Quote of the Day
The price of greatness is responsibility.
Sir Winston Churchill
Strategic Oil Release: A Cynical Opinion
Worldwide consumption of oil is roughly 90 million barrels a day. Slack capacity is roughly 4 million barrels a day. Libya produces, under normal conditions roughly 1.5 million barrels a day. The IEA, an organization of 24 oil importers are committed to maintaining a minimum of 90 days of reserve (they actually average about about 145) with the US maintaining roughly 700 million barrels. During a 30-day period, the US will contribute 1 of 2 million IEA barrels daily. Given recent price corrections due to perceived slowdowns in economic growth, it's fairly clear this was a temporary move meant to manipulate prices for a short period of time (say, the summer driving season). Gue has an interesting reflection that the very fact of the IEA action shows that the bogeyman of "oil speculators" is nonsense (i.e., the release is an implicit acknowledgment of the reality of oil supply and demand)..
Others have pointed out that the very fact of contango shows the futile nature of these manipulations. Effectively short-term price drops provide an incentive to sell at higher prices (i.e., the reality of tight supplies given any modest global GDP growth). This arbitrage is made possible due to artificially low storage costs (i.e., enabling purchasing at today's lower oil price and sell at future higher prices: without these speculative purchases, weaker oil demand would result in larger price drops). In essence, you could combat that by raising the costs of storage; McClelland points out the President could have effectuated the same short-term solution without touching oil by encouraging the Fed to defend the dollar and contain inflation with more historically responsible short-term interest rates. (The Fed has been unwilling to boost near-zero interest rates for fear of further dampening economic growth. But this is the stuff that erodes currency value with price implications for imports (including oil) and encourages many dysfunctional economic activities, including asset bubbles. One interesting side note to strengthening foreign currencies is an explosion of Miami area real estate/housing purchases by strong currency Brazilians and oil-rich Canadians and Venezuelans.)
New York Passes Same Gender "Marriage" Act:
Thumbs DOWN!
New York is the largest state approving same gender "marriage" with other states being Massachusetts, Iowa, Connecticut, New Hampshire, Vermont and Washington DC. The principal issue seemed to be ensuring religious organizations couldn't be prosecuted if, say, they would not rent out facilities to gay couples, a lifestyle not supported, e.g., by thousands of years of Judaic-Christian tradition, among other faiths and civilizations. (In theory, this should never be an issue under property rights and free association guaranteed by the Bill of Rights.) For me, the issue is one mostly of terminology. As I've written on this blog several times, I don't have a problem with gay couples having certain civil rights, say, through civil unions with hospital visitation and inheritance rights, but marriage has been a concept defined by thousands of years of social experience.
Musical Interlude: My Favorite Groups
Chicago, "We Can Last Forever"
