Category Archives: Economics

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This year’s “October surprise” As Joe Biden tries to lower inflation, his actions have pushed OPEC to increase prices

In his efforts to dial down the inflation rate, one would think that President Joe Biden wouldn’t want to see OPEC cut oil production, decreasing petroleum supplies and thereby increasing prices. But perhaps Mr Biden’s actions have had precisely the opposite effect. From The New York Times:

In Rebuke to West, OPEC and Russia Aim to Raise Oil Prices With Big Supply Cut

by Stanley Reed | Wednesday, October 5, 2022 | Updated 3:42 PM EDT

Saudi Arabia and Russia, acting as leaders of the OPEC Plus energy cartel, agreed on Wednesday to their biggest production cuts in more than two years in a bid to raise prices, countering efforts by the United States and Europe to choke off the enormous revenue that Moscow reaps from the sale of crude.

President Biden and European leaders have urged more oil production to ease gasoline prices and punish Moscow for its aggression in Ukraine. Russia has been accused of using energy as a weapon against countries opposing its invasion of Ukraine, and the optics of the decision could not be missed.

“This is completely not what the White House wants, and it is exactly what Russia wants,” said Bill Farren-Price, the head of macro oil and gas analysis at Enverus, a research firm. It also puts Saudi Arabia on a diplomatic “collision course” with the United States, he said.

The cut of two million barrels a day represents about 2 percent of global oil production.

Karine Jean-Pierre, the White House press secretary, told reporters that the decision was a “mistake and misguided. “It’s clear that OPEC Plus is aligning with Russia with today’s announcement,” she said.

There’s more at the original.

As The Wall Street Journal reported, the stop-gap emergency funding bill to avoid a government shutdown included some major funding for Ukraine:

The stopgap legislation included several provisions beyond funding the federal government’s current operations.

The resolution contains more than $12 billion in aid to Ukraine to help fortify the country’s military with new weapons and support the government in Kyiv as it fights off Russia’s invasion.

That aid includes $3 billion for training, equipment, weapons and other support—such as salaries and stipends—for Ukraine’s military and security forces, and $4.5 billion in budgetary support for Ukrainian government operations. It also dedicates $1.5 billion to replenishing U.S. military stockpiles and those of foreign allies who sent supplies to Ukraine at the request of the U.S.; it also includes $540 million to increase production of critical munitions and $2.8 billion to bolster Defense Department operations in support of Ukraine.

So, in trying to prevent Russia from forcing the price of crude oil higher, President Biden and the United States government will continue to send money to the nation with which Russia is at war. Perhaps, just perhaps, that isn’t the best way to get Vladimir Vladimirovich to pay attention to what the United States wants.

Of course, it wasn’t just Russia pushing for the production cut; Saudi Arabia was as well. From The New York Times again:

Biden Says He Told Saudi Prince He Blames Him for Khashoggi Murder

by Peter Baker | Friday, July 15, 2022 | Updated: Monday, July 18, 2022

President Biden said Friday night that he brought up the murder of Jamal Khashoggi during his closed-door meeting with Crown Prince Mohammed bin Salman and told the prince that he considered him to blame.

While Mr. Biden said nothing about Mr. Khashoggi during the public part of his meeting with the crown prince, he told reporters afterward that he considered the killing “outrageous” and directly confronted Prince Mohammed, who was judged responsible by the C.I.A. for the assassination carried out in Istanbul by a team of Saudi operatives in 2018.

“I raised it at the top of the meeting, making clear what I thought at the time and what I think of it now,” Mr. Biden said. “I was straightforward and direct in discussing it. I made my view crystal clear. I said very straightforwardly for an American president to be silent on an issue of human rights is inconsistent with who we are and who I am. I always stand up for our values.”

He reported that Prince Mohammed, often known by his initials M.B.S., denied culpability.

“He basically said that he was not personally responsible for it,” Mr. Biden said. “I indicated that I thought he was.” . . . .

Mr. Khashoggi was a Saudi contributor to The Washington Post who was critical of the prince’s rule. After his killing, Mr. Biden had said he would make Saudi Arabia a “pariah,” but aides say world events have left him little choice but to deal with the kingdom.

Asked about that remark on Friday, he said, “I don’t regret anything I said.”

But Mr. Biden’s decision to meet with the crown prince left human rights activists and Mr. Khashoggi’s family outraged. Hatice Cengiz, his fiancée, tweeted what she said Mr. Khashoggi would have thought: “Is this the accountability you promised for my murder? The blood of MBS’s next victims is on your hands.”

Mohammed bin Salman, the Crown Prince, was already the de facto ruler of Saudi Arabia, and his father, King Salman bin Abdulaziz, 86, just appointed him Prime Minister as well.

So, the two nations which have been the number one and number two petroleum exporting nations, and the two nations which lead and drive OPEC, are the two nations President Biden has decided he’s going to piss off. So, when Karine Jean-Pierre, the White House press secretary, told reporters that the decision was a “mistake and misguided,” and that, “It’s clear that OPEC Plus is aligning with Russia with today’s announcement,” perhaps, just perhaps she might have noted that her boss helped to give Russia and Saudi Arabia a common cause.

Full disclosure: I have been very opposed to the United States and NATO providing military aid to Ukraine. Not only did Ukraine decide to decline NATO membership previously, but the idea that we are fighting a proxy war with Russia directly, with a nation which has a strategic nuclear arsenal easily capable of destroying the United States and Europe, strikes me as utter madness. President Putin is, in some reports — though who can really know what to believe here — thinking very much differently than a Western leader would only means that he could, though not necessarily would, think very differently than we would about the use of tactical nuclear weapons against Ukrainian troop concentrations, and once the nuclear threshold is crossed, all bets are off. No, I do not want Russia to win its war of aggression against Ukraine, but I don’t want it so badly that I’m willing to risk a nuclear war to prevent it.

Now, Mr Putin is using one of the weapons he does have, a weapon to raise oil prices around the world, just as the northern hemisphere has exited summer and is heading toward winter. This year’s “October surprise,” just a month before the congressional elections, will just take more money out of the pockets of working Americans. And now you know why I call him the dummkopf from Delaware.

