Sunday, June 1, 2008

Addressing my readers

A Plea
I realize that many of my readers are left leaning and liberal, or there are some that are more libertarian and pro free-market.

The good thing is that they read my blog, that they question (or started to question) the narratives and memes sold to us in the mass media, and they started to think.

The bad thing is that the folks on the right (actual, honest to goodness conservatives and libertarians) and on the left (environmentalists, socialists et al) have ideological blinders, which they refuse to cast off and admit the possibility that what they believe in is wrong.

They refuse to entertain the possibility that some of their ideas and world viewpoints are incorrect, much like a religious person does not entertain the idea that his religion may be wrong on some issue or other.

So lets deal with my readers here on this one issue - oil commodity futures.

First, the left wing.
Listen to me and listen good. Peak Oil exists. The demand is increasing due to more people being born and many of them driving new cars. Of course, the supply of oil is not increasing. And yes, you are right re: the global climate change, peak oil, and many other subjects.

But admit it, I dare you - I have hammered home the point that this particular record increase of the oil price is due to speculation. I have listed countless articles and sources which state exactly this fact. There is no denying it, and the fact that speculation is to (mostly) blame for the oil price does not deny or preclude the Peak Oil theory, the environmental damage that the use of all this oil does to our planet, etc etc.

Don't disagree with the premise of my oil bubble articles because of your ideological beliefs - that is terrible, and is an instinctive reaction. A reaction of a cornered animal - a reaction of a deeply religious person who refuses to think and analyze.

A reaction of a zealot.

Next, the right wing.
There are many libertarians reading my blog. So, what comes next might be a shock to you guys, but I am a believer in honesty and strong medicine.

There never was and never will be an actual, honest to goodness FREE MARKET. Ever.

The market is always regulated, chiefly for two main reasons:
1) To allow the people on top, the elites and the rulers of the system to make money by "gaming" the system
2) To protect the ordinary citizens from a free market.

Point 1 is self explanatory. The elites, the rich people at the top, the hedge funds, the banks, the millionaires, today employ lobbyists and use other means to pass laws favorable to themselves. One of the examples is the law which was written by Senator Gramm called the 'Commodity Futures Modernization Act', and was then attached as a rider, an addendum to a gigantic unrelated bill as a favor to Gramm's buddies (fellow thieves) at Enron. I wrote about it at length, and linked to the villagevoice article repeatedly.

This one law has started the current commodity speculation insanity in oil and food futures.

Do you get this?
This is your free market, this is speculators unshackled by pesky laws and government interference.

One of the funniest arguments I read on a board was that "this goes against the spirit of commodity trading!".

Well, guess what - this is free market, 100% without government regulation, and "free" means anything, and I do mean ANYTHING goes. There is no spirit of the "commodity trading", just like there are no such things as ethics or common sense here - after all, the chief duty of a capitalist is to make money within the system.

So if the is a free market, where anything goes...

We get this oil price futures trading, and all that it entails - expensive gas, people starving around the world, world wide economies now have to deal with those facts...

Are you sure, 100% sure that you want to shout for your free market, buddy?

But wait, let us deal with point 2.
A free market allows the most ruthless, most blatant abuser, the biggest bandit to rise to the top and stay there. The closer a society is to a free market, the worse off its citizens are. (Of course, if we go to the other extreme, to the level of government intrusion of communism, the society is even worse off. Real life is about being in the middle and compromises).

Read up on the definition of the Robber baron in wikipedia:

Robber baron was a term revived in the 19th century in the United States as a pejorative reference to businessmen and bankers who dominated their respective industries and amassed huge personal fortunes, typically as a direct result of pursuing various anti-competitive or unfair business practices.

The people who rose to the top of the economic food chain did so as a result of anti-competitive and unfair business practices.

But hey, in a free market that you shout for so much, there are no anti-competitive or unfair business practices - because there is no regulation. At all.

And how does the free market protect you, the ordinary citizen, from these anti-competitive and unfair business practices?

In a real free market, you are not protected. At all.

There are no laws that stipulate working conditions. Safe working conditions are a luxury. There are no laws on the safety of medicines and no government testing for the side effects of a medication. If you happen to die from taking a pill - hey, it is a free market, you could have bought another kind pill!

