3rd From Sol

~ Learn from before. Live now. Look ahead.

3rd From Sol

Tag Archives: OPEC

Ryssdal Allows Guest To Euphemize High Crude Oil Price As Desirable

26 Wednesday Apr 2017

Posted by Paul Kiser in Aging, Business, Customer Service, Ethics, Government, Government Regulation, Green, History, Management Practices, Politics, Public Image, Public Relations

≈ Leave a comment

Tags

big oil, crude oil prices, Kai Ryssdal, Maria Hollenhorst, Marketplace, npr, oil prices, OPEC, Robert McNally

As host and senior editor of NPR’s (National Public Radio) business-focused, Marketplace, Kai Ryssdal has a tough job. He and his staff have to meld business, politics, and society into small chunks of edible information for his listeners to consume during one of four syndicated shows that air multiple times each day.

For most people, developing and presenting an informative, factual, unbiased radio program about business and everything around it would be a tax that is over 100% of their brain’s income. But Ryssdal isn’t ‘most people.’

So it would be perfectly reasonable to give Mr. Ryssdal a break and overlook a segment that didn’t really measure up to a perfect journalistic standard. Sorry, Kai, but you don’t get that break.

Last week, (April 18, 2017,) Ryssdal and Maria Hollenhorst produced a segment on oil pricing called, “Why boom-bust oil prices may be here to stay.” Ryssdal was interviewing former President George W. Bush advisor, Robert McNally who recently came out with a book called, Crude Volatility.

In his book, and during this interview, McNally attempts to generate fear that low oil prices are bad. Only, he doesn’t use the words, “low oil prices.” Instead he refers to price instability and price swings. McNally uses the euphemism of price stability to indicate artificially high crude oil prices are good, and free market, low crude oil prices are bad.

Historical Crude Oil Price (red line = adjusted for inflation. Credit: Wikipedia)

Adjusted for inflation, crude oil prices were relatively stable for forty years at around $20/barrel from 1933 to 1973. McNally implies that once OPEC began controlling the oil market in the 1970’s, the artificially high price of crude oil was a ‘stable’ oil price. He seems to suggest that the return to lower oil prices at the end of the 20th century and in the past two years are a sign of instability, simply because the free market is controlling the prices.

From his book and interview, it is clear that McNally is a conservative, on a first name basis with major oil executives, and one who believes that the future consumption of oil, as Agent Smith might say, is the sound of inevitability. It is also clear McNally desires to be a mercenary for oil corporations that seek to manipulate the market for their gain.  

What isn’t clear is why Kai Ryssdal gave him a pass on his attempt to generate fear of free market influences on crude oil prices. Ryssdal is too smart to not see McNally’s pandering to his oil clients, and the Marketplace staff had to know that McNally is not an unbiased source of information. 

Sure, high oil prices are good for oil companies and their investors, but wasn’t this past election allegedly about making things fair for the poor guy who has to pay the price at the pump?

(Marketplace is owned and operated by American Public Media)

2016: Oil Prices Near $5/Gallon?

12 Monday Oct 2015

Posted by Paul Kiser in About Reno, Business, Ethics, Government, History, Management Practices, Politics, US History

≈ 1 Comment

Tags

alternative fuel, big oil, Bush, Clinton, crude, electric, fuel, gas prices, gasoline, margin, oil, oil prices, OPEC, President Obama, profit, Reagan, solar, Supply and Demand

Oil prices have more excuses than a meth addict. Demand in China, oil refinery fires or in maintenance, OPEC restricting supply, Saudi Arabia flooding the market, etc. Reality in oil pricing is elusive; however, despite what some experts say, next year will likely see the price at the pump jump based on current factors and on politics.

Minor Influence:  Supply and Demand
We have always been told that supply and demand rules the capitalistic market. Most people mistakenly assume that free market means the market can’t be manipulated, but a free market is ripe for manipulation, especially for the unethical business person.

A prime example of market manipulator is Saudi Arabia. Big oil producers are constantly seeking a bigger piece of the oil market, and fracking in the United States has revitalized US oil production. The Saudi response has been to flood the market with oil to bring down the price/barrel, leaving US producers with increased expenses and less revenue.

World oil supply carefully follows demand (Graphics credit: Yardeni.com)

Graphic 1.0:  World oil supply carefully follows demand (Source: Yardeni.com)

Despite temporary manipulations of the oil supply, the ratio of world supply and demand has not significantly changed in recent history. Demand has steadily increased (See Graphic 1.0,) and supply has increased just slightly less than demand. In fact, the supply of oil carefully follows demand so perfectly that it seems unnatural. It’s almost as if oil companies knew that an over supply would force oil prices down and oil shortages would lead to high gas prices, which would stimulate the development of alternative fuels.

