The Exurbs Are Slowly Dying

"The project of the American suburbs is the greatest misallocation of resources in the history of the world." - James Kunstler

Well, Jim, you have to be feeling pretty good about the recent vindication you received from an article that appeared last Friday in USA Today:

Almost three years after the official end of a recession that kept people from moving and devastated new suburban subdivisions, people continue to avoid counties on the farthest edge of metropolitan areas, according to Census estimates out today.

The financial and foreclosure crisis forced more people to rent. Soaring gas prices made long commutes less appealing. And high unemployment drew more people to big job centers. As the nation crawls out of the downturn, cities and older suburbs are leading the way.

Population growth in fringe counties nearly screeched to a halt in the year that ended July 1, 2011. By comparison, counties at the core of metro areas are growing faster than the nation as a whole.

"There's a pall being cast on the outer edges," says John McIlwain, senior fellow for housing at the Urban Land Institute, a non-profit development group that promotes sustainability. "The foreclosures, the vacancies, the uncompleted roads. It's uncomfortable out there. The glitz is off."

The fucking glitz? Pardon me for being so crude, but I live in a metropolitan area that is ringed by a huge band of exurbs that has been exploding over the past couple of decades. It is fucking UGLY, a vast wasteland of bulldozed fields and woodlands, tract homes, strip malls, megachurches, ribbons of new asphalt and horrendous traffic. What compels people to move to such godawful soulless places just so they have a bigger back yard is absolutely baffling to me.

There is perhaps no other phenomena the so clearly demonstrates just how far we have our collective heads shoved up our asses in this country than the exurbs. Think about it. America's rapid drive towards car-centric suburbification after World War Two was short-sighted enough, but at least then we had the excuse than we had never before experienced an oil shock. Then in the 1970s, we received two major shots across the bow in the form of the 1973 and 1979 Middle East oil supply disruptions. Those should have served as a warning that a automobile-dependent transportation infrastructure was ultimately not sustainable. So what did Spoiled Rotten Nation do in response? As soon as oil prices began to fall, we doubled down on our stupidity by building ever farther flung and even more car dependent communities as well as starting to buy gas hogging minivans and SUVs.

The building of exurbia, in fact, went into overdrive during the housing bubble years this past decade leading right up to the next major round of oil shocks. Instead of putting the brakes on sprawl as we were so clearly warned that we should do, we petulantly stepped on the accelerator and ran headlong right into the brick wall of peak oil and permanently high gasoline prices.

Nevertheless, this being a mainstream media article, it fudges on sounding any kind of warning about our real predicament:

"This could be the end of the exurb as a place where people aspire to go when they're starting their families," says William Frey, demographer at the Brookings Institution. "So many people have been burned by this. … First-time home buyers, immigrants and minorities took a real big hit."

During the '70s gas shortage and the '80s savings and loan industry crisis, some predicted the end of suburban sprawl. It didn't happen then, but current trends could change the nation's growth patterns permanently.

Aging Baby Boomers, who have begun to retire, and Millennials, who are mostly in their teens and 20s, are more inclined to live in urban areas, McIlwain says.

"I'm not sure we're going to see outward sprawl even if the urge to sprawl continues," he says. "Counties are getting to the point that they don't have the money to maintain the roads, water, sewer. … This is a century of urbanization."

First of all, Mr. McIlwain, the Millennials are not drawn to the cities because of any particular change in the American mindset. They are being drawn there becuase they are graduating from college with massive student loan debts into the worst jobs market since World War Two and thus they cannot AFFORD to buy a fucking house. Secondly, this isn't going to be the "century of urbanization." It is instead going to be the century of decentralization and economic collapse. When the day finally comes that the just-in-time delivery support systems for the urban areas cease functioning, both the exurbs AND the central metro areas are going to become very bad places to be for anybody.


Bonus: "How come...I can't tell...the free world from a living hell?"

Three More North Carolina Firms Closing

There have been quite a few mass layoff stories from North carolina as of late. Here is The Business Journal with the details:

LC Transportation Services, a Mount Airy-based trucking company that has been in business for nearly three decades, has shut its doors for good.

Saturday's closure of the trucking company — which employed 90 — comes as two other Mount Airy firms are shutting down operations.

