Commodity and Oil Prices Could Really Gum-Up Recovery!

Discussion in 'Energy' started by JimofPennsylvan, Jan 13, 2011.

  1. JimofPennsylvan
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    JimofPennsylvan VIP Member

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    Skyrocketing agricultural commodity prices and high oil prices could de-rail the economic recovery especially in terms of increasing employment and increasing lower and middle income wages which the American people are seriously looking for. The Congress and the President need to get on the job for these problems or they are going to be facing an electorate looking to throw people out of office in 2012! Worldwide weather conditions over the past year have been terrible with a record set for rainfall and a record tied for high temperatures so says various federal agencies reported by NYT News Service. News reports support these developments with their reports of flooding in Pakistan, fires in Russia, droughts in Argentina, etc.. Some of the specifics are alarming. Less than eighteen months ago corn was trading at $3.00/bushel (9/09) today it trades at $6.42/bushel a 114% increase; wheat $4.29/bushel (9/09) today $7.83/bushel a 59% increase; soybean $8.85/bushel (10/09) today $14.10/bushel likewise a 59% increase; and sugar 13.75 cents/lb (5/10) today 32.06 cents/lb a 133% increase. This development is really going to bite into American families food budgets, livestock farmers will have to cut their herds and increase prices because of increase feed costs, this will hurt food producers profits and will suppress their employment figures. This is really bad economically for America but it is a crisis for many developing countries who have to import large amounts of commodities. Washington has to wake the hell up here and start improving this situation. Specifically, Washington needs to figure out how to bring huge amounts of more farm land on line this spring, the Wall Street Journal says (1/13/11) some grain experts say U.S. farmers need to plant an additional eight "million" acres this year to essentially bring commodity prices back into the reasonable range. I don't know if America can meet that target but I know America has an abundance of land and that is just public land that could be opened up to farming, it will be an utter disgrace if Congress and the President don't figure out a way to meet this national and world need of bringing more farm land on line. I know that Republican leaders in the past to fulfill their priority of having a border fence to seal the southern border from illegal immigration have given a Department Secretary special powers to take border lands that even litigation can't overcome doing the right thing here means giving the USDA Secretary power to give farmers special permits at the Secretary's discretion for new farm land that will trump litigation by environmentalist et al. to block turning land into farm land. Moreover, why doesn't Washington give for the next twenty-four months new farmland whatever experts calls those tax advantage areas "enterprise zone status" so farmers can get outstanding tax breaks on farming businesses on this new farm land to really incentivizing American farmers to bring new farm land on line and pull the world out of this food crisis it is mired in!

    The oil price uncertainty for America is just as alarming. Many experts say oil price will exceed a $100.00 barrel this year, the head of Toyota in America granted he has a bias because his firm sells the Prius, an electric hybrid, predicts gas will go to $4.00 a gallon this year. Gas this last couple of months exceeding $3.00 gallon has already begun to affect Americans behavior they drive less that isn't good for retailers and if it continues a high rate of climb to $4.00 this year U.S. consumption will be significantly negatively impacted, people can only cut driving so much, they have to go to work, do food shopping, doctor visits, school relate transportation for their kids. Gasoline prices involve a zero sum game for the American economy, they go up significantly and another part of the U.S. economy goes down significantly the American consumer has limited spending power. Trusting the oil commodity markets to do right by the American consumer I respectfully submit is a reckless policy by Washington politicians those markets beyond question by any measure a reasonable person would conclude are significantly unpredictable. Washington politicians have to aggressively cut U.S. oil demand and aggressively bring on oil demand granted they have limited options but they have a few meaningful options. First, incentivize large vehicle and some trucking fleets of America to convert to natural gas from gasoline and diesel. Converting America's vehicle fleets to natural gas isn't a permanent solution because natural gas prices although they are low now because of increased production due to new extraction techniques from shale it will rise especially for electric generation needs world-wide considering CO2 pollution concerns and natural gases superiority over coal in this area. On all America's major interstates there should be natural gas supply stations so America's trucking industry can use this lower than diesel cost fuel. Businesses and organizations with large SUV, van and truck fleets should be aided by the federal government to acquire a natural gas fuel station and convert these fleets to natural gas powered vehicles. On the supply side, the Obama Administration has to stop failing the American people. All these deepwater oil drilling permits that are currently in the pipeline should have been approved yesterday. I am not saying that all the current policies in place for approving these permits don't need to be improved what I am saying is that they should have been improved to provide satisfactory and the best government officials can fairly do "yesterday". I'm no expert in this area, but the improvements in policies since the Macondo well incident are vast improvements, independent inspections by third parties of the blow out preventers would be one example, trustworthy professionalism amongst the inspector staff, etc.. One new policy detail it would seem to me that should be a given would be requiring blow out preventers on deep water rigs to have two shear mechanisms with independent hydraulic systems and independent communication systems so that if one shearing system fails there is a complete separate back-up system. This requirement that an individual permit applicant have the resources lined up to clean up a spill in a worse case scenario seems like an overly onerous requirement. The Gulf of Mexico in American Waters has an abundant number of drillers with deep water rigs drilling for oil and natural gas in the Gulf of Mexico. The U.S. government should either itself pool all these drillers or compel all these drillers to join together and have an action plan and the resources available to successfully respond to and clean up an oil well accident. Washington needs to be maximizing oil production from the Gulf Of Mexico which they obviously aren't doing which would help America's oil supply problem. What is going on up in Alaska to Shell Oil Company and the lack of cooperation on the development of its shallow water off shore oil production leases is an utter "national" disgrace, the Federal government has revoked the air quality permits it already approved for Shell which Shell needs to pursue the drilling, the Federal government says the wrong standards were used in reality it is in part philosophical changes on drilling by the Administration as a result of the BP oil spill. This oil company has spent $3 billion dollars on this production effort, the Administration is blocking them recouping any return on that investment with their foot dragging on approvals, Shell has extremely responsible plans to drill safely on the site - a backup blowout preventer, a containment system, a back-up rig to drill a relief well if needed; air permits please first there is nothing unique about this drilling site that says there is a unique danger of air pollution, the closest inhabited community, and an extremely small one at that, is forty-six miles from the drill site that being Cross Island. Washington needs to dramatically change its ways and begin facilitating this increased domestic oil production that Shell can offer the American people!
     
  2. WillowTree
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    WillowTree Diamond Member

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    Bad news for democrat party.
     
  3. shintao
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    shintao Take Down ~ Tap Out

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    This is a capitalist system, and not the job of congress or the president. sorry...........
     
  4. Revere
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    Revere BANNED

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    Well, yes, the administration can abandon its plan to backdoor Cap And Tax through the EPA, thereby compounding energy problems.

    In fact, things continue to be as bad as they do because this administration can't or won't "do no harm."

    There is no recovery. The housing market is flat on its back and shows signs of getting worse.
     
  5. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    Obama said (and I paraphrase) "Energy prices will have to necessarily go up". He was only upset because they rose so quickly last time.
     
  6. Mr. H.
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    Mr. H. Diamond Member

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    There are proposals to put limits on commodity trades by speculators.

    Of course, agriculture is expected to be given a pass.

    The same speculation that drives prices up, also drives prices down.
    Witness the $1/gallon gasoline of 1998.
     
  7. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    It's going to be very interesting to watch the Dem Bureaucrats explain to SS recipients that there is No Inflation, hence no increase in their benefits.
     
  8. Old Rocks
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    Old Rocks Diamond Member

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    Food and fuel are both going to go up in price. Fuel because we are now competeing with Asia for oil. Food because of the continueing crop losses from adverse weather. Supply and demand in both cases.
     

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