Honey they shrunk the dollar!

I can't bear to listen to the sound of our whining, hypocritical Congress. This week the Senate Judiciary Committee held "hearings" to investigate high oil prices (what do oil prices have to do with judicial issues?). The quotes from certain Senators posing as "concerned protectors of hard-working Americans" make me gag. Diane Feinstein, all innocence and outrage, accused oil company executives of "having no ethical compass about the price of gasoline.” Feinstein and her Congressional cohorts are the ones without compasses. They know the real reasons for high oil prices. And so do we:

1. Growth in world-wide demand for oil.
   
2. Stupid, stupid, stupid (did I mention stupid?) US energy policies, which have done nothing but encourage consumption.
3. Tightening oil supplies (there are fewer and smaller new oil fields coming online, and older fields in places like the North Sea and Mexico are running dry).
4. The weak dollar (if the dollar was as strong today as it was in 2001 the price of a gallon of gas today would be about $2.70)
   

I hesitate to give the impression that I think that high gas and oil prices are a problem, because I don't. Given Congress's lack of spine and Bush's belief that a legitimate energy policy consists of drilling in Alaska and begging the Saudis to pump more oil, we need high prices to force us to cut our consumption of petroleum. But one thing that we ignore when we complain that those OPEC meanies and oil company bullies are kicking sand in our faces, is how much of a role the diminished dollar has played in making oil prices appear higher.

Since 2001 the price that Europeans and Asians pay for oil has doubled, while for Americans the price has quadrupled. Similarly, since 2001 the price of gasoline in Europe has increased about 40%, while the price of gas here in the US has grown 110%. The reason for the difference has little to do with market dynamics, it's because the dollar has shrunk in value compared to other currencies. It's not just oil, the same thing is happening with other commodities, like gold (see chart below). In 2001 the Euro and the dollar were equal in value, whereas today the dollar will only buy you .6 Euros. If the dollar had remained as strong as the Euro, today we Americans would be paying $70-$80 for a barrel of oil, and (as mentioned above) about $2.70 for a gallon of gas.

The dollar's value is akin to our credit rating, and as far as the rest of the world is concerned, our credit's in the toilet. Since 2001 (remind me, who moved into the White House in 2001?) the dollar has lost half its buying power in world markets. This is because of the huge budget deficits we’ve run up to pay for Bush’s tax cuts and the wars in Iraq and Afghanistan. It's also a result of our ballooning trade imbalance which comes from importing far more than we export, and borrowing money to pay for all those overseas goodies (we are China’s biggest debtor). And the dollar has shriveled significantly from our mortgage and banking crisis, and the fact that the housing portion of the US economy has lost 25% of its value in the past two years.

Price of gallon of gasoline in Euros or Dollars	2001	2008	Change
Belgium	€ 3.75	€ 5.43	+45%
France	€ 3.75	€ 5.20	+39%
Germany	€ 3.77	€ 5.30	+41%
Italy	€ 3.72	€ 5.36	+44%
Netherlands	€ 4.17	€ 5.95	+43%
UK	€ 3.04	€ 4.33	+42%
US	$1.87	$3.94	+111%
Relative value of the Euro and Dollar	2001	2008	Change
Price of gold in Euros	€ 275.00	€ 550.00	+100%
Price of gold in dollars	$275.00	$900.00	+227%
Value of the Dollar in Euros	€ 1.05	€ 0.65	-38%
Price of bbl oil in dollars	$30.00	$130.00	+334%
Price of bbl oil in Euros	€ 30.00	€ 65.00	+115%

Congress wants us to believe that high gas prices are somebody else's fault, and so they hold hearings to pin the blame on greedy corporate execs and callous OPEC sheiks. They're hoping that we won't notice that because of our shriveling dollar, gas prices have risen twice as fast here as in Europe or Japan. So far we seem to be buying the ruse. The average citizen, and even the typical reporter, gives little thought to what it means to be living in a world economy. We assume that the dollar is rock-steady, and oil price increases will disappear in a flurry of committee hearings. Instead of applauding Congress for playing the blame game, we should be holding them (and the Bush Administration) accountable for their head-in-the-sand economic policies that have cut the purchasing power of the dollar in half, and for wishy-washy energy policies which have done nothing to cut US consumption of oil.

Blogger's choice awards

(A bit of a detour this week - into media favorites)

I like GoodReads, the web site that helps you (their blurb):

• see what your friends are reading.
• keep track of what you've read and what you'd like to read.
• get great book recommendations from people you know.