And what about your food? With the government non-interference into food production, no testing for safety and no food safety laws, we arrive in the land of Upton Sinclai'r 'The Jungle':
Although Sinclair originally meant for his novel to focus on industrial labor and working conditions, food safety became the most pressing issue. Sinclair's account of workers falling into meat processing tanks and being ground, along with animal parts, into "Durham's Pure Beef Lard", gripped public attention. The morbidity of the working conditions, as well as the exploitation of children and women alike that Sinclair exposed showed the corruption taking place inside the meat packing factories.

Free market: "Sinclair's account of workers falling into meat processing tanks and being ground, along with animal parts, into "Durham's Pure Beef Lard", gripped public attention."

Free market: "the exploitation of children and women alike that Sinclair exposed showed the corruption taking place inside the meat packing factories".

Now, even if you are a dyed in the wool libertarian, maybe, just maybe, you should say to yourself "Well, some laws and regulations are needed, perhaps!".

Congratulations!
You have just ceased to be a libertarian, and so welcome to the real world!

On the other hand, if after reading all this, you are now calling me names, deleting my blog from your favorites, and thinking to yourself: "The free market's competition would allow the best companies with the best practices to win over in the end, because that's how it is supposed to work!" then, well buddy...

If me and you were in a room somewhere, and you told me that, I would look at you, smile sheepishly and then start to sloooowly back out towards the exit.

This level of insanity may be dangerous.

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3 comments:

Anonymous said...

American Goy wrote:

"Real life is about being in the middle and compromises)".


That pretty much says it all. We are supposed to use our brains to make a legal/social infrastructure that benefits the most at the detriment of the least. Everyone -really- knows what is just in the truest sense. An intelligently regulated market, not communism or market-as-utopia-neocon-malarkey-....is the best way to maximize the nation's circumstances.

Finding the perfect medium is never easy and adjustments would always have to be made in reaction to changing circumstances out there. Checks and balances, just like the forefathers intended, are vital.

Greg Bacon said...

Food for thought regarding Peak Oil. In addition to this article, I have a brother that works out of Wyoming as an onsite geologist for oil drilling companies.

He says that damn near all of the oil wells found in the last several years have been mapped and capped, then it's on the the next potential site.

Bakken Formation

A landmark paper by Dow and a companion paper by Williams (1974) recognized the Bakken as a tremendous source for the oil produced in the Williston Basin. These papers suggested that the Bakken was capable of generating 10 billion barrels of oil (BBbls). Webster (1982, 1984) as part of a Master’s Thesis at the University of North Dakota further sampled and analyzed the Bakken and calculated hydrocarbon generation capacities to be about 92 BBbls. This data was updated by Schmoker and Hester (1983) who estimated that the Bakken was capable of generating 132 BBbls of oil in North Dakota and Montana. A research paper by USGS geochemist Leigh Price in 1999 estimated the total amount of oil contained in the Bakken shale ranged from 271 billion to 503 billion barrels, with a mean of 413 billion barrels.[7] While others before him had begun to realize that the oil generated by the Bakken shales had remained within the Bakken, it was Price, who had spent much of his career studying the Bakken, who particularly stressed this point. If he was right, the large amounts of oil remaining in this formation would make it a prime oil exploration target. Unfortunately, Price passed away in 2000 before his research could be peer-reviewed and published. Nevertheless, the drilling and production successes in much of the Bakken beginning with the Elm Coulee Oil Field discovery in 2000 have proven correct his claim that the oil generated by the Bakken shale was still there. New estimates of the amount of hydrocarbons generated by the Bakken were presented by Meissner and Banks (2000) and by Flannery and Kraus (2006). The first of these papers tested a newly developed computer model with existing Bakken data to estimate generated oil of 32 BBbls. The second paper used a more sophisticated computer program with extensive data input supplied by the ND Geological Survey and Oil and Gas Division. Early numbers generated from this information placed the value at 200 BBbls later revised to 300 BBbls when the paper was presented in 2006."[8]. In April 2008, a report issued by the state of North Dakota Department of Mineral Resources estimated that the North Dakota portion of the Bakken contained 167 billion barrels of oil[9].

While these numbers would appear to indicate a massive reserve, the percentage of this oil which might be extracted using current technology is another matter. Estimates of the Bakken's technically recoverable oil have ranged from as low as 1% — because the Bakken shale has low porosity, making the oil difficult to extract — to Leigh Price's estimate of 50% recoverable.[10]

http://en.wikipedia.org/wiki/Bakken_Formation

A. Peasant said...

Just think of it this way: Peak Oil - legitimate though it may be - can't make the price at the pump jump ten cents in a day. It's just not that kind of phenomenon.