published Tuesday, March 8th, 2011

Gas Prices

about Clay Bennett...

The son of a career army officer, Bennett led a nomadic life, attending ten different schools before graduating in 1980 from the University of North Alabama with degrees in Art and History. After brief stints as a staff artist at the Pittsburgh Post-Gazette and the Fayetteville (NC) Times, he went on to serve as the editorial cartoonist for the St. Petersburg Times (1981-1994) and The Christian Science Monitor (1997-2007), before joining the staff of the ...

Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
AndrewLohr said...

Drill baby drill?

March 8, 2011 at 12:38 a.m.
steve_smith_tn said...

With the current emissions standards (as well as all the other non-emissions hoops required for inspections these days) only expensive cars make it onto the roadway legally. Coupled with high oil prices, few refineries and a near monopoly of gasoline distributors and retailers, only the wealthiest of us can afford to drive. Did I mention legally mandated insurance?

We're building bike lanes and passing 3 feet laws. I think Volkswagen recently built 6 new assembly plants just like ours in China. This is a strange kind of progress. We're progressing back to 1900.

March 8, 2011 at 12:48 a.m.
blackwater48 said...


There are few issues that both liberals and conservatives can agree upon but ending the taxpayer’s $4 billion subsidy to oil companies is one of them. Opposition to such a subsidy – often euphemistically referred to as incentives, tax credits, preferences or loan guarantees – spans the ideological spectrum. Both sides agree for different reasons, but it’s a start. A recent article by John Broder outlined some of the issues.

David Kreutzer, an energy economist with the conservative Heritage Foundation, argues tax breaks distort the marketplace. “We would like to get rid of all subsidies,“ Kreutzer said recently. “We know that petroleum and coal survive just fine in places where there are no subsidies. I don’t know if that’s true for wind and solar now, but someday it will be when prices come down.”

H. Jeffrey Leonard, president of Global Environment Fund, a private equity firm that invests in clean energy ventures, agrees. He said the current tax structure is the result of 60 years of intense lobbying. He also calls for scrapping energy subsidies and letting all fuel sources compete on a level playing field.

Wow. Isn’t that great. Maybe Republicans and Democrats can find common ground and begin to solve a few of our monumental problems. Ha, ha. Just kidding. President Obama’s proposal to end tax payer financed subsidies for oil companies was met with fierce Republican opposition.

You know, come to think of it, maybe I'm looking at this all wrong. Oil companies report PROFITS in the billions. Every quarter. Oil companies are the most profitable corporations in history. They don't need our help. The industry isn't hanging by a proverbial financial thread.

So, when 'We The People' send them $4 billion of our hard earned money every year, maybe it's not really a tax subsidy.

Maybe it’s tribute.

March 8, 2011 at 1:52 a.m.
bookworm said...

What we need to do on rising gas prices is enforce a sliding scale at the pump: The less you make, the less you pay, the more you make the more you pay. When rich billionair oil company CEO's find that they have to pay 10,000 for a galon of gas --- the prices will plummet.

March 8, 2011 at 5:56 a.m.
najones75 said...

Better yet bookworm, why don't we just give gas away for free to anyone who makes less than....well, how much is too much for you bookworm? I mean they're rich, right? They have enough money, right?

Nothing but wealth envy...please get a clue.

March 8, 2011 at 6:06 a.m.
EaTn said...

We all know the price of gas is shooting up and feel helpless not only at the pump but everywhere else that's effected, like on groceries. Now is the time for our government to remove oil subsidies, and even more remove the ethanol subsidies and requirements which obviously doesn't help in controlling gas prices. With my vehicle getting 20% less mileage, the ethanol blend is actually adding the equivalent of over fifty cents per gallon. Then there's the effect on grocery prices. Senators Alexander and Corker, step up and help us Tennesseans who are suffering.

March 8, 2011 at 6:25 a.m.
fairmon said...

All subsidies, incentives, deductions, reductions, ear marks and grants essentially all help the wealthy and corporations at the expense of middle income tax payers. There has been a constant flow of manipulation using these vehicles of distortion and favor for years. Over 11,000 pages of IRS regulations that benefit those with shrewd accountants that most people don't have access to. Abolish all and set a reasonable corporate rate of around 14% that all pay on every dollar of EBITDA. Abolishing farm, energy and other subsidies, incentives etc. may cause a temporary spike in some sectors and an adjustment period but no more than the skewed markets we now have. Abolish earned income credit and increase welfare assistance if necessary and call it what it is, earned income credit is welfare. Alternative minimum tax is another manipulation that targets a few tax payers, adjust the rates appropriately instead.