When Colleen (or maybe it was Marin) first sent the GoodReads link to me, I went crazy, entering in all of the books I've read over the past gazillion years. But once I had finished compiling my reading history, my contributions to GoodReads dwindled to a book every month or two. The problem is, GoodReads is only about books and books make up a small part of the media I (please give me another word, "consume" seems so banal - absorb? digest? ah well...) consume nowadays.

What I'd love to find is a GoodReads for all the other media - podcasts and movies, and radio shows and websites and magazines and (yes, even the boob tube) TV shows. So I thought I'd make a stab at it here. What follows (which I admit is an amateurish beginning without the database and Friends e-connections and fancy-shmancy user interface) is a list of a few of my favorite things. (Sing along..."Podcasts on roses and bright shiny movies, warm woolen web sites and books that are groovy, brown paper magazines wrapped up in string..." etc etc)

Some of my favorite podcasts:

• I love "Fresh Air", and I also hate it, depending on the day. When Terry Gross focuses her interviewing acumen on a topic of interest to me - politics, religion, science or economics - her show is terrific. She has a talent for crafting questions that draw people out, and that ask them things that I would ask if I were a clever interviewer. Her interviews with controversial characters like Tim Lahaye or Bill O'Reilly provide revealing insights into the way these folks think and act. On the other hand, when she plays the NPR version of Barbara Waters, dabbling in pop music or TV shows (topics in which I have zero interest), I feel that she's wasting her talent on trivial trash. Why is "Fresh Air" under the podcasts, you may ask? First off, I am seldom near a radio when it broadcasts, and secondly, in iTunes I can delete the crappy shows where Terry enthuses breathlessly about "Desperate Housewives" or "The Wire".
  

• The Cato Institute's podcasts are much more than just libertarian propaganda. Cato provides a forum for politicians, historians and economists of all stripes to present their views. They usually invite two or more renowned guests to present differing views of an issue. Listening to Cato podcasts gives me the feeling of being a fly on the wall of the halls of power.
  

• "On The Media" is a straight-forward and intelligent look at how the news is reported (not to mention that Brooke Gladstone, who I met when NHPR brought her to Concord, NH, is my secret crush). You might think that a weekly show that's all about making media would be insipid and navel-gazing, but I often learn more about the news from OTM than I do from the news.
  

In the interests of brevity, here's a quick list of some of my other favorites:

• Movies - "Brazil" (every minute is brilliant), "The Great Match" (I never thought I'd use the word "cinematography" when explaining why I loved a movie - Thanks, Murray!) and "A Clockwork Orange" (many of Kubrick's films, like "2001: A Space Odyssey", show their age, but this one is just as powerful as it was 25 years ago).
  

• Books (or rather authors) - John LeCarre (I wish the Cold War hadn't ended), William Gibson (sci-fi that's more than cowboys in space), John MacPhee, E. B. White and John Steinbeck
  

• Web sites - NYTIMES.COM (check out the Freakonomics and Dick Cavett blogs), forecast.weather.gov (mmmm, weather porn about northeasters "bombing out in the Gulf of Maine!"), thesaurus.com (when you need another word for "consume" and you need it now!)
  

• TV shows - "The Daily Show" (John Stewart doth protest too much when he says "we do humor, not news"), "The Colbert Report" (although Stephen can be too much to take, sometimes), Red Sox games, "Mystery" on PBS (Helen Mirren is my other secret crush, but why is so much of the rest of PBS programming nothing more than "self-help for yuppies"? Will someone please put Suze Orman out of my misery?)

• Radio Shows - "Wait Wait, Don't Tell Me" (but only when Paula Poundstone is on), "Morning Edition" (although I have to warn you that NPR will never keep you up to date on Amy Winehouse), "Lucky Dog Radio" (on iTunes Radio)
  

• Magazines - "Harpers" (if only Lewis Lapham didn't have to use the word "mammon" in every issue), "The Atlantic" (long articles that are actually worth the time it takes to read them), "Paste" (just for the CDs and DVDs)
  

Okay, your turn. What are some of your favorites, and why?

Pander bear

I got an email from Lisa yesterday, nudging me because I hadn't posted on Saturday morning (my usual schedule). It's true, I was a laggard, but I was working. Really.