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Now Our Betters want you to charge your Chevy Dolt at work, not a home. That's going to cost you more money.

A 2019 Chevy Bolt electric vehicle caught fire at a home in Cherokee County, Georgia, on Sept. 13. Source: Cherokee County Fire Department. Click to enlarge.

Perhaps I am stepping on William Teach’s toes with this one, but when this article appeared in my Google feed, it was too much of an opportunity on which to pass. I did check first to make sure Mr Teach hadn’t already written on the subject! From Stanford University:

Charging cars at home at night is not the way to go, Stanford study finds

The move to electric vehicles will result in large costs for generating, transmitting, and storing more power. Shifting current EV charging from home to work and night to day could cut costs and help the grid, according to a new Stanford study.

by Mark Golden | Thursday, September 22, 2022

The vast majority of electric vehicle owners charge their cars at home in the evening or overnight. We’re doing it wrong, according to a new Stanford study.

In March, the research team published a paper on a model they created for charging demand that can be applied to an array of populations and other factors. In the new study, published Sept. 22 in Nature Energy, they applied their model to the whole of the Western United States and examined the stress the region’s electric grid will come under by 2035 from growing EV ownership. In a little over a decade, they found, rapid EV growth alone could increase peak electricity demand by up to 25%, assuming a continued dominance of residential, nighttime charging.

To limit the high costs of all that new capacity for generating and storing electricity, the researchers say, drivers should move to daytime charging at work or public charging stations, which would also reduce greenhouse gas emissions. This finding has policy and investment implications for the region and its utilities, especially since California moved in late August to ban sales of gasoline-powered cars and light trucks starting in 2035.

“We encourage policymakers to consider utility rates that encourage day charging and incentivize investment in charging infrastructure to shift drivers from home to work for charging,” said the study’s co-senior author, Ram Rajagopal, an associate professor of civil and environmental engineering at Stanford.

There’s more at the original, and there’s no paywall to stymie you.

The authors believe that people should charge their Teslas and Chevy Dolts at work, rather than at home. Great idea, except there is no guarantee that your employer is going to add the infrastructure, and if he does, he’s going to need to recoup that cost: he’s going to charge employees for using the at-work charging stations, for both the installation costs and the sparktricity used.

One of the problems is the extreme egocentrism of the authors. It’s far too easy for people to think of their situations as the only situations. When they have an assigned parking space at a prestigious university, they might not consider that far more people work at places like Seven/Eleven, where management isn’t likely to run the power lines and install the stations for their minimum wage employees — who can’t afford a plug-in electric vehicle in the first place — to use. Perhaps they are unfamiliar with trades employees, who go to different jobsites across their area.

Once 50% of cars on the road are powered by electricity in the Western U.S. – of which about half the population lives in California – more than 5.4 gigawatts of energy storage would be needed if charging habits follow their current course. That’s the capacity equivalent of 5 large nuclear power reactors. A big shift to charging at work instead of home would reduce the storage needed for EVs to 4.2 gigawatts.

Storage capacity is a huge issue: solar plants generate exactly zero electricity at night, which means that charging your plug-in electric car after you get home from work means that most of the charging will be done after sundown. That means you will be drawing power not from the hundred-acre solar farm, but from the batteries to store the electricity the solar farm generated during the day.

More, electricity generated and going into the battery system before going to your home is less efficient than going from the solar plant directly to your home; there is increased energy loss due to the second stop.

Another issue with electricity pricing design is charging commercial and industrial customers big fees based on their peak electricity use. This can disincentivize employers from installing chargers, especially once half or more of their employees have EVs. The research team compared several scenarios of charging infrastructure availability, along with several different residential time-of-use rates and commercial demand charges. Some rate changes made the situation at the grid level worse, while others improved it. Nevertheless, a scenario of having charging infrastructure that encourages more daytime charging and less home charging provided the biggest benefits, the study found.

It also means that charging your car at work means that you will be paying not the residential power rate, which normally drops after 11:00 PM, but the commercial rate your employer is paying. It will cost you more to charge at work than at home, not even counting the charges the employer will have to put in place to pay for the employee charging stations.

It seems as though the global warming climate change emergency activists all had this great idea, that everyone should drive a plug-in electric car — excluding, of course, the activists who don’t think people should have privately owned vehicles in the first place — but they never really thought through the problems.

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This morning’s rant

At length I remembered the last resort of a great princess who, when told that the peasants had no bread, replied: “Then let them eat brioches.“

— Jean-Jacques Rousseau, Confessions

My good friend and sometimes blog pinch-hitter William Teach pointed me to this article from Nicholas Goldberg in The Los Angeles Times, which can also be found on Yahoo! News to get around the Times paywall:

Americans don’t care about climate change. Here’s how to wake them up

by Nicholas Goldberg | Thursday, September 22, 2022 | 6:00 AM PDT

Why is the greatest threat to the planet of so little concern to most Americans?

It’s shocking, frankly, that global warming ranks 24th on a list of 29 issues that voters say they’ll think about when deciding whom to vote for in November, according to the Yale Program on Climate Change Communication. Only 30% of voters say they are “very worried” about it and more than two-thirds say they “rarely” or “never” discuss the issue with family or friends.

Actually, some of us see the United States and democratic Europe so willing to engage in a proxy war with Russia, a nation with a strategic nuclear arsenal, with seemingly little thought as to what could happen, as “the greatest threat to the planet”.

How can people be so blithely unconcerned when the clear consensus of scientists is that climate disruption is reaching crisis levels and will result not only in more raging storms, droughts, wildfires and heat waves, but very possibly in famine, mass migration, collapsing economies and war?

Uhhh, with a year-over-year 8.3% inflation rate in August of 2022, on top of August 2021’s year-over-year inflation rate of 5.3%, perhaps Americans are more worried about “collapsing economies” today than they are about such “crisis levels” in fifty or eight years?

