Lit.Org - a community for readers and writers Advanced Search

Average Rating

(0 votes)

You must login to vote

TO: The Producers of "All Things Considered," (Air Date 07-18-2008)
Being obviously familiar with a report indicating that Americans are curbing their gas consumption by an almost immeasurable 0.6%, Mr. Flynn of Alarcon Trading announces to the host of NPR's All Things Considered that he's prepared to declare "mission accomplished" on the strength of a few short-term turnaround events in petroleum futures trading. Not only does Mr. Flynn see moderating American consumption through a 17 point drop in crude prices over the course of a single recent week, he sees this solitary data point as a "trend" which should be extended to include China, India and nearly all countries right 'round the globe. Think about it. Market Movers are saying that the "smart money" is betting on $80 for a barrel of oil sometime within the next six months. Smart, huh? Maybe too smart. Basically, if the gentleman is that good a prognosticator, people could start thnking Enron.

What Market Movers are doing at this very moment is colluding with Big Oil and each other to establish a new fixed-firm floor price for a barrel of crude, and without any hesitation whatsoever, I would call Mr. Flynn a Market Mover. . .meaning that what NPR has done, in effect, is invite the wolf into the henhouse. Or, to be perfectly clear, they've called in a member of the cabal that has engineered the problem and are now asking for his opinion concerning the solution.

In 1960 I was paying $0.45 for a gallon of gasoline--the highest grade being offered by the highest priced retailer in the midwest. A decade later I was paying even less--about $0.35 per gallon, albeit for a lower grade and from a different retailer. Then came the oil shock of the early '70s. It took only weeks for the price to break the $1.00 barrier before finally settling back at $0.75. We knew what to call it, and we called it by its real name. . ."price fixing" by the new kids on the block--the carteliers of the Middle East. But when the dust had finally settled, I remember people saying, "What are you complaining about?. Gas could be $1.00 Instead it's only seventy-five cents."

This is the legacy we've been living with ever since. Today, however, the "free and unfettered" supply side markteers don't like the term "price fixing", even though that is what it remains. Only the language has changed. "Speculation" is out. The new Greenspan-ish term "artificial demand," is in, which, in Market Mover jargon, is synonymous with an automatic rise in prices. Surely, Adam Smith is turning over in his grave about now.

So here's the question. Are we supposed to believe that a 0.6% drop in *real* consumer demand for oil could "swamp out" or have any real significance in a market environment that is being driven by a 70% *artificial* demand?. . .assuming first of all that there is any justifiable correlation between "product deliveries" [note 1] and that which is actually consumed? [note 2]. Can no one hear P.T. Barnum at the microphone?. . ."Ladies and gentlemen. And *suckers* of all ages! Welcome to the Greatest Show On Earth!" I'm sure ol' P.T. never dreamed it could be this easy.

It's clear that the Market Movers will go on the air and say anything. . .anything that will throw us off the track, like,."It's all tied into the natural rhythm of the market," and "Let the market do it's magic," and "We need less regulation--not more." [Oh, were it only so.] Well maybe they're not hearing what *we're* saying --"We're mad as hell, and we're not going to take it any more."

"Because you see, Grandma, we don't remember you having such round, baggy eyes."
"Well. . .all the better to. . .uh-h-h, good heavens, are they that baggy , dear?"

"And also Grandma, we don't remember you having such long, hairy ears."
"Well. . .all the better to. . .uh-h-h, oh my, are they that hairy, dear?"

"And furthermore, Grandma, we don't remember you having such big, sharp teeth."
"Well. . .all the better to. . ."
"Yes, Grandma?. . .you were saying?. . ."
"I'd leave the teeth out of it if I were you, dear," Grandma said, as she pulled out a nail file and began honing the tips of her dazzlingly white fangs. "I'll admit I could use a nip here and a tuck there, but I have way too much invested in *these* pearly whites to start making changes now."

The abyss awaits.
[1] "Although demand for gasoline and jet fuel grew, higher prices and slowing economic growth continue to affect overall petroleum product demand in the U.S.,” said Ron Planting, manager, information and analysis, for API. “Over the past few years, demand growth in petroleum fuels has slowed in contrast to what’s been happening in many other parts of the world, including Asia. More recently, U.S. demand has flattened or even declined slightly. For the year, product deliveries are down 0.6 percent compared with 2007." []

[2] Six-tenths of one percent could be scarcely any larger than the margin of error for such a correlation.


Related Items


The following comments are for "Issue Two--Skidding on Oil"
by fritzwilliam

Add Your Comment

You Must be a member to post comments and ratings. If you are NOT already a member, signup now it only takes a few seconds!

All Fields are required

Commenting Guidelines:
  • All comments must be about the writing. Non-related comments will be deleted.
  • Flaming, derogatory or messages attacking other members well be deleted.
  • Adult/Sexual comments or messages will be deleted.
  • All subjects MUST be PG. No cursing in subjects.
  • All comments must follow the sites posting guidelines.
The purpose of commenting on Lit.Org is to help writers improve their writing. Please post constructive feedback to help the author improve their work.