Higher energy prices are the most damaging tax we pay and hurts the middle and lower income more than the wealthy. To continue not safely accessing U.S. assets is ludicrous. China, India, Russia and others are actively building nuclear reactors for electricity while the U.S. prohibits them. Safe harbors is a company that can contain and assure natural gas shale processes don't pollute but internal affairs and the EPA impede progress instead of assuring proper environmental regulations. The electrical distribution grid can't handle a huge increase in electric cars being plugged in so all battery powered cars is not a viable solution. Ethanol reduces gas mileage, increases pollution and corn prices are out of sight. Brilliant, we subsidize the use of one of our food staples that affects the price of live stock and the food we consume and our government requires that it be done. Mid west senators love it. Environmentalist keep blocking off shore and land based wind turbines and deep water or Alaska drilling while U.S. wealth flows to Russia, the middle east, Brazil, Africa, Venezuela etc. etc.

o U.S. federal government annual spend rate=3.7 trillion

o U.S. federal government annual revenue= 2.4 trillion

o Net gain (loss)= (1.3)trillion

14T+ currently projected to be 28T+ in 10 years or less. No one willing to give up anything, cut their program but not mine and tax them but not me with the government inisisting on being the investor of choice. How long before we implode? Interest on the debt is ~200 billion annually with interest rates projected to go up. What happens then? Neither party is addressing the issue or root cause, both are still playing high stakes 2012 politics at our expense. Steps such as abolishing tax manipulation with increased jobs paying decent wages and higher taxes don't get lobbyist contributions and votes. The tea group makes noise but offer no sound solutions and they have essentially zero influence due to the congressional seniority system.

March 8, 2011 at 6:28 a.m.
woody said...

First, I believe I'll pass on sniffing the cork. My car will need all the extra fumes it can burn.

And..just to make things interesting..while those of you with a real talent for numbers are trying to solve the problem of over-priced oil (gas and all of its by-products), you may as well begin trying to figure out the best way to overcome the rising cost of electricity. Because just as soon as all of those "Green" vehicles really 'catch on' we are sure to see the cost of electricity go through the roof.

Bet on it...Woody

March 8, 2011 at 7:24 a.m.
memphisexile said...

While I also agree that the oil companies should not be subsidized by tax breaks I am amused by the "sky is falling" mentality because the price of gas goes up. If gas costs too much, buy less. Don't drive as much, carpool, etc. If forking out an extra 5-10 dollars at every trip to the pump is going to break you financially you need to alter your behavior.

We do not have a right to cheap gas, it is a commodity like any other and will be subject to the market place. If you can't deal with that, buy a bike.

March 8, 2011 at 8:05 a.m.
limric said...

Rising gasoline prices have very little or nothing to do with unrest in the Middle East The medias reported price increases are bogus. The real reasons for rising prices at the pump is caused primarily by Wall Street Speculation. Lets think about this. Specifically, what amount of oil in Libya was disrupted by fighting? What percentage of the total oil coming into the US does this “disrupted” Libyan oil represent? How long will any disrupted oil be delayed? How many oil tankers full of oil head from Libya to the US were sunk? Is there a blockade of oil tankers being maintained by rebel forces on the high seas? If so, how much oil is in these blocked tankers and how long will it be delayed? How many Libyan oil wells and other oil facilities have fallen to rebel forces? And how much of the oil was specifically earmarked to go to the US? And what percent of the total oil coming into the US does this “fallen” oil represent? Have there been additional security guards dispatched to stand guard over oil wells? How many guards? Specifically, how much are they paid? How many oil wells have had guards protecting them? How many ports have had their export of crude specifically to the US blocked by the unrest in Libya? for how long? What percent of the total number of ports do these “blocked” ports represent? For instance are we talking just one port out of 500 ports? Is the nearest alternate a mere 5 miles tanker truck ride down the coast? What is the cost per mile of transporting this one particular port’s oil that is headed specifically to the US an additional 5 miles? Are there lines at any US gas stations? The truth is, there is no lack of gasoline, or any petroleum products for that matter, in any part of the US. My point being, the rise in gas prices at the pump has NOTHING to do with the unrest in Libya or for that matter the entire Middle East. By far the biggest influence on gas prices at the pump is NOT the short-run dynamics of supply and demand for actual physical oil rather Wall Street Speculation on the Standards & Poors Goldman Sachs Commodities Index and DOW-AIG indices. For instance back in 2005, the supply and demand characteristics faced by OPEC – including adding additional security – caused them to raise the price per barrel – once - to $45.00. At the height of the corresponding boom in the commodities index, the price per bbl was $149.00, and prices at the pump reflected this $149.00 per bbl. Please remember that demand by China, a few additional cars on the road here in the US, unrest in the Middle East, all of these excuses actually have negligible effects on the price per gallon of gasoline at pumps in the USA. By far the largest determinant of the prices American’s pay at the pump is speculation on S&P GSCI and the DOW-AIG indices. Goldman Sachs et al spend millions promulgating bogus theories explaining rising gas prices that are almost entirely a result of their own index speculation

