent on inexpensive goods imported from China and other Asian countries. A sudden dramatic rise in prices of all those goods would cripple an already-struggling economy. But the problem is much more far-reaching than that. Many of the things we take for granted would never be possible without abundant and relatively inexpensive energy. Skyscrapers and other large construction projects would not be economically viable without abundant energy to operate excavators, cranes, and construction tools. Many areas thought to have been unsuitable for habitation before the advent of modern air conditioning and refrigeration are now major population centers. Old fashioned supply chains involving warehouses and long-term stores of inventory have been entirely replaced with just-in-time delivery systems that are highly dependent on fast and reliable long-distance transportation. In the United States particularly, millions of people are dependent on employment 50 or more miles from their homes. Energy is a component cost of virtually all products. If energy costs were to increase dramatically, so would the cost of all other items. In short, the world simply cannot continue to function in the manner we associate with “modern times” unless energy continues to be available at affordable prices." Chris Martenson
"Today, as the oil from an enormous spill in the Gulf of Mexico creeps toward the shores of the southern U.S., the administration is having its doubts about the new policy. David Axelrod, senior adviser to Obama, told “Good Morning America” today that there’s a moratorium on the expansion until the recent spill can be controlled and investigated.
“No additional drilling has been authorized and none will until we find out what happened here,” he said." Washington Independent
Read the story below and them look at the chart. This chart was generated by the Federal Reserve in Philadelphia. Only one state has seen improvement in economic activity year over year.
How can you reconcile this with all the happy, happy talk from the media and our government about the depression being over and the economy rebounding?
What else are they lying about?
"49 out of 50 U.S. states are still showing less economic activity than a year ago, based on February 2010 coincident economic indicators from the Federal Reserve of Philadelphia. The chart below is organized from top to bottom, from the most growth in economic activity to the largest declines in economic activity.
States like West Virginia (WV), Maryland (MD), Idaho (ID), and Wyoming (WY) are the worst off year over year. Their February 2010 economic activity remained 13.5%, 6.3%, 6.3%, and 6.2% lower year over year. Thus their economies, along with those of another 45 states, all the red ones, are all underwater on an annual basis.
North Dakota (ND) is the only state to currently have a higher level of economic activity year over year. Its February 2010 economic activity was 1.1% higher than February 2009, as shown by the green dot in the chart below.
Moreover, 28 out of 50 states even exhibited less economic activity in February 2010 than just three months earlier (not directly shown below). This means they have been deteriorating most recently as well.
In fact, the chart below is organized from left to right by the change in economic activity in the last three months (February 2010 vs. November 2009).
Thus West Virginia (WV), Maryland (MD), Montana (MT), and Delaware (DE), have seen their economic activity fall since November 2009 the most, given that they are the left-most dots. For example, West Virginia's economic activity fell 3.1% vs. November 2009 (percentage not shown). In contrast, Michigan has done the best most recently, given that it is the right-most dot, rising 1.5% vs. November 2009 (percentage not shown).
Net-net what this tells us is that 49 out of 50 state economies are still underwater on a one year basis, and 28 out of 50 are even still falling vs. November."
So, do you want to see our "recovery" come to a screeching halt?
"U.S. crude futures hit an 18-month high on Monday, climbing toward $86 per barrel on expectations of faster-than-expected economic recovery and increasing demand for fuel.
Data on Friday showed U.S. employers created jobs in March at the fastest rate in three years. Non-farm payrolls rose 162,000, only the third increase since the U.S. economy fell into recession in late 2007 and the largest since March 2007.
U.S. manufacturing is also expanding at its fastest pace for more than five years, while Chinese manufacturing is picking up and Japanese business sentiment is also improving." Reuters
"Rising factory output and a decline in the pace of layoffs are giving economists confidence that the recovery has staying power.
The government is expected to report Friday that the economy added jobs in March for only the second time since December 2007.
Still, job creation is likely to remain weak for years to come, in part because U.S. factories have become more efficient, producing more goods with fewer workers. On top of that, the sector's contribution to the overall economy has been shrinking for decades due to competition from China and other countries where factory workers are paid much less.
Another reason the job-growth engine is stuck in a low gear is that the building sector remains extremely weak in the aftermath of the housing bust.
Construction spending fell sharply in February to its lowest level in eight years, the Commerce Department said Thursday. Spending fell particularly hard in commercial ventures, such as hotels and office buildings." Yahoo
So here's my question: if construction is in the toilet and we aren't building that many cars, what are all of these manufacturers making? I don't trust the numbers that the government is supplying because common sense tells me that the underlying economic activity that is needed to drive all of the stated activity just doesn't exist. And now, using numbers that I believe are falsified for political reasons, speculators are causing the price of crude to jump, thus insuring that those of us that can't find a decent job, and believe me that number is north of 20%, will be forced to pay higher costs for everything, further eroding our purchasing power and negatively impacting America's GDP which is based nearly completely on consumer activity.
How can demand for manufactured goods be rising in Asia when their primary market, the U.S., just isn't buying much? I know that their economies have grown and that some internal demand exists but, really, without the American consumer how large can the overall need for finished goods produced in Asia be?
I'm just a carpenter and as such I claim no expertise in matters economic. That being said, I follow the economy as a point if interest and read a lot of economic reports. Too many numbers say too many different things. It seems as though if the truth were being told by all parties involved there would be some sense of order; but there isn't, or at least I can't see it.
Manufacturing is supposed to be up while the two industries that support it most, houses and cars, are way down. More people are supposedly employed, yet the true unemployment number keeps creeping up. I read the want ads every week and the only area that I see consistently hiring is nursing. There are a few adds for truck driving schools and that's about it. I've been applying for jobs and finding that the few that are available pay minimum wage for part time work and the employer has more applications than they know what to do with.