General contractor John S. Clark, once one of the biggest commercial builders in the Triad, announced in a mid-March letter to customers that it was closing after failed negotiations for a management buyout. Harvest Time Bread Co., a national baker for the grocery and food service industries, is also closing its manufacturing plant in Mount Airy and cutting 57 local employees.

Phil Arrington, vice president of Mount Airy-based LC Transportation Services, said the company shut down due to a combination of issues, including rising fuel prices and costs for workers compensation and insurance. He also said a major customer cut their rates and contributed to the demise of the business, although he declined to name the business.

Arrington described the closing as a “death in the family,” adding that his employees were very disappointed.

“They didn’t work for us, they worked with us,” he said.

Hmmm...I wonder if that "major customer" was Walmart. If so, that wretched company is already fulfilling my prophecy of the other day about what passing on further price cuts will do to its suppliers.


Bonus: "Hell's on both ends of it...nowhere in between...this highway's mean"

High Gas Prices Eat Into Nonprofits' Funding

This story merely served as yet another reminder of just how precarious and dependent upon cheap gasoline so many of the more vulnerable members of our society really are. Here is delmarvanow.com with the details:

Rising gas prices are siphoning money the Food Bank of Delaware would rather spend to feed a record number of low-income families, at-risk kids and impoverished seniors.

“We definitely feel the impact,” spokeswoman Kim Kostes said. Every added $1 pumped into its trucks and vans could provide four nutritious meals, she said.
Gas in Delaware hit an average of $3.82 per gallon Sunday, and is expected to soon top $4 a gallon.

The food bank now is also working to raise the last $1 million effort for a $2.7 million to add a kitchen to expand its Milford site, serving southern Delaware, where need is growing fastest, she said. “Gas cards are great,” Kostes said, but money for operations and a new kitchen is also needed.

For nonprofits, rising gas prices mean not only higher costs for food and goods, but also a drop in donations, because people already suffering in the recession “just aren’t feeling like they have as much to give,” said John D. Baker, spokesman for the Delaware Association of Nonprofit Agencies.

The worst-hurt programs are those like the food bank and Meals on Wheels, which directly involve transportation or delivery, he said.

Some longtime volunteers at the Modern Maturity Center in Dover, where Meals on Wheels rolls out 700 meals each weekday, are starting to ask for help buying gas, said Executive Director Carolyn Fredricks.

Some volunteers have asked for shorter routes, some long routes have been split and there have been modest gas reimbursements when donations made them available, Meals on Wheels Deputy Director Ken Bock said.

Still, he said, paid staff members often end up doing a lot of deliveries that were done by volunteers before gas prices spiked.

Leaders of Delaware nonprofits say they already have been poaching from other budgets, doing more fund-raising and asking for gas card donations to help cover rising costs.

“We appreciate every bit of help,” said Newark Senior Center Executive Director Carla Grygiel. “We need it.”

Fuel costs are up 39 percent from last year for the center’s thrice-weekly member pick-up bus, she said. But the center is determined not to raise its $1 fare.

“We can’t raise our fees to our people who take the bus, because they are our most frail individuals,” Grygiel said, adding even a $1 fare “is difficult for some of them.”

Right now there is still enough latent wealth spread out around our economy to keep rising gasoline prices from turning into a potential humanitarian disaster. So what is going to happen when the day finally comes that those prices do rise to $5.00 or $6.00 a gallon or even more?

Spoiled Rotten Nation Not Sure Who To Blame For High Gas Prices

This is a good companion piece to my post the other day about a recent public opinion survey on energy issues that demonstrated how clueless the public really is. Spoiled Rotten Nation doesn't understand why gas prices are skyrocketing, and Spoiled Rotten Nation is plenty pissed off about it. Spoiled Rotten Nation just does not know who should get the blame, as this story from Yahoo Finance points out:

Families canceling vacations. Fishermen watching their profits burn up along with their boats' gasoline. Drivers buying only a few gallons of gas at a time because they can't afford to fill the tank.

From all corners of the country, Americans are irritated these days by record-high fuel prices that have soared above $4 a gallon in some states and could top $5 by summer. And the cost is becoming a political issue just as the presidential campaign kicks into high gear.