March 8, 2011 at 8:24 a.m.
khargis said...

just wondering, but is this still bush43 making his oil buddies rich?

as i recall, that's who we blamed for the previous increse in fuel cost.

March 8, 2011 at 8:27 a.m.
moon4kat said...

Ironic that -- for some 40 years -- "conservatives" have opposed virtually every measure that would encourage the actual conservation of petroleum by using that limited resource efficiently and wisely.

March 8, 2011 at 8:33 a.m.
BigRidgePatriot said...

I like your point khargis. Most of the people here do not have a clue what drives oil prices. If this cartoon was drawn with Obama serving it would be a great cartoon instead of a mediocre one.

Whereas Bush actually brought down prices by lifting the moratorium on drilling Obama has done everything he can get away with to make oil a “rare” commodity. Notice the liberals are not screaming with pride over Obama’s energy politics which are designed to make oil and coal prices skyrocket. Careful what you vote for, in this case we got exactly what the obamabots gave us.

March 8, 2011 at 8:41 a.m.
Musicman375 said...

Great post, woody. Although the cork isn't really offered for sniffing, but that's another subject altogether. I am hoping with fingers crossed on both hands I can begin telecommuting in the next 6 months or so. That would solve my current problem of filling my tank every five days. I wouldn't know what to do with all that extra income.

March 8, 2011 at 8:51 a.m.
fairmon said...


Very good post and very accurate. Keep in mind the speculators are not all U.S. based. China and Russia are big players and buy many futures to assure they get oil or benefit from higher prices. There is currently no shortage or anticipated shortage in the U.S. Tapping the national reserves as some advocate would appease them but do nothing to lower cost. The reserves are to fill voids when there is in fact a shortage. Russia loves it, as a major producer of more barrels per day than the Saudis they are getting wealthy. Chavez in Venezuela is thrilled.

History may be repeating itself. You seldom hear anyone in office acknowledge that extreme energy cost increases precipitated the last economic collapse exposing the over leveraged financial sector. Who will it expose this time? Could it be governments at all levels and financial entities that are still at the edge? Terrorism may not be all about guns and bombs. Those that hate us know what will hurt us most and that an armed attack won't work.

March 8, 2011 at 9:29 a.m.
woody said...

Thank you, Musicman. The 'cork' thing..well you had to be there. I do wish you the best with the "telecommuting." I'm afraid, had I been born a little or so later than I was, I too might have had to resort to that form of doing business. Nahh, I'm a confirmed "people-person"..I'd have found a way to do business my way somehow. Of course, that very attitude may well account for the fact I am retired before I really wanted to be. So, I guess Ill be rooting for you and whatever it takes to keep you 'in the game' as long you'd like to stay.


March 8, 2011 at 9:39 a.m.
bret said...

memphisexile, if it were only that simple. The problem is that the rising gas prices cause everything else to go up in price as well. It is no coincidence that the previous recession happened right after the gas prices hit $4/gallon. So I could take your suggestion and ride a bike everywhere I went, but I'll still have to pay higher prices for everything because the truckers won't be switching to bicycles anytime soon.

