Friday, October 28, 2005

Pinocchio's Nose

So I'm watching GMA this morning while doing my back exercises. Charlie Gibson is grilling Mellody Hobson, the show's economics troglodyte, about the huge profits the oil companies have been reporting and the high price of energy. It was a particularly delicious moment where the lines between news and an SNL parody of news were hilariously blurred. Hobson's dropping her economics 101 textbook bon mots, such as:

This is a free enterprise system in a global market and the big oil companies
themselves simply don't have a hand in setting the price of oil or its
derivative, gasoline.

We have to remember: this is not charity, it's business.

Now that big oil has these record-breaking profits, they have an incentive to put more money into drilling and refining.

This is one situation where (the public is) at the whim of the markets...

Of course, none of this has even the slightest basis in reality. The history of the oil industry is the history of ruthless restraint of trade, price fixing, and cartelization of the most important commodity in industrial economies. (This is most comprehensively chronicled in Daniel Yergin's Pulitzer Prize Winner, The Prize.)

But the ridiculousness of Hobson's claims wasn't the funny part (though their social Darwinistic leanings did shed light on the favorite quote listed on Hobson's bio "Kill and drive on.") The funny part was that, while Hobson was talking, GMA had a counter in the bottom left of the screen, keeping track of the profits Exxon was making WHILE Hobson was talking. In the two minutes she spoke, Exxon made another $150K in profit!

It was like watching Pinocchio's nose grow!

Peak Profit

Here are some numbers. In October of 2003, a gallon of heating oil in the Boston area would run you around $1.34. When I filled up my tank a couple weeks ago, I paid $2.65 a gallon. That's not the 36% increase that's being bandied around in the news these days. That's about 100%. Someone is making a s$%tload of money off of our middle class asses.

In the words of Dana Carvey's Church Lady, "Well, well, well... I wonder who it could be... I really couldn't imagine... hmmm... Could it be... BIG OIL?!!"

Why, yes!

Here are the numbers from the Times:

Exxon Mobil, the world's largest oil company, said yesterday that its third-quarter net income jumped 75 percent, to $9.92 billion. Its profit in the first nine months of this year - $25.42 billion - already equals its full-year earnings for 2004. This year's sales, which topped $100 billion in the last quarter, are expected to exceed those of Wal-Mart.

Another oil giant, Royal Dutch Shell, reported a 68 percent jump in profits yesterday, to $9.03 billion. Chevron is expected to post a profit of more than $4 billion today.

So, while people may question whether or not the world has reached a peak in oil production, there's certainly no question that a new peak in profits has been reached for the big oil companies.

Thursday, October 27, 2005

Poor Marksman

Well, if the T "Aims to Ease Red Line Disruptions," so far the early returns say that they're just wide of the broad side of a barn.

Another breakdown this morning. This time, the doors on one of the cars at North Quincy wouldn't open. They had to offload one jam packed rush hour train, then cram the commuters onto another.

People were pissed (ROYALLY), but fatalistic. When I suggested to some grousing commuters that they get in touch with our state senator, they just sneered. What's the use? They're all in cahoots, they said.

Terrific example of effects of right wing chutzpah. For years we've been told what a bunch of crooks people in government are, and that they can't do anything right. Then, a few years ago, the funding formula for the MBTA was changed. The burden for paying for the service fell more proportionately on its working class riders. Not surprisingly, the T has been strapped for cash since then. We've seen two fare increases and service cutbacks. Now we're starting to see the transit system break down. See? I TOLD you public services were incompetent!

Got to South Station finally and the train was actually held for a schedule adjustment. Hunh? Isn't that only supposed to happen when the trains are running ahead of schedule. I got off the train and decided to walk a few blocks to Downtown Crossing. The conductor was sticking his head out of the window like Puxatawney Phil on Groundhog Day. I turned to him and laughed as I headed for the exit.

"What?!" he said.

