In the upside-down world that passes for our government, the House has just passed legislation pressing China to raise the value of its currency. According to House Ways and Means Committee Chairman Sander Levin (D-MI), "China's exchange-rate policy has a major impact on American businesses, and American jobs, which is what this is all about." That may well be true, and yet there is an important segment of American business, ranging from such American industrial icons as Corning, FedEx, General Motors, Goodyear Tire and Rubber, among many others, who have voiced their concern that such legislation would poison the well of U.S.-China commercial relations, exacerbating feelings of mistrust and suspicion. Last Thursday in New York, in a meeting with Chinese Premier Wen Jiabao, President Obama indicated that he wants to see "more action" relating to the value of the yuan. Other than the value of the yuan, there are significant and important trade issues with China extending to market access, technical data, patent protection and copyright infringement, which certainly need be addressed.
While the legislation has passed in the House, it remains to be seen whether the Senate will follow. Yet what is ironic is that here we have a situation whereby China, by holding down the value of the yuan, is able to flood us with cheap goods that many of our unemployed and the many newly impoverished can at least access. China's trade balance with the United States, over the first seven months of the year, has widened to $145 billion from $123 billion the year before. Significant? Yes. But hardly when you consider the distortions visited on us by OPEC and its allies in the oil industry.
The price of oil has escalated over the last decade by a factor of more than five and since the first months of the Obama administration has more than doubled by more than $40 per barrel (from the low $30/bbl to the mid $70/bbl). Multiplied by current oil consumption in the United States of some 20 million barrels a day, that comes to an increase of $800,000,000 a day, or near $300 billion a year going into the rapacious pockets of the Organization of the Petroleum Exporting Countries (OPEC) and the oil industry and its interests. That, with nothing for us to show for it expect having had our pockets fleeced. And then one needs ask, where is the outrage here, and where is our vigilant Congress, our administration, our somnolent Justice Department and Federal Trade Commission, not to speak of our oversight agencies such as the Commodity Futures Trading Commission (CFTC), while the oil boys are taking us to the cleaners? At least the Chinese are delivering bargains.
Where is the outrage from this White House at OPEC and its policies, and that of its putative leader, Saudi Arabia, restricting oil production to achieve artificially high prices and their supportive allies in the oil industry who benefit in the wake of the OPEC cartel's manipulations?
Where is the intercession by our oversight agency, the CFTC, led by Goldman Sachs alumnus Gary Gensler, in the highly suspect oil-trading activities on the commodity exchanges that keep prices at astronomical levels and have left large swaths of the oil trade itself puzzled (Please see "BP's Smoking Gun and the Manipulation of Oil Prices," 06.30.10)? In January of this year, the CFTC announced it would vote to set position limits on energy trading on the exchanges. Since then, a deafening silence. (Question: Are there laws in place that prohibit these "commissioners" from taking employment with the very firms/industries they are overseeing, or is serving on these commissions simply a pathway to a sinecure in the very industries under surveillance? And if so, how long can we tolerate it continuing?)
Bringing the price of oil down to levels that reflect a true market dynamic, say achieving a price level at the low $30/bbl, as was the case in February 2009, or less (please see "Why Are We Paying $50 a Barrel for $20 Barrel Oil?," 04.27.09) would save the nation hundreds of billions now being transferred to oil interests.
Would lower prices result in higher consumption? Yes. But paying oil interests to keep consumption in check borders on the insane. There need to be government programs that restrict the usage of petroleum-based gasoline (not biofuels nor electric, and so on) to current levels or less through voucher programs (please see "The Energy Solution That Dare Not Speak Its Name," 07.17.07) or whatever program is workable rather than the transfer of our national wealth to the oil nabobs.
Consider what those sums could do were they applied to a national infrastructure program such as high-speed rail or improvement of our inland waterways and port facilities, thereby enhancing our export capabilities and the thousands upon thousands of jobs that would result. We would even begin to give China a run for their money from our level and enhanced playing field.
You're absolutely right about both China and OPEC. Trade with either of them shifts American wealth into the hands of despots who actively work against our interests abroad.
I'm old enough to remember the original "Gas crises" of the 1970s. The Carter Administration begain some bold initiatives to significantly decrease our dependence on foreign oil.
The Reagan Admin. came in and undid all of that hard work.
Since then, we haven't made any serious attempts to address this issue.
So far all we've gotten is lip-service from Congress and the Obama Administration.
We should tax oil imports as well as many imports from China. We could use these proceeds to institute and fund a comprehensive energy independence plan.