The real aggravating part about rising oil prices is that they have absolutely nothing to do with supply and demand. So Andrew's parroting of Palin's "Drill, Baby, Drill" will do nothing except pollute more beaches. There is no shortage of oil and people are driving less than they used to when gas was cheap. The oil prices are being bid up on the open market by speculators. It costs Exxon and BP "X" number of dollars to get the oil from the ground to the pumps. That number hasn't changed. The only number that has changed is the amount being charged at the pump, so look for the oil companies to continue to show huge Billion dollar profits each quarter. They don't need subsidies, we do.

March 8, 2011 at 9:43 a.m.
Clara said...


Thanks for writing what you did. The minute I heard that Libya was the cause of the price rise, I said "NO WAY".You said it much more clearly!

Has everyone forgotten the people who rank the lowest in income that were unable to keep up with the price just a month ago.

It is, for me, a 5 mile round trip just to pick up milk and eggs, and 24 miles round trip to pick up some fresh produce, or buy hardware.

It's a 44 mile round trip to the nearest Walmart who has already raised prices. I stopped by a Food Lion to pick up up some items on the way back from the VA. It cost almost $31.00 to pick up 9 items. My Mother would feed a family of four for 3 weeks on that.

March 8, 2011 at 10:14 a.m.
nucanuck said...

There is almost no spare world oil production capacity. The Saudis claim they have excess capacity,but their production numbers over the last few years don't confirm that. Because oil is fungible,any disruption anywhere can affect the price of a barrel of oil. That world barrel price applies to all oil,no matter local circumstance.

For thirty years,new discoveries have lagged consumption. We have reached the tipping point where world production growth cannot keep up with world demand growth. While oil is not running out,newer dicoveries are in harder and harder to access (more expensive) or in tar sands or shale that is also quite expensive to produce.

We have a two pronged problem. First,world demand is pushing up against production capability and second,newer supplies are getting very expensive to bring to market. When you combine that with the US push to lower the value of the US dollar,you have a formula for long term escalation of energy prices,even more so in the US.

The ONLY weapon we have at our disposal is reducing consumption,nothing else will make enough difference to measure.

March 8, 2011 at 10:46 a.m.
blackwater48 said...


When they have to. Memphisexil is right. The last time gas prices went nuts the public responded by driving less. Reserve supplies increased and prices only fell when oil companies decided they had to move product. In the mean time, people who rely on gasoline for their lively hoods get clobbered.

It’s a dreadful situation but I’m beginning to appreciate the irony. Pro-democracy uprisings in the Middle East will continue to spike American oil prices.

For years, the United States supported oil producing tyrants while turning a blind eye to the fate of Middle Eastern people. Now a pro-democracy movement – however it is defined – is sweeping the region and oil commodities are surging on fear that exports could be interrupted.

But to Limrick’s point, there is no oil shortage. Reuters reported today:

“There is no need for OPEC to boost oil production because consumer worries over supply are mostly "psychological" and not based on any real shortage in the market, Iran's OPEC governor Mohammad Ali Khatibi said on Tuesday. "There is no shortage in the market. There is no need for further OPEC supply," he told Reuters in a telephone interview.

“Khatibi said he believed the oil supply lost because of the bloody unrest in Libya was around 700,000 to 800,000 bpd, but added that OPEC's current production levels were still above demand.”

Sorry BRP, but Obama is not driving up the price of oil. If you have to blame someone, point to Wall Street commodities speculators. They are in the prediction business and sometimes their actions can result in self-fulfilling prophecies.

The price of oil is rising because they are speculating that the price of oil will rise which drives up the price of oil.

That’s a little ironic too.

March 8, 2011 at 10:48 a.m.
Francis said...

the envirowackos/democrat party chickens are coming home to libs are hypocrites, you like your comforts, which are nearly all possible because of oil, but you don't want to drill for it in this country....they can drill for it over there. that region will never, ever be stable.. there will always be fighting and chaos..history proves it. there is nothing that can replace oil in the forseable with it.

i agree that subsidies should be eliminated, but to demonize the oil industry is lunacy..considering that the world will come to a screaching halt without it.

the solution is to use your own recources..which are plentiful..instead of depending on foreigners who on a whim decide to raise prices.....just because they feel like it.

the chaos over there does matter because the oil is being drilled there and shipped out of there. anything that disrupts the process is a problem.