This was the week of the gas pump pander, with Hillary Clinton staging her ridiculous idea of a gas-tax holiday from the back of a pickup at a North Carolina truck stop. Hillary's playing the slimiest of political ploys, and it appears to be working. She's proposing to suspend the paltry 18 cent a gallon federal gas tax from May Day to Labor Day, to "ease our pain at the pump". She wants us to believe she's doing us a favor, but she's really just helping us fall further and further behind the rest of the developed world. She's betting on Americans being myopic, and it appears from her recent gains in the polls in North Carolina and Indiana that she's making the right bet.

We Americans have gotten ourselves horribly addicted to gasoline, and the last thing we need is a politician to enable us. Over the past 25 years European and the Asian governments have deliberately raised oil & gas taxes about 20 times the measly 18 cents we pay, exacting this price to become nearly three times as energy efficient as we are. We did nothing but guzzle. Our faith-based energy policy rested on the belief that the world oil supply would grow forever. America played the grasshopper to Europe's ant. Three of the four best-selling vehicles in the United States last year were the Ford F-150, the Chevy Silverado and the Dodge Ram - all pickup trucks which get 15-17 MPG. Europe's economy is humming today, as is their currency. When Bush took office in 2001, the dollar was worth 1.15 Euros. Since then the dollar has steadily shriveled, it's now worth 0.65 Euros. What we have to show for 25 years of "head in the sand" energy policies are decrepit mass transit systems, suburban garages full of SUVs and pickup trucks, and trade deficits ballooning because of oil imports. Whose fault is this?

What Americans should be doing is accepting responsibility for our profligate ways, but we'd much rather look for scape goats. The oil companies are easy targets, after all they're making tanker loads of money from the worldwide demand for oil. Hillary's plan combines the suspension of the federal gas tax with a windfall profits tax on those big oil company meanies who forced us to buy all those SUVs and build all those suburbs (Exxon and Shell are probably behind the explosive economic growth in China, too). She knows her tax proposal is a gimmick that's unlikely to ever pass Congress, but what the hey, demagoguery sells. She accuses anyone who disagrees with her gas tax holiday plan of being on the side of the oil companies. Such b*llshit. She's the one proposing to pass our tax dollars over to the oil companies, using us as the middle men. Because the biggest benefactor of her gas tax holiday will be the oil companies.

If we're worried about the oil companies taking too much of our money, what do you think we should do - try to tax their profits or buy less gas? I did a quick calculation this week. A Ford Explorer (one of the most popular SUVs of the past 10 years) gets about 17 MPG, and has a 22.5 gallon gas tank. My 2002 Honda Civic gets 39 MPG and has an 11 gallon gas tank. It takes me $35 today to fill up my tank. It takes the Explorer driver about $80 to fill up her tank. We can both go about 400 miles on that tank of gas. Which one of us is inflating oil company profits?

This spring we're seeing headlines that show that high gas prices are starting to have a beneficial effect. Americans are buying smaller cars and driving less. As Americans buy less gas, oil companies take less of our money. If we cut our driving and gas consumption enough, gas prices might actually drop, but no matter, the important thing is that we'll cut our consumption of and expenditures for gasoline. On the other hand, if Hillary's tax holiday was to pass, this good behavior likely goes on holiday as well. The short-term, symbolic drop in gas prices would motivate Americans to hold off trading in the guzzler for a sipper, at least until the fall. Many of us would change our minds and decide to drive the family to Disneyland after all. Gas consumption would go up! Oil companies would smile, broadly. Even if they had dropped prices at the pump the full 18 cents when the tax was suspended (doubtful) they'd start to raise them again as demand soared over the summer. The oil companies (and their profit margins) will just LOVE Hillary's gas tax holiday. And where will we find ourselves (and gas prices) come Labor Day, when the gas tax will be reimposed? How happy will we be at that point?

The primary reasons that oil companies are making big profits in the US is because we've done nothing to cut our demand, and demand from the rest of the world is growing rapidly. America consumes half of all the world's gasoline supply. We're 1/20th of the world's population and we use 1/2 its gas! What did we think was going to happen, when the rest of the world started to catch up? Worldwide demand for automobiles and gasoline is growing exponentially as newly minted middle class consumers in China and India adopt a western lifestyle. Do any of us honestly believe that this is the oil companies' fault? We all know that we need to become more efficient, and conserve more. The thing is, we didn't mean we wanted to do it right now. Maybe next year, or next decade. We'll change our ways sometime in the not-too-distant future, as soon as we've paid off the Chevy Tahoe and taken that Las Vegas vacation. Hillary's doing us no favors, but you can't really blame her, she's just giving us what we want.