Sure, there are some obvious reasons for the apathy: High among them is that fossil fuel companies have spent decades pulling the wool over the eyes of Americans. And Republican politicians have been complicit.

Well, of course it’s all the fault of evil, reich-wing Republicans and greedy fossil fuel companies! But Mr Goldberg, an associate editor and OpEd columnist for the Los Angeles Times, as well as the formerly being the newspaper’s editorial page editor, then changes his theme, and goes strongly toward a more marketing approach to persuade people to get worried about global warming climate change emergency. After pointing out what he sees as the activists’ naïveté in ignoring marketing techniques, he tells us that the only way to sell the activists’ ideas is to consider those who are not already on their side that people are stupid:

Deliver simple messages, for one thing. In general, climate activists lean toward complexity and nuance because they don’t want to patronize or condescend or mislead by oversimplifying to their audiences.

Once you have a simple message, repeat it over and over. Did you know that consumers generally have to see an ad more than half a dozen times before they will be persuaded to buy a product?

Embed facts and data in what (David) Fenton calls “moral stories that tug at the emotions.” Anyone who has ever watched TV ads knows that strategy can make arguments far more powerful.

Talk about what people care about. There’s been too much talk about the effect of climate change on polar bears, and not enough on what it means for humans.

Use language people understand. Research shows, Fenton says, that many people don’t understand the phrases “existential threat” or “net zero” or “climate justice.” They understand what “pollution” is, but not what an “emission” is — which suggests that it might make more sense to use the former term.

That practically drips with condescension: Mr Goldberg is saying that those who aren’t already on the side of the global warming climate change emergency activists just can’t understand.

Still, at the end, he throws at least a little bit of concern that people will have to make “sacrifices”:

Is (Mr Fenton) right when he says the climate problem can be solved in a way that enhances economic prosperity? I hope so; that’d be great. But I worry — and this is just my opinion, not an expert’s analysis — that we’ve waited too long, and that to avoid the worst effects of climate change we are going to have to sacrifice, whether it sells or not. I take the gloomy approach.

Either way, we can all agree there’s an awful lot to be done. And Fenton is certainly right that you can’t mobilize people for war if they don’t know they’re under attack. Public education is obviously a missing piece of the puzzle.

Somehow we need to awaken a nation of sleeping, underinformed and insufficiently motivated citizens and persuade them to rise to the great challenge of modern times. To do that, the unmanipulation process needs to begin in earnest.

Apparently, for Mr Goldberg, those who do not support the global warming climate change emergency activists are victims of ‘manipulation’ by fossil-fuel companies and wicked conservatives, but it’s “unmanipulation” to market to people his ideas.

With a guesstimated annual salary of $88,663, and net worth of $845,000, and a wife, Amy Wilentz — who didn’t respect her husband enough to take his name — who earns a similar salary from The Nation as well as being an English Professor at the University of California at Irvine, perhaps the distinguished Mr Goldberg doesn’t truly understand that working-class Americans might be more concerned with paying the rent, keeping the electricity turned on, and food on the table now than they are in projections of doom fifty and eighty years in the future. With the high inflation rate, with which wage increases have not matched, Americans are poorer, in real terms, than they were two years ago.

Then they read what the global warming climate change emergency activists want to do, and all they can see are more expenses falling on them: a wholly rebuilt electricity grid for which they’ll have to pay, plug-in electric cars which cost more than gasoline-powered ones, power restrictions that don’t allow you to recharge your Chevy Dolt at home when it gets too hot, and government requests, along with some actual action to force you to set your thermostats higher in the summer and lower in the winter, heating costs projected to rise 17.2% this coming winter, and the last thing that they want are the programs of the global warming climate change emergency activists making them poorer.

Mr Goldberg wrote that he believes that “we are going to have to sacrifice,” but, with his wife’s and his resources, they are not going to have to sacrifice nearly as much as the average American. Whatever sacrifices they will have to make, perhaps fewer dinners at nice restaurants, or having to pay an electrician to install an at-home charging station for a Tesla, won’t be as stressful for them as the sacrifices made by the single mother with two kids left her by a deadbeat ex-boyfriend in Pittsburgh, or the family in eastern Kentucky trying to survive in a poor area in which the coal mines have all closed.

Mr Goldberg is not, like the “great princess” mention by Monsieur Rousseau, saying “Let them eat brioche,” but is suggesting that those who eat cake might occasionally have to eat bread instead. What he misses is that there are those who can only afford bread right now, and the policy proposals of the activists would take that away from them as well.

Those people are already sacrificing under the current economy, something today’s left just really don’t understand. Oh, they say that they are concerned, say that they know and understand, but they simply do not: you cannot understand people who are living paycheck-to-paycheck and concomitantly propose mandatory programs which will make them even poorer.

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What a surprise! Lithium prices are increasing as countries push electric cars.

In the episode “Mudd’s Women” in the original series Star Trek, Harry Mudd and the three women he was taking to sell as wives to settlers are detoured to a planet inhabited solely by dilithium crystals miners. Captain Mudd tells the three women that they’ll now be wives to “lithium miners, rich lithium miners”. Who knew that this might actually be prescient?

As President Biden and his supervisors Administration push zero-emission automobiles, and have proposed to ban the sale of gasoline-or-diesel-powered personal vehicles by 2035, many people have said that this could only drive up the cost of such vehicles. 2035 is still a long (?) way off, but sales of electric vehicles in China are already having an effect. From The Wall Street Journal:

Electric-Car Demand Pushes Lithium Prices to Records

Driven by a surge in Chinese electric-vehicles sales, the sharp rise in a key commodity for batteries could slow adoption of EVs globally

By Joe Wallace and Hardika Singh | Wednesday, September 21, 2022 | 5:30 AM EDT

Surging prices for lithium are intensifying a race between auto makers to lock up supplies and raising concerns that a shortage of the battery metal could slow the adoption of electric vehicles.

Lithium carbonate prices in China, the benchmark in the fast-growing market, stand at about $71,000 a metric ton, according to price-assessment firm Benchmark Mineral Intelligence. That is almost four times as high as a year ago and just below the record set this March in yuan terms.

