Hmmm

Steve Forbes has been saying the oil market bubble is going to burst.

"I'll make a bold prediction... in 12 months, you're going to see oil down to 35-40 usd a barrel," he said, according to Agence France-Presse.

I wonder if he'd care to revise that now. My gut says it would be good if it the price of oil was cut in half, especially with some major rebuilding expenses around the corner. But I wonder whether that would cripple the oil refineries the way 9/11 did to the airline industry.

"I don't think it's going to go to 100 usd but if it does the crash is going to be even more spectacular," he said. "It will make the hi-tech bubble look like a picnic -- this thing is not going to last."

Sounds like Forbes thinks it might.

Category:gas, economy

Recriminations: Katrina

Rod Dreher has a very interesting comment on the Corner. Why weren't they better prepared? Seems like they had no excuse.

Just heard from a Louisiana source in the medical industry that New Orleans hospitals were advised after 9/11 to move their generators from the first floor to the third floor -- presumably to protect them in case terrorists dynamited the levee. Obviously, they didn't do this, which is why the hospitals are evacuating now.

Junk Science

CNN reports the state of Hawaii has decided to cap wholesale prices for gasoline.

The refiners weighed in against it last month, calling it a bad idea.

"Chevron continues to believe that price caps are bad public policy which will not be in the best interest of Hawai'i's consumers, and that free markets perform most efficiently and effectively in balancing supply and demand," the company's filing stated.

and in stronger terms:

Tesoro, Hawai'i's other refiner, opposed the price cap outright.

"Price controls of any type or design do not work and will create harmful market distortions that may increase the risks to Hawai'i consumers and the economy and may jeopardize the viability of Hawai'i's refining industry," Tesoro wrote.

They're absolutely right, but the state "consumer advocate" pooh-poohed their complaints.

The state consumer advocate, the only other party to weigh in on the caps, suggested changes to the price cap formula currently being developed by the PUC. John Cole, executive director of the state consumer advocacy office, wrote that the caps could increase the risk of gasoline shortages and lead to the closure of a local refinery and some gasoline wholesalers among other things. However, the office generally supported implementing the caps.

"The regulation of wholesale gasoline prices is a first in this country and the risks outlined above are just that — risks," Cole wrote. "They are not certain to happen."

Read the whole artice in the Honolulu Advertiser.

How is it that the "Dismal Science" gets treated like such a mystery? Some things about economics are complex, but the law of supply and demand is pretty simple ECON101 stuff. Any time demand rises relative to supply (or supply shrinks relative to demand) the price of the goods will rise until there is a balance.

So what does a lower price do to demand? What happens when your favorite cereal goes on sale? You buy more. What happens when Big 3 automakers give employee discounts to everyone? They sell more cars. Whatever the commodity is, when you lower the price without lowering the value the demand will increase.

What does an increase in demand do to supply? That depends. If the suppliers have capacity to increase output to meet demand without additional unit cost, they will likely do so to increase profit. If the suppliers must make a large investment (build another refinery) with delayed returns (x years to build, including cutting through bureaucratic red tape; additional y years to pay off initial investment) and uncertain levels of risk (what will the total supply and demand be in (x + y) years) then they may be very reluctant to take the risk .

And we are resource-limited in this country, when it comes to refineries. So when demand rises due to an artificially low price, the suppliers are reluctant to make the investment to increase capacity. They then have a choice. Let's assume, for argument's sake, that Hawaii accounts for 1% of all gasoline consumption in the country. Now let's also assume that the demand for gasoline in this country is 1/4% more than the total available production capacity. (That is: 1/4% of the demand is unmet. We'd use more if it were available, but it isn't.) The refiners can supply Hawaii its full demand at a lower profit margin (or possibly a loss) or they can take 1/2 of what would be sold in Hawaii and deliver it to the mainland, where it can be sold at full price. The result: the mainland gets its full demand met, while Hawaii gets only half its demand met. This is a shortage, and not a little one. This is the kind which would cause governments to be overthrown in non-democratic nations.

(I haven't bothered to account for shipping costs here. Obviously, it may be cost prohibitive to send oil to Hawaii to be refined, then ship it back to the west coast for distribution. But it would be in the refiner's best interest to refrain from shipping refined gasoline to Hawaii. The capacity of Hawaii's refineries may be the limiting factor in determining the portion of the available product supplied to Hawaiians.)

Just about everyone over the age of 10 should understand profit motive, though many have sadly accepted the idea that the people with the least right to determine the profit margin are those who have an interest in the company.

