I hated to edit that down some --- it's an outstanding analysis. Worth sending to the politicians who represent you.
Framing the Energy Crisis
By Matthew S. Miller, AlterNet"There is nothing in that equation that says oil should cost what it costs today. Nothing! With one exception -- speculation." -- Mike Norman, Fox News Central"A major contributor (to high oil prices) is the rise in speculation." -- Sen. Carl Levin, D-Mich., to CNNMoney"Perhaps 60 percent of today's oil price is pure speculation." -- F. William Engdahl, Global Research
The $11 spike in the price of crude oil on Friday, June 6, pasted a great big exclamation point on the sentence, "Something is wrong with oil prices" banging around in the worried minds of America's happy motoring hoi polloi. With the national average for a gallon of liquid mobility hovering around four bucks, fear, now the only motive for action among the populace of fortress America, inevitably initiated some reflection among them. Such instinctive fear-inspired attention developing around the plug-in of the matrix must be deflected, and so it was: Enter the speculation explanation.
The speculation explanation blurs the issues involved in our present energy crisis by suggesting the wrong semantic frame to truthfully explain high oil prices and the likely consequences of depletion. Oil futures speculation is only tangentially relevant to an honest discussion of the price of oil. In fact, it is harmful because it undermines and replaces a reality-based appraisal of the problem. This meme arose simultaneously from a variety of sources by institutional necessity from within the propaganda apparatus to serve the interests of the military-industrial- congressional-cultural complex. Those interests are "business as usual" at all costs. The story will sound familiar.
. . .
Pairing the words oil and speculation ubiquitously and uncritically, the usual cable news talking heads faithfully disseminated the meme to the masses. The cacophony reached new heights in congressional hearings last week. Politicians from the auto state opined repeatedly about speculation for an obvious reason -- the inverse relation between high gas prices and Michigan's economic survival. The notion of speculation as the principle cause of recent price spikes also found a defender from among those who also believe that oil comes from a magic oil fairy that lives at the center of the Earth and abiotically refills oil reservoirs as they deplete (making the 60 percent speculation quotient easier to estimate presumably?). So what is the average American to make of this?
Economists employ the term speculation to refer to a specific kind of market activity. Markets generate wealth in four ways: profit from direct financing of business activity or investment; profit through risk minimization or hedging; profit from price differences between two distinct markets, or arbitrage; and profit through price differences in a single market, known as agiotage, or speculation. The speculator tries to buy low and sell high, thereby profiting from the market uncertainty about the future supply. Speculation and market manipulation are two different things. The speculator is simply betting the price will go up.. . .
While the Saudis announced plans last week to increase their production by a quarter of a million barrels, they -- or even a unified OPEC -- cannot lower price by increasing supply. The proposed increase represents a mere quarter of a percent of daily world production, and it has no chance of making even a minor dent in price. Considerable doubt remains about whether such an increase can be sustained for long. The Saudis cannot increase supply to match demand in any event, so that's it for supply-side price controls. It should come as no surprise that even Abdullah joined the speculation sing-along lest he witness his vast dollar-denominated assets devalue further.
According to many prominent geologists, the planet reached or will reach very soon its all-time petroleum production peak. No amount of investment or innovation can alter that fundamental geologic fact. Because of this, according to legendary oilman T. Boone Pickens, only demand destruction can lower prices now. . . .
In an economy where Bubbles Greenspan blew hot air into tech stocks and the housing market in rapid succession, it is easy to view any steep rise in prices as the result of a speculative bubble. The real long-term value in the underlying market remains the question. There is no oil bubble, only a widening gulf between the amount of oil available and the amount of oil we want to use. Since world supply has remained flat since 2005, prices have risen and consumers in poorer nations simply quit buying, creating the facade of equilibrium and postponing inevitable shortages in the industrialized nations. According to energy analysts Matt Simmons and Dr. Robert Hirsch, oil at $140 remains significantly underpriced.
We in the United States have come to expect low energy prices as a birthright; however, because our economy and infrastructure cannot function without massive amounts of hydrocarbon energy, we will pay whatever it costs for as long as possible to keep the lights on and the trucks moving. Given rapidly growing demand from Chindia, the only direction for the price in the near term is up. As the true picture of future supply becomes apparent to all, oil at $140 will look like a real bargain. . . .
If it is true that oil supply is not being artificially but geologically and politically constricted as I have suggested, then the whole discussion of oil speculation as the cause of high prices must have a different purpose. It does! A quick dose of cognitive science reveals it. . . .
Evoking the speculation frame serves to keep the entire discussion of our energy crisis within the province of economics. The implication is that markets, investment and economic growth are primary considerations in understanding it. This frame interprets high oil prices as an economic problem and thus infers that the problem has an economic solution. The appropriate tools to handle the problem are market oversight, tax incentives for business, and removal of restrictions to free enterprise, i.e., permit offshore and ANWAR drilling immediately. The solution is to do more of what we are doing now. The market will adapt and all will be well.
While the energy crisis will have severe economic impacts, it is not fundamentally about economics. It is about human ecology and the limits of growth. Our cultural institutions like driving and consumption conflict directly with the material conditions that make them possible. When the discussion of energy remains in the province of economics, the key assumptions of the economist that the planet is an infinite resource, that the free market will solve all problems, and that growth is a universal good are effectively concealed beyond the focus of critical evaluation. The speculation frame hides the truth by suggesting the wrong context to understand our energy predicament. It just keeps us speculating about what percentage of the price is speculation.
If there is anything the public relations executives running the propaganda system have learned, it is that perceived uncertainty about factual issues generates apathy among the proles. It's no wonder that the Fox News presentation of the "speculation" story is to simply repeat the word speculation as many times as possible. The last 20 years of public discourse on global warming perfectly illustrates the technique: Just keep saying "there is still a debate," and the masses tune out and flip back to HGTV.