Dead Line

From the Boston Globe, Sunday, October 23:



BODY:Anyone who rides the subway is accustomed to the occasional frustrating delay, which is seldom accompanied by any information from train or station personnel about what's happening and how long the wait is expected to last. But Red Line riders seem to be experiencing more than their fair share of aggravation lately.

became so frustrated after several recent service interruptions that he did some research. He sent us a complaint filed with the T documenting 21 disruptions on the Red Line on 16 days between Sept. 20 and Oct. 18, based on alerts posted on the Massachusetts Bay Transportation Authority's website.

Major problems on the Red Line "have been going on really ever since the blizzard of January," Paul wrote. "At first, the T said the problems were weather related, but the service failures have not abated and now occur regardless of the weather. . . . These failures are not isolated events but a pattern."

Red Line chief Maureen Shrikus reviewed Paul's incident list and responded with details on what caused each delay. Mishaps included signal failures, power problems, door malfunctions, loss of air pressure, trees down on the track, medical emergencies (including a person under a train), police incidents, switch troubles, and a smoke sighting.

Trains on the Red Line's two branches make 224 trips each weekday, second only to the Green Line, which has four branches. With an estimated 200,000 daily riders, the Red Line is the T's most heavily traveled. The large number of service disruptions "have drawn considerable attention" from Richard Leary , the T's acting chief operating officer , said spokesman Joe Pesaturo .

Leary, who was director of bus operations until his promotion earlier this month, "is allocating additional funds and dedicating more resources and personnel toward preventive maintenance activity," Pesaturo said. "This stepped-up effort will not only address current issues, it will also help to ensure that the Red Line is better prepared for whatever the upcoming winter season sets upon us."

We expect our loyal readers will keep us posted on whether any improvements are seen in coming months.

Wednesday, October 19, 2005

Peak Oil

The debate over whether or not we're running out of oil is the kind that makes one's head spin. The problem is that there are smart people on both sides of this issue.

Last August, journalist Peter Maass wrote in the Times Magazine that essentially, the Saudis are the ballgame when it comes to oil. Saudi Arabia has by far the biggest known reserves in the world with about 25% of known oil. He says that the Saudis themselves think they can move from their current production of 10 million barrels a day up to about 12.5 million barrels/day. The US has them slotted up to 20 million barrels. Privately, the Saudis say "Uh-uh." Moreover, Maass writes that we'll run into supply problems, well before we start to run out of oil, because the geology of oil wells means you can only pump out so much, so fast. Moreover, he says that those Saudi production estimates to which Michael Lynch referred during the show may be overly optimistic because Saudi officials don't want to see alternative energy sources developed, which would kill the goose that laid the golden egg.

On the other hand, Daniel Yergin, author of the Pulitzer Prize winning history of oil, The Prize, says that his firm's analysis indicates an additional 60 million barrels of oil/day coming online in the future. He says that the tar sands in Canada will be a major source of petroleum, as will the Caspian Sea, Azerbaijan, Russia, West Africa (offshore), Brazil (offshore) and Libya. It will be more costly and difficult to get the oil out, but the issue isn't a lack of oil under the ground. He notes that, in the 1920s, the US geological service estimated that the supply of oil would run out in just over nine years, and that this current discussion of peak oil is about the fifth time in the last century that we've worried the gas would run out. He says that additional capacity along with greater efficiency in the use of oil will preclude the sort of "long emergency" James Kunstler predicts.

So... who to believe?

After listening to author James Kunstler and energy analyst Michael Lynch duke it out on PRI's Open Source, I found myself unpersuaded by either side. Host Chris Lydon was right on in sussing out Kunstler's agenda: he hates the 'burbs. Kunstler's argument was based on external events he thinks indicate that oil is running out: price spikes, wars in the Middle East, etc... I think Yergin would say that Kunstler is responding to the geopolitics of oil, rather than the geology.

I got no comfort from Lynch, though. Chris summed up the most common sense argument for peak oil: they're not making any more of it, and we've got over 2 billion people in India and China singing "zoom, zoom, zoom." Lynch's response, "China has been coming online for 20 years now and production keeps going up," was absurd. We haven't scratched the surface with India and China. It seems ridiculous to think that there won't be enormous repercussions. Lynch's perspective basically adds up to "Well, things have always worked out before..."

