Free Markets, Free People
The other day this sort of slipped under the media radar:
First Solar Inc. will lay off 2,000 workers and close its factory in Germany following a collapse in solar panel prices that has erased the industry’s profits and forced some smaller companies into bankruptcy.
America’s biggest solar manufacturer said the layoffs amount to 30 percent of its global workforce.
B..b..but why!? Green shoots, alternative energy, clean energy, what the frack?!
This is the future, the government says so! How did it all go so wrong? How in the world could solar panel prices “collapse”?
An influx of Chinese competitors has led to a rapid buildup in supply. At the same time governments in Europe, the biggest market for solar power, are reducing generous subsidy programs that had fueled demand. From March to December last year, solar panel prices dropped 50 percent, said Aaron Chew, an analyst with the Maxim Group.
That damn “supply and demand” thingy again, right?
So let me get this straight … cheap foreign product (subsidized by the Chinese government) flooded the market created by government subsidized demand, driving up supply while lowering the price. Meanwhile the false demand that had been supported by “generous [government] subsidy programs” ended (thus ending the “demand”). Consequently there is no demand for the current over supply and no one is buying the stuff?
Wow … who could have seen that coming?
And the current producer can’t make a profit and thus has to lay off people?
You know, when you’ve seen the same thing over and over and over again (see Einstein’s definition of insanity), sometimes you just have to resort to sarcasm.
By the way for the terminally slow – news flash – that supply and demand thingy also seems to work in the petroleum market as well.
Scapegoating oil speculators–Obama counts on public’s economic ignorance to shift blame for high gas prices
Icould pretty much stop there and say the title tells you the story. Obama knows high gas prices are not good for his re-election campaign. He also knows his energy policies have actively worked against ameliorating or lowering the price of gas.
Therefore, it is necessary to find a scape-goat. Someone or something he can shift the blame too and demonize. In other words, the usual disingenuous attempt at distraction.
David Harsanyi explains what “speculators”, otherwise known as commodity traders, do:
Let’s start by being thankful for oil speculation — no matter what the motivation of those involved might be. To begin with, speculation allows companies with exposure to fluctuating commodity prices to hedge against rising costs by locking in. Sometimes the bet pays off; other times it doesn’t. But risk and profit are not yet crimes.
Oil speculation also offers consumers and investors information about the future that can help them make informed long-term decisions. Speculators trade commodities based on the information available in the marketplace. They reflect reality; they don’t create it.
But sometimes, unfortunate as it is, prices will rise. "Gouging," the close scaremongering cousin of "speculation," helps persuade consumers not to use what they don’t need. It incentivizes to modify behavior — our driving habits or the size of our cars. We conserve more when prices are higher, so we avoid shortages, and producers intensify their production. (Funny how Democrats get this concept when writing energy policy designed to artificially spike fossil fuel prices.)
In reality, this sort of trading helps moderate the market. And, being a zero sum game – i.e. if you make money someone else loses it – it is done carefully. As Harsanyi explains, they “reflect reality; they don’t create it”. In essence you’re seeing a relatively free market work as it should.
Of course, what Barack Obama wants to do is have government intrude on that market because politically he doesn’t like the reality it is reflecting because it is politically damaging to him. So:
Speaking from the Rose Garden, the president announced a proposal to spend $52 million to fund increased government oversight of oil futures market trading in addition to harsher civil and criminal penalties for manipulation in energy markets. “We can’t afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick,” Obama said. “That’s not the way the market should work.”
Or, said another way, if you make a profit based on your foresight, you’d be considered a criminal. If you lose money, I suppose, that’s ok in Obama’s world.
Of course, it’s all nonsense (I mean how would Mr. Obama regulate oil trading in foreign exchanges?). It is a calculated attempt to use ignorance of how these markets work to cause voters to shift their rage from him to his designated target. Successful scapegoating means one less issue the opposition has to use against him (not that he doesn’t provide a target rich environment anyway). He’s counting on this sort of populism to work.
David Kruetzer asks some questions I’d like to see the press ask:
If speculators are making unconscionable profits on energy, why are they only doing it occasionally and not all the time? Why are there only speculators in oil, not natural gas (whose current price is about half of what it averaged over the last decade)? And given how the petroleum market works — for every speculator who makes money on a trade, somebody else will lose money — the president’s theory “requires an endless string of chumps to take the other side of the speculators’ deals.”