Monthly imported crude oil price (1980 to 2014) Source: Energy Information Administration (eia.gov)

Graphic 2.0:  Monthly imported crude oil price (1980 to 2014) Source: Energy Information Administration (eia.gov)

There is no obvious correlation when comparing the wild deviations in crude oil price (See Graphic 2.0) to the world supply and demand (See Graphic 1.0.) This raises the question: If supply and demand doesn’t control the price of oil in the United States, what does?

US and Europe Oil Demand

Graphic 3.0:  US and Europe Oil Demand. The 2008 recession-triggered a drop in demand (Source: Yardeni.com)

The Game of Oil Pricing
World oil demand has been on the increase, but not in the United States and Western Europe (See Graphic 3.0.) The Recession of 2008, pushed demand down in the United States and Western Europe, but as the world economy collapsed, the price of crude oil rocketed up, then dropped dramatically for six months, then returned to its pre-recession price and resumed a steep climb for the next five years. The price of crude oil didn’t coincide with pre-recession, recession, or post recession demand.

Interestingly, retail gas prices (See Graphic 4.0) make even less sense than crude oil prices, as the price at the pump spiked while crude oil prices dropped. This deviation between crude oil prices and retail gas prices would be repeated, in 2012. The common denominator? The Presidential election. 

2016
Some experts are saying oil prices will remain low in 2016. The problem with these predictions are that the demand for oil is increasing, Republicans are self-destructing, and the economy is in good shape. Low prices at the pump in 2016, would be death to Republicans, and that is not what conservatives in the oil industry do in an election year.

October 2008 and 2012 pricing show a dramatic deviation from past years

Graphic 4.0:  October 2008 and 2012 pricing show a dramatic deviation from past years (Source eia.gov)

Since 1980, oil pricing just prior to Presidential elections in the United States follows an interesting pattern. According to the Energy Information Administration (eia.gov) the average retail regular unleaded price has a strong correlation to the  imported crude oil prices; however, during the last two Presidential election years, the October retail price jumped dramatically, while crude oil prices fell (See Graphic 4.0.) The rare deviation in the price of retail regular unleaded gasoline just before an election again indicates that the market was influenced by political, not free-market, forces. 

Oil pricing during Presidential election year follows a consistent pattern

Graphic 5.0:  Oil pricing during Presidential election year follows a consistent pattern

As 2016, is another election year, and as the Republican party is in deep trouble, the conservative leadership in the oil industry will likely follow the past pattern of attempting to create an economic crisis through manipulation of retail oil prices. Based on the Presidential election years since 1980, the average at-the-pump price of regular unleaded (See Graphic 5.0) will be about $270/barrel or around $4.91/gal.

(NOTE:  Personally, it’s hard to believe we could see $4.91/gallon next October. Despite what the trendlines suggest, I would expect the price to be closer to an average of $4.50/gallon. However, I’m confident that the average price of regular unleaded gas will be over $4.25/gallon.)

This is Why (2015 vs the 1970’s)

15 Sunday Mar 2015

Posted by Paul Kiser in Aging, Business, Crisis Management, Education, Ethics, Generational, Government, Health, Higher Education, History, Honor, Politics, Pride, Public Image, Taxes, Traditional Media, Universities, US History

≈ Leave a comment

Tags

1973 oil embargo, Afghanistan, American Hostage Crisis, Arab, Conservatives, Democrat, Egypt, fuel, GOP, Iran, Israel, Middle East, Munich Massacre, Munich Olympic Games, OAPEC, oil, oil prices, oil shortages, OPEC, petroleum, President Gerald Ford, President Jimmy Carter, President Richard Nixon, Republican, Russia, Soviets, Syria, USSR, Watergate, Yom Kipper War

The 1970’s – American Implosion

The Decade of Oil Domination

  • Population:  203.2 million
  • Gross Domestic Product (GDP) per capita:  $23,381
  • Median Annual Income:  $7,559
  • Life Expectancy:  70.8
  •  Average Age at Marriage:   Men 23.2, Women 20.6
  • % of pop. w/high school degree or higher:  52.3%
  • % of pop. w/college degree or higher:  10.7% 

ENEMIES DOMESTIC AND FOREIGN
America was rocked by the internal conflicts during the 1960’s, and the 1970’s did little to sooth the hearts and minds of the citizens. Inflation slowed slightly in 1970, only to be followed by recession. Then the White House was rocked in 1972, by an ever-growing scandal called ‘Watergate’ after the place where Republican operatives attempted to break into Democratic headquarters. Over the next year it would be revealed that the Republican party, including President Richard Nixon played dirty politics during the President’s re-election campaign and then used power tactics to cover up their misdeeds.

