Biden: "We Misread How Bad The Economy Was" -- A Comment Scripted by the American Petroleum Institute?
Vice President Biden, in humble contrition "confessed" that the Obama administration "misread" the depth of economic troubles it inherited. In doing so, in putting it into the terms he did, displayed a chilling lack of understanding of the economic landscape.
There seems no comprehension, and no mention, of how the cost of oil has encumbered the economy. Since February, or less than a month into the Obama presidency, the price of oil has doubled. It has moved quickly from some $33/barrel to over $72 barrel, and hovers around $66 barrel today.
The nation consumes some 20 million barrels of oil daily. A doubling of price to the current circa $66/bbl dollars means a daily additional "tax" on American consumers and industry of some $660 million. Simple arithmetic: 20 million barrels by $33 (the difference in today's $66/bbl price to February's $33/bbl) totals $660 millions a day. In rough numbers, making allowances for variations from these benchmarks both up and down, the massive total cost to the economy impacted by the doubling of oil prices from the end of February through the first days of July was nearly $70 billion. This real-time sum virtually neutralizes in large measure that portion of government's stimulus package that has been spent to date.
No it wasn't altogether "We misread how bad the economy was" it was more "We misread what was happening in the economy". Yes, and rightfully, alternative energy was seen to be a high priority of the administration. However, to the oil industry's cheer, there was little or no focus on the immediate and insidious impact of oil prices, their manipulation by OPEC and speculators who were given a pass, in spite of their machinations on oil prices and its profound impact on a faltering economy with mounting job losses and the steep contraction of discretionary spending due in large measure to the cost of energy.
Hardly any forceful initiative by the CFTC over the aberrations of oil trading worldwide, not only in the commodity exchange of New York, but in the offshore exchanges be it London, Dubai, Singapore, not to speak of the burgeoning over-the-counter market. The CFTC needs to pursue aggressive policies for far greater transparency in trading of oil futures -- to identify who and for whom trades are made, how much is being traded, and to what end.
And then the administration placated the oil industry and the likes of the American Petroleum Institute by blindly continuing to load up the Strategic Petroleum Reserve, purposefully or inadvertently, sending a signal that the doubling of oil prices is OK as far as it is concerned.
As the New York Times quoted a Deutsche Bank analyst today, "Crude oil prices appear to have been divorced from the underlying fundamentals of weak demand, ample supply and high inventories". Certainly the administration has its hands full, but clearly something is deeply amiss. The sooner Mr. Biden et. al wake up to this issue the better for all of us!
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The DLC Dems are owned by the banksters and big business. Look it up.
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"Crude oil prices appear to have been divorced from the underlying fundamentals of weak demand, ample supply and high inventories". The price of anything can be divorced from the underlying fundamentals for a while. Interventions by producers, governments, consumers etc. will all make prices fluctuate. Think of housing, commercial real estate, precious metals, diamonds....and yes oil.
The particularly wacko group of countries that have most of the easy oil have a vested interest in keeping the price high, but not so high as to encourage alternatives to develop too quickly.
Groups that use a lot of oil (or other commodities) hedge their needs to avoid the natural (or un-natural) spikes from effecting their operations. Think airlines, metal fabricators, jewelery manufacturers. Even entering a long term lease is a hedge on property costs going up.
I don't think it is a conspiracy.
Great article, thanks!
.
Legalize Hemp we need to put our big rigs on 20% hemp diesel diet in 2 years.
50% in 5 years
8X more bio fuel than soy
That was the same excuse Bush gave about WMD's.
Sheesh. Incomplete information. Man.
"This is your captain speaking. Smoke em if ya got em, we'te goin down"
Oil prices are manipulated by huge funds that are uncontrolled by anyone. They buy short, buy long, give price targets, scare investors, urge suppliers to store on tankers . . . it is endless manipulation. The liberals ignore it because they dream high oil prices will lead to more of their self-centered green revolution. The wealthy ignore it because they make money as insiders, sucking cash out of the working class that needs gasoline to drive to wage slavery jobs.
