Vegas Sculptor’s Blog

I was having trouble finding something to write about, so I thought I would ask the readers for some help.

You see, I don’t know much about economics so I am having trouble understanding the current gasoline prices. I’m hoping that some of you will explain it to me.

First of all we have the oil companies reporting record profits. Now it seems to me that if I manufacture a product and my costs of raw materials, production, and transportation costs $1.00 and I sell my product for $2.00, I make x amount of profit. Now if my costs goes to $2.00, I sell for $3.00 and demand stays the same, I make the same amount of profit.

If the cost of a barrel of oil has gone up and the oil companies are simply passing this increased cost on to us, how are they making record profits?

I think I might know at least part of the answer to this one. Back in the late ‘80’s I worked on contract at a large oil company. At that time oil was going up and was about $15 a barrel. I remember hearing some of the people who worked there say that if oil ever reached $20 a barrel it would be profitable to reopen some of the wells that didn’t produce enough to make it worthwhile to keep them open. They were of the opinion that there would be plenty of oil at that price.

Now if the oil companies are pumping oil that cost them $20 a barrel to produce and selling it for $135 a barrel they would be making record profits wouldn’t they?

Of course we are being told that high prices are a result of supply and demand. Supply is down so price is up.

I went looking for an answer to this and discovered a few interesting things. First of all, according to MasterCard Advisors, a unit of MasterCard Inc., the demand for gasoline is down 5.2% from last years levels. I also discovered a site called This Week in Petroleum. The site is run by the Energy Information Administration, part of the Federal Department of Energy.

According to the various charts and graphs presented there, it appears that supply is up and demand is down, yet prices are at record levels. Demand for gasoline is 9.411 million barrels a day (mbd) compared to 9.487 mbd one year ago. Total supply is 210.1 mbd compared to 201.5 mbd a year ago. This equates to a 22.1 day supply whereas the supply was 21.3 days a year ago.

Production is down this year compared to a year ago. Producers are only producing 8.974 mbd today compared to 9.326 mbd a year ago. Why is this? Have you heard of any refinery problems that would cause them to curtail production? I did read a couple of weeks ago that there were plans to curtail refinery production in order to stop prices from falling.

So in the U.S. at least supply of gasoline is up, demand is down, and price is up. Please explain how this can be.

So what about worldwide oil prices? A source at OPEC says (at bottom of article), “Based on present supply and demand, he said it should be fetching $60-$70 a barrel.” As a matter of fact Saudi Oil Minister Ali al-Naimi says that the high prices are a result of investor speculation. It would appear the market is being manipulated in order to profit at our, the common persons, expense.

In order to bring oil prices back down Saudi Arabia is planning to increase production 200,000 barrels a day next month. This in on top of a 300,000 barrel a day increase last month, something I don’t remember hearing anything about in the media. I also didn’t see oil or gasoline prices going down in response to this either.

So what’s going on here? Simple greed? Some economic “fact” that I don’t understand? Is there anything we can do?

I’m beginning to hear some people call for a general strike by the citizens of the world. Would this get the attention of the oil companies? Would this finally get the governments of the world to take some kind of action? Would you take part in such a strike?

There’s a lot of talk these days about global warming. It seems that most scientists believe the earth is warming. The debate seems to be whether our burning of fossil fuels is to blame.

The argument that this warming is part of a natural cycle got a boost recently with the discovery of a third red spot on the planet Jupiter.

The Space.com article about the new spot included this, “The latest Hubble and Keck images also support the idea of Jupiter undergoing global climate change. Warming near the giant planet’s equator and cooling at the South Pole could be destabilizing the southern hemisphere, causing jet streams to go haywire and spawn new storms.”

Now unless there are a lot of cars driving around on Jupiter it would seem that whatever is warming Earth up is also warming Jupiter.

But even if the warming is natural, all the crap we are dumping into the atmosphere can’t be helping. I think that for health reasons, as well as global warming reasons, it just makes sense to try to cut back on the release of carbon dioxide and other warming gasses. It may not help with the warming, but it can’t hurt.

Some people though have gotten so militant about our “carbon footprint” that I think they are actually causing more harm than good. One example of this is the Australian Broadcasting Corporation.

The Register is reporting that ABC’s website has a new feature called “Planet Slayer”, aimed at children, that advises that the best way to leave a small carbon footprint is to die early!

“The site is aimed at 9-year olds. However even a ‘virtuous’ rating (e.g. not owning a car and recycling) is outweighed by eating meat, or spending an average Aussie income - with the result that many 9-year olds are being told they’ve already outstayed their environmentally-compliant stay on the planet.”

“(The) science blog Watts Up With That points out, the site clearly breaches Australian broadcasting guidelines on ‘harmful or disturbing’ content.”

The reporter for The Register visited the site and took the test. When he answered honestly he was told he should have died at age 3.9 years in order to save the planet. He went on to say, “After a couple of run-throughs, it appears that eating meat is a major factor. But this is overshadowed by claiming a) very low earnings and b) spending what remains of one’s pittance on organic food and ‘ethical investments’.”

“Whether that’s a life worth living is another question entirely. But the message from the Carbon Cult seems pretty clear: humans are a stain on the planet and should die; yet should they be permitted to live, they should live a life that’s as miserable as possible.”

You can take the test yourself here. According to my test, I should have died at age 4.4 years.

Do you think it’s appropriate to tell children that they should die to help the environment? Do messages like this create more hatred toward the “green movement” or do they help the cause? Did you find out anything about your lifestyle by taking the test that you might change? The test aside, are you doing anything to reduce your “carbon footprint”?