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Tuesday, August 16, 2005

Tight Margins

From The Oil Drum, news that China has an oil supply crunch, forcing businesses to cut back on operations. I would imagine that businesses with the tightest profit margins will become affected first during the early stages of a competitive bidding process. The lean manufacturing economies of the far east happen to inhabit the lowest rungs of the pecking order in the energy-driven global economy, and will likely cut their losses at the first hint of cash flow problems.

By the same token, the poor get hit first on the consumer level. Gasoline price increases work as a flat tax, particularly regressive in the fact that the wealthy (apart from how it affects their business) laugh at the prospect of a price increase. They double down in laughter realizing that:
... it is erroneous to calculate that the adjusted price for gasoline, including inflation, is under the price of two and a half decades ago. This is because "subsidies - direct, indirect and hidden, such as the War on Iraq -- to oil and refined products, if included in the price, would make oil cost perhaps $120 per barrel today. This is one reason people must work longer hours and obtain extra jobs," he explained. -- writes Jan Lundberg (from TOD)

Yet the influential William F. Buckley, writing in "what can I lose?" prose, does not seem humored at all by these prospects. He now has joined his life-long protagonists Noam Chomsky and Gore Vidal, in a limited partnership of understanding. Whatever their differences, they all see the coming squeeze. However, I seriously doubt Buckley will go so far as to implicate his neo-con buddies in the downward spiral.

But then again, maybe Buckley just did:
It was 20 years ago that the Saudis and the United States arrived at a deal. The Saudis would set prices so as to protect the U.S. oil industry. And the U.S. would protect the Saudis' independence. We regret that, and should make the Saudis regret it also.

Update: From Corrente, the heed to stay nice to Canada:
Canada exports more oil to the US than Hugo Chavez or the House of Saud. Canadians already pay $4/gal for gas; wouldn't it be amusing to see Bush voters pay rebates to Soviet Canuckistan for the same privilege?

Not long ago Bill O'Lielly urged Americans to boycott Canadian products over Iraq, much to the amusement of the Globe and Mail journalist, Heather Mallick, who was his guest. Be careful what you wish for, Bill; you just might get it.


Professor Blogger SW said...

So by this time next year instead of some Saudi Prince, George Bush will be getting buggered by the Canadian foreign minister! Schweeet!

8:40 PM  

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