March 8, 2011 at 11:04 a.m.
acerigger said...

Too bad no body saw this coming! Oh wait,

March 8, 2011 at 11:20 a.m.
limric said...


“The price of oil is rising because they are speculating that the price of oil will rise.” You said in one sentence what took me an essay to relate. A tip 'o' the hat to ye. The uninformed hordes chanting "Drill Here - Drill Now" are completely ignorant of the fact that whatever company drills and extracts the oil, it is not our oil. It is Sunoco's, or Exxon’s. They can and will sell it to the highest bidder. Regulation specifically written to allow only sales to the US would be, well, regulations. And we all know that regulations are very bad in this new century...unless you’re a woman.

March 8, 2011 at 11:34 a.m.
LibDem said...

This is a great discussion. I wondered when it would come up.

memphisexile is quite right. My family cut back on mileage years ago and pump prices don't bother us. Most people can do this.

limric said there is no shortage. I think that is true as well. We the people can make the oil companies squeal by reducing our consumption of their product.

And thanks to nucanuck for reminding us that oil is a fungible resource. Whether it's pumped from Alaska, the Gulf or my back yard, it will sell at world market price.

March 8, 2011 at 12:13 p.m.
blackwater48 said...


We import about five million barrels a day from the Middle East. There is not enough domestic oil by the most optimistic estimates to cover that should OPEC stop exporting.

Besides, unless you want to nationalize our natural resources - isn't that socialism? - it's not our oil. As Limirick pointed out, (you) "are completely ignorant of the fact that whatever company drills and extracts the oil, it is not our oil. It is Sunoco's, or Exxon’s."

And even if they were to get their hands on every last drop of domestic crude it still wouldn't be enough to quench our insatiable thirst for oil.

Go ahead, Francis. Blame Democrats for trying to explore alternative energy sources and congratulate Republicans for keeping us totally dependent on imported oil.

March 8, 2011 at 12:19 p.m.
Musicman375 said...

I am no wall street buff by any stretch of the imagination. Can bw or anyone inform me why these people are allowed to speculate on these rates when their prediction drives prices up or down so significantly? It just doesn't seem like it can be morally or ethically justified for them to pretend to predict the prices will go so high just to continue lining the oil giants pockets, if that is their motivation. Or am I misunderstanding how that works?

March 8, 2011 at 12:20 p.m.
EaTn said...

I rarely agree with Senator Alexander but he did hit the nail on the head regarding the oil crisis: drilling for cheaper oil is not the long term solution since in the long run it will get more expensive. The solution lies in building more efficient vehicles, expanding technology for electrical and natural gas vehicles. Chalk up one for Lamar-- your turn Bob.

March 8, 2011 at 12:32 p.m.
canarysong said...

Thanks blackwater, limric, nucanuck, and harp for some great posts!

It's very unfortunate that this situation hits hardest where it always does, the working poor. Those who are struggling to make it must now deal not only with paying more to get to their low-paying jobs, but also will pay more for food (affected by increased shipping costs) as well. They are not likely to be able to afford newer, higher efficiency vehicles and do not always live near good public transportation, or close enough to work to make cycling an option.

At the same time that I worry about the effects on those that can least afford this added burden, I must admit there is a large group for whom I have no sympathy whatsoever. The county where I live is filled with big, expensive, gas-guzzling SUVs. I see even more of them down in the city than up where we live. Based on the fact that they are nearly always pristinely clean and shined to perfection, I doubt that many of them ever leave the pavement of suburbia. It disturbs me deeply to know that our young people are losing their lives (not to mention the lives of innocent Iraqis) to keep gas prices low enough to make such self-absorbed wastefulness possible. We live in the mountains where we drive over pot-holed, steep, snow-covered roads almost daily; to get into the back-country, we use our feet. If we can manage fine with all-wheel-drive cars where we live, then I'm sure that very few people actually have a real 'need' for these SUVs. Perhaps when it starts cutting into their ability to afford the heating bills on their suburban mini-mansions, they will start rethinking their choices.

March 8, 2011 at 1 p.m.
Clara said...