Some blame President Barack Obama. Some just cite "the government," while others believe it's the work of big, greedy oil companies. No matter who is responsible, almost everyone seems to want the government to do something, even if people aren't sure what, exactly, it should or can do.

A Gallup poll this month found 85 percent of U.S. adults believe the president and Congress "should take immediate actions to try to control the rising price of gas." An Associated Press-GfK poll last month showed 71 percent believe gas prices are a "very" or "extremely" important matter.

Once again, we see how meaningless public opinion polls are in regards to energy issues. It may come as a shock to 85% of the American public, but there isn't fuck all the president and Congress can realistically DO to reduce gasoline prices. The COULD repeal the federal excise tax on gasoline, which would lower the price by a whopping 18.4 cents per gallon. State legislatures, which the president and Congress do not control, could also help out by repealing all state gasoline taxes, which vary by state but average around another 18 cents per gallon. And that is the grand total of what the government could do, lower the price of a gallon of gas by less than 10% in the short term.

But then, guess what? There goes all of that tax revenue governments at all levels are expecting will help pay to build and maintain roads and highways along with running public transportation. Let America go a year or so without any road or highway repairs, and let's see how quickly the entire transportation grid collapses.

But Spoiled Rotten Nation doesn't want to hear it:

"When I go out to change the prices, they honk their horns and yell at me," said Siroub whose station's cheapest grade of gas, regular unleaded, was selling for $4.44 a gallon earlier this week. "The other day one person even gave me the finger."

Boy, you gotta love the visual image of an enraged driver flipping the bird to a gas station manager because he is forced to raise his prices just to stay in business. What is that fucker going to be like when gas finally does rise to $5.00 or $6.00 a gallon or ever more? Worse yet, what will he be like when gasoline starts to become unavailable at any price? Something tells me he isn't going to handle it too well.

The last guy they interviewed for the article does make an accurate statement in the middle of his cluelessness:

Shrimpers in Louisiana and lobstermen in Maine complain that high fuel prices are cutting into their profits. Craig Rogers, who burns through 50 gallons of gas a day tending his lobster traps along Maine's rocky coast, blames commodities traders, though he questions whether politicians are doing enough. He said politicians are too well off to really grasp what ordinary people are going through.

"They can say they feel for us, they can say they understand us, but when you have that kind of money, there's no way you can truly understand what we're feeling," he said.

No, Mr. Roberts, they don't understand what you are feeling. More importantly, they don't give a shit even if they may act like they do. But even if they did give a shit, there really is very little they can do. Yes, they've been lying to you about our energy predicament for 30 years, ever since Ronald Reagan defeated Jimmy Carter after the latter tried to tell the country the truth about peak oil. You and everyone else who is now whining about high gasoline prices didn't want to hear it then, and now you're all butt hurt about it.

As the saying from the old Fram oil filter commercial used to go: "You cay pay me now, or you can pay me later." Well, later has arrived and now reality has showed up at the door of Spoiled Rotten Nation waiving a huge bill in its hand, and it isn't going to go away until it gets satisfaction.


Bonus: How fitting is it that this commercial came out in 1981?

High Gas Prices Take A Bite Out Of "Meals On Wheels"

Back when I was in college I had job working in the dietary section of the public hospital in my hometown. One of the things we used to do was put together Meals On Wheels so they could then be delivered to needly elderly people in the community. It was a nice feeling to know that part of your job involved actually helping someone.

I hadn't thought about the Meals On Wheels program since those days, until I read this distressing story from a local South Dakota television station:

The high price of fuel not only affects families and businesses, but non-profit agencies as well. Volunteer drivers who deliver food to low-income elderly people are looking for answers from members of Congress.

Meals On Wheels driver Gayle Sagmoe has a VIP riding shotgun on her route: South Dakota Congresswoman Kristi Noem.

"It's the number-one issue that our office hears about right now, is gas prices," Rep. Kristi Noem, R-South Dakota said.

The 500-plus volunteer drivers with Meals On Wheels furnish their own vehicles and pay their own gas.

"I go probably average of 12-15-18 miles a day for a route; at $4 a gallon that's not going to go very far," Sagmoe said.