It is from that group that the question is posed:

Why can't the refineries continue to meet the demand in Hawaii at a small loss, since they would continue to profit in the rest of the country?

The assumption implied by those who ask is that the lower price in Hawaii is subsidized by the company. Maybe so. What happens when California decides to fix the price as well? The market for gasoline in the state of California is obviously larger than that in Hawaii, and it would be nearly impossible for the refiners to simply absorb the loss. They must then either pull back from the California market or increase the price for everyone else.

(It gets worse still, in the case of California. Let's say the CA market for gasoline is 15% of the total national consumption. They can only pull 1/2% out to sell at a profit, leaving 14.5% to be sold in CA at a loss or not at all. It is almost inconceivable that suppliers would continue to sell such a large portion of their product at a loss, if there is a profitable market elsewhere. It's possible that they would respond by withholding almost all shipments to California, supplying less than 20% of the demand, as compared to 50% in the Hawaii example.

There's really no question that in the California example, a shortage would result, and that the cause would be the effort to directly control prices. The difference between the actual price cap in Hawaii and a hypothetical price fix in California is only a matter of degrees. In either case it is wrong. Bad science. Foolish meddling. Just plain morally wrong.

Update: Kip Esquire has a great post on this from a few days ago.

Update 8/29: McQ covers the impact of Katrina on the situation.

Freedom of Speech

La Shawn Barber has this as a side comment about the limitations of Freedom of Speech, pertaining to the termination of radio talk-show host Michael Graham.

I support Michael Graham but disagree with the implication that his First Amendment rights were violated. The amendment protects citizens from government suppression of speech.

La Shawn is spot on. The protections of the bill of rights are limitations on the powers of government, specifically the federal government. The free speech clause of the First Amendment states that you have the right to say what you want without fear of legal recriminations.

That doesn't mean you can expect to be paid to say things against the interests of your employer. Michael Graham's employer is ABC, which is owned by Disney. Regardless of how you or I feel about what Graham said, his employer has the right and the responsibility to its shareholders to take action against him if they feel his actions reflect poorly on them. As an immense global corporation, Disney has much to lose if people were pressed by CAIR, for example, to boycott them.

This is nothing new. The truth is, people lose their jobs over much less, eg: people who blog on company time, people who speak publicly against their employer or their peers, etc. Graham's position, though was such that he was paid to give his opinion. This is a valuable position to be in, so long as your employer is interested in hearing your opinion. There should be nothing to stop him from finding similar employment elsewhere, should someone be interested in paying to hear his opinions.

Vacationblogging

Started a week's vacation by going camping Friday with our older three kids, their two cousins, and my parents. Actually my parents took them camping, and I came along to help even the odds. It was our kids' first real camping experience, and we did all the requisite things: marshmallow roast, spooky stories and campfire songs, fishing etc.

Since there were eight of us, and my parents' camper sleeps two adults and two kids semi-comfortably, I slept in the tent with Oldest Daughter and Younger Daughter, while Older Son slept in the camper with his cousins and grandparents. (Youngest Son stayed home with Gearmommy, who has only agreed to go camping in theory.) Everyone was overcrowded, and we succeeded in spreading the discomfort around evenly. Until it started to downpour.

You can't really appreciate sleeping in a tent in the rain with two kids until you understand that this tent was used by myself and my brother when we would take family camping trips, and that it was also used by my parents before they had children. It's heavy canvas, and it leaks at the seams, and smells. It's got a steep pitch to it, and when the rain hits it should run right off, but somehow the waterproofing has long since ceased to function, so that touching the sides causes the water to seep through. So we had effectively packed three people into a two-man tent, and created a sort of no man's land three inches from the wall of tent, all the way around.

Then factor in that my sleeping bag (not that I needed it in August) was right under the less-than-perfectly closed window of the tent, so that it was dripping on my pillow, and my feet were at the door of the tent, being dripped upon. (Did I mention that it was raining, and that the tent leaked? Well, I have now.) So in a vain attempt to remain dry, and to avoid my own brand of water torture, I curled up into a ball on top of my sleeping bag in the center of the tent, and did my best to not move for something like eight hours. Didn't really work. Of the three of us, my sleeping bag seemed to have absorbed the most water, having been strategically positioned under the biggest leaks. Woke up stiff as a board, too.

But you know what? I loved it. Not the tent, certainly, but the time. Spending time with my kids, building the kinds of memories I love of my own childhood: of family vacations and campfires, and expanding their horizons beyond their town and school and street and backyard. Teaching them about fishing and hiking, and leaving things in a better condition than you found them. And especially, teaching them that the time I spend with them is as important to me as it is to them.