Lithium is an outlier in commodity markets that have broadly retreated in recent months, reflecting gloom over an economic outlook dimmed by the Federal Reserve’s interest-rate increases and stuttering growth in China and Europe. Brent crude oil and copper—commodities used throughout industry and transportation—have fallen about 15% and 7%, respectively, this quarter. Even European natural-gas prices, propelled higher for much of 2022 by Russia’s move to cut supplies, have dropped by 10% over the past month.

But lithium keeps rising, driven by a pickup in electric-vehicles sales in China, the world’s biggest market for EVs. Car purchases jumped after Shanghai eased Covid-19 lockdowns in June, juicing demand for lithium-ion batteries. The China Passenger Car Association forecasts six million new EVs will be sold in the country this year, double the 2021 level.

“Lithium is really following the Chinese EV market and that’s just taking off,” said Edward Meir, a metals consultant at brokerage ED&F Capital Markets. “This is a preview of what could await us in the U.S.”

Draining supplies further, power outages caused by a heat wave in central China curbed output of refined lithium carbonate and hydroxide, which go into battery cathodes. Suppliers in Sichuan province—which has a third of China’s lithium processing capacity—closed factories for several days and ran down inventories to meet their sales commitments, said Rystad Energy analyst Susan Zou.

There’s a lot more at the original.

The final quoted paragraph notes a temporary problem, though one which could always recur. But the steadily increasing demand for lithium, something the proposed policies in the United States will only exacerbate, is not going to be a temporary thing.

Plug-in electric vehicles are already expensive. In Economics 101 theory, increased demand generates increased production and supply, which should bring the costs of electric cars down, but that’s theory only. The basic theory does not account for shortages of essential materials for increasing production and supply, and the lithium shortage will not be the only one which will force the prices of electric cars higher. For example, as the demand for electricity greatly increases, and more transmission lines are needed to get the required power to homes across the nation, the price of the aluminum used in power transmission lines. The price of aluminum is already increasing, due to the increased demand for canned goods, and it can only go higher.

No one who knows the first thing about economics can be surprised at this, but it sometimes appears that the environmentalists don’t know that first thing. One thing is certain: they don’t actually care about the economics of what they want, and don’t care about how the costs of their proposals will affect Other people, especially the working-class people of this country.

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The Dummkopf from Delaware really doesn’t have a clue Enjoy paying your heating bills this winter!

We noted, on September 19th, that President Joe Biden said that we should put things in perspective, that the “inflation rate, month-to-month, was up just an inch, hardly at all”, that we’re in the position where for the last several months it hasn’t spiked, “we’re basically even.”

Well, our distinguished President doesn’t have to worry about paying his heating bills this winter, but most Americans do:

A cheery fire in our wood stove in Jim Thorpe, December 18, 2016.

Here’s how much more you’ll pay to heat your home this winter

By Kelly Hayes | Tuesday, September 20, 2022 \ 11:41 AM EDT

Americans are likely going to pay more to heat their home over the winter months.

The average cost of heating a household is set to increase by 17.2% this winter, compared to winter last year, according to a forecast by the National Energy Assistance Directors Association (NEADA), an educational and policy organization for federal programs that help low-income families pay their utility bills.

The article was illustrated with a nice, stock photo of a cheerily burning wood fire in a nice, upscale home fireplace, but I figured that, using my own photo from our previous home, was wiser for copyright purposes. Alas! Mrs Pico absolutely vetoed a wood-burning stove in our current house, because she says they make too much of a mess, so, to supplement the heat, and be a backup for when the sparktricity goes out — something not that infrequent here, and can be for several days out here in the country — we installed a propane fireplace.

The group expects the average winter heating bill to increase from $1,025 to $1,202, which would be the highest figure in over a decade.

U.S. residential electric bills are also forecast to increase 7.5% from 2021, according to the U.S. Energy Information Administration’s latest short-term outlook.

There’s more at the original.

Gas fireplace in my computer room/den.

Mr Biden is wealthy, and even if he did have to pay his own electricity and gas bills — which, for his private homes, he does — the increased costs would be an insignificant matter to him. But an extra $177 for the average working-class family? That’s a big bite. In the past, I’d have compared that $177 to a week’s trip to the grocery store, but now that’s barely half a week!

Let’s tell the truth here: for all of their protestations that they care about ordinary Americans, the Democrats really don’t understand us. The Washington elites have plenty of money, and the increases in energy costs simply don’t matter that much to them. Their proposals to fight global warming climate change will add thousands to people’s electricity bills, because so much new infrastructure will have to be built to support the greatly increased demand for electricity as people have to charge their Chevy Dolts at home. Phasing out reliable, fossil-fuel burning power plants and replacing them with solar and wind power generating facilities will cost big bucks.

By 2050, the US will demand nearly 90% more power than it did in 2018, in a scenario in which all new passenger vehicles sold by 2030 are electric and buildings and factories also aggressively electrify, according to an analysis by Nikit Abhyankar, a senior scientist at the Goldman School of Public Policy at the University of California, Berkeley.

Different scenarios will lead to a smaller increase in demand, but any changes which require more energy not from fossil fuels are going to lead to a huge increase in demand. Yet the projected increases in home heating costs are coming without any significant global warming climate change policies additions to current costs.

Perhaps President Biden doesn’t personally understand this, but his advisors certainly do, but that doesn’t matter: they just don’t care about what you have to pay, as long as they get their way.

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Clueless at the top

American television networks spent all morning covering the funeral of Queen Elizabeth II, and if Her Majesty was just a figurehead, who reigned but not ruled, she still seems to have been more self-aware than President Biden:

The President tried to soft-peddle it, saying that, month-to-month, it was up “just an inch, hardly at all.” That would be great . . . if inflation hadn’t already been high. From The Wall Street Journal:

U.S. Inflation Remained High in August

Consumer prices excluding food, energy rose sharply, showing broad price pressures strengthened

By Gwynn Guilford | Updated September 13, 2022 | 7:17 PM EDT

U.S. consumer prices overall rose more slowly in August from a year earlier, but increased sharply from the prior month after excluding volatile food and energy prices, showing that inflation pressures remained strong and stubborn.

