Republicans Must Face Facts

There are many topics Republicans much enjoy blustering about, or as the nation witnessed on Tuesday night, acting out with childlike behavior when confronted with data that goes against their rhetoric and fund-raising efforts. While it goes without saying a large majority of the GOP base is wedded to partisan and misleading reporting (and I am being mighty generous with my wording) and even duped by conspiracy theories that are pure lunacy on steroids, there is no getting around the bottom line. Facts matter. Complied data showing trends and outcomes matter. As such, I want to post a number of charts (thanks to Steve Rattner) that underscore some of the topics which have made news of late, and which created such inner turmoil for some conservative House members they presented their true colors to a national television audience. (I tried to size these somewhat equally, but given how each was detailed in varying ways, it did not come out as visually desired.)

A few days ago the nation was reminded, with data from Republican states, how popular the Affordable Care Act is with conservatives. In spite of the zeal and energy from conservative elected pols in those states, the data does not lie. Overall, more Americans (16.3 million) signed up for healthcare through ACA exchanges last year than ever before. The numbers show a 36% increase since 2020.

For better or worse, U.S. crude oil production is set to break records this year. For all the sputtering and pretending the evidence supports that this industry is not being hemmed in and still not doing all it can to reap profits.

Though the national debt has increased under both parties when in power, the national debt grew faster under Trump than any other president in recent history. Just a fact. The gnashing of teeth and the all-but throwing of feces from the likes of Marjorie Taylor Greene at the SOTU can not refute the data.

History, a topic this blogger warms to, shows that when it comes to bipartisan work to pass the debt ceiling increase, Democrats work more often with the other side of the aisle than do Republicans.

This blog has noted for years (since 2006) that raising the debt ceiling is not an option and one that is just part and parcel of being an elected official with an understanding of what must be done. As history proves, it has happened many times and the pressure to undertake, again, what is the only logically adult path, will force the pols to do the same this year.

The gun deaths in our nation are staggering and unacceptable.

The Child-Care Tax Credit is an issue that strikes many Americans, this home included, as just a wise and prudent policy that should not be burdened with needless partisanship. Data shows this policy kept 2.9 million children out of poverty in 2021.

One more chart that lands on a topic that concerns me as a customer of goods, and for the sake of this paragraph, cars. The chip shortage, apart from the supply chain issues, dealt a harsh blow to the auto industry with my local Mini car salesman lamenting (before Congress acted), the folly of how our nation has dropped the ball on the production of this much-needed technology. From a defense production and national security perspective, this has long been a ripe topic for discussion. The wave of the future will be electric cars and investing as a nation in this goal is vital to our economy and the environment.

Black Monday, Again?

Oil markets crashing, and Dow futures are down 1,200 points. This is going to be a rough day for investors. And it is only 1 AM…..

Latest from Bloomberg News on oil prices crashing.

Oil markets crashed more than 30% after the disintegration of the OPEC+ alliance triggered an all-out price war between Saudi Arabia and Russia that is likely to have sweeping political and economic consequences.

Brent futures suffered the second-largest decline on record in the opening seconds of trading in Asia, behind only the plunge during the Gulf War in 1991. As the global oil benchmark plummeted to as low as $31.02 a barrel, Goldman Sachs Group Inc. warned prices could drop to near $20 a barrel.

The cataclysmic collapse will resonate through the energy industry, from giants like Exxon Mobil Corp. to smaller shale drillers in West Texas. It will hit the budgets of oil-dependent nations from Iraq to Nigeria and could also reshape global politics, eroding the influence of countries like Saudi Arabia. The fight against climate change may suffer a setback as fossil fuels become more competitive versus renewable energy.

What About The Price Of Oil Per Barrel?

The price of oil per barrel is one of those odd things I note daily in the paper.   Some check box scores….I follow the price of oil on the world market.  (It is $68 as I write this post.)  And the pressure on prices, will of coarse, have an impact on many different levels.

