Whenever there is talk of inflation and the rising cost of basic staples there is inevitable concern for the well-being of working class folks and seniors on fixed incomes. These are demographics groups most obviously hit hard by sustained inflation of prices for food, fuel, etc.
Let us consider one other demographic: the well-meaning middle-class. The families who make choices of sacrifice as part of what some would view to be a comfortable household budget. They have serious tuition bills, save for retirement, have comparatively modest mortgages, and give generously to charity.
These are not the folks living up to the stereotype of the over-consuming American. They don't take lavish vacations. Their homes are not filled with electrician electronic gadgetry. They drive used cars. And dining out is still more of a treat than a regular practice.
Thus, when the cost of staples goes up, such families have less fat to trim in their budget than some others in their income bracket. There is no identifiable interest group that represents this demographic, no horde of reporters looking to cover them as the next hip batch of swing voters like the "soccer moms" or the "NASCAR dads."
Nevertheless, they vote and they're feeling the pain of current economic trends. Given that elections tend to become volatile when the middle class is restive, that's a trend worth watching - especially in our own already high cost of living locale.
Posted by Eric Earling at May 12, 2008 07:55 AM | Email ThisInflation hurts the idle rich such as Bill Gates and Paul Allen, who made their money on yesterday's technology and now sit around doing nothing.
The Rs need to be pointing out the failed policies or lack of policies of the Democrats in the legislature- both federal, state and local. I don't think they have. I think they are afraid to engage.
Posted by: swatter on May 12, 2008 08:25 AMI'm trying to get coin just like the rest of you. I'm hoping inflation will carry my stock portfolio up to the stars.
Inflation is a good thing right now...it's probably the only way to get us out of the mortgage mess fairly. Just quadruple everyone's salary and suddenly a $400,000 house is a $100,000 house...you can pay it off in a few years.
Dig?
Posted by: John Bailo on May 12, 2008 10:19 AMAre we all as dumb as they're counting on?
Results in November...
Posted by: Independent Voter on May 12, 2008 10:20 AMYou could drill off Florida & California, both states are held by GOP Governors...yet when pressed to allow drilling offshore they declined to allow it. What hypocrites!!
I seem to recall Bush signed the biofuels bill passed by a GOP led Congress...and was also included in the farm bill.
Seems like the problem extends to both sides of the isle Independent, but something tells me you are looking more for a scapegoat rather than a solution.
The radical left is only 30% of the country. Do they call the shots? I think you're way underestimating how much opposition there is to oil drilling. It's way more then 30%.
Posted by: FreedomLover on May 12, 2008 12:14 PM
be too hard on John. I payed off a large loan in the 70's compliments of Jimmie Carter. Was it right for me as a young man,Yes. Was it right for my friends paying 20% on operating Loans? No. Was it right for America? No.And it still is not right for America!It,s tough to make that decision as a young man. What is right for America and what is right for your family is a hard choice.
Call me a heretic, but I have a lot more faith in this nation's ability to drill for, and refine oil without causing an ecological disaster than I do for us to significantly reduce our dependence on foriegn oil by producing ethanol from corn, replacing all vehicles on the roads with electric/hybrids, or getting everyone out of their cars and into mass transit.
Posted by: Smoley on May 12, 2008 12:41 PMHow's that?
Posted by: Independent Voter on May 12, 2008 01:20 PMAlso, doesn't it make sense to increase Iraqi production, which would be less expensive, than drilling in ANWR.
ANWR doesn't make sense from a short term issue of gas prices (i.e., would have negative effect through increased extraction costs compared to Middle East oil). Therefore, it doesn't address the gas prices oil grumpiness that Eric addressed.
Posted by: tc on May 12, 2008 02:31 PMYour logic is backwards...you imply that it would be more costly to retrieve oil out of ANWR so we should just continue to beg and plead for whatever OPEC feels like giving us. I would contend that the moment OPEC knew we were serious about drilling, the prices worldwide would drop. It's simply supply and demand - even if it was slightly more costly to extract from ANWR in the beginning, I still think that the overall cost to everyone would drop because of an increased production. (And the national security issue must be factored into the equation - it is too important to ignore)
By the way, "irregardless" isn't a word.
