Thursday, April 16, 2009
Wrong State, but right idea...
If you have been reading my stuff for a while, you know that I think some pretty unthinkable things could happen politically - I have written several posts about the possibility of States in the West, and in particular California, seceding from the U.S.
Yesterday the Republican Governor of Texas acknowledged that some people also see this as a potential outcome for Texas.
(Please keep in mind a don't write about what I "hope" will happen. I write about potential outcomes and their varying probabilities. I love and value my country and our freedoms and rights. - I merely bring to the attention of people (the LEFT for the most part, but the RIGHT, too) that don't think that some of their policy drives might have some very unpleasant unintended consequences another point of view.)
California and Texas will, in my opinion, not last the century as members of the U.S. in its current representative form from a combination of historical errors (the Missouri and Connecticut compromises) and demographics (DNA wins ALL wars, eventually). The Framer's could not have envisioned a population distribution that would lead 1/8 of American's with 2 Senators (California), and 1/12 of American's with another 2 Senators (Texas).
Hopefully, a Constitutional Crisis can be avoided through some future compromise. Hopefully, too folks on either extreme of the political spectrum will grasp that their activities may work in ways not intended.
We now have just a bit more than 1 quarter's data on oil imports and domestic production. The picture is getting clearer and is no prettier than last year. "Total net Imports" have declined 2.3% during the first 99 days of 2009 when compared to 2008, and were down over 8% in 2008 when compared to 2007. "Total Products Supplied" is down 4% for the first 99 days of 2009 from 2008.
This is how investment in productive capacity in commodities is supposed to work. The price went down, and domestic production went down even faster than imports. After all, we are the high cost producer.
Regardless of how "its supposed to work", the reality is that our economy, as presently constructed, cannot "grow", irrespective of who is doing the counting, if energy supply/consumption is declining.
So which came first? The chicken or the egg? The recession has had its starting date recast as December of 2007. What a coincidence. Peak oil imports into the U.S. were either Q3'07 or q4'07, depending on who you want to listen to, the IEA or the EIA. Did the imports decline as a result of the economic contraction, or did the contraction result from decreased oil availability? Probably not a black or white kind of thing, but grey, and that would indicate that Oil, or lack thereof, contributed to our economic circumstances.
To my mind, all commodities, with perhaps (and only perhaps) the exception of Gold, are led in price by the real cost of Oil. Want to know where corn is headed? Look to oil. Wheat? Look to Oil. Copper? Look to Oil, etc...
But back to the above link... Notice anything funny about the break down of total products supplied? Gasoline is relatively unchanged, while Jet fuel has had its back broken and distillates (diesel) has been rocked as well. It would seem to me that American's have not cut into their driving just yet, but have cut back on travel and consumption (diesel moves goods). Of course, not all of these numbers jive with the Vehicle Miles Traveled number or inventories. (That's what makes this job so much fun - tongue squarely in cheek). Ahhh, but then you scroll down Table 1 to the area headed "Petroleum Stocks"... notice gasoline is first totaled, and then broken out into reformulated, conventional, and blending components? Anybody care to bet me that "blending components" are mostly made up of ethanol? (If you doubt this just look up to "other liquids new supply" in paragraph 2 of Table 1. Up 71% year over year. You know of anything other than ethanol that's supply could be up 71% in a year? Yes, the government could make this data far more transparent, or at least not so purposely opaque, but then they would not be being the government, now would they?) If I back that number out, it would appear that we are not really so flush with gasoline, after all, perhaps even dangerously low considering that now is the time to be building inventories for the summer driving season - if you CAN, that is.
Stocks of the industrial fuels, diesel (distillate) and propane are rising fast - which, to me, would again point to a continued contraction in the U.S. (and world, the U.S. is 25% of it) economy.
Lastly, the decline in domestic production of 17% for Natural Gas Plant Liquids would dovetail nicely with Matt Simmons argument that last years surge in production was the blowing off of "gas caps" in superannuated wells.
It is pretty amazing, when you stop and think about it... just how much data is out there at your finger tips. Now connecting the dots is whole other story...
That's just to make people feel better. Truth is, they will NEVER be rebuilt.
And that is a shame.
I was in the towers on September 10, 2001 and caught a flight out after midnight from LaGuardia on September 11 - one of the last flights out for over a week. I was with a handsome young man and his lovely fiance at a funeral that weekend (9/11 was a tuesday) named Mike Armstrong - unfortunately, Mike worked for Cantor Fitzgerald and was killed in the attack. Wall Street is a small community. I knew a lot of guys from Cantor and Sandler ONeal that did not survive that day. The story might be in the past for many Americans, but for some families it is the defining moment in their lives.
Perhaps just another example of the unintended consequences of policy decisions that echo for decades.
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 3:18 PM