Number one, the price of oil only hit $33 a barrel for a few moments of one day and only on the front month contract. The months out contracts never got below $40 a barrel. Second, the increase in the price of oil has nothing to do with OPEC. Everyone expected a bounce because it was incredibly oversold, having fallen to $33 from $147 in a matter of months. There was also buying as a hedge for the weakening dollar. You can't blame "speculators" for buying oil because of inflationary monetary and fiscal policy and the debasement of the currency. Often times people buy oil in these cases to protect themselves. Back in the 30s the govt took away the peoples right to own gold and that should never be repeated again. The price of oil also went up because there was a sense that the global economy would recover and that oil demand would go up. Last, the increase in the price of oil from $33-$40 back to the $50-$70 level was actually a good thing. It enabled many energy production and exploration companies to continue making money and continue exploring for more oil. It propped up the energy equipment manufacturing sector as well. All those propped up employment. But most importantly, it kept the economies of the commodity producing nations, particularly, Russia from imploding, which would have horrible political and social ramification worldwide.
Now you are defending oil biz and speculation
plenty of credible sources show that speculation is the primary driver in the fluctuation of oil prices
why should oil make usch dramatic price spikes? what new value has been added to justify?
No credible source as EVER shown that speculation causes prices to go up. Speculators only speculate when the fundamentals are good and/or govt policy is bad. Speculators are never the cause, they are the result of the real cause.
the only positive to higher oil prices is that it finally gets people interested in alternative energies and efficiency
I agree wholeheartedly with SLG's post!!
BTW
oil shale and tar sands do not count as cheap oil
no is producing oil shale
and tar sands have a low production rate and low net energy
it's like very sour crude, not light sweet crude
You’re partially correct Mr. Learsy….
Oil cannot be ignored
Higher oil prices means less discretionary spending.
But what’s with this whole obsession with Opec and Seculators...?
I have a question for you Mr. Learson...., what if you're wrong
about speculators and Opec..., and I'm right about Peak Oil?
Peak Discoveries
WORLD Discovery vs Consumption of Oil
YEAR DISCOVERIES
1930 10 billion barrels
1964 48 billion barrels
1988 23 billion barrels
2005 ~6 billion barrels
YEAR CONSUMPTION
1930 1.5 billion barrels
1964 12 billion barrels
1988 23 billion barrels*
2005 30 billion barrels
World oil discoveries peaked in the 60's
Now the world consumes 5-6 barrels of oil for every barrel discovered
And overall rate of discoveries is declining through time
http://ngm.nationalgeographic.com/2008/06/world-oil/roberts-text
http://www.flickr.com/photos/anuragjain/15754008/
http://jluscher.googlepages.com/world_crude_oil_production.png/world_crude_oil_production-full.jpg
http://www.eia.doe.gov/emeu/aer/txt/ptb1105.html
http://www.energybulletin.net/image/uploads/World%20Oil%20Production%20through%20May%202006.gif
also try googling ASPO
or the OIL DRUM
Wow, that's like saying we stopped going to the moon in the 60s, therefore the moon must have disappeared!
We are in trouble . The answer may be more than cut taxes and cut services, or tax and spend. We really have to have price control, profit margin caps and controls on the hikes in oil prices. These kind of things are things that neither party is will to consider.
Yes they misread it, and compounded it by putting us in hopeless debt for generations.
The administration misread the impact of the broken credit markets. They are still misreading the impact of broken credit markets. Oil is a sideshow compared to foreclosures and denial of auto credit for people with credit scores of 700.
http://www.escapethenewgreatdepression.com
how can oil be a side show
without oil..., there is no economy
w/o a ramped up alternative ready to go
The problem is that we can't really know if this statement really reflects the administration's position, or is just another one of Biden's foot-in-mouth stammerings.
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