And Kreutzer points out the basics of any commodities market, again something of which Obama banks on your ignorance:
For speculation to drive up prices, the speculators must either cause oil production to slow down (which they haven’t) or to pull oil off the market. If the flow of petroleum and its products remains unchanged, the price at the pump will not change. If petroleum is pulled off the market, which can happen even though there are limits to what can be stored, it will eventually come back on the market.
The question becomes, ‘When the oil comes back on the market, is the price higher or lower than when it was pulled off the market?’ The price will only be higher if the amount supplied at that time is lower or the demand is higher. In either of those cases, speculators have helped moderate price fluctuations and will be rewarded with profits. If the price is lower, then the speculators did a bad thing and will be punished by losing money.
So those are the basics of the issue as it concerns such trades and markets.
As can plainly be seen, Obama hasn’t a leg to stand on. But that doesn’t stop him from claiming that government is the answer to this made up problem.
Why? Well other that it is his political nature, he can’t sell the nonsense without some sort of “action”. It becomes much more believable to those who don’t know better if he’s going to spend millions to regulate the contrived problem out of existence.
Of course he knows his actions will not have any positive effect on gas prices, and, in fact, may actually have a detrimental effect, which is why he couches this attempt at scapegoating the problem via government with “none of these steps by themselves will bring gas prices down overnight”.
But he can claim to be taking action while continuing to blame speculators for the problem and counting on general economic ignorance to carry the day for him.
Pretty typical of the man, I’ve come to learn.
Yes, he’s apparently finally realized that as goes coal, so goes his union (via Labor Union Report). Interesting comparison to Osama Bin Laden. My guess is the administration see’s coal in the same sort of light as they viewed bin Laden – an enemy. And thus, the results of their campaign against it – the loss of jobs, even if they’re union – are acceptable “collateral damage”.
The coal industry will suffer the same fate as Osama bin Laden under new climate regulations proposed by the Environmental Protection Agency, the head of the United Mine Workers of America said this week.
“The Navy SEALs shot Osama Bin Laden in Pakistan and Lisa Jackson shot us in Washington,” Cecil Roberts, president of the powerful union, said during an interview Tuesday on the West Virginia radio show MetroNews Talkline.
Roberts blasted Jackson, the EPA administrator, over the proposed regulations, which would limit greenhouse gas emissions from new power plants. Opponents of the regulations, including Roberts, say the new rules would be the death knell of the coal industry.
But, will Mr. Roberts actually do anything to actively protect the jobs of his union members?
While the United Mine Workers of America likely won’t actively oppose President Obama’s reelection bid, Roberts said the new EPA regulation could prevent the union from endorsing the president.
“That’s something that we have not done yet and may not do because of this very reason. Our people’s jobs are on the line,” Roberts said, adding that Obama has “done a lot of great things for the country.”
So United Mine Workers, why are you paying the dues to pay this man’s salary?
He certainly has made his choice hasn’t he? Unquestioning party loyalty over your jobs. He doesn’t care about them and obviously neither does the president.
I’m sure you’re surprised.
In Nebraska, where environmental groups had protested the construction of the Keystone XL pipeline because it would pass through the “environmentally sensitive” Sand Hills, they are now protesting a proposed solution as well.
The legislation is designed to restart a state review of a pipeline route that avoids Nebraska’s ecologically sensitive Sand Hills region.
Gov. Dave Heineman has indicated that he would sign the bill. He supports getting the Keystone XL pipeline built as quickly as possible.
But, say the environmental groups, this is just not acceptable:
Such eagerness was one of the concerns expressed by the groups. Under LB 1161, the governor would make the final decision on whether to approve a crude-oil pipeline route through the state.
Jane Kleeb of Bold Nebraska said that would be a clear conflict of interest because an agency under the governor — the Nebraska Department of Environmental Quality — would oversee an environmental review of the new route.
Using Kleeb’s logic, Obama had no right to refuse it in the first place because the agencies that conducted the review process for the pipeline at a national level worked for him.
Regardless, the environmentalists intend to try to tie the law up in court:
Kleeb and others said they would prefer the pipeline regulation bill that was passed during last November’s special session, which would put the Nebraska Public Service Commission — an independent agency with elected commissioners — in charge of reviewing the Keystone XL.
Ken Winston of the Sierra Club said he expects a lawsuit to be filed challenging LB 1161′s constitutionality.
Of course Nebraska, as those who’ve followed this story know, is criss-crossed with multiple oil pipelines, none of which have caused the catastrophic environmental problems the environmental groups claim will come with the approval of this pipeline.
