Weather or Not

Severe Outflow by R. Edwards

Gasoline Prices: A Layered Issue

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Oil prices: it’s not just Ukraine, nor “big bad oil companies”.  Not is it even mere supply and demand.  I’ve seen a lot of people on social media (including friends) fall for some fantastic fallacies and pop-appeal “malarkey” offered by politicians and celebrities, that are wildly ignorant of economic fundamentals as applied to the crude-oil markets.

First and foremost, oil is a predictive market — strongly futures-influenced.  You can call it “speculative” if you want, but you’d be misrepresenting things; “speculation” implies guessing without basis, and therefore is as worthless a term as calling weather forecasts “speculation”.  Both can be wrong, and often are to varying extents, but are still well-educated predictions by experts in their fields, and are near the mark more often than way off it. Unexpected spikes and falls happen due to unexpected and/or severe events, whether geopolitical (invasions, etc.), mechanical (major-refinery failure) or natural (tsunami, northern Gulf hurricane, protracted deep freeze or heat wave).

Because oil prices are rooted significantly in futures, current and recent Federal government policy (yes, that includes executive orders as well as things Congress threatens to do, much less actually passes) absolutely influences prices. Yes, canceling pipelines and imposing moratoria on new leases and drilling don’t change the current supply. Each does, however, threaten to curtail future supply. Again, prices are based on futures. Then when a major producer (USA) isn’t producing to its capacity, that dwindles current supply and prices, as well as raises futures. An obvious solution, purely economically, is: produce more!

Overlay these factors, along with other global supply threats like a war involving a huge and boycotted oil producer (Russia), and we get what we see.  Throw in ambient price inflation due to unrestrained money printing (watch this this slightly over 1-hour lecture by Milton Friedman for a full explanation), and the resultant devaluing of the money relative to goods and services, and that adds to the problem.  In turn, rising fuel costs add to inflation, and it becomes a sort of slow-motion death spiral. Hence, the Fed steps in and raises interest rates, which historically curtails inflation over the span of months to years, but harms the Federal budget through higher interest payments on our incomprehensibly enormous national debt.

Oil companies aren’t innocent here, but not for the reasons you may think. All companies have the right to make a profit; otherwise they go bankrupt and fail shareholders (including many Americans’ 401Ks and pension plans). Blaming profiteering or price gouging by oil companies is populist bullshit!  Utter economic quackery, and most of the politicians who say this know it…they’re just pandering for votes from the mass ignoranti.  Nothing more.

Oil companies can profit off low prices at high volume, just as off high prices at lower volume.  Instead, where they went wrong was in their experts’ inability to foretell supply (and supply-chain) problems and adjust accordingly beforehand, including through greater refining and production capacity.  Part of that is their fault through lack of foresight and poor planning. Penny-wise, pound-foolish!  But a lot of it is not.

What is one reason refining and production are slow to move? Wait for it…governmental regulation (a.k.a. interference). Every unfunded governmental mandate adds to the cost of doing business, no matter your business. It just does. This is fact. You experience this when you spend lots of time (time is money!) doing your taxes, which is mandated, or buying software to help you. Business owners see this in many more ways.

Magnify that by hundreds of thousands of regulations — federal, state, and local — baked into the cost of extracting and producing petroleum-based products of all kinds, including gasoline. Compliance corporately is a huge drag on cost, additively.  Indirect attacks, such as regulating banks that lend to the oil industry, further add cost.  [Look up “Biden Administration Restricts Leasing for Overseas Fossil Fuel“, which of course the Sierra Club loves.  I presume none of them ever have been poor and needed to drive a petroleum-powered vehicle to work.].

It’s fair to argue what regulations are needed and what aren’t, but the fact is, they *add cost* regardless.  Take a look just at biofuel mandates, for example.  Threats of still more regulation, prohibitions, and actual executive orders, drive up futures.  Futures heavily move current prices.  Therefore, the oft-seen mantra, “Presidents don’t influence prices” is garbage.  They absolutely, positively do.  While the Biden “I did that!” sticker you see on gas pumps isn’t completely true, it has some merit.

It’s irrational how people who support one party’s candidate or the other subscribe wholesale to whatever that candidate spouts off.  Whither independent thinking?  Those who claim Biden policies have nothing to do with inflation as a whole, or of fuel in particular, have turned off a key part of their brains.  Same with those who ignored Trump’s straight-up factual lies on other topics.  Yet these men were both pretty honest about what they were going to do, and they did it.