Drivers like Sagmoe worry that if gas prices climb too high, she may have to cut back on deliveries or stop volunteering altogether.

Unfortunately, the main interviewee for this article is looking for help in all the wrong places:

"I hope it doesn't because volunteering for me is the joy of my life, so I'm hoping and crossing my fingers that somebody will fix something and we can get prices back down," Sagmoe said.

Meals On Wheels hopes lawmakers like Noem can do the heavy lifting toward finding a solution to high prices.

"People are asking us, 'Why?' And simply, it's the uncertainty in the world and that we've got a lot of resources out in the country that we're not accessing," Noem said.

Sorry, Ms. Sagmoe, but your dingbat Congresswoman is far more interested in trying to score political points against Obama than she is in helping you. Because otherwise, she would explain to you that there is not much she, Obama or any other of our national "leaders" can do to bring down the price of gasoline in this era of peak oil. If she really wanted to help, she would suggest that the government provide a fuel subsidy for the Meals On Wheels program, because high gas prices are not only here to stay, they are going to get even worse in the future. But she doesn't want to do anything that might be construed as "socialism," so she'd rather look you in the eye and lie her ass off about all of the bountiful supposed resources America still has that for some inexplicable reason we refuse to access.


Bonus: Just because this story is from South Dakota, here is "Badlands"

GM Stops Building Chevy Volts For 5 Weeks--Lays Off 1,300

Lessee, according to Gas Buddy.com, the price of a gallon of the sweet stuff just topped $3.70 again, higher than it has ever been this early in the year. Gas prices have once again become a hot topic evidenced, as I pointed out the other day, by the number of mainstream news stories breathlessly warning of the impending possibility of $5.00-a-gallon gasoline by this summer.

Given all of that, you would think that newfangled electric cars like the Chevy Volt would be selling like hotcakes right now...and you would be precisely wrong. Not only are the cars not selling, GM is temporarily laying off the workers who build them. Here is USA Today with the details:

General Motors is stopping production of the Chevy Volt and European sibling Opel Ampera for five weeks due to slow sales.

"Even with sales up in February over January, we are still seeking to align our production with demand," said GM spokesman Chris Lee.

GM told the 1,300 employees building Volts at its Detroit Hamtramck plant that they will be laid off from March 19 to April 23.

Chevrolet sold 1,023 Volts in the U.S. in February and 1,626 so far this year. In 2011, it sold 7,671 -- short of its initial goal of 10,000. And GM had planned to expand production of the plug-in, extended-range electric car to 60,000 this year, with 45,000 for sale in the U.S.

So what exactly is the problem with this wonder vehicle that is supposed to solve all of our transportation-related energy problems?

The Volt is a technological "halo" car for GM, but also has been a political target. Critics have pointed to its $40,000 price tag and the federal subsidy of $7,500 plus state subsidies for people to buy one. They charge that the average buyer has a $170,000 household income and doesn't need to have a new-car purchase subsidized.

Sales also took a hit last fall when the National Highway Traffic Safety Administration opened a probe into why two Volts burst into flames days or weeks after severe NHTSA crash testing. NHTSA later deemed the Volt safe, meanwhile GM on Jan. 5 said it would improve the battery structure and coolant system.

I realize that the conservatives have been dumping on the Volt in order to try and score political points with their troglodyte base, and I have no desire to help them in that cause. But liberal and progressives also need to stop drinking the hopium surrounding the Volt and electric cars in general. They are NOT "green," because they for the most part run on the coal that fuels many of our electrical power plants. And they won't save us from Peak Oil because there is no way we could possibly generate enough electricity to power 250,000,000 of them. The truth of the matter is that the age of the passenger automobile, which is an historical aberration that has lasted only a little over a century now, has at most another decade or two to run before being consigned to the dustbin of history.

But hey, at least they build the damn things in America. That's something, right?


Bonus: Ballsy southern rockers Drivin'n'Cryin' rock Detroit

George Will Has A Rare Moment of Lucidity On High Gas Prices

Continuing on with the high gas prices theme from this morning's post, here's one for the You Really Can't Make This Shit Up file. This past Sunday conservative scold George Will, the very same guy who once labelled the idea of building more passenger rail service "collectivism," ripped Tea Party dipshit Representative Allen West and Newt Gingrich for blaming Obama for high gas prices. Here is The Raw Story with the set up:

Conservative columnist George Will says it’s “economic nonsense” for tea party favorite Rep. Allen West (R-FL) to blame President Barack Obama for the high cost of putting gas in his Hummer.