The Labor Department on Tuesday reported its consumer-price index rose 8.3% in August from the same month a year ago, down from 8.5% in July and from 9.1% in June, which was the highest inflation rate in four decades. The CPI measures what consumers pay for goods and services.

Here’s where the Journal’s paywall hits, but really, everyone who cares about economics should go ahead and subscribe to it!

And I guess that President Biden doesn’t read the Journal either, because in the 60 Minutes clip, because he didn’t know July’s inflation rate, either, saying:

It was 8.2, 8.2 before.

Clearly his supervisors hadn’t clued him in.

A President in command of the facts would have both expected the question about inflation, and would have said that yes, 8.3% is too high, but at least the inflation rate had dropped a bit.

Back to the Journal:

So-called core CPI, which excludes energy and food prices, increased 6.3% in August from a year earlier, up markedly from the 5.9% rate in both June and July—a signal that broad price pressures strengthened.

On a monthly basis, the core CPI rose 0.6% in August—double July’s pace. Investors and policy makers follow core inflation closely as a reflection of broad, underlying inflation and as a predictor of future inflation.

Let’s, as the President said, “put this in perspective”: the August 2022 inflation rate of 8.3% is on top of the August 2021 inflation rate of 5.3%

Skipping further down, we come to this stark paragraph:

The average household is spending $460 more each month to buy the same basket of goods and services as last year, said Ryan Sweet, senior director of economic research at Moody’s Analytics.

Assuming 22 workdays a month, and a loss of 20% to taxes and insurance withheld, that “average household” would need a wage increase of $3.136 per hour just to break even. Do you think that happened?

Real average hourly earnings decreased 2.8 percent, seasonally adjusted, from August 2021 to August 2022. The change in real average hourly earnings combined with a decrease of 0.6 percent in the average workweek resulted in a 3.4-percent decrease in real average weekly earnings over this period.

That’s for all workers. The Bureau of Labor Statistics — same source — also broke it down for “Production and Non-supervisory Workers”:

From August 2021 to August 2022, real average hourly earnings decreased 2.4 percent, seasonally adjusted. The change in real average hourly earnings combined with a 0.9-percent decrease in the average workweek resulted in a 3.2-percent decrease in real average weekly earnings over this period.

It’s kind of amusing: the supervisors and managers saw a greater loss of real earnings, but the working-class people, the ones who feel the economic pinch more because they earn less, still lost 3.2% in real terms.

Inflation is a serious, serious problem, and it is making the American people poorer in real terms. Perhaps President Biden doesn’t realize it, now that he’s got the government paying for his seemingly every weekend trips to Rehoboth Beach, but the surge in inflation, which began almost as soon as he took office, has made life worse for the public. But hey, at least there are no mean tweets!

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Bidenflation The American working class are primarily Republican voters, so you can't expect the Biden Administration to consider them, can you?

I was wryly amused to see these two editorial links together on the front page of The Wall Street Journal’s website front page Wednesday morning. As President Joe Biden wants desperately to reduce inflation, with the midterm elections just 55 days away, it demonstrates the lack of thought the Administration has put into its policies.

Another Inflation Jolt for Markets

Investors get a reality check about prices and Fed tightening.

By The Editorial Board | Tuesday, September 13, 2022 | 6:54 PM EDT

Biden Administration officials have been claiming so confidently that inflation is under control and falling that investors may have believed it. Bad idea. Tuesday’s report on the consumer-price index for August showed inflation has remained high and sticky, and markets promptly fell out of bed.

And we mean from the top bunk. The 3.94% tumble in the Dow Jones Industrial Average was the worst day since 2020, and the declines in the S&P 500 and Nasdaq were worse. Investors apparently had believed the hopeful chatter that inflation was headed downward, and that the Federal Reserve wouldn’t need to raise interest rates so high as to court a recession. Investing lesson of the week: Never trust a politician.

Consumer prices overall rose 0.1% in August, after being flat in July. But the decline was almost entirely the result of falling energy prices. Gasoline fell 10.6% and fuel oil 5.9% in the month. That was a happy respite from the spring when gasoline prices averaged more than $5 a gallon nationwide, but prices at the pump are still up 25.6% in the last 12 months and still average $3.71 a gallon.

The larger problem is that the energy declines weren’t enough to offset price increases across nearly everything else. The 12-month inflation rate in August fell only to 8.3%, down from July’s 8.5%, but higher than the 8% to 8.1% that economists had expected.

Then there’s this, from Washington Post economics reporter and Editorial Board member Heather Long:

Hmmm: “Inflation has been eating up wage gains since April 2021 and shows little sign of significant easing.” People are getting poorer in real terms, and that has been the case really since Joe Biden became President.

Then there was this:

Biden Freezes Oil and Gas Leases

Calling Joe Manchin: Interior uses ‘sue and settle’ to suspend Trump-era approvals.

By The Editorial Board | Tuesday, September 13, 2022 | 6:53 PM EDT

Joe Manchin’s deal with Democratic Senate leader Chuck Schumer isn’t looking so good for the West Virginian, and the latest evidence is a Biden Administration settlement with green groups that stops previously approved oil and gas leases.

The Interior Department last week agreed to conduct additional climate reviews for five federal oil and gas lease sales held in 2019 and 2020 that were challenged by environmental groups. Activists claimed the Trump Administration didn’t sufficiently study the climate impact of the leases under the National Environmental Policy Act (NEPA).

Rather than defend the earlier environmental reviews, the Biden Administration surrendered to their progressive friends. According to last week’s legal settlement, the climate reviews will incorporate the “social cost” of greenhouse gas emissions that could result from the leases. This takes into account indirect global costs of emissions such as property damage from natural disasters, risk of conflict over resources, reduced agricultural productivity from drought, and more.