What I think is happening is that we are seeing a minor surge in manufacturing to replenish inventory. This is temporary. If no one is buying the products once the inventory levels are back to where they need to be the surge in manufacturing will be over. That's why we don't see any hiring. The manufacturers are producing with as few people as they can get by with. They aren't going to hire people and spend the money to train them when they probably will have to be laid off in the near future. Layoffs are slowing down, but not stopping. We are seeing a small respite just to get us through this rebuilding of inventory.
Oil is being traded at an artificially high level which will drive up the cost of everything. As more and more people realize that the only job they can get, if they're lucky, will pay a fraction of the wage they have become accustomed too their spending levels will decrease, permanently. This is creating a situation where America is facing falling wages and much higher prices for consumer goods. How is that going to work? The value of our houses will continue to fall and many people, even those that have traditional loans and played by the rules will find themselves underwater. They won't be able to sell their homes for what they owe on them, if they can sell them at all, and because wages have fallen they won't be able to make the payments. How is that going to cause a recovery?
Taxes are going to rise sharply because politicians won't cut programs. As cities, counties and states have more costs imposed on them by the federal government they will go bankrupt. They can raise taxes all they want but if the people don't have the money they won't be able to collect. And then what? Does some guy from the government show up at your door, if you still have one, and demand payment, or else? What if you say no?
We have entered a dual feed back loop. One the one side we have the stock market, constantly moving upward on hopes and the taxpayers money. On the other side we have the real economy, contracting on the basis of the housing collapse, the jobs market and the rising cost of goods such as food and energy. Both loops are moving apart, causing destructive tension which will, I believe, cause an economic collapse unlike any we've seen before.
On one side we have the federal government and the bankers, printing money and investing, creating rights and Ponzi schemes, entitlements and investment scams like the credit card has absolutely no limit. On the other side we have the states and the citizens, caught in a never ending whirlpool of demands and obligations to the federal government and the bankers with our savings exhausted and our credit cards way past the limit and shut off.
Something has to give. It's sort of like that thing we talk about when we're kids; the immovable object being struck by the unstoppable force. As adults, we realize that there can only be one infinite thing and so this question establishes a false dichotomy. One of these two forces will overpower the other.
I think that a confrontation is inevitable and has already begun with the various lawsuits and legislation relating to the Tenth Amendment. I believe, hope and pray that the people and the states can overcome the federal government and it's printing presses. We'll see. I think that the federal government intends to use the power to tax to destroy the sovereign states and to force them to bow before Caesar. Will we stand up to it? Will we refuse to bend our knee but instead take up our arms?
I don't know the answer to any of this, I just see the confrontation on the horizon.
As I watch the cheery assessments of our current economic state on the various business channels I just have to wonder if these people really believe what they say or if pressure is being applied by someone. The reality of the situation cannot be ignored. Yet, I talk to people all the time that are convinced that everything will return to the normal they have come to expect. As if saying it often enough will make it true. Fear is blinding Americans to the truth.
When the blinders finally come completely off there will be hell to pay. But of course those that have supported and driven this national insanity will by that time have secured themselves someplace far removed from the threat of danger. The people will lash out at each other, in blind rage, in the same way the poor in the inner city always seem to burn their own neighborhoods during riots.
So yes, this will end just like it did in the 30's. Except for one crucial difference. The people of the 1930's still retained a sense of morality. All most have today is a sense of entitlement. One leads to acceptance and resolve while the other leads to rage and destruction.
Pray for guidance and prepare yourselves and your family. There is only one way this can end.
"The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.
Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.
The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.
Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.
Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.
This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process."
Man, aren't you glad the economy has turned around? Happy days are here again!
"Ford Motor Co. says it is offering buyout and early retirement incentives to all of its 41,000 U.S. hourly workers to further reduce its factory work force.
Company spokesman Mark Truby said Ford still has too many factory workers for its current sales levels.
He would not say how many workers the company wants to leave but said Ford is working that out with the United Auto Workers union. Ford currently has about 600 blue-collar workers laid off but available for recall.
The buyout offer includes $50,000 cash plus a $25,000 car voucher or $20,000 more in cash. The retirement package includes $40,000 cash for skilled trades and $20,000 for production workers."
"Children, it is the last hour; and just as you heard that the antichrist was coming, so now many antichrists have appeared. Thus we know this is the last hour. They went out from us, but they were not really of our number; if they had been, they would have remained with us. Their desertion shows that none of them was of our number. But you have the anointing that comes from the Holy One, and you all have knowledge. I write to you not because you do not know the truth but because you do, and because every lie is alien to the truth."
1st John 2:18-21
“The hottest places in hell are reserved for those who in times of great moral crises maintain their neutrality”
Dante Alighieri
“Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.”
John Quincy Adams
“Government is not reason, it is not eloquence, it is force; like fire, a troublesome servant and a fearful master. Never for a moment should it be left to irresponsible action.”
George Washington
“If once the people become inattentive to the public affairs, you and I, and Congress and Assemblies, Judges and Governors, shall all become wolves. It seems to be the law of our general nature, in spite of individual exceptions.”
Thomas Jefferson
" I come from a state that raises corn and cotton and cockleburs and Democrats, and frothy eloquence neither convinces nor satisfies me. I am from Missouri. You have got to show me."
Willard Duncan Vandiver
"The issue is, to use a sporting metaphor, whether in the game of life the government shall captain the national team or shall act as referee."
S. Harcourt-Rivington
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
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