Writing on his Facebook page last week, West charged that Obama’s energy policy was “insidious political gimmickry.”

“Here is the bottom line, last night it took 70 dollars to fill the tank of my 2008 H3 Hummer, what is it costing you?” he asked.

And here is Will's exact quote:

“Allen West from south Florida, a Republican, said he was outraged this week because it cost him $70 to fill his car,” Will pointed out. “He drives a Hummer. Newt Gingrich said the American people have a right to demand $2.50 gas. They have a right to demand to lobsters grow on trees. I mean, this is economic nonsense.”

I never thought I would say this, George, but I agree with you completely. I only wish, in light of your own previous "economic nonsense" about collectivist mass transit, that one of the other panelists on your show had asked you exactly what bright ideas you have for addressing high gasoline prices. That would have been entertaining to watch.

Much as the know-nothing West in particular may deserve it, you can take this attack as a pretty obvious sign that the arrogant Will was speaking for establishment conservatives who have officially had it with the Tea Party.


Bonus: Allen West's car probably isn't what Billy Corgan had in mind when he wrote this song--but whatever

So What Happens If Gasoline Hits $5.00 A Gallon This Summer?

You gotta love the mainstream media. For months now the drumbeat has been about how the economic recovery in the U.S. is picking up steam, even though the only two indicators which are in agreement with that assertion are stocks and jobs, both of with are being relentless manipulated by the Federal Reserve and the Bureau of Labor Lying Statistics respectively. Nevertheless, despite the persistant propaganda designed to get the consumers suckers back into the malls and spending freely again, the media just can't resist the temptation to goose its ratings/readership/page views by doing a little scaremongering over rising gasoline prices. Numerous stories have appeared in the last week breathlessly proclaiming that gasoline prices will hit $5.00 a gallon by this summer.

You would think that someone would quickly spot the inherent contradiction here. After all, every recession since the 1970s has been preceded by a spike in oil and gas prices. But, surprisingly, you would be wrong about that, as shown by an article which appeared over the weekend on MSNBC.com. The title, "8 Reasons Why Gas Will Hit $5 a Gallon This Year," seems straightforward enough, but let's take a closer look at their supposed "expert" analysis. Here are the reasons from the article listed in order, followed by my commentary:

1. Strait of Hormuz
About 20 percent of the crude oil produced in the world is shipped through the Strait of Hormuz, and Iran has threatened to shut down shipping traffic through the Strait. At its narrowest, the passage is 30 miles wide, so there is a realistic case that a conflict could close it. Iran has already been isolated as a trade partner by U.S. and EU sanctions. The regime in the country has made a number of threats about what it might do if its “national interests” were threatened. If Iran follows through with its threats, the period the passage is closed could be very brief if the U.S. Navy, which has a carrier group in the region, moves to reopen the lane. But it is not clear that the American government would make that decision without the open support of allies or the United Nations. A closure of the passage, or any escalation that would make a closure more likely, will drive oil prices higher -- and by extension, gasoline prices.

No argument there. Tensions involving this key oil transportation checkpoint are certainly putting speculative upward pressure on prices. Let's move on.

2. Iran
Iran contributes to a second problem in terms of global oil supply well beyond that of its ability to interrupt supply. Because of the embargo against the nation due to nuclear weapons violations, the U.S. has pressured large oil importers such as Japan to act to isolate Iran by cutting their imports. This puts Japan in a position in which it has to tap even tighter global supply. Japan apparently has agreed to cut its Iranian crude imports by 20 percent. But as the world’s third largest oil importer, Japan indeed will have to get its oil somewhere other than Iran -- which will put more pressure on current production.

Not sure I agree with this one. The sanctions against Iran are laughably self-defeating given that China and India have shown no inclination to join the embargo against Iranian oil, and as long as Persian oil is being bought somewhere, there should not be any corresponding increase in world oil prices as that just means those two countries will buy less elsewhere.