Hasn't oil been regulated before? Perhaps it was during WWII.

March 8, 2011 at 1:40 p.m.
mountainlaurel said...

Nucanuck said: "That world barrel price applies to all oil,no matter local circumstance."

Yes, the mind of the fossil fuel cheerleader is a sight to behold – forever clueless. They act like U.S. consumers will somehow get a cost break if the home team is drilling oil on their own turf. Will the clueless ever learn? I don't think so.

March 8, 2011 at 2:04 p.m.
limric said...

Last Post Musicman375, you do not misunderstand its lack of moral or ethical justifications, how it works or the motivation. You hit it right on the nose.
Investors are hoping that not only will the uprisings spread, but also that the population in each country will suddenly decide to cut off their major (or only) source of revenue once they magically overthrow the current despots in power. Overall, their "bets" on an unknowable future endangered oil supply are built upon a speculation, which is built upon even more speculation. Meanwhile, you and I pay hundreds more at the gas pump every year. We need to impose restrictions on speculation in commodities trading – especially foodstuffs. Also; Obama needs to fire Gary Gensler (of Goldman Sachs fame) who he appointed head of the Commodities & Futures Trading Commission. But seeing that Obama has turned out to be such a great Republican President, that ain’t gonna happen.

March 8, 2011 at 2:17 p.m.
potcat said...

A Freaking Men on that one Limric.We need to impose a cease and desist on all speculation that effects the people of this country. Housing, Oil and all wall street gambling.Its fixed and maniplinated were they can't lose. Obama, I am sorry to say let the opportunity slip with the bank bailout.Obama is not running shi.The MONEY CULT is and he has appointed every single one of the Crooks to run this show. We are screwed!

March 8, 2011 at 2:58 p.m.

at this point, i am afraid that if we took away the big oil/energy subsidies without properly regulating them(gasp), they would simply pass that cost on to the consumer.

March 8, 2011 at 3:55 p.m.
blackwater48 said...


The original Troubled Asset Relief Program (TARP) received bi-partisan Congressional support and was signed into law by George Bush in 2008.

Here’s my problem the bill:

The government drove truckloads of cash to NYC and just dumped it on the doorstep of troubled Banks with no strings attached. We said, “Here, just don’t fail, okay?”

Instead, the government should have said, “Okay, we’ll provide $700 million to stabilize the credit markets but we’re taking over.” Get rid of the clowns who caused the meltdown, enact legislation to prevent it from happening again, and reorganize with Federal Reserve oversight.

In other words, enact a plan similar to the one Treasury implemented with regards to Fannie Mae and Freddie Mac. That plan contained three measures: an increase in the line of credit available to the GSEs (government sponsored enterprises) from the Treasury to provide liquidity, the right of the Treasury to buy equity in the GSEs to provide capital, and a consultative role for the Federal Reserve in a reformed GSE regulatory system.

And put a few people in jail. I mean, where were the handcuffs?

We couldn't have handled TARP worse if we tried. We allowed the Banks to lobby the negotiations to get the best deal for them. Then they took the money, paid out handsome bonuses for a job well done, and contributed heavily to candidates in 2000 who promised to roll back the paltry regulations that managed to get through Congress in the aftermath.

Essentially, nothing has changed.

“The Big Short – Inside the Doomsday Machine” by Michael Lewis is great book to read if you really want to know how we nearly suffered a global economic implosion. Scary stuff.

March 8, 2011 at 4:21 p.m.
fairmon said...

Most Americans don't realize the decreasing dollar value has a major impact on the cost of oil and other products, especially imports. A simple example; My first trip to Canada one U.S. dollar would exchange for about $1.40 Canadian currency. Today one U.S. dollar gets only .97 cents Canadian. A $2.80 gallon of gas in Canada that cost me $2.00 U.S. on the first trip would now cost me $2.86 U.S. dollars. 43% more because of the decreased value of the dollar.

The U.S. dollar is the worlds reserve currency which means any country buying from another country has to exchange their currency for U.S. dollars then pay the providing country in U.S. dollars. The higher food cost that contributed to the middle east protest is not simply because of a food shortage and low wages but higher prices due to the decreased value of the U.S. dollar. The more dollars printed the worse it will eventually get.