Biden fulfilled promises that have direct and short-fused influence on petroleum inflation.  If you like that, it shows either your ignorance of basic ECON 101 concepts, or reveals a pampered, soft, privileged status of not being poor enough, and being hurt enough, by inflation to change your mind.  I was in a poor household, in the ’70s to early ’80s oil crises, and can testify the effects are real even to renters, on prices of basic needed goods, electricity, and so forth, as well as rent itself.

Stop falling for and repeating political lies because you voted for the liar — of either party.  It hurts your own credibility in argument.  To wit, the current administration’s turn from “Putin’s fault” to “price-gouging oil companies”, for the very same event, has been remarkable.  Both excuses are way, way overplayed, with only a partial, lower-order speck of truth in the case of Putin.  It’s just a distraction and diversion to take your attention from the tangible effects on futures (thus on current prices) of this administration’s executive orders and this Congress’ statements and bills directed at future availability.

Finally you can say we should get off oil.  Fine.  Over decades, I agree.  I think we should too, and in America, go all in on lowest-carbon, highest-efficiency, smallest-imprint, least-waste-volume  nuclear energy long term.  Others claim renewables someday, somehow, will be a steady and dependable source.  Whatever.  That’s then.  This is now.  Until we can, and do, we are dependent on fossil fuels, especially for transportation and lubricants — like it or not.  High prices in all those drive up costs for all goods and services, and hurts the poor the most.

Perhaps, just perhaps, that’s by design.  After all, even if not deliberate, the more people in poverty, the more dependent they are on central governmental authority.  And by extension, the easier they are to control.  We are clearly headed for a digital (therefore trackable by centrally controlled AI) currency.  Do some critical thinking about that as well.  When you do, current events make more sense, including what China is doing with their mass tracking and “social credit” tyranny.  I’ll leave the specifics of that exercise to you, to the extent it can be applied here.

Finally I’ll finish with a quote from a recent President’s State of the Union address.  How I wish the same claim honestly could be made today.

“Nowhere is the promise of innovation greater than in American-made energy.  Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources.  Right now, right now American oil production is the highest that it’s been in eight years.  That’s right – eight years.  Not only that – last year, we relied less on foreign oil than in any of the past sixteen years.” — Barack H. Obama

Trillion-Dollar Coin? Insanity!

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This is insanity. It’s truly come to this?…serious talk about the feasibility of minting and depositing a coin stamped “ONE TRILLION DOLLARS” to avert a debt-ceiling default? Again, insanity. Perhaps the scheme would work, technically, but it should be prevented from being necessary to even consider!

The national-debt crisis grows ever deeper as the debt vs. GDP swells grotesquely (even before the pandemic!), and even more importantly, interest on the debt cancerously eats up an ever-larger share of the budget, invariably crowding out needful things by slow creep (hence, the growing, already massive, silent debt crisis), and yielding a vicious cycle in which the debt can make itself worse and worse without any assistance from us. Where does this lunacy end?

Read this little primer I posted in January to better relate to our debt. This is the fruits of decades of abject, shortsighted failure of the Republicrat duopoly to rein in their entirely undisciplined fiscal practices with our tax dollars, and instead pander to their ever-bloated lobbies and bases (mainly different entitlements favored by the Ds and Rs, and war spending by both parties).

Don’t dare blame just one party. Democrat presidents with Republican Congresses, Republican Presidents with Democrat Congresses, either with mixed Congresses, either with their own party effectively controlling both chambers (as now)…it hasn’t mattered. The national debt has grown, factually and demonstrably, for decades, under every permutation of those — every single one. Even with record- to near-record-low interest rates, so has the percentage of the budget devoted to debt interest.

What if interest rates double, or worse, approach levels of the early ’80s? That accelerates the vicious cycle much faster than any current projections, introducing upward nonlinear growth of our debt, even with small yearly deficits (which aren’t happening).

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Plotted by PGPF from public-domain CBO data.

These Republicrats will drive us straight to economic ruin through their base-pandering shortsightedness and hapless ignorance of the greatest economic crisis our nation ever will face, staring us right in the face. And it’s not just the extremes of D and R either; the so-called “moderates” are ignoring it too. Only a very few outliers (e.g., Justin Amash, Ron then Rand Paul) ever bring serious attention to the debt, and they get swamped in a tsunami of everyone else’s drunken-like spree of profligacy.

Republicrats in Congress have shown they simply won’t behave themselves as they’re supposed to — adults managing a budget — refuse to control federal net spending to zero-deficit yearly levels, and certainly won’t bring about budget surpluses needed to draw down the debt. They’re not going to force themselves to balance the budget. Therefore, they need to be forced to do so externally, by The People.

