Official "Extremely Unctuous Antics" Thread

[ewmayer]

Time to update those Valero gas prices I've been posting since early summer - they have tumbled a full dollar in the past 6 weeks, and are now as low as they were in early Spring:

Mon, 22 Sep: 3.799
Fri, 26 Sep: 3.769
Mon, 29 Sep: 3.749
Wed, 01 Oct: 3.729
Fri, 03 Oct: 3.699
Mon, 06 Oct: 3.699
Tue, 07 Oct: 3.679
Wed, 08 Oct: 3.659
Fri, 10 Oct: 3.599
Wed, 15 Oct: 3.579
Thu, 16 Oct: 3.479
Tue, 21 Oct: 3.399
Thu, 23 Oct: 3.379
Mon, 27 Oct: 3.339
Tue, 28 Oct: 3.199
Wed, 29 Oct: 3.159
Thu, 30 Oct: 3.099
Fri, 31 Oct: 2.899
Mon, 03 Nov: 2.859

Chavez`s Ambitions in Venezuela, Abroad May Collapse Along With Oil Prices: The same tumbling oil prices that led OPEC to slash output last week threaten to send Venezuela`s economy into a tailspin, and put an end to President Hugo Chavez`s ambitions to expand his socialist revolution at home and abroad.

Oct. 27 (Bloomberg) -- The same tumbling oil prices that led OPEC to slash output last week threaten to send Venezuela`s economy into a tailspin, and put an end to President Hugo Chavez`s ambitions to expand his socialist revolution at home and abroad.

To cope with plummeting oil revenue, the source of half the government`s spending, Chavez may have to cut domestic handouts and foreign aid. The first items likely to go will be arms purchases from Russia, oil subsidies for Cuba, and job- creating local projects such as bridges and subways, economists say.

``You have a country with an oil boom, that doesn`t know how to save, doesn`t know how to set up productive industries that generate jobs, and goes into debt,`` said Elsa Cardozo, a professor of political science and international relations at the Universidad Central de Venezuela. ``Then oil prices fall and the party ends.``

Venezuela may be poised to repeat the economic collapse it suffered in the 1980s at the end of its last oil boom. Former President Carlos Andres Perez, employing policies similar to Chavez`s, lavished petrodollars on public works projects, foreign aid and nationalizations in the late 1970s, setting the stage for a 1983 currency devaluation and spending cuts that sent millions of Venezuelans into poverty.

My Comment: It couldn`t have happened to a nicer radical-leftist demagogue. My heart goes out to the Venezuelan people, but OTOH since Chavez came to power via a democratic election, they are getting the government they voted for.

Venezuela spent $4.4 billion on 12 contracts for Russian weapons, the Kremlin said. The agreements include deals to buy 100,000 Kalashnikov rifles, 50 military helicopters and 24 Su- 30 fighter jets, according to a U.S. Defense Intelligence Agency report. Russia last month offered Venezuela a $1 billion line of credit to buy more weapons.

The president has also used his oil-fed largesse to offer subsidized financing for poor countries in the Caribbean and Central America to buy Venezuelan oil products. As of July, the 18 countries in his Petrocaribe alliance were receiving up to 200,000 barrels of oil a day.

Domestically, Chavez may have to end his drive to nationalize businesses in the so-called strategic sectors, Grisanti said. The government so far has swept up the country`s biggest telephone, electricity and steel companies, among others, at an estimated cost of $11 billion, according to Ecoanalitica, a Caracas-based economic consultant.

Tripled Spending

Chavez probably won`t cut spending on the social ``missions`` that have brought services such as health care and adult education into some of the country`s most impoverished areas and which have been key to securing electoral victories. Chavez has more than tripled total government spending in the past five years.

My Comment: Here you have the key disconnect - if Chavez had increased spending on health care and education for the poor without at the same time spending huge sums on weapons purchases and programs to "export the revolution" and nationalize nearly all of Venezuela`s key industries, the situation for the country now would look very different, and oil would not have to remain at $60 or more per barrel to balance the budget. [Although irrespective of the "revolutionary" spending, high crime and rampant inflation and cronyism had already significantly eroded Mr. Chavez` approval rating, even among his most loyal supporters.]


Related NYT Op-Ed on how falling oil prices and a new U.S. President (specifically one not named McCain) might change the dynamic between the U.S. and countries like Iran, Russia and Venezuela:

NYT OP-Ed | Thomas Friedman: Sleepless in Tehran

I’ve always been dubious about Barack Obama’s offer to negotiate with Iran — not because I didn’t believe that it was the right strategy, but because I didn’t believe we had enough leverage to succeed. And negotiating in the Middle East without leverage is like playing baseball without a bat.

Well, if Obama does win the presidency, my gut tells me that he’s going to get a chance to negotiate with the Iranians — with a bat in his hand.

Have you seen the reports that Iran’s president, Mahmoud Ahmadinejad, is suffering from exhaustion? It’s probably because he is not sleeping at night. I know why. Watching oil prices fall from $147 a barrel to $57 is not like counting sheep. It’s the kind of thing that gives an Iranian autocrat bad dreams.

