Under this proposal from treasury, they would ask for offerings from the banks and then take the lowest prices for up to $50 billion at a time.
This means they will be paying more and more for each round of purchases, driving up the prices from current market value.
And if the plan is to spend the entire $700 billion they could drive prices up through the roof.
They would need to limit the prices they are willing to pay somehow.
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>
> On 8/3/08, Craig wrote:
>
> Ok. And the irony is as prices fall, demand increases again.
> Until consuming governments get their head around that fact
> and put some kind of floor under crude prices to incent
> substitution (which may be beyond their thinking and/or impossible
> politically), it seems like crude prices are gonna play rope-a-dope
> with consumers.
>
>
> Craig
>
>
Crude will be rationed as is everything else (scarcity, etc.).
The question is how. Ration by price or by other things?
Rationing by price is the most pervasive and means the wealthy (by definition) outbid the less wealthy for the available supply.
Make you wonder why the Democrats support higher prices, as that means they support their supporters going without while the wealthy drive any size SUV they want. Much like wondering why Obama supports Bernanke after Bernanke explained to Congress how he’s keeping inflation down by keeping a lid on inflation expectations after explaining the main component of inflation expectations is workers demanding higher wages, meaning Obama, Kennedy, and the rest of the left is praising Bernanke for doing a good job of suppressing wages.
Non-price rationing is less common but not unfamiliar, such as mandating cars get an average of 27 mpg, minimum efficiency standards for refrigerators, windows, etc. This takes an element of rationing by price away and results in the wealthy consuming less and leaving some for the less wealthy to consume a bit.
So seems to me the logical path for the Democrats would be something like my 30 mph speed limit for private transportation, which is ‘progressive’ and also drives the move towards public transportation with non price incentives as previously outlined. But there hasn’t even been any discussion of a progressive policy response. All seem highly regressive to me.
So I expect the world’s new and growing class of wealthy will continue to outbid our least wealthy for fuel and other resources.
Also, there may be limits to how high we want world consumption/burning of fuels for all the various ‘green’ reasons.
That would mean drilling and other production increases are out, as would be increased use of coal via the electric grid for electric cars.
And, again, it would be the world’s wealthy outbidding the less wealthy for consumption of the allowable annual fuel burn, as somehow allocation by price continues to rule.
Most paths keep coming down to the continuing combination of weakness and higher prices.
Warren
(comments from my brother, Seth, who was cc’d)
>
> I think democrats have lots of business and profits waiting
> in govt subsidies for wind and solar. If oil prices fall that goes
> away for now and they can’t produce on the subsidies for
> them-cynical view but probably true
>
> There are also a lot of wealthy democrats and they want their
> votes. Poor people all vote for democrats anyway-even with
> declining lifestyles they are not going to McCain. So I think
> Obama is pandering to the wealthy-it might be who he is-no
> one really knows.
>
> With all of their green talk I have not seen any of them reduce
> air travel, suv caravans or turn off the a/c in the capital. Just a
> way to get votes and sound concerned. I saw a tv program
> about how the chinese olympic swimming building is a green
> sustainable building. It is 7 acres, pools, 25,000 people.
> they finally said it uses about 25% less energy than a comparable
> building would have. That is not green or sustainable, especially
> since the building was not needed in the first place. I think “green”
> is about making money, not the environment.
>
>
> Seth
>
I just can’t allow myself to be that cynical like you new yorkers!
:)
Warren
>
>
> I think I am cynical usually, but this green thing drives me nuts
> it started 30 years ago but is now all about money
> when I see some lights turned off in Times Square (even in the
> daytime) or the 5 huge spot lights on the CBS building lighting up
> Katie Couric’s 50′ x 30′ poster which are on 24 hours a day turned
> off, then I will believe it is about resources and not money.
> there is a long way to go.
> they advertise expensive green buildings here-I am not kidding-the
> big thing is thermostats with timers on them and bamboo floors-didn’t
> we have those 30 years ago??
>
> they talked about the oscar ceremony being green this year-the
> celebrities were all giddy about it-what they did was use red
> carpet made of recycled fibers????? what is that?
> absolutely nothing-
> anyway, time to calm down. too much excitement here
> seth –
>
>
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Interesting no one even mentions anything close to my proposal:
That would:
The reduction in consumption could be up to 5 million bpd in the US alone, which would:
It’s a political choice- ration by price as we are currently doing, or use other methods, some of which we already do, such as fuel economy standards.
This proposal simply adds the price of ‘time’ to burning gasoline for all private transportation, thereby making fuel efficient, cleaner, less resource intensive, alternative transportation more attractive.
Feel free to try to make it happen if you agree!
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