This debate reminds me of the show Chris did on the housing market. Some people think it's a bubble. Some don't. What I wrote then about housing applies, I think, to oil: it doesn't have to be a bubble (or a peak), before it's really bad news. Yergin's analysis seems fairly solid. We probably will get oil from the tar sands and develop hybrids, yadda, yadda. But it's going to cost more and more to get that oil out of the ground. And anybody checked out the cost of a Prius lately? Increased demand for a limited natural resource will have a huge impact on geopolitics and, more practically, how we live on a day-to-day basis.

Personally, if it means no more aircraft carrier sized SUVs on my ass when I'm trying to bike someplace, I'm okay with it.

Wednesday, October 05, 2005

Still Cursed?

Every dyed- in-the -wool Red Sox fan said it before 2004: "If they win just once in my lifetime, I'll die happy."

Well, they won it. The Sox won the World Series in 2004. So why have I still been so unhappy following the Red Sox this year?

They won 95 games in 2005 and even tied the Yankees for the best record in the American League East. Moreover, they did it with an absurdly handicapped squad: no ace and no closer; only one starting pitcher with an ERA under 4.00; a 39 year old set up guy who's been mercilessly overused; a center fielder so banged up he can hardly throw. Why did I take it personally when the Sox dropped two of three to the bottom dwelling Devil Rays in September, then split eight games with the sub-.500 Blue Jays?

Moreover, why am I in such robust company? There's been no let up in the sort of whining and recrimination heard on sports radio before the Sox won the Series. In fact, this year it seems worse. Callers are ready to pillory the first manager to win a championship in 86 years. For the good natured first baseman who has lost his power and the error prone shortstop, there is unrelenting bile.

So I'm thinking maybe the curse hasn't been lifted. Maybe it wasn't ever really about winning or losing. Maybe it was - and is - about addiction to the Wagnerian opera that is the Boston Red Sox: dramatic triumph in the face of certain defeat; perverse and even tragic losses snatched from the jaws of victory.

I can't tell you how often I've heard people say that they're happy the Sox won last year, but felt it was... well... a little anti-climactic. Other than the series with the Yankees, the Sox rolled over their post-season opposition in 2004, sweeping the Angels 3-0 in the ALDS and the Cardinals 4-0 in the World Series. As ESPN's Peter Gammons noted, Boston built the best team in the league by shoring up their pitching and defense, then just went out and dispatched their opponents. This was never more evident than in the World Series. The Sox had a sort of consistent excellence and confidence usually reserved for the old Celtics teams during their championship runs. It sounds funny to say, but the way they won was immensely satisfying if you liked baseball, but a disappointment if you were a "die hard" Red Sox fan.

This year, of course, the drama is back, partially due to bad luck and injury, and partially by design. Like the teams of old, these Red Sox win games 10-7 and lose games 10-7. Their pitchers are old, unproven or hurt. Their defense is spotty. They slug their way to wins, often with dramatic 9th inning hits from the astonishing David Ortiz and Manny Ramirez.

After getting myself worked up into a lather again, living and dying with Red Sox wins and losses, something different has happened for me. I realize that I'm not enjoying myself. One day the Sox look like they can beat the 1927 Yankees. The next, they can't beat the Devil Rays. It's not fun and exciting year after year like this. In 2004 I had a taste of the good stuff. Now the comebacks, the late inning dramatics, the walk offs, the "backs against the wall," and the "cowboy up" all just seem overwrought and tedious. I've no desire to return to 1946, 1967, 1975, 1978, 1986, or 2003. Desire? Hell, I've no energy for it.

At this writing, the Sox are down 2-0 to Chicago in the ALDS. I wouldn't be surprised if they came back and won the series. In fact, I wouldn't be surprised if they made it to the World Series again. I also wouldn't be surprised if the White Sox beat them 3-0. But I'm no longer watching their games, though I hope to tune into some of the National League playoffs. Give me the Cardinals or the Braves or even the Astros: teams that play the game well and do it consistently with pitching, good defense and timely hitting. The curse is lifted when I'm more baseball fan than Red Sox fan, I guess. Too bad it took me 31 years.