Still on vacation for the rest of the week, and the weather's great so posting will be light. Meanwhile, enjoy your week. I will!

About Me

I've been asked to give some information about myself, but I'm not sure where to start, or even what would interest anyone but me. So for now, I'll start with what I think someone reading this would want to know.

Political alignment: conservative. fiscal, social. Registered R, but I vote on principle rather than party. Did I leave anything out?
Education: bachelor's degree in engineering
Career: machine design.
Blog preferences: working on adding them to my blogroll. Bear with me.
Center of my life on this earth: family, God's #1 blessing to me and my #1 responsibility

OK, so it's not much. I promise I'll write more. Meanwhile, this is me asking for requests. What would you like to know

$126 fine and 4 months suspended sentence

... is nothing. This guy is going to get what's coming to him, though.

A good cause

Chris John Muir would like your help with some traffic to this site. His sister is a patient.

Day By Day© by Chris Muir.

Update: Got so impressed with myself for posting an image, that I didn't bother to get his name right! Caught it when I added the copyright info.

Caught

The Tennessee fugitives were caught in Columbus, OH, about 300 miles North of where they killed corrections officer Wayne Morgan. Looks like they'll both be charged with first-degree murder.

Apparently his wife married him while he was incarcerated. She met him as a prison nurse, but was fired from that job after sneaking food into the prison for him, according to the Canton Repository.

Things the world attaches to Christianity, I

Objective Justice has a piece about Rev. Fred Phelps and his Westboro Baptist Church, which I will not link to. Apparently WBC is picketing the funerals of American soldiers on the premise that they died because they were gay. Now Phelps is an extreme case, but he certainly feeds the stereotype that all Christians are intolerant homophobic cavedwellers.

Give them adjacent cells

These two will be caught. She'll be in prison for longer than his sentence, even if she doesn't end up on death row.

Welcome home, Discovery

Landed on Runway 2-2 at Edwards AFB, about 8:15 ET.
Glad to have them safe and sound.

On Parenting...

We've been parents for a while now, and with more children than most people we know. We've gotten used to hearing things like:

So, are you guys done yet?

How many more kids are you gonna have?

Isn't it hard work having four?

The first two questions are just rude, but we've gotten pretty good at deflecting the question without embarrassing the person who asked - even though they might deserve it. The third question isn't rude, though. It's genuine, and it's a question every parent must answer eventually. I work outside the home, and my wife is a full-time mom, so our answers to that question haven't always been the same.

Raising four kids used to mean she would stay home during the day, take them to doctor appointments and preschool, feed them, dress them (the younger ones), and plan the day's activities, etc. My part was to come home after work, play with them after dinner, bathe them if necessary, and read to them at bedtime. On weekends, I would stay home with them while she went shopping in the morning (or Sunday afternoon), and then we would have family time together in the evening. This could all be time-consuming, but not usually hard, and usually pleasant.

OK, so I've simplified it a bit. There's more to it than that, and it's never completely defined. But we've developed something of a routine which has made manageable the logistics of raising four children. The thing is, parenting is much more than the routine or the logisitcs. As parents, we are challenged to raise our children to be valuable, contributing members of their community. When they're very young, that means teaching them obedience, and then later to value the feelings of others. Those, too, were relatively easy.

But now our older children have reached an age where right and wrong are more than a simple list of Do's and Don'ts. The thing they most need to learn now is judgement. This is a much more complex thing to teach, because it is subjective by definition. Something tells me this is where it actually becomes hard work.

More to come...

Welcome back, Mr. Lileks

Lileks has brought the bleat back from hiatus. If I haven't read his post by 8am, my day just isn't the same. But he's not quite finished working on the new layout, you've been warned. Screedblog's got a good post on the intelligent design vs. evolution debate, and it's much easier to read.

First Things

Welcome to the first day of an experiment. I hope to maintain a fairly regular journal here. What it will become, I don't really know yet, but I anticipate it will include statements of my opinions and beliefs.

I intend to keep private things private for now, so no names. But here's a little bit about my life:

I'm the father of four beautiful, wonderful children, and am happily married to the love of my life. I learn from her every day, and I'm a better person for her presence. And she never reminds me how lucky I am to have her. Suffice to say, I am richly blessed.

From which you may assume that I am a Christian. I claim Jesus Christ as my savior. There are certain things which that should imply about me, and I struggle to live up to those things. There are other implications which the world attaches to the word Christian. I hope to address those in a future post, but it isn't my intention to make religion or faith the sole focus of this blog.

Thanks for dropping by, and I hope you'll return.