The obvious point, of course, is this has never been about “environmentally sensitive” areas. It has been about stopping this pipeline because it will be carrying crude that comes from an area environmentalists have decided produces “dirty” fuel and that we should be denied its benefit. For whatever reason they seem to think if they stop this pipeline, the oil sands in Canada they will come from will simply cease to produce. Of course that’s poppycock. Canada has already said it has plenty of other customers for its oil, to include China.
So this is the latest in the battle to deny this country a safe and secure fuel source for groundless practical reasons, but instead based in ideology which refuses reality for some asinine utopian fantasy world. They would deny this country the benefit of 800,000 barrels of oil a day because they have decided we shouldn’t have it.
Yet my guess is they’d also claim to be big proponents of “democracy”. The only problem, as poll after poll demonstrates, “democracy” firmly backs the construction of the pipeline by huge majorities.
So to hell with it. It’s off to Plan B as outline by Saul Alinsky – use their own rules against them.
Or, in other words, instead of letting the democratic process work and accept the results, tie it up in court.
Seriously. This administration will invest your dollars in every sort of “alternative energy” scheme but that which runs the county (i.e. fossil fuel) is not one of them. From pond scum to BS.
Western Plains Energy, LLC, a Kansas company, will use the money to "utilize waste energy resources from a local cattle feedlot to replace almost 90 percent of the fossil fuels currently used" at the plant.
"Projects such as this are a key part of the Obama Administration’s all-of-the-above approach to American energy that is supporting the development and usage of renewable energy, revitalizing rural economies and creating an America built to last," USDA Secretary Tom Vilsack said in a statement touting this project as an example of the policies that cut dependence on foreign oil.
"Animal waste from a local feedlot will be the primary feedstock that Western Plains will use for the digester," USDA added. "Support for renewable energy projects such as these is an example of the many ways USDA is helping revitalize rural economies."
USDA expects the project to create 15 permanent jobs and 100 temporary construction jobs.
Just when we thought we had seen the epic failure of every single possible "alternative energy" project by this administration, along comes the announcement that the USDA is investing $5 million in a "biogas anaerobic digester" that will use "cow manure to heat an ethanol plant and create 15 permanent jobs." Which for anyone confused, is roughly exactly what it sounds like. Perhaps if "Hope and Change" is a little passé now, a far more appropriate slogan for the 2012 Campaign will be "From Bullsh*t to Jobs, and Back Again."
Got to love it … it’s heating an ethanol plant (another subsidized “alternative fuel”). And how much will each BS shoveling job cost the tax payer?
So how many sh*t shovelers does it take to run a "biogas anaerobic digester"? Apparently 15. At $333,333 a poop, pardon pop.
Oil? Well, it’s just not something this administration wants to invest your tax dollars in because it’s ideology says it’s bad stuff and while admin hacks will flap their gums about “all of the above” energy strategies, it is, in fact, invested in BS (and here’s hoping the feed lot never goes away or those sh*t shovelers will be out of work won’t they?).
As an aside, one has to wonder if these are jobs “Americans won’t do”.
Food inflation continues apace.
Question: Is there a correlation between high oil prices and higher food prices?
You bet there is:
High crude oil prices have fuelled the upward pressure on inflation since the start of this year. Consumer prices in the 17 nations sharing the euro were up 2.6 percent in March from a year ago, despite stumbling economy.
"The food price index has an extremely high correlation to oil prices and with oil prices up it’s going to be difficult for food prices not to follow suit," said Nick Higgins, commodity analyst at Rabobank International.
Energy prices affect the production of fertilizers as well as costs related to food distribution and farm machinery use.
That’s reality (What!? No solar powered tractors?). And, as the Obama administration continues its war on cheap fossil fuels even while demand for them rises globally, you can expect costs for food to continue to rise as well.
Finally, given all that is true, who gets hurt worst by rising food and fuel prices?
That’s right – the poor and middle class. The supposed people Obama claims to be looking out for.
So, as prices go up and you’re able to afford less and less food (and gasoline) for your family, you know who to thank.
Not that President Obama will much care.
As you know, if you’ve followed the news, a few months back, President Obama stopped the building of a critical oil pipeline from Canada’s oil sands in a fit of pique at the GOP for demanding a decision sooner rather than later. His excuse was it hadn’t been studied enough even though his own State Department had unofficially announced they were satisfied with Trans Canada’s application and environmental studies and prepared to okay the project.
A huge outcry ensued and as he usually does, Obama tried to blame his decision on someone else. The result of his decision, of course, was to further delay the transport of up to 800,000 barrels a day of crude oil from Alberta’s oil sands to our Gulf Coast refineries. He essentially turned down an increase in safe and secure oil that is strategic to our economic growth and national security.