Posted by: suzihomemaker on May 12, 2008 02:44 PMIt all fell apart.
A more reasonable approach is to acknowledge that houses are non-fungible and "sticky" in pricing with a lot of sociological factors that aren't strictly supply and demand.
Rather than "compensating" everyone for losses, I agree with the Fed, we should be pushing inflation to let salaries "catch up" with current housing prices (assuming that wages rise with prices).
I'm no economic genius but wouldn't drilling and refining within our borders be paid for with US dollars, whereas buying foreign oil would be subjected to the value of the falling dollar vs. other currencies?
I've heard that one of the main reasons for the increase in the price of oil lately was the declining value of the US dollar?
That would be true...
"What's going on with oil is partly the flip side of that same financial coin. Since oil is priced globally in dollars, it's typical for any big markdown in the dollar to be mirrored in a big markup in oil prices. For foreign buyers, that keeps the price of oil fairly stable."
suzihomemaker @21 and Smoley @23:
On incremental costs, domestic oil may be less price, but you forget that we don't have ANWR into production right now. Therefore, it is estimated that it would take nine years to get on-line. Add to the incremental costs, the startup costs and regulatory costs, and you have a whole different ballgame. Of course the oil industry is going to state the best case scenario and not include the whole picture, just like the Sierra Club and environmentalist try to paint the worst case scenario.
The bottom line is ANWR is not an answer to today's problems. If you are talking about future needs, it is one possibility, but so is cutting consumption by moving to alternative energy sources.
Posted by: tc on May 12, 2008 04:10 PMIf it were even possible to pump the remaining 5.6 billion barrels/year from ANWR - which it isn't - ANWR would in the best case last 2 years before running dry.
Drilling ANWR won't solve anything without addressing consumption. I agree about nuclear power, though - the French have the right idea on that one. They produce 75% of their power with safe, standardized nuclear power plants.
Posted by: ANWR no panacaea on May 12, 2008 04:55 PMHe says that McCain wants to turn us into the Soviet Union.
After listening to this, I can't understand how any conservative can vote for him.
Posted by: Larry on May 12, 2008 05:29 PMYes the talk is on the poor and working class rather than the middle class. That is for good reason. They are hit harder by inflation. The real lack of discussion is not however which class is hit more or worse. Any discussion like that is really an attempt at dividing the people against each other when really the discussion should be on which politicians support the poor monetary of the federal reserve and the poor fiscal policy of congress.
Obama, McCain, and Clinton all favor the Federal reserves control over monatary policy. Paul stands alone in his opposition to the federal reserve. It is surprising that he is alone since his position is based on the constutional requirement that only congress "To coin Money, regulate the Value thereof"
Obama, McCain, and Clinton all favor the Federal spending levels far above what the federal government collects (aka post clinton level spending). Paul stands alone in favoring the reduction of spending backed up with specific agencies and departments he would cut.
Eric, Why do you never post about McCains poor fiscal and monetary policy positions?
Posted by: Lysander on May 12, 2008 05:52 PMThis country was formed specifically to get away from the excessive taxation of the British nation.
The Boston Tea Party was a famous effort against over taxation.
Kentucky Bourbon is a result of the east coast politicians raising liquor taxes so high the producers all moved to the hills of Kentucky.
It's time to sweep out the barn in Olympia this year.
Vote for Rossi for some financial sanity, or you will find the next four years adding Billions and Billions of taxes including an already written 7% income tax hike on top of all of the other taxes you are paying.
Oil was $120 a barrel on May 5, 2008.
The cost of a barrel of synthetic fuel from coal is estimated to be $55, including the infrastructure and labor force necessary to operate plants.
Germany fueled WWII with synfuel from coal. It is proven technology.
America has 1/3rd of the coal on Earth and can eliminate dependence on foreign oil.
Reducing America�s trade imbalance keeps money and jobs here in America.
Every billion in trade deficit costs 13,000 American jobs. $400 billion for oil last year: you do the math.
And we can stop sending billions to countries that sponsor terrorism.
Synfuels are cleaner burning than gasoline and carbon sequestration can remove CO2.