First, oil prices are rising, in part, because demand is so strong, not just because OPEC is keeping barrels off the market. Oil at $100 would essentially amount to a doubling of the price from the past few years, which would quickly put an end to high demand growth rates.

A corollary to this is that $100 oil would likely impact economic growth. The economic recovery from the financial crisis in 2008 is almost a decade old at this point, much longer than the average upswing. History suggests that we are due for a recession at some point in the not-so-distant future. A spike in fuel prices around the world could help bring that on.

“Oil prices are high because the dollar is low,” Daniel Lacalle, chief economist at Tressis Gestion, told CNBC on Thursday. Taking too much oil off to the market for too long could send prices “artificially” high he said. “That is a big concern…Because oil prices don’t generate crises; the abrupt and unexpected rise of oil prices creates crises,” Lacalle said.

Second, $100 oil would set off yet another round of frenzied drilling, likely resulting in an even stronger wave of new shale supply. Several years of triple-digit oil prices led to a near doubling of shale production in the U.S., a volume that helped crash the market in 2014. A spike in oil prices could result in history repeating itself.

Texas Energy And Their Boom And Bust Economy

Catching up on some good reads and this one is most interesting.  Concerns the boom and bust cycles of the Texas energy sector.

Texas is the only state that has its own electrical grid. It is operated by the Electric Reliability Council of Texas (ercot), and was created largely to avoid federal regulations. Because of the intense energy needs of the oil-and-gas business—it takes a lot of power to run oil refineries and petrochemical plants—Texas uses more electricity than any other state. (California, the second-largest consumer, uses about two-thirds as much.) Yet electricity in Texas is cheaper than the national average, and in some places it is free at night. That’s because Texas gets about seventeen per cent of its electricity from wind power, and wind generally blows more at night, when demand is lower. The plains and mesas of West Texas, and the coastal region south of Galveston, are lined with regiments of wind turbines. They are so heavily subsidized by the federal government that wind-energy producers sometimes pay companies to take the energy off their hands, in order to receive federal tax credits. In October, 2016, Jeff Bezos, the founder of Amazon, broke a bottle of champagne atop a three-hundred-foot turbine to inaugurate a vast new wind farm in Scurry County, three hours west of Fort Worth; it will provide a million megawatt hours a year to the Texas grid.

Toss Another Old Assumption Aside–For Now

Recall how we were once told oil market forces had a high disdain for uncertainty.

When I was following the news this past weekend from the Middle East I wondered what would happen to the price of oil on the world market.  After all there was (and is) a lot to be concerned about following Saudi Arabia’s execution of a Shiite cleric.  Iran and others in the Shia world forcefully demonstrated their anger about the killing and left many outside that region to ponder the consequences.

But over the past days oil prices actually fell even as those tensions flared.  This news underscores the  fact our world has a vast over-abundance  of crude oil and there are of course positive and negative effects of this supply issue.

The upside is that gas prices remain low.  The downside is that those low prices make people think larger and less environmental vehicles are now worth buying.

The oil glut pressures Russia’s economy, but also serves notice that China is stagnating and not using the amount that otherwise would add to their overall economic output–which then weighs down international markets.

But for me the news from this weekend and then the lower slide of oil prices flies in the face of everything my generation always felt to be a fact.  Political unrest in the Persian Gulf is no longer a sure-fire source of price increases per barrel.

It will be almost a sure bet that Saudi Arabia nor their OPEC allies will not be lowering production at a time when such a move would only assist their main regional rival, Iran.  But if tensions increase and there is some event that threatens to curtail movement of tankers all bets will be off for how fast prices increase.

Great News: Keystone Pipeline Dead

The Obama administration did the right thing after seven long years regarding a major environmental project by rejecting the Keystone XL pipeline.  This is exactly what was needed to happened given the limited amounts of oil that would have been delivered in relation to how much is consumed daily.  To have wounded the environment for such a short-term gain would have been a major stain on this nation and pure folly.

