Thursday, May 31, 2007
John Edwards is an idiot, or thinks that we are idiots
This is predictable, but that doesn't make it any less asinine:
Democratic presidential hopeful John Edwards says a wave of mergers in the oil industry should be investigated by the Justice Department to see what impact they have had on soaring gasoline prices.
During a campaign stop in Silicon Valley Thursday, Edwards planned to berate the oil industry for "anticompetitive actions" and outline an energy plan he says would reduce oil imports "and get us on a path to be virtually petroleum-free within a generation."
"Vertically integrated companies like Exxon Mobil own every step of the production process -- from extraction to refining to sale at the pump, enabling them to foreclose competition," says an outline of Edward's energy plan.
This is so stupid we are left to choose between two alternatives: John Edwards is an idiot, or he thinks that we are idiots. There is no possible third explanation.
If oil companies were conspiring to control gasoline prices, why are they lower in the United States than any other oil-importing country on Earth? If it is conspiracy, rather than competition, that determines gasoline prices, why are they so volatile? Why do they fall when the world price of crude oil falls? One would think that oil companies would conspire to keep them high even when the world price for crude declines. And why have none of the tens of thousands of people who would have to participate in such a conspiracy decided to bring their evidence to one of John Edwards' colleagues in the class-action bar? Why have none of the numerous politically-motivated investigations of Big Oil in the last 30 years turned up any evidence of price-fixing?
I'll tell you why: Because the petroleum industry remains so fragmented that no conspiracy is possible even if the executives in question were so inclined.
Of course, the claim that "vertically integrated companies like Exxon Mobil own every step of the production process" is false far more often than it is true in a world in which state-owned oil companies manage 80% of the world's supply. Saudi Aramco, Petrobras, Statoil ASA, Nigerian National Petroleum Corporation and all their corrupt co-monopolists are hardly going to let ExxonMobil keep more than a small fraction of the value of the oil pumped from their national fields. Yes, a cartel is collecting monopoly rents from the world's oil consumers, but it is run from Riyadh, not Houston.
Now, there are bottlenecks in refining capacity, and that gives the owners of refineries the ability to drive higher margins in certain times or places, especially in California because it has banned the most common formulations of gasoline. Tight refinery capacity, particularly for gas that can be sold in California, is now the main reason why gasoline prices can remain stubbornly high even when crude oil prices fall. That invites the question, why have there been no new oil refineries built in the United States in more than thirty years? Do you think it is because a secret cartel of integrated oil companies has subverted their construction, or because government regulations, community activists, environmental agitators, and local property owners have raised the costs and the risks and thereby destroyed the expected rate of return on the necessary investment?
Your answer to that last question more or less determines whether you think John Edwards is an idiot or you are the idiot he's pandering to.
9 Comments:
By 
, at
Fri Jun 01, 12:43:00 AM:
Why dont JOHN(TOILETFACE)EDWARDS take a hike and quit his rediclous and idiotic braying before someone decides to tie a knot in his tail
By 
Unknown, at
Fri Jun 01, 02:51:00 AM:
The 'no new refineries meme' must be junked.
It is completely unnecessary to build 'green field' refineries. ALL of the refineries operating today have had repeated and fantastic increases in capacity. The equipment, itself, is being replaced and improved just about every six months. Each Spring and Fall, when the demand changes from gas to heating oil... and driving is not too intense... the industry shuts down some capacity to bring it back EVEN STRONGER.
That rhythmic heartbeat caused the latest speculative surge on the commodities slot machine....
I will admit that no new entrants can be for this major industry. But that's like admitting that no one can get into the buggy whip industry in 1905.
There's plenty of oil left. But there's no intelligently pumped crude left.
Iraq ought to be pumping more than Saudi Arabia. Might that be a reason to support the Sunni suicide faction?
The Azeris have has much oil as Iraq or Saudi Arabia... it's under the Caspian. But you don't hear much of it.
The amount of crude under the land of the idjit nations is astounding.
Can you believe that Russia has found all of it's crude. Hell, they didn't even know that Azerbijan had ultra sweet crude in monumental amounts.
For your information: the Arabian/Persian deposits run all the way up through Russia. They are MUCH older than the Caspian Sea; which was created by the compression of India into Asia.
Time was that the Volga emptied into the Indian Ocean.
Azerbijan is a northern continuation of the ultra ancient deposit.
By Purple Avenger, at
Fri Jun 01, 05:33:00 AM:
enabling them to foreclose competition
My mother used to work in the office at the port of Albany. All the gasoline for all the area's gas stations, of any brand, and independent stations, all came out of the same storage tanks.
By k2aggie07, at
Fri Jun 01, 12:18:00 PM:
What Purple Avenger said. Gasoline is a fungible commodity. That means its the same no matter where you get it and the price is set by relative availability and speculative free market trading. The only variation in gas prices across the country comes from taxation, not delivery cost or local demand (barring extremely small local phenomena ie gas stations running out during evacuations). The only difference in gas is between grades...all unleadeds are created equal. All premiums are not.
I had the exact same line of reasoning when I read this post as you did TH. I just approached it from a different angle. Check it out here. Good post!
By DaveG, at
Fri Jun 01, 01:52:00 PM:
This is so stupid we are left to choose between two alternatives: John Edwards is an idiot, or he thinks that we are idiots. There is no possible third explanation.
I heartily disagree: I think there's a third (and correct) option: John Edwards is an idiot and he thinks that we are idiots.
By Assistant Village Idiot, at
Fri Jun 01, 10:17:00 PM:
DaveG took my answer.
People don't understand large-scale economics because they think what they do is valuable, but some other group of people seems to get rich. Resentment clouds the understanding and blinds us to our own prosperity.
There's votes in that, if you know how to punch up the resentment. Why, you could probably go a long way by giving out the idea that there are Two Americas, and it's the guys in the other one who are getting rich unfairly somehow. Oh wait...
I think I should market a line of T-shirts or ballcaps that conservatives could buy for their liberal friends: "I have NO IDEA how the economy works." I'm sure I'd ship a lot to North Carolina (no offense to any sensible Tarheels - you might be my best customers).
By D.E. Cloutier, at
Fri Jun 01, 10:48:00 PM:
Edwards should scrap his campaign and run off with Paris Hilton.
By , at
Sat Jun 02, 12:37:00 AM:
Edwards is a idiot and a jerk he is acting like a idiot
By Purple Avenger, at
Sat Jun 02, 02:24:00 AM:
he is acting like a idiot
Its not an act.