3. Refiners raising prices
Most of the oil refined on the east coast of the U.S. is Brent crude, a type of oil produced from the North Sea. The price of Brent -- more than $124 a barrel -- is almost $16 higher than the price of West Texas Intermediate (WTI) crude, the amount most people read about in the media. But because Brent has replaced WTI as the global price benchmark, U.S. refiners set prices for gasoline and other products as if Brent were the only grade of crude used. That allows refiners with access to cheaper WTI to make larger profits.

However, when the prices converge, as happened in the final two months of 2011, WTI refiners lose their edge -- and their hefty profits. “Refiners were losing money in November and December. You can only lose money for so long,” John Felmy, chief economist for the American Petroleum Institute, recently said. Many large refineries are owned by public companies that do not have much appetite for posting ongoing losses. To avoid losses, refiners will have to increase gasoline prices.

Can't quibble with this one in light of the recent refinery shut downs in Pennsylvania and New Jersey, which certainly wouldn't have happened if they were turning big profits.

4. Other geopolitical risks
Iran does not present the only geopolitical challenge to oil production. In Nigeria, which is the 14th largest producer of oil in the world, Islamic terrorist group Boko Haram has continued to attack Christian areas of the country. The Nigerian Army has reacted by attacking Islamists. Militants have continued to attack pipelines, apparently in a move to disrupt the government.

This segment went on to mention Venezuela and other unstable Middle Eastern countries, but I've left that part out for brevity's sake. Again, no argument here.

5. The EU may save itself
For now, Greece has been bailed out again -- a move that should buoy confidence in the region and encourage demand for oil. Even with the Greek bailout, however, the eurozone is not out of the woods as nations continue to implement austerity measures to protect against the risk of default on sovereign debt.

Also edited down for brevity's sake. Can the EU muddle through for another year? Well, it pretty much muddled all the way through last year, so it certainly is possible.

But here is where things suddenly begin to go completely off track and way out into la-la land:

6. U.S. economic recovery
An improved U.S. economy means higher oil prices. U.S. GDP, employment and even housing have all staged unexpected improvements in recent months. Many economists now peg a 2012 GDP increase at more than 2 percent. The new White House budget assumes growth of 3 percent by 2013. An average of more than 100,000 jobs has been created in each of the past six months. And an extension of payroll tax cuts through the end of this year may further aid the employment recovery. An extension of unemployment benefits means that hundreds of thousands of American who would have no income, will have at least enough to consume basic goods and services. The argument that Americans now drive less is not a powerful one for gas and oil demand when a healthy economy also means more consumption of oil for business, petrochemicals and jet fuel. Demand for oil-based products across the entire economy will pick up with any recovery.

Even if you buy the recovery propaganda, how can any rational observer of the economy not realize what will happen to the American consumer well before gas prices hit $5.00 a gallon? Is 2008 really that far in the past that it has been completely forgotten? That year, gas prices topped out in July at a national average of $4.11, and the shock to the system was so traumatic that it helped trigger a deflationary crash across the financial sector. By January of 2009, gas prices bottomed out at $1.61 (figures courtesy of the chart above from Gas Buddy.com). Yet we're supposed to believe that prices shooting towards $5.00 wouldn't cause an even worse economic shock this time around?

But wait, it gets even more absurd:

7. Summer
In the U.S., summer vacation driving has historically boosted demand for gasoline. Over the past three or so years, however, that boost has been small, if present at all. In 2011, U.S. traffic volume decreased year-over-year in every month except January and February. But that was last year. So long as the U.S. economy continues to improve, more drivers will be on the road this summer.

Right here we see the blind spot of every economic commentator who uses the raw jobs figures to back up the claim of economic recovery. Are there more jobs now than there were a year ago? Undoubtedly. Are most of those newly created jobs the kind of stable, good paying positions which would allow their holders to take a couple of weeks off this summer and take the family out for a long driving vacation? Unlikely. It seems like many of those who get paid to write articles like this one in the mainstream media think that everyone who has a job is as comfortable and well off as they are.

8. Supply risk
In December 2011, OPEC members produced nearly 31 million barrels a day, cutting the cartel’s spare capacity capability from 3.18 million barrels per day to 2.85 million. Saudi Arabia accounts for 2.15 million of those daily barrels of spare capacity.