Visit http://governor.mt.gov/hottopics/faqsynthetic.asp
Harness your anger at the pump. Call you're US Senators and demand they break ground on America's energy independence by encouraging an American synfuel industry in this decade.
If you don�t raise your voice the oil companies, lobbyist and politicians will assume you are fat, dumb and happy and ready to pay even more.
Posted by: Michael Lewis on May 12, 2008 09:23 PMHOW AMERICA BECAME FOREIGN OIL DEPENDENT & WHY IT STAYS THAT WAY
Perhaps the legitimate desire to preserve water front property plays a role in stopping the development of new refineries and oil exploration. But international agreements and foreign tax credits have much more to do with it:
The United States agreed to transfer jobs and technology to developing countries under
INTERNATIONAL AGREEMENT
Algiers Declaration
Algiers, Algeria, 4-6 March 1975
In this context, they emphasize the necessity for the full implementation of the Programme of Action adopted by the United Nations General Assembly at its VI Special Session, and accordingly they emphasize the following requirements [excerpt from full declaration]
"With regard to the depletable natural resources, as OPEC’s petroleum resources are, it is essential that the transfer of technology must be commensurate in speed and volume with the rate of their depletion, which is being accelerated for the benefit and growth of the economies of the developed countries"
A major portion of the planned or new petrochemical complexes, oil refineries and fertilizer plants be built in the territories of OPEC Member Countries with the co-operation of industrialized nations for export purposes to the developed countries with guaranteed access for such products to the markets of these countries. [Excerpt from declaration] Read sections 10 and 11]
FOREIGN TAX CREDITS
In 1977 Representative Benjamin Rosenthal of New York produced secret Internal Revenue Service documents going back to 1950. They showed that the tax laws of Saudi Arabia were drafted with the help of Aramco to call the added price of oil not a "royalty" or "cost of doing business," as was proper, but an income tax." The Saudis did this knowing that income tax paid to a foreign country is deductible from the income taxes an oil company pays the United States on all income received in the United States by the parent firm. From Pgs. 61-64 The Media Monopoly by Ben H. Bagdikian 5th edition paperback color emphasis added
"This plan was approved in secret session of the National Security Council and carried out without any request for authorization by Congress. A quarter of a century later, when members of the Senate Foreign Relations Committee un-earthed details, the source of the king's added income had become too self-evident for comment." From pgs. 193-196 Oil Power The Rise and Fall of An American Empire by Carl Solberg 1976 paperback
"Essential to the deal was a renegotiation of Aramco's royalties, most of which were now called taxes. These were increased to a level equal to half the company's expected profits for the year. The amount of the rise just happened to equal the income taxes the company had been paying to the U.S. Treasury. Thus, by a transfer to the Saudis of a sum that would henceforth have to be made up to the U.S. government by its taxpayers, the 12. progressive fitly-fifty profit-split plan was introduced to the Eastern Hemisphere, and the lord of the world's richest oil pools was bound over to the United States as never before: the Saudi monarchy became outspoken in its anticommunism." From pgs. 193-196 Oil Power The Rise and Fall of An American Empire by Carl Solberg 1976 paperback
"This practice, perfected in Saudi Arabia, was quickly adopted elsewhere. Eventually, every oil-producing nation where American companies had a concession enacted an income tax law to increase its oil revenue by tapping the foreign tax credit provision of the U.S. Internal Revenue Code." From pgs. 183-190 America: Who Really Pays The Taxes by Donald L.Barlett & James B. Steele paperback
"Since that time the major multinational U.S. oil companies have paid hardly a penny of U.S. income tax on their foreign income." page130 BANKS. BORROWERS, AND THE ESTABLISHMENT
Excepts from Aramco's Stormy Petrol
Monday, Dec. 24, 1979
http://www.time.com/time/magazine/article/0,9171,947130-1,00.html
In their middleman role, Aramco's American chiefs plainly have divided loyalties. From Chairman John J. Kelberer, a career-long Aramco engineering manager, on down, executives remain determined to do nothing that would anger their Saudi hosts or jeopardize the company's concession. During the 1973-74 Arab oil embargo, Aramco's executives not only did as they were told by the Saudi government, but cut back production by more than requested just to show that they were good Saudi corporate citizens.