In the Fall of 1972, the world was shaken by a group of Palestinians that took Israeli athletes hostage in Germany’s Summer Olympic Games. The Palestinians were given logistical assistance by German Neo-Nazis which helped them penetrate the athlete’s living area and capture eleven of the Israel delegation (two of the eleven were killed during the invasion of the Israeli rooms.) As the world watched, the Germans eventually attempted a botched night rescue as the hostages were moved to an airport. The German snipers were untrained and had no night vision equipment. Every aspect of the German rescue plan was flawed and the Palestinians eventually made a decision to kill all hostages during a stalemate in the fighting.

In October of 1973, Israel responded to a surprise attack by Egypt and Syria (the Yom Kipper War) with a counter attack. The United States and Russia quickly began resupplying their allies (US/Israel and USSR/Syria-Egypt) with arms and materials. In response the Organization of Arab Petroleum Exporting Countries (OAPEC, later OPEC) began a six month oil embargo that created massive fuel shortages in the United States. This caused the price of oil to rise from $3/barrel to $12/barrel and sparked a new round of inflation.

OUTCOME: American Politics
By the late 1974, the Watergate scandal had ended in resignations by the Vice President and President. Gerald Ford, who had just replaced the Vice President, became the President and limped his administration through the end of Nixon’s term. By the 1976 elections people were done with the Republican party and Jimmy Carter was thrust into the job of restoring faith in government.

OUTCOME:  Oil, Greed, and the Middle East
The OPEC oil embargo and the Munich Massacre sent a message that America should be focusing on the Middle East, but the Watergate scandal had caused an information overload, so many Americans still saw Russia as the main foreign threat. However, because the Middle East had massive oil reserves it became the most strategic region in the world for oil consuming countries. This caused the governments of Russia and the United States to attempt to secure the region for each country’s own self-interest.

The questionable tactics of unscrupulous American oil companies opened new wounds in the Arab world.  Our public image had been defined by U.S. business and political interference in internal matters of many Arab countries. Americans were caught off guard by the festering hate for America in the Middle East.

OUTCOME:  Economic Instability
The roller coaster of inflation, recession, inflation left Americans with a sense of fear about the economy. The typical American was caught by surprise in 1973 when the oil embargo practically put the United States on its knees. The pride America had after beating the odds in World War II and putting a man on the Moon were all erased by one unethical President and our country’s economic vulnerabilities.

THE NEW HOPE EXTINGUISHED
Jimmy Carter’s election in 1976, brought a new hope to America. That produced a new fear for Republicans. Nothing could hurt conservatives more than to have a Democratic President restore America’s self-confidence. President Carter focused on peace and humanitarian initiatives that conservatives said made America look weak. Fortunately for conservatives, the Middle East would be what they needed to derail the Democrats and return to power.

In 1979, Russia invaded Afghanistan and students in Iran overran the American Embassy and took hostages. At the same time a mythical oil crisis (world oil supply dropped by only 4%) drove oil prices up to $39.50 per barrel in one year. The events dominated the news and overshadowed Carter’s re-election campaign. Republicans successfully used political ads to paint Democrats as out of touch during the worst political crisis of Carter’s administration. The events of 1979 could not have been more perfect for the resurgence of the disgraced conservatives.

NEXT:  The 1980’s

THE SERIES:  The 1950’s    The 1960’s    The 1990’s    2000’s    Epilogue

Other Pages of This Blog

  • About Paul Kiser
  • Common Core: Are You a Good Switch or a Bad Switch?
  • Familius Interruptus: Lessons of a DNA Shocker
  • Moffat County, Colorado: The Story of Two Families
  • Rules on Comments
  • Six Things The United States Must Do
  • Why We Are Here: A 65-Year Historical Perspective of the United States

Paul’s Recent Blogs

  • Dysfunctional Social Identity & Its Impact on Society
  • Road Less Traveled: How Craig, CO Was Orphaned
  • GOP Political Syndicate Seizes CO School District
  • DNA Shock +5 Years: What I Know & Lessons Learned
  • Solstices and Sunshine In North America
  • Blindsided: End of U.S. Solar Observation Capabilities?
  • Inspiration4: A Waste of Space Exploration

Paul Kiser’s Tweets

Error: Twitter did not respond. Please wait a few minutes and refresh this page.

What’s Up

June 2022
S M T W T F S
 1234
567891011
12131415161718
19202122232425
2627282930  
« May    

Follow Blog via Email

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 1,649 other subscribers

Create a website or blog at WordPress.com

 

Loading Comments...