By including the social cost in the NEPA reviews, the Administration will be able to claim the leases have a significant negative environmental impact even when they don’t and then seek to cancel them. Alternatively, the Administration could try to force oil and gas producers to mitigate their emissions by helping fund its climate agenda.

While the settlement doesn’t outright cancel the leases, it will effectively freeze their development. Interior has agreed not to approve new drilling permits or rights-of-way on the leases until it completes the climate reviews. Even after those reviews are done and if Interior allows development, green groups will still be able to challenge the reviews and leases afresh in court.

There’s more at the original. The Wall Street Journal has a serious paywall, but even if you’re not a subscriber, you can get a couple of free articles a month.

The Biden Administration wants to reduce carbon dioxide (CO2) emissions and the use of fossil fuels to do so, but freezing oil and gas extraction leases won’t do anything about that. It simply means that more oil-and-gas production will come from overseas, and less from the United States, which means more of United States’ workers money will be going to Saudi Arabia and Venezuela rather than staying at home. Even if you don’t like those evil oil corporations, it means that there will be fewer American oil company workers, workers who earn what the Biden Administration likes to call “good, union wages,” will have jobs while more men overseas will be drawing paychecks from American dollars.

All of this makes American workers poorer. The American oil rig worker who makes big bucks per hour, but is getting no hours isn’t helping his family, and isn’t helping our economy. The oilfield worker who is unemployed because the Biden Administration is throwing obstacles into American production isn’t spending money at Dunkin’ Donuts for a coffee and bagel on the work in the morning, is buying fewer clothes because his work clothes aren’t getting worn out as fast, and his lack of work affects a lot of other people downstream.

The economic measure I find most important is actually a simple one, the velocity of money. The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. The lower the velocity of money, the less positive impact a dollar has on the economy. If the gasoline you buy is extracted in Kuwait, it may cost the same amount as if it had been extracted in Texas, but the dollars spent on Kuwaiti wages disappear from our economy while the dollars spent on Texas workers stay here. The more gasoline and diesel fuel we produce in the United States, the faster he velocity of money in the United States, and the more benefits and wealth accrue to American workers and their families.

There is another part not being considered in all of this. If we assume that we can move away from an energy economy based on petroleum, as the climate change activists want, and we can power our homes and cars and economy on ‘renewable,’ non-polluting energy, the more petroleum we buy from overseas because we are producing less here during that transition, then the more of the value our natural resources we have just wasted, left in the ground with no value. We will be making ourselves poorer during the transition.

Of course, the Biden Administration’s climate change activists can’t see that part, because they never think things through, and never really consider the economic impact on American workers in their plans. But hey, the American working class are primarily conservative, primarily Republican voters, so you can’t expect the Democrats to consider them, can you?

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What happens when you leave dirty dishes in the sink for 70 years?

On August 17, 2020, The Philadelphia Inquirer published a long story about the open air drug markets clustered around the infamous Kensington and East Allegheny Streets intersection, and the SEPTA station there. The newspaper even published a photo, by staff photographer Tim Tai, showing what appears to be a junkie shooting up right in front of the Allegheny Street Station on the Market Street-Frankford line. I asked, What are Mayor Jim Kenney and Police Commissioner Danielle Outlaw doing about open air drug markets in Philly?

The answer, apparently, is nothing.

A triple shooting happened outside this Philly elementary school. But for Kensington families, the risk of violence is constant.

“We don’t play in the parks, ever,” said Jasmine Albury, a mother of five. “There are shootings everywhere.”

by Kristen A. Graham and Ellie Rushing

Jasmine Albury doesn’t like to linger on Philadelphia’s streets. She and her five kids are an “in-and-out family,” she says — they leave the house only for the things they need.

“We don’t play in the parks, ever,” said Albury, who lives in North Philadelphia. “There are shootings everywhere.”

When three people last week were shot outside Willard Elementary — the Kensington school where her son is a fourth grader — Albury felt despair, she said, but certainly not shock. For many Philadelphia families, the city’s gun violence crisis means constant risk and trauma exposure in daily tasks as simple as getting children to and from school.

No part of the city is as plagued by gun violence as Kensington, largely fueled by an open-air drug market and higher rates of poverty. Law enforcement officials have said that dealers sell heroin, crack, and other drugs on more than 80 blocks in the neighborhood.

Willard is just one-quarter of a mile from the intersection of Kensington and Allegheny, the longtime hub of the area’s drug trade. A previous Inquirer analysis found that within a five-minute walk of this intersection, more than 300 people have been shot since 2015, a rate that, per square mile, is 11 times higher than the city as a whole. At this intersection and into the surrounding blocks, there are sprawling homeless encampments. People in addiction openly use drugs, and fall over into the street. There is trash and suffering as far as the eye can see.

The Philadelphia Police Department know where all of this stuff is, and know what’s going on, but won’t actually do anything about it.

Mr Finberg replied:

Good question, they’re rentals and I’m a long term owner. The rent doesn’t have to be very high to cover the mortgage and I’m keeping costs as low as possible. It’s not the most profitable thing I’ve done in my life that’s for sure.

I suppose “the rent doesn’t have to be very high” is a relative thing: the rowhouse at 835 East Hilton Street is listed for rent at $1,100 a month, and, as you can see from the map, it’s just a couple of short blocks from the Allegheny Street SEPTA station.

Full disclosure: I do not know if the listed house is one of Mr Finburg’s rental units.

The inside looks decent: neat and clean, with everything freshly painted, a new, builders’ grade kitchen, and new, though (shudder!) laminate, floors. 🙂

The link for the exterior picture is from Google Maps, and Google Maps indicates that the photos of East Hilton Street were taken in August of 2021, more than a year ago. The interior photos do not show the window air conditioner hanging out of the living room window that we see in Google Maps.

I know nothing about Mr Finberg. He may be a really great guy, or he may be the way so many people view landlords, as Snidely Whiplash tying Sweet Nell to the railroad tracks. Most probably, he’s very much in the middle of those extremes, a man trying to make some money, but one who has also been willing to put his own money at risk to bring better housing to a sadly depressed area.

