I hope I’m not too late to the party. I don’t understand any of this. I see oil being affected by supply and demand but the supply is controlled either by OPEC or the large oil companies with large storage facilities. Years ago OPEC raised the price by slowing production. There’s no reason why it can’t do that today, just as there seems to be no reason why Exon, like Enron, cannot influence the market by turning off its spigots. It seems to me the oil market is regulated, it’s just not regulated by the government in the public interest.

Taxes – the governments there have decided to put more money towards public transportation = more taxes to discourage use of the car.

In this country the problem is that you often can’t get from point A to point B via public transportation. Also, for example, there was a concerted strategy by GM and their lobbyists against streetcars in the 50s.

By the way, the English (who are more conservative about taxes than the rest of Europe) are now paying $7 ($7.50 for diesel) and the Europeans between $8 and $9/gallon.

so why is it that England and Europe have had $5/gallon or more for years?
Does that figure into this?
And thank you!
I’ll need to re read this, to be sure, didn’t get it ALL in one swallow, but that’s par for me with a lot of your work here.
Great, Really great post!!!
Thank you.
:)

May do a post on Hugh’s list at some point, we shall see.

wesgpc – i agree w/ you on getting rid of the enron exemption – but lets also get rid of the “foreign” exchange exemption and stop categorizing investment banks (and indeed anyone who does not take physical possession) as “commercial interests” / hedgers and not the speculators that they are.

and of course we need real oversight by cftc.

…. and finally i’d like to recommend hugh’s item #365 – which is the best description i’ve seen of the speculation argument (and my favored explanation of the oil price spike in general) and what got me hooked.

Those who doubt the ‘mostly speculation’ theory say that new or fringe producers, and spot traders should move in (either through increasing spot sales, or going into contracting) undercut these types of contracts when they expire, or for new business. But they have no data at all, just examples of what should happen, and anecdotes and their own business tales in their tiny corner of the market.

And then you get very deep into the weeds of substitutability of different types of oil on a large scale, convenience yields, how much market power existing producers have in setting conract regime, transaction and transportation costs, how market participants use complicated contracts as a kind of option to hedge. And it all ends up in a muddle. If people in the real world business of oil contracting cannot agree, I, along with you, will surely will not venture a firm opinion.

So… we all do the best we can do. And right thnking people agitate to get rid of Phil Gram/Enron expemption as soon as possible!

I look forward to more on this from the FDL crew, as developments suggest usefl.

Again, thanks very much for this post.

Fast trains require special track and DUAL track- so that trains can go both north and south (or east and west) at the same time..The TGV in France is a great example—but it takes a LOT of money.

Sure, a long-distance trip is one way fast. But, a commuter train is shorter distance and not quite as fast and can run a circuit the way a bus does, with another not too far behind. To run ONLY one train on a line and not use a circular (or thereabouts) track with another train behind isn’t very efficient. Can you imagine a highway which only allows one-way traffic and only one vehicle at a time? Silly.

There’s no doubt about the need for trains. The fun part is going to be either building new lines and/or wresting control from all the freight companies that get priority over the current lines that Amtrak actually uses nowadays. That’s the one thing that causes the most delays with trains. Freight gets priority, not passenger trains. And the freight companies LOVE it that way.

I’d love to have high speed trains here. I’d rather travel by train than drive long distances. I can’t afford to fly a lot, so a train is an excellent alternate.

Maybe it’s just a matter of eliminating ‘priority’ the way we like it on the interstate highways, the telephone system and the Internet.

Of course, the rail lines are owned by private companies, not like airports or interstate highways. But, deals can be made.

There is another factor that is part of this…. In France & Italy gas was running between $8-9.00/gallon….. BUT the car we rented was getting 66 miles per gallon. Now calculate your current cost per mile on your car driving in the US and that is where the Europeans are saving…… The cost per mile is a lot less for them than ours because they have cars that get way more miles per gallon. Cars you will never see here in the states.

I have heard such stories. What kind of car(s) did you drive or see that got great mileage? What was it about them that precluded their import to America?