Pairing the word oil with the word speculation and repeating it over and over creates the impression that there is some uncertainty about the future of oil rather than merely about the price of oil futures contracts. This short-circuit thought about the issue and reasoned prognostication, like that made by the Association for the Study of Peak Oil, becomes mere speculation. Just think of the vernacular uses of the term speculation, as in "that's just speculation" or "he's only speculating." The speculator is somebody who believes his own ill-founded conjectures.
We are led to reason that there is not enough information about the energy problem to take drastic measures. It's as if the system is screaming, "Don't revolt, don't revolt." While the facts of oil depletion and peak production are undeniable and the inferences about the likely effects of depletion on global politics and economics are very strong arguments, the speculation frame undercuts actions based on these facts. This framing just reinforces the petroleum preservation paralysis that is the precondition of the status quo energy use paradigm.
This oil uncertainty is paradoxically palliating to boomers who lived through the '70s and thus learned to understand energy issues in exclusively economic and political terms. Their apathy stems from the mistaken inference that this energy crisis will be like the last one: painful for a while but only a blip in the permanent bliss of our American petroleum paradise. News flash: There will be no Prudhoe Bay this time around, boys and girls.
The uncertainty associated with oil in the average American mind leaves room for the hope and belief that we'll get back to normal soon enough. Maybe, just maybe, gas prices will drop. Americans will soon realize that a drop in oil prices will only come after the global economy, one that now uses every available drop of crude, crashes and burns in an entropic catastrophe. It will take more than airline inconvenience or high gas prices to get Americans to unplug themselves from the hologram, but remember, petroleum powers the propaganda system, too. It's the lubricant that makes social order possible. I'm betting they will come unplugged in droves when the "Out of Gas" signs start showing up at 7-Eleven, that is, the ones that don't just go postal on the spot. The near future won't be normal!
Joe Average experiences high oil prices as a constriction of discretionary income, or worse, a shortfall for basic needs. This fact requires an explanatory narrative. Such a downgrade in one's standard of living requires someone to blame. Price shocks ascribed to speculation provide this framework.
Speculation that artificially restricts supply through hoarding in order to gouge consumers is a crime. While this is not actually occurring, it makes compelling news copy. There are victims, perpetrators, law enforcement, and a predicable sequence of actions and outcomes. The poor schmuck driving an hour each way to work from his McMansion and the homemaker who can't afford eggs and milk any longer easily recognize themselves as the victims in this cruel petroleum farce. The big boys on the trading floor running up the price of crude, consumed with greed and lust for profit, play the role of dastardly yet faceless criminals. The affable sheriff Levin and his slapstick deputy Stupid, uh, I mean Stupak, investigate the complaints and haul the speculators in for questioning. After some reprimand for the bad apples, all will be back too normal in Consumption County.
While it remains a comforting thought to some that Congress is exercising some sort of oversight, the whole episode of investigative hearings is about creating a scapegoat and thus political cover for the next election. It also provides voters with the illusion of potency and action from their elected representatives. When you can buy whole city blocks of houses for $5,000 apiece in Detroit, "somebody's gotta do sumthin."
Michigan's senatorial contingent likely believes their own speculation about why oil prices have spiked; however, the political calculus remains the proximate cause of their hearings. The speculation explanation pacifies both the drivers and former factory workers composing the Michigan electorate by postponing the grim news that the American auto industry and our personal transportation system are on their way to the morgue. Kudos to Carl for such an exhibition of political jujitsu!
The speculation explanation simply delays the arrival of the moment when we will begin, as a nation, to address the reality of our energy crisis. No market solutions will address the geologic and cultural roots of the problem. Enforcing apathy through uncertainty will only buy time for the status quo to profit from the collapse and temporarily deflect the political wrath of the proletariat. The hope for a return to normalcy afforded by the contention that today's price shocks resulted from criminal behavior also postpones the tipping point of the national consciousness necessary to demand reality-based energy policy. It won't be long until disruptions and disasters that are the face of the energy crisis make it impossible to keep the accoutrements of the American Way of Life up and running. . . .
Saturday, June 28, 2008
That's until you notice the implications of this story:
Capitol Street Bridge will undergo repairs
Work will begin soon and close one lane of traffic
Salem will spend as much as $60,000 to make temporary repairs on a failing bridge, even though the state plans to build a replacement in two years.
City leaders have determined that Salem can't wait until 2010 for the Capitol Street Bridge over Mill Creek to be replaced. Instead, the deteriorating bridge will undergo a round of stop-gap fixes this summer.
Stricter weight restrictions were placed on the Capitol Street Bridge last year in hopes it would last until 2010, when the Oregon Department of Transportation is expected to build a $3 million replacement using federal funds. But the city didn't count on the many drivers of overweight vehicles, who have crossed illegally the bridge despite multiple warning signs and the risk of substantial traffic fines.. . .
Salem Mayor Janet Taylor grilled public works officials about the need to fix a bridge that's on track for replacement. City officials responded that environmental permits from various state and federal agencies needed to be processed before the bridge replacement could begin, and ODOT could not move the project ahead of schedule. Becktel also noted that Salem's bridges would last longer if the city had a comprehensive maintenance program.
"This is an example of where we have deferred maintenance and it's come back to bite us," he told the council.
City officials say tight budgets prevent them from allocating more money for bridge work. Revenue from gasoline taxes, which have been declining and not keeping pace with inflation, provide funds for street and bridge repairs. In the current budget, the city set aside about $10,000 for bridge repairs and those limited funds go to making minor repairs, not major structural work, Becktel said.