But it has had even more profound effect for the long term. Most people are pretty sure that the pipeline will eventually be built. However the sweet deal it offered us prior to the President’s turn down is no longer available. It is because the refusal pointed out that Canada couldn’t depend on the US to be a reliable trading partner:
In a public one-on-one interview here with Jane Harman, head of the Wilson Centre think-tank, [Canada’s Prime Minister Stephen] Harper said Obama’s rejection of the controversial pipeline — even temporarily — stressed Canada’s need to find other buyers for oilsands crude.
And that wouldn’t change even if the president’s mind did.
“Look, the very fact that a ‘no’ could even be said underscores to our country that we must diversify our energy export markets,” Harper told Harman in front of a live audience of businesspeople, scholars, diplomats, and journalists.
“We cannot be, as a country, in a situation where our one and, in many cases, only energy partner could say no to our energy products. We just cannot be in that position.”
Of course there’s no particular problem finding new customers. China, naturally, was waiting in the wings for us to shoot ourselves in the foot and when we obliged them, they stepped right in.
That, of course, has another effect:
Harper also told Harman that Canada has been selling its oil to the United States at a discounted price.
So not only will America be able to buy less Canadian oil even if Keystone is eventually approved, the U.S. will also have to pay more for it because the market for oilsands crude will be more competitive.
That’s right, we get less and it will cost more.
We have taken a significant price hit by virtue of the fact that we are a captive supplier and that just does not make sense in terms of the broader interests of the Canadian economy," Harper said. "We’re still going to be a major supplier of the United States. It will be a long time, if ever, before the United States isn’t our number one export market, but for us the United States cannot be our only export market.
"That is not in our interest, either commercially or in terms of pricing."
Congratulations Mr. President, with your childish fit of pique you’ve managed to again do something that will help achieve your goal of seeing energy prices “skyrocket”.
And the people you profess to be looking out for, the poor and middle class, are those who will pay the most for your tantrum.
Because, as you know, the laws of supply and demand can’t be repealed, no matter how much some want that to be true.
Today, the EPA will act to make electricity more expensive.
The Environmental Protection Agency will issue the first limits on greenhouse gas emissions from new power plants as early as Tuesday, according to several people briefed on the proposal. The move could end the construction of conventional coal-fired facilities in the United States.
The proposed rule — years in the making and approved by the White House after months of review — will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.
If you can’t get Congress to pass a “cap and tax” law, then simply go it alone and direct executive agencies to implement regulation which will cap CO2 by making it too expensive to operate if the plant produces CO2 above the arbitrary limit you set.
“After Congress refused to pass carbon caps, the administration insisted there were other ways to skin the cat, and this is another way — by setting a standard deliberately calculated to drive affordable coal out of the electricity market,” Popovich said.
And that’s precisely what Obama’s done here.
Well it gives lie to the “all-of-the-above energy plan” that Obama has been pushing in stump speeches around the country:
Industry officials and environmentalists said in interviews that the rule, which comes on the heels of tough new requirements that the Obama administration imposed on mercury emissions and cross-state pollution from utilities within the past year, dooms any proposal to build a coal-fired plant that does not have costly carbon controls.
“This standard effectively bans new coal plants,” said Joseph Stanko, who heads government relations at the law firm Hunton and Williams and represents several utility companies. “So I don’t see how that is an ‘all of the above’ energy policy.”
Nor do I.
And it will have a significant effect:
The proposal does not cover existing plants, although utility companies have announced that they plan to shut down more than 300 boilers, representing more than 42 gigawatts of electricity generation — nearly 13 percent of the nation’s coal-fired electricity — rather than upgrade them with pollution-control technology.
Michael Brune, executive director of the Sierra Club, said the new rule “captures the end of an era” during which coal provided most of the nation’s electricity. It currently generates about 40 percent of U.S. electricity.
So the war on coal continues apace despite claims of an inclusive energy policy.
This is a preview of a 2nd Obama term. As mentioned yesterday, public opinion will be of no consequence in January 2013 if he’s re-elected. Hence, there’ll be no need to concern himself with it again. 4 years of unilateral action by agencies such as the EPA can certainly be expected:
The EPA rule, called the New Source Performance Standard, will be subject to public comment for at least a month before being finalized, but its backers said they were confident that the White House will usher it into law before Obama’s term ends.
“The Obama administration is committed to moving forward with this,” said Nathan Willcox, federal global warming program director for the advocacy group Environment America. “They’re committed to doing it this, and we’re committed to helping them do it.”