Again, edited down for brevity. Maybe Saudi Arabia has that spare capacity. Maybe it doesn't. No one outside the desert kingdom really knows for sure. But at least the article ends on a more sensible note.

To sum up, there are a lot of very good reasons to believe that oil and gas prices are going to rise higher in the coming months, but reasons six and seven listed above are absolutely laughable in their absurdity. The fact that they were included in an otherwise relatively astute analysis shows just how powerful the propaganda spewed forth by the Hologram really is.

What will happen if gas prices hit a nationwide average of $5.00 a gallon this summer? Personally, I think that absent a war with Iran we're not going to find out. Because while the economic free fall we experienced in late 2008 and early 2009 was halted by the enormous increase in federal deficit spending and the loose monetary policies of the Federal Reserve, the economy is far too fragile withstand prices surging to that level. Almost certainly, another financial market crash will short circuit the rise in gas prices well before they reach those lofty heights, at least for this year.


Bonus: "Putting out the fire with gasoline"

Yet Another Oil Refinery is Shutting Down

On January 27th of this year, I posted a story about a ConocoPhillips oil refinery in New Jersey shutting down. Well, now comes word that a Sunoco refinery near Philadelphia is also closing up shop. Here is NBC 10 Philadelphia with the details:

Officials at a Sunoco refinery near Philadelphia say about 100 employees are being laid off at the end of the week.

The workers at the company's Marcus Hook plant in Delaware County were given layoff notices saying Friday would be their last day, reports the Delaware County Daily Times.

Sunoco spokesman Thomas Golembeski said Tuesday that the hourly employees were told not to return because the first phase of the plant decommissioning process has been completed. But he says the workers will be paid their wages through the end of the month.

Sunoco said last year that it would idle the refinery and lay off about 490 employees because of deteriorating market conditions. Another Sunoco refinery in Philadelphia is expected to close by July if a buyer isn't found.

And all the politicos can do is whine about it:

Pennsylvania politicians urged Sunoco CEO Brian MacDonald to find a buyer for the facilities.

"With so many jobs on the line and the risk of higher fuel prices for consumers across the northeast, Sunoco and ConocoPhillips must be held accountable for the impact refinery closures would have on the region," said Sen. Bob Casey (D-Pa.) in a letter sent Wednesday. "We need these companies to be more transparent with workers and the public as they contemplate decisions that could have very damaging impacts not only on the local communities but on the entire northeast."

What a pathetic, pandering little worm. Do you really think these refineries are closing because the companies are deliberately being mean, Senator Casey? Or that they wouldn't sell the refineries if they could actually find buyers for them? They're shutting these refineries down because they can no longer turn a profit with them, for whatever reason. The implications of that fact ought to be as clear as they are dire. And you'd be much better off telling your constituents the truth instead of continuing to blow smoke up their asses.


Bonus: Bad boy that he was, Pennsylvania would still likely be better off with the fictional Senator Bob Roberts

Finally, Some Good News: Congress Ends Ethanol Subsidies

One of the dumbest public policy decisions made in recent years was the subsidy paid by the federal government to ethanol producers. Not only did the subsidy directly contribute to the national debt, it helped drive up the price of corn, which is one of our most basic food staples. It also artificially suppressed the price of gasoline, and if there is one thing government policies should NEVER do in this peak oil era, it's encourage people to use more oil and gas than they would otherwise. Here is USA Today with the details:

Gasoline could cost 4.5 cents a gallon more starting as early as this week, and it's not because of rising oil prices.

It's because Congress declined to renew the 30-year-old federal subsidy for ethanol, letting it expire Sunday.

Ethanol, denatured grain alcohol used as a proven smog-cutting ingredient, currently makes up 10% of most gasoline-based motor fuel for general use, so-called E-10. In a few areas, E-85 fuel, 85% ethanol, also is available. E-85 can be burned only by vehicles equipped for "flex fuel."

How much the end of the subsidy could add to gas prices, and how soon, is yet to be seen. Ethanol blenders got a 45-cents-a-gallon tax credit, which amounts to 4.5 cents for the amount blended into each gallon of E-10 fuel.