After all, it was the collapse of global oil prices in the early 1990s that brought down the Soviet Union. And Iran today is looking very Soviet to me.

As Vladimir Mau, president of Russia’s Academy of National Economy, pointed out to me, it was the long period of high oil prices followed by sharply lower oil prices that killed the Soviet Union. The spike in oil prices in the 1970s deluded the Kremlin into overextending subsidies at home and invading Afghanistan abroad — and then the collapse in prices in the ‘80s helped bring down that overextended empire.

(Incidentally, this was exactly what happened to the shah of Iran: 1) Sudden surge in oil prices. 2) Delusions of grandeur. 3) Sudden contraction of oil prices. 4) Dramatic downfall. 5) You’re toast.)

Under Ahmadinejad, Iran’s mullahs have gone on a domestic subsidy binge — using oil money to cushion the prices of food, gasoline, mortgages and to create jobs — to buy off the Iranian people. But the one thing Ahmadinejad couldn’t buy was real economic growth. Iran today has 30 percent inflation, 11 percent unemployment and huge underemployment with thousands of young college grads, engineers and architects selling pizzas and driving taxis. And now with oil prices falling, Iran — just like the Soviet Union — is going to have to pull back spending across the board. Fasten your seat belts.

[ewmayer]

Bloomberg | The World is 'Drowning in Oil' (again)

Oct. 28 (Bloomberg) Three months ago, the world was running out of oil.

Seriously. I kid you not. Everywhere you turned, you heard whispers that the day of petroleum reckoning was at hand.

Now there's too much oil, prodding OPEC to cut production targets for the first time in two years. Last week, the Organization of Petroleum Exporting Countries, confronted with the halving of oil prices since July, announced a 1.5 million barrel-a-day cut in output. World markets greeted the news of reduced oil supply by pushing prices down further.

All speculative bubbles have a kernel of truth behind them to justify their existence. This time around it was China and India. These emerging Asian giants were gobbling up all the commodities the world could produce to fuel their rapid industrialization.

It wasn't that the story was untrue; it was old. Growing global demand probably was the reason for the gradual rise in oil prices from $20 a barrel to $40 earlier in the decade, and even to $60 by mid-2005.

It was the moon shot to $147 that took on a life, and a litany, of its own. Emerging nations didn't start gobbling up crude, coal and copper all of a sudden in the middle of 2007.

Yet analysts on TV and in print told us with a straight face that the doubling in oil prices from July 2007 to July 2008 was a result of fundamental demand, not speculative buying or investors, including pension funds, "diversifying" into "alternative investments" in search of "uncorrelated returns." (It sounds a lot better than admitting you got suckered into buying what was going up and are now stuck with a pile of stuff that no one wants.)

"It happens in every market," says Michael Aronstein, president of Marketfield Asset Management in New York. "Once it goes up an enormous amount, creating unfathomable wealth for the fortunate participants, someone makes an ex-post case as to why we are only at a beginning and it's not too late to get in."

My Comment: We could see oil below $50 per barrel by year`s end, and staying low for years, if the global recession proves as bad as I think it`s going to. At my local Valero station, gas this morning was at $2.49⁹, down a full two dollars [and by nearly half] from its midsummer high.

[cheesehead]

Originally Posted by cheesehead

BTW, from a distance it looks like all traces of "Hummerism" are gone from the former Hummer first-in-the-universe dealership near my place that's being converted to a Chevy dealership.

Update:

On the facade above the freeway-facing main entrance are several GM brands, such as Chevy, GMT, ... and, last on the right, "Hummer".

[CADavis]

The other day gas was at $1.849 in Des Moines, Iowa. We have the ethanol blend though so it is cheaper than regular.

[Uncwilly]

Originally Posted by CADavis

The other day gas was at $1.849 in Des Moines, Iowa. We have the ethanol blend though so it is cheaper than regular.

Goes running and screaming

[masser]

Is it time to change the title of this thread?

[cheesehead]

Nominations are open!

[Uncwilly]

....the recent change in U.S. ....

[masser]

How about:

The "REAL" reason for the recent drop in U.S. gasoline prices...

But I guess we already have a thread about that, thanks to Ernst' diligence.

[ewmayer]

Trade Deficit Narrowed 4.4% in September on Declines in Crude-Oil Imports: The U.S. trade deficit in September narrowed more than forecast as a record decline in the cost of foreign crude oil caused fuel imports to tumble.


Those Valero gas prices I've been posting dropped so much in the past week that it`s time for an update - italics is the last-posted datum of 3 November:

Mon, 03 Nov: 2.859
Tue, 04 Nov: 2.699
Wed, 05 Nov: 2.659
Fri, 07 Nov: 2.599
Mon, 10 Nov: 2.499
Tue, 11 Nov: 2.399

Roughly fifty cents in a single week...

[cheesehead]

I nominate

"that gasoline-and-other-petroleum-products thread"

or just

"that gasoline thread"