We won't get these things unless we demand them.
In the meantime, buy American products (esp. local ones) and decrease your own footprint.
The largest US rail freight company, union pacific, is perennially the largest buyer of diesel - 2B gallons+.
The US and the globe is awash with natural gas. Come peak oil, we will deeply regret not converting heavy users sooner.
The next easy target is road freight.
http://www.bloomberg.com/news/2010-07-28/pickens-home-depot-beat-wind-turbine-makers-in-u-s-energy-legislation.html
It is all happening right now - email your representative with your thoughts. Hey, its your tax $. If you let them blow it, there may not be a second chance, and this is a chance. If america can cut its enourmous fuel bill, it will be much richer.
Up to $50k (only 6x subsidy for one Volt) subsidy for filling stations doesnt sound enough, given there will be few sales for years as there are no gas vehicles & there are no vehicles as there are no filling stations.
There is nothing technologically radical in the above. All major engine manufacturers have natural gas products. All that is lacking is refueling infrastructure. It should be so easy, the US is laced with gas pipelines. It doesnt even have to be transported.
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Because merely pumping more oil will not solve the underlying problem: That burning oil is pure insanity!
Because the key is energy efficiency (a radical change in the nation's approach to resource use).
Rather that fight higher oil prices, Our energy policy should seek to INCREASE the cost of oil products to the consumer to a level that represents the true, unsubsidized cost of this resource, thereby revealing the advantages of conservation, efficiency, and utilization of alternate energy resources.
You'd like to see more of our personal spending supporting each other more rather than those emerging markets? Well? We're the spenders Bozo! You'd like to see less of our personal spending going to OPEC and more to supporting each other? Well? Who picked out your car?
So... your article fails on all counts.
Congress hasn't acted against unfair trade nor in response to our energy crisis.
That IS the point.
Peace.
A report (I think it was put out only a couple of weeks ago) published by "Der Spiegel" from the Future Studies group of the German Centre for the Armed Forces Transformation (a military think tank working for the Berlin Ministry of Defense) examines the effect of decreasing supplies of crude oil on the geo-political and world economics landscape.
What i found particularly interesting is they predict there will be a break down of strictly market driven supply and demand, making the need for oil diplomacy crucial to all importers and will increase tensions that can easily turn into war. There is much more of course
The story can be seen at BI:
http://www.businessinsider.com/the-oil-peak-has-been-reached-2010-10#comment-4ca6287f7f8b9a79036d0600
Regards,
GAB
America has 1/4th the coal on planet Earth and over 100 years worth of natural gas. If citizens demand it, these resources could be used to establish United States energy independence in a matter of a few years. Declaring our energy independence would greatly reduce the US trade imbalance, create jobs,keep capital in this country for job creation and deny funds to Middle East terrorists.
Existing fleets of automobiles can readily be retrofitted to run on natural gas and would be more practical than subsidizing electric cars that have limited range and long recharge cycles.
I have often wondered. Does that make the American funded "color revolutions" illegal also? What is good must be universal.
Is there international law governing this? What court would you go to? Or is it might makes right?
We need to DEMAND Congress to seek 1)energy independence, 2) end unfair trade.
http://www.huffingtonpost.com/ian-fletcher/dont-fear-a-trade-war-wit_b_742811.html
But the manufacturing deficit with China is a bigger problem because it is the hollowing out of the American economy.
Black is white and bad is good.
Yeah!!
"Affordable imports" that result in their being mass unemployment in America are indeed a major problem. To consider "low prices" due to manufacture by populations that are not burdened with things like the costs of health care, pensions, a standard of living, environmental regulations, health and safety regulations.....with the result that manufacturing capacity is dismantled in the US and moved en masse to China.... as simply "affordable prices" is laughably naive.
Black is black and bad is bad.
Yeah!! (huh?)
The other takes our jobs.
Neither one is in our best interest.
TY jake
Higher prices are always bad for the consumers, as they can now afford LESS. Less is not good. Less is painful.
The consumer makes adjustments in his/her choices when faced with higher prices. Allowing the consumer to make choices based on the true costs of products is always a better idea than manipulating their choices based on how much profits a company can make.
When the cheapness of a product is made to be the only consideration, the consumer is prevented from making a choice for higher quality, or for a better lifestyle, or in this example, for more local employment.
When viewed only through a cost sense, crude oil is like beer. The container is always worth more than the contents. The base price is very low. The profit taking on many levels quickly inflates the price.
OPEC is just......."meet the new boss..same as the old boss."