Anyone can buy futures on oil or any other commodity on the open market with a winning bid to buy and take delivery on a future date at the agreed price. Futures are a zero sum game, for each buyer there is a seller agreeing to deliver the oil at the agreed price on the agreed date. Those buying the futures think they can sell it for more than they paid and put up the money for, the seller thinks the price offered is as good as will be available and is willing to sell at that price on the future date. For every winner there is a loser. Some get wealthy others go broke while the broker makes money from both parties for handling the transactions. People blame the broker who could care less what people bid and pay. They get paid a commission either way.

Mr. Bernanke and the government are as much the culprit as the oil companies. Printing money and nflation is the way they will reduce the debt by making the deficit a lower percent of GDP. It is the same as buying a house with borrowed money. As inflation occurs you are paying the loan back with cheaper dollars. Interest is intended to off set inflation and the cheaper dollar but that isn't presently working. Inflation will result in higher interest rates but not likely enough to off set inflation.

From all appearance we might as well get used to a higher cost for most essential items. Prices may fluctuate but with a steady up trend unless there is an economic implosion with deflation and a much dreaded depression. Just like any household the government cannot borrow and spend itself into prosperity. They do have a hard time changing their life style and they just can't tell the kids no. They are like an alcoholic that says I've solved my problem I am off the hard stuff I just drink beer now. Their dilemma is making tough choices versus getting votes. The blame game both parties are playing is not healthy.

March 8, 2011 at 4:54 p.m.
canarysong said...

Great post, blackwater!

Michael Moore said some similar things when he spoke to the crowd of 40,000 protesters in Madison a few days ago. I thought his speech was well worth watching. It can be found at:

March 8, 2011 at 4:54 p.m.
fairmon said...

Good point Blackwater,

I have to wonder if we may have been eventually better off if they had been allowed to implode and fail. I don't know much about banking but I would have supported confiscating all their assets including the assets of those taking those institutions to the brink of failure. Empower the FDIC to dispose of the assets in a way that protected depositors. I am sure you recall several presidents boasting of an increase in home ownership, more people own homes etc. I recall Barney Franks, Cris Dodd and the black caucus members getting irate and calling Secretary of the Treasury Snow racist and insensitive to peoples when he testified that stricter regulations and over sight of the financial industry was needed and failure to do so was risky. "Wuss" Bush didn't support him and republican committee members gave little more than token support. He later resigned in disgust. Congress has too many ties to the financial sector and it seems neither party is willing to regulate them as they should be. I still don't understand how and why brokers are also bankers and bankers are also brokers, too many conflicts to be under one management. It would good if congress gave nearly as much attention and support to those creating wealth and providing good jobs. Home ownership could and would likely be a by product. The need for welfare may be reduced. It just doesn't appear either party is committed to increased employment.

March 8, 2011 at 5:36 p.m.
Clara said...


Are you OK?


March 8, 2011 at 10:26 p.m.
fairmon said...

Increasing the supply whether it be from home turf or not will drive down prices. It used to be called free a market or supply and demand. Markets don't work when governments intervene and attempt to manipulate and call it regulating. Regulations should address operating, transporting and environmental safety not taxes with one hand then subsidies and breaks with the other. An aggressive pursuit of natural gas, nuclear, wind, solar conservation and drilling to increase supply could drive oil to prices lower than bottled water. Then, instead of billions to the middle east enabling those in power to suppress people they may have to allow people to prosper so their people could support them albeit less lavishly. They would not have the money and resources to support terrorist.

We have only known these issues would occur for over 30 years. Remember Jimmy Cahta (Carter) from Ga. instructed the DOE to assure we achieved energy independence over the next ten years. Right now they are a little occupied building plush multi-million dollar office complexes for their personnel. They do make a few audits and issue weekly inventory reports. Is either party or the DOE proposing a detailed holistic approach? Pass the ethanol please there is no affordable food and many rather drive than eat.

March 9, 2011 at 12:03 a.m.
please login to post a comment

videos »         

photos »         

e-edition »


Find a Business

400 East 11th St., Chattanooga, TN 37403
General Information (423) 756-6900
Copyright, Permissions, Terms & Conditions, Privacy Policy, Ethics policy - Copyright ©2014, Chattanooga Publishing Company, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Chattanooga Publishing Company, Inc.