The move today sends a clear signal that  today to green supporters that their voices and efforts over the years were not in vain.  Meanwhile it was nothing but a stunning defeat for the oil industry and Republicans in congress who simply championed the wrong proposal.

Perhaps the most ridiculous claim that the GOP made and continually repeated was this project would be a major job-creator.   In no way, shape, or fashion was that true.

This decision at this time will now allow President Obama to head to Paris in a few weeks and try to produce with other global partners an agreement on climate change.

There is nothing but smiles for those who have fought hard–and won this victory.  It matters that sincere and hard-working activists along with common-sense citizens won the fight.

But even more it matters that the environmental concerns came out on top.

It is simply great news.

News To Ponder About (If You Can Get Past Donald Trump)

Today one of those articles that was designed to make for long-term pondering was printed in The Wall Street Journal.  Saudi Arabia and the price of oil on the world market is more than just about the price of gas at the local station.  This is world economics and geo-political nuts and bolts that impacts everything we read about on a daily basis.  The impact of any decision that does or does not get made to stabilize oil prices is stuff we need to be talking about in the presidential elections.

On Monday, Iran, another OPEC member, said it would welcome an emergency meeting of the group, even as it restated vows to boost its own production as soon as international sanctions are lifted, possibly later this year.

Those calls are aimed directly at Saudi Arabia, the only country capable of leading an effort to restrain production. Even Saudi Arabia’s short-term fortunes are taking a beating. The country is now expected to run a budget deficit as large as $150 billion, or about 20% of its gross domestic product, this year, compared with only 3% last year, according to the International Monetary Fund.

Saudi Arabia’s determination to keep pumping away had largely been focused on how the resulting lower prices would whittle away at supply as higher-cost projects are delayed and canceled. That is happening, though far less quickly than many predicted.

But the other pillar of the Saudi strategy is that demand would increase steadily in response to lower prices. That, so far, has been taken almost for granted. The International Energy Agency this month said total demand accelerated almost sixfold from the first half of last year to the same period this year, as the global economy expanded and consumers used more of the cheaper fuel.

The world’s largest exporter of oil accelerated a decline of crude prices last November when it decided to aggressively pump even more oil into an already oversupplied market. That set off a global production race, further expanding supply and filling storage tanks around the world.

The strategy was deliberate: Scramble for market share now, so when supply tapers off later as high-cost producers cry uncle the kingdom, and any others left standing, reap the rewards of increasing demand. The problem now: Demand, at least in the world’s biggest consumer of oil, China, may not increase anywhere near as fast as expected.

Low Oil Prices Will Lead To Higher Prices

Great read today.

Over the past six months, 53% of vehicle purchases in the U.S. were light trucks or sport-utility vehicles, which tend to consume more gas than cars, according to Commerce Department data. That was the highest share in a decade and up from 51% last June, when oil prices peaked for the year. The Transportation Department estimates Americans drove more than three trillion miles in the 12 months through November, the most since mid-2008 and the biggest annual increase—38 billion miles—in a decade.

Earlier this month, the Organization of the Petroleum Exporting Countries reversed its forecasts that energy consumption would decline with the weakening economy. Instead, the lower prices will boost consumption of OPEC oil, the cartel said.

“In 2008, prices fell sharply starting in the summer with the onset of the financial crisis and the global economic recession, which also led to a deterioration in demand,” the OPEC report said. “This time the sharp fall in prices has been mainly driven by excess supply. As a result, lower prices are likely to help to accelerate the pace of oil demand growth this time.”

Few experts see demand increasing so quickly that oil prices rise rapidly. More likely is that some oil producers will be unable to achieve a profit with oil prices so low, and they will curtail production.

“Historically, the initial response of consumers is to increase purchases of other items rather than use more gasoline,” said James Hamilton, a University of California, San Diego, economist who specializes in energy economics. “That is why most of the short-run adjustment in oil markets will have to be on the supply side, as high-cost producers are forced out. And until that happens, low prices will continue.”