But until the city of Philadelphia does more, does a lot more, to clean up the entire area, there will be no real improvements for the people. Drug use is not just some victimless crime; drug use affects other people, and the decent people of Kensington are examples of just how much it does affect other people; the entire neighborhood has been destroyed, become part of the Philadelphia Badlands. That nickname did not arise out of nowhere; it came to be because Kensington and Fairhill and Strawberry Mansion and Hunting Park have been ravaged by criminal activity, criminal activity largely driven by drug dealers and junkies.

There’s the natural urge to say, well, heck, just legalize drugs and this won’t be a problem. But, as the Inquirer article cited noted:

People in addiction openly use drugs, and fall over into the street. There is trash and suffering as far as the eye can see.

One thing is obvious: Commissioner Danielle Outlaw’s Philadelphia Police, and Federal Marshals, need to make a huge sweep through Kensington, and arrest every last one of the bad guys, and the United States Attorney needs to prosecute all of those cases to the maximum extent of the law. Allowing those cases to become part of state law would mean that District Attorney Larry Krasner, who hates locking up people, or even putting them on a serious probation, would just let the arrested back on the streets.

Perhaps the Commissioner has done so little regarding the well-known open air drug markets because she understands that Mr Krasner wouldn’t prosecute seriously anyone her officers rounded up. Perhaps she figures that anyone arrested and actually taken off the streets would simply be replaced by the next ‘generation’ of bad guys, but so what? Arrest them, too! And the next ‘generation’, and the next.

If you allow dirty dishes to pile up in the kitchen around the sink, what happens? You get ants and roaches and mice and fruit flies crawling and flying around your kitchen, you get unpleasant odors wafting through the air, and eventually everything gets soiled around those dishes, around your kitchen. Well, the City of Brotherly Love, in its 70th consecutive year of one-party Democratic rule, has left the dirty dishes in the sink of Kensington, left them to rot and fester, and everybody is shocked, shocked! that the whole kitchen, and much of the house, have become dirty, smelly and dilapidated. It would have taken a lot less effort to just wash the dishes the day they were soiled, but no, now the problem is huge and nasty.

But if the city does not clean up now, then when?

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Sometimes even The Los Angeles Times has to tell people the truth

There has been much mockery of the California’s announcement that, beginning in 2035, only zero-emissions personal new vehicles could be sold in the Pyrite State, followed just a couple of days later by pleas that owners of plug-in electric vehicles not be recharged at home during peak energy use hours, and that was followed by the threat of rolling blackouts, to avoid a major collapse of the state’s power grid. If the power couldn’t be kept on during a heat wave, and people couldn’t recharge their Chevy Dolt’s when there just aren’t that many of them on the roads, how could things be handled if only plug-in electric vehicles could be sold come 2035?

Somehow, in all of that, what Patterico used to call the Los Angeles Dog Trainer managed to use 2,351 words to actually document what all of this means.

With gas-fueled car ban, California hopes to lead the nation. Can it deliver?

By Hayley Smith and Tony Briscoe |

It was the sort of bold, climate-focused initiative that California has developed a reputation for — an effective ban on the sale of new gasoline-powered cars by 2035.

But last week’s historic vote by the California Air Resources Board follows a number of sweeping state environmental actions that have met with varying degrees of success.

Now, as officials seek to fundamentally change California’s automotive culture — thereby reducing its largest source of planet-warming carbon emissions and air pollution — experts say those past initiatives may shed light on whether California’s nation-leading auto plan can work.

In Los Angeles, the dense smog that once smothered the city is regarded today as folklore. At its worst, between the 1950s and 1980s, the caustic haze was so thick that people could see only as far as a city block. It irritated people’s throats and lungs, and gave them bloodshot eyes. Back then, there were more than 200 days with unhealthy air annually, according to the Air Resources Board.

Since that time, there has been tremendous progress toward reducing smog and air pollution, much of it due to cleaner cars. The amount of smog-forming nitrogen oxides has been slashed by more than 50% in the last two decades, substantially improving public health.

But California’s progress in fighting air pollution has stagnated in recent decades, and the state is still home to the worst air pollution in the nation. The South Coast air basin — Los Angeles, Orange, Riverside and part of San Bernardino counties — has yet to meet any federal health standards for ozone levels, including the oldest measure enacted in 1979.

“If you’re looking back 70 years, we’ve done a wonderful job,” said Joe Lyou, president of the Coalition for Clean Air. “If you’re looking back over the last decade or two, not so good. And if you’re looking at the legal standards that demand that we provide healthy air for people to breathe, we’re not doing well at all.”

Naturally, I have to cut a lot of the text, to avoid plagiarism and copyright violations, but what follows next is a brief history of the state’s efforts to reduce smog produced by exhaust pipe emissions. It notes that California was the first state to require catalytic converters. Then, in 2006, the silly cap-and-trade system was introduced.

Also read: William teach: Bummer: California’s Solar Batteries Have Been Kicking In At The Wrong Time

It was in 2002 that I was part of a meeting in which a cap-and-trade proposal was made at the ready-mixed concrete company for which I worked. Because the company used flyash as a pozzolan, or partial cement replacement, it would have carbon ‘credits’ for the Portland cement that was not used. Those credits could be sold to a company which was supposed to reduce its CO2 emissions, but found itself unable or unwilling to spend the money to do so. I saw it for what it was: not the reduction in CO2 emissions, but simply the moving around of money.

One of California’s landmark climate programs, cap-and-trade was initially launched in 2006 with the aim of reducing the state’s greenhouse gas emissions to 1990 levels by 2020. It exceeded expectations, and in fact reached the target four years ahead of time.

In 2017, the program was reauthorized with a much more ambitious goal: Slashing greenhouse gas emissions to 40% of 1990 levels by 2030. To get there, the program uses a system of pollution credits that essentially lets large carbon emitters buy and sell unused credits with the aim of keeping everyone at or below a certain total.