The only way I see out of this is for an Article 5 Constitutional Convention of States to go around these spineless fiscal children in Congress and enact a Balanced Budget Amendment to the Constitution, which would force Congress to balance the budget yearly. This at least would stop the debt-growth bleeding via ending yearly deficits. [While we’re at it, enact a Congressional term-limits amendment as well.]

Worried about wars or pandemics under a BBA?

From the PPGF:

Most amendment proposals go further than requiring a balanced budget or budget surpluses. Some of the most frequent additional elements are:
* A requirement that the President submit a balanced budget to the Congress;
* Provisions that allow some flexibility in times of war or economic recession provided that a supermajority (typically three-fifths) of the members of the Congress vote in favor of a waiver;
* A provision requiring a supermajority vote of both houses of Congress in order to raise the debt ceiling;
* A cap on total spending (as a percentage of gross domestic product or GDP) unless waived by a supermajority of both houses;
* A limit on the total level of revenues (as a percentage of GDP) unless waived by a supermajority of both houses; * A provision to prevent the courts from enforcing the amendment through tax increases;
* A provision assigning the Congress the responsibility to enforce the amendment through legislation.

Some of these (especially the last item) would water it down to something near uselessness. Others, such as a declared-war provision, might be beneficial in that it would, in effect, enforce what’s already in the Constitution: making sure all wars are formally declared, or they can’t count as BBA exceptions.


A balanced budget needs to be forced on Congress, because it will not come from Congress. Otherwise…disaster! Maybe not this year or next, but in the lifetimes of our children (and maybe us middle-aged people too).

Making National Debt Relatable

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A game has been going around some social media relating large quantities, like a million or billion, to time. This is to get people to understand how large really huge numbers really can be. I support that.

Here’s a more-relatable version. If you earn $20 an hour, that’s a little over half a cent per second. If you earn $60 an hour, that’s 1.7 cents per second. Not bad, right?

If I gave you a whole dollar every single second, you’d get $86,400 a day. You’d be a millionaire in a little over 11-1/2 days. Cool! At the same rate of a buck per second, it would take you 31.7 years (11,574 days) to be a billionaire. That’s a lucrative career, taking my money at a single a second. If I had enough… 🙂 I don’t, so I’d go essentially a billion dollars in debt to do you such benevolent favor. Who in their right minds will loan me a billion bucks for that? Show me that loan officer, and I’ll show you a sucker…and a guy who is about to bankrupt his employer.

Now instead of money I’m spending that I don’t have and would have to borrow, let’s look at the amount of money our federal government borrows and spends.

If I paid off the U.S. national debt ($27.77585 trillion and counting at 2 p.m. CST yesterday) at the very same pace of a dollar every second, it would take 880,164 years. That’s about 440 times the amount of time elapsed since Jesus was crucified. Put another way: if you donated $86,400 every day to pay off today’s national debt, it would take over 880,000 years.

Pretend you got a great job netting $100,000 a year pocket money, and donated it all to the national debt, because you’re a generous citizen that way. You’d pay the debt in over 277 million years. That’s between 3.5 and 4 million human lifetimes, back to back. It’s also over 4 times farther into the future than the time elapsed since the end of the Cretaceous, when dinosaurs perished.

By then, whole continents will slide over the face of the earth, pivot this way or that, and merge, while others split in two and set sail across oceans vast. Entire new mountain ranges will buckle skyward, some maybe as high as the Himalayas, while the modern ones get worn down to remnant, stumpy nubs, rendering today’s Rockies of Wyoming and Colorado a high, rolling plain broken by sporadic hills. Parts of what’s now the Mediterranean seafloor will be rock faces covered in glacial ice, 18,000 feet above sea level. The Yellowstone hotspot could be cracking the craton and blasting scalding water skyward — near Hudson Bay. Baja long will have docked somewhere near Anchorage, and you’ll be able to see not only Russia from there, but perhaps Sydney too. All that world geology reworked, before you paid down the national debt at a hundred Gs a year!

Let’s look instead at those with wealth beyond our reasonable comprehension. Jerry Jones is worth $8.4 billion. We’d need to confiscate all the assets of 3,300 Jerry Joneses to pay off the national debt. Alas, there aren’t that many of his financial stature, even if you wanted to crank your taxation engines full-throttle communist and pillage their last dimes.

Elon Musk just passed Jeff Bezos and became the world’s richest person. His net worth is $188 billion. To pay off our national debt, 148 Elon Musks and even more Jeff Bezoses would need to give all their assets away to the treasury today.

What about us? If every taxpayer in the U.S. was billed the national debt, called in today, we’d each owe almost a quarter of a million dollars. We’re the bankers here, and we’re being played for suckers.

Keep track of our governmental and societal debt burden on the National Debt Clock, and have a lovely week!