SO CONSUMERS WILL ULTIMATELY PAY MORE
REFINERIES IN AMERICA OPERATING AT 85% CAPACITY
Excerpts from Senator Dick Durbin of Illinois floor statement http://durbin.senate.gov/showRelease.cfm?releaseId=296989 below:
That is fact. The oil companies say: Well, the problem is we do not have enough refineries. If we had more, then we would have more product and we might have a smaller spread and we would not be. Let me tell you what: Today, the refineries in America are operating at 85 percent of capacity. Do not buy this argument that it is about refineries. They have more capacity. They are holding back so they can keep their product dear and limited and short, and so the consumers will ultimately pay more.
This morning, British Petroleum, BP, announced they made $7.6 billion in profits in the first quarter of 2008. Royal Dutch Shell announced $9.08 billion in the first quarter. We are still waiting for ExxonMobil.
Understand, these are not the biggest profits in the history of the oil industry, these are the largest profits in the history of American business, some say in the history of all business throughout mankind; the largest profit taking ever. At whose expense? At the expense of consumers and families, small businesses, truckers, airlines, and our economy.
GLOBAL WARMING
The Green Phantom
Global warming's curious absence as a campaign issue.
http://www.newsweek.com/id/133652
In the summer of 2006 I went to see Congressman Rahm Emanuel, who was running the Democrats' successful effort to regain control of the House of Representatives. I had been reading a great deal about global warming in the mainstream press ("Be Afraid, Be Very Afraid" warned Time). So I asked Emanuel, how are the environment and global warming playing out there in the heartland? Is it stirring voters? No, he replied. In the 2006 congressional elections global warming was virtually a nonissue, he said, a low-priority item way behind the war and the economy and old staples like education and health care. Global warming is an issue for the elites, he said, not for the average voter.
SO Who Benefits from the Global Warming Advertisement Campaigns that discourage exploration for oil in Alaska & the Gulf of Mexico and new coal fired power plants?
By Michael Lewis
• 3rd world countries who are the beneficiaries of a transfer of wealth and technology from America.
• The bottom lines of International Oil Companies that use foreign tax credits to avoid paying taxes in the US and show loyalty to no nation state.
Or
• American taxpayers
Pennsylvania Governor and Former CIA Director Warn Foreign Oil Is a Threat to America's Economy
Friday, September 14, 2007
http://www.foodandfuelamerica.com/2007/09/pennsylvania-governor-and-former-cia.html
Pennsylvania Governor Edward Rendell and former director of the CIA James Woolsey this week called America’s growing dependence on foreign oil one of the greatest threats to the nation’s security and economy.
According to the governor during a press conference:
“As a nation, we import more than 60 percent of our liquid fuel supplies. That kind of dependence on foreign oil leaves us exposed to political upheaval or hostile agendas from elsewhere in the world. “It is intolerable that our economy and way of life are so much at the mercy of foreign nations. We need to act now and spur the development of biofuels here at home. Instead of Pennsylvanians sending $30 billion each year overseas to buy gas and fuels, we can invest that money here and support our farmers who grow the crops that produce ethanol and biodiesel, the new manufacturers that refine the oils and the trucking and rail industries that ship it.”
Posted by: Michael Lewis on May 12, 2008 09:25 PMI see the left/liberal talking points about ANWR are alive and well. ANWR could replace 20 years of Middle Eastern oil imports. That is, if all sources from there were cut off. The 2 year LIE that is often repeated assumes we don't get oil from any other source but ANWR. That is so illogical on its face that it's not even worth responding to.
Drilling in ANWR creates American jobs, supports the American economy, and protects America's national security interests. Of course Democrats are against it.
Posted by: Palouse on May 13, 2008 07:24 AMThen what?
Again, false. However, the price of oil might be lower now. Since ME oil has not been cut off, production at ANWR could easily have been curtailed or increased as the need arose, so supplies could last quite a bit longer than 20 years if there are no disruptions in other supplies world wide.
More incentives to build a refinery in this country should have been done as well over the last 20+ years, but we know who has been against that as well. It was part of the last Bush energy policy, and summarily dismissed by Democrats.
Posted by: Palouse on May 13, 2008 12:13 PM