It's hard to calculate the immediate impact. Oil prices and ethanol stocks are in flux. And unknown is the impact of another move by Congress: dropping the 54-cents-per-gallon tariff on ethanol imports. Brazil is a leading global producer of ethanol made mostly from sugar cane.

In the U.S., ethanol primarily is made from corn. That has made the ethanol subsidy controversial because of allegations that it raised food prices. The estimated $6 billion annual cost of the subsidy also has added to the federal deficit.

Of course, they had to go and diminish the positive effect on the nation's balance sheet by also eliminating the tariff on Brazilian ethanol, but at least this is a step in the right direction.


Update: I stand corrected on this actually being good news. See reader bmerson's comment below and my response.

What's the Matter With the Electric Car?

Very few people want to buy them, actually. Here is MSNBC with the details:

If the White House hopes to meet its ambitious goal of putting 1.5 million battery cars on the road by mid-decade it better hope that 2011 wasn’t a good indication of what Americans think of electric vehicles.

Add them all up, hybrids, plug-ins and pure battery-electric vehicles, or BEVs, and they accounted for little more than 2% of the U.S. automotive market last year. Remove conventional gas-electric models, such as the Toyota Prius and Ford Fusion Hybrid, from the equation and more advanced battery vehicles generated barely 20,000 sales.

“I’d say they failed,” proclaims Joe Phillippi, chief analyst with AutoTrends Consulting.

Ouch...harsh. So if they failed, as Mr. Phillippi says, WHY exactly did they fail?

...they aren’t cheap, battery vehicles saddled by price tags that are thousands – in some cases, tens of thousands – of dollars more than comparable gasoline vehicles.

That might make sense had fuel prices held at the near-record levels seen in early 2011, but gas has dropped sharply since then. Meanwhile, manufacturers have been making major strides when it comes to the fuel efficiency of conventional, gas-powered vehicles. In the compact segment where Ford will compete with the Focus Electric, for example, 40 mpg on the highway is the new norm.

Both government bureaucrats and electric vehicle manufacturers, says analyst Sullivan, “aren’t giving consumers credit for being able to do the math. It just doesn’t make economic sense” to buy an electric vehicle – at least if your primary goal is to save money by reducing your energy bills.

There are, of course, other reasons. There’s the desire to clean up the air and to curb oil imports, especially from the Mideast. But whether that can be used to draw more buyers into the market remains to be seen. Especially in this economy, value is the big motivator, rather than politics and social concerns.

Oh, no shit? You mean that very few people other than a handful of greenie-minded, upper middle class yuppie types actually takes such things as the environment or Middle East oil imports into consideration when making a major purchase like a car? For that brilliant observation, let me present you with the coveted Dr. Obvious award. I'm not saying it's right, but it is a fact of life that most people make purchasing decisions based upon the bottom line to their pocketbooks.

I wrote back in June on this blog about how when I was ready to purchase a new vehicle after nine years and ultimately decided on a Ford Escape, that I chose to go with the conventional gasoline powered model rather than the hybrid because the latter cost nearly $6,000 more (and there was a three month waiting list for the hybrid). Six months later, I've put just over 5,000 miles on the car, meaning I would have to drive it for many more years to make up the cost difference between the purchase price and what I would have saved on gasoline.

The sad fact is that the time for America to start transitioning to electric vehicles was 20 years ago or more before we began staring the peak oil crisis right in the face. Even if President Hopey-Changey's unrealistic goal of 1.5 million EVs on the road by the middle of the decade is met, that is less than one percent of the total and still leaves something on the order of 250 million gasoline powered vehicles still out there.

There is also the problem that even if every car were suddenly magically converted to being an EV, the power grid couldn't handle charging them all. Additionally, much of our electricity comes from coal fired power plants, and coal is also not only also a fossil fuel but a bigger contributor to global warming than oil. You wouldn't think it would be necessary to have to keeping repeating all of that, but sadly it is because so few people seem to realize it.

I suspect that going forward EVs will remain a niche product purchased mostly by select members of the upper middle class in a desperate attempt to keep their car-centric lifestyles going as long as possible. But I doubt that ultimately they will have a future that lasts much longer than their gasoline powered counterparts.


Bonus: The Boss's Chevy wasn't a Volt, that's for sure