Experts say it only sort of worked. While the program has remained a key element of California’s climate strategy, emissions were down about 11% in 2020 — far from the 40% goal. What’s more, that number likely accounts for emissions reductions tied to the start of the COVID-19 pandemic.

This was a point which covered only half the issue. Yes, the panicdemic — no, not a typo, but the word I intended to use, because the biggest effect of COVID-19 was panic — would up reducing greenhouse gas emissions, but only via the mechanism of throwing millions of people out of work.

Despite California’s green reputation, it remains the seventh-highest oil producing state in the nation, extracting about 358,000 barrels per day, according to state data.

However, oil production has been declining for decades, and the California Geologic Energy Management Division, or CalGEM, reported that “more permits have been issued to plug and permanently seal existing wells than to drill new ones since 2019.” The agency issued 564 new well permits in 2021, down from 1,917 in 2020 and 2,665 in 2019.

Some experts said that’s not aggressive enough.

“This transition can’t happen too slowly, because there is a climate crisis, and there are significant public health impacts on frontline communities,” said Bahram Fazeli, director of research and policy at Communities for a Better Environment.

Although there are ambitions to phase out California’s oil and gas production completely — most recently, Gov. Gavin Newsom set his sights on 2045 — there has yet to be an official deadline such as the one for the gas car ban.

Just like the panicdemic, reducing and eventually elimination petroleum production in California doesn’t mean that gasoline and diesel will not be used; it simply means that more of the state’s residents will be thrown out of work. Perhaps Governor Newsom thinks that all of the displaced workers will simply learn to code.

For example, reducing demand without supply could mean California ends up exporting its excess oil, Meng said, while reducing supply too quickly could leave communities that rely on the industry in bad shape. In Kern County, one of the state’s top producing regions, oil and gas extraction provide as much as 20% of the area’s property tax revenue.

A few silly paragraphs then follow concerning “equity,” or the notion that trying to meet the state’s goals must not disproportionately impact disadvantaged racial and ethnic groups.

Then comes the big part.

Although phasing out gas-powered cars is one of the state’s greatest priorities, that alone won’t be enough. Driving habits must change, too, if the state expects to achieve carbon neutrality.

The state climate plan depends on motorists driving at least 12% fewer miles by 2030, and no fewer than 22% by 2045.

How, I have to ask, can the state require people to drive less, when California is the poster child for suburban sprawl?

“Highway building and sprawl go hand in hand,” said Susan Handy, a researcher at UC Davis who has studied strategies to reduce automobile dependence. “That’s true in California, and it’s also true everywhere else. When we built highways, it made it possible to develop farther from city centers than ever before. And now we’re in a situation where we’ve got these sprawling development patterns and it makes it very hard to get around by means other than the car.”

As the state’s population has risen and more cars are on the road, state officials funded highway construction and expansion to ease congestion, which ironically fostered more driving.

The only major significant decreases in miles driven occur during economic downturns and, recently, with the onset of the COVID-19 pandemic in 2020 as more people have worked remotely. However, driving has rebounded to pre-pandemic levels.

There you have it: even the very liberal Los Angeles Times has admitted that driving is necessary for the state’s economic health. You cannot reduce the transportation abilities of the people without making people poorer.

The article continues to talk about changing people’s behavior, but let’s face it: that means making them poorer. Public transportation is cited as a replacement, but public transportation is a burden and an inconvenience. You have to leave your home and walk to or drive to, depending upon the distance and weather, the bus or train or subway stop, ride in a smelly, dirty and sometimes unsafe public conveyance to the bus or train or subway stop, hoping that isn’t like the SEPTA station on Allegheny Avenue, and then walk or taxi from that station to where you work. Hope it isn’t raining!

Of course, the state will need multiple thousands and thousands of public car charging stations, and

plans to construct at least 250,000 public vehicle charging stations by the middle of the decade; 10,000 of which should be fast chargers, according to the California Public Utilities Commission.

Uhhh, the “middle of the decade” is almost here! 2025 is less than 2½ years away.

If 240,000 of those public charging stations are not 480-volt “fast chargers”, that means that people would need eight hours to recharge their vehicles. Even the fast charging stations require 45 to 75 minutes to recharge fully a vehicle that is down to 25% of battery capacity.

The state also plans to require landlords of multifamily housing units to provide residents with a means to charge electric cars, though those details are still being worked out.

Really? Great! Now, how can that be done?

There are hundreds of thousands of apartment buildings which have no designated parking for residents; how can landlords get charging stations for such buildings? More, in those “multifamily housing units” which do have designated parking places, requiring landlords to provide electric car charging facilities costs money. The Pyrite State is already one of the most expensive places to live in the country, and half of the state’s 40 million people are renters. If landlords have to plow multiple thousands of dollars into car charging stations for their tenants, rents will have to be raised to cover that cost, and rents are already increasing significantly thanks to Joe’s Bidenflation.

So much of not just California’s, but the global warming activists’ plans nationwide show two very fundamental flaws: they don’t understand economics, and they don’t understand poor people and how they have to live. California has a huge homelessness problem, and major cities which can’t keep people from living and pooping in the streets are going to be impossibly pressed to provide the infrastructure to increase electricity supply and delivery by the amount needed to meet its goals. We have already noted how the Inflation Enhancement Reduction Act’s renewal of tax credit for electric car purchases has been met with electric vehicle prices rising, because economic forces trump the good intentions of liberal legislators. California’s legislators have already voted to keep Diablo Canyon, the state’s last remaining nuclear power plant, open several years longer, because as much as the left hate nuclear power, the state needs the sparktricity.

It doesn’t matter how good or noble or necessary the state’s liberal leaders believe their intentions to be; reality cannot be denied, and what they want California to become is simply not something which can be legislated into existence. Construction takes time, often lots of time, and it takes money, usually lots of money.

But more, they believe that they can change the culture of the state in ways people do not wish to change. Who wants to take the bus to the grocery store, and have to lug grocery bags back several blocks by hand?

California’s car culture emerged because that was what the people of the Pyrite State wanted. But, then again, the left have never really cared what other people want.