Category Archives: Economics

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The Fed finally admits it: they don’t know what they are doing! Fighting Bidenflation by causing a recession

The Federal Reserve’s Board of Governors once again raises interest rates to try to fight inflation, but they’ve admitted what people who pay attention to economics already knew: the Board don’t really know what they are doing, or what effects their decisions will have. From The Wall Street Journal:

Fed Approves Fourth 0.75-Point Rate Rise, Hints at Smaller Hikes

Officials signal a possible slowdown in the pace of rate rises by acknowledging how increases influence the economy with a lag

by Nick Timiraos | All Soul’s Day, November 2, 2022 | 2:31 PM EDT

WASHINGTON—The Federal Reserve lifted interest rates by 0.75 percentage point to combat inflation and signaled plans to keep raising them, though possibly in smaller increments.

Members of the Fed’s rate-setting committee acknowledged Wednesday that it could take time for their rate increases this year to be reflected in the economy, and they indicated they might reduce the size of coming hikes. “In determining the pace of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation,” they said in a statement released at the conclusion of their two-day meeting.

Fed Chairman Jerome Powell, at a news conference Wednesday, said officials could consider approving a smaller 0.5-percentage-point increase in December or January, but they had made no decision yet. He added, however, “The question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restrictive.”

Officials are boosting interest rates at the fastest pace since the early 1980s to reduce inflation that is running near a 40-year high. They have raised rates by 0.75 point at four consecutive meetings, with the latest one taking the central bank’s benchmark federal-funds to a range between 3.75% and 4%.

If the Board of Governors recognize that it takes time for their increases to do what they project will happen, why go for such large increases? Stock prices fell following release of the interest rate hike, even though the 75 basis point increase had been widely anticipated. Had the Fed increased the rate by only 50 basis points, stocks would almost certainly have risen, which would lift the value of the retirement accounts for most people. As it is, the Fed made retirees and those close to retirement age poorer, at least on paper.

Thirty-year fixed mortgage rates topped 7% last week, as Freddie Mac reported the average was 7.08%, rising from 6.94% the previous week. The last time rates were above 7.00% was in April of 2002. At this point in 2021, the average rate was 3.14%.[1]As I previously noted, we bought a house last December, which was negotiated in November, and the interest rate would have been 2.75%. However, since we weren’t going to be living in the house … Continue reading So, while the increase in home prices has moderated, the cost of buying a house is increasing due to the interest rate hikes.

The Fed wants to rein in inflation, but do so without causing a steep recession. Yet the Board of Governors keeps making 75 basis point increases — four in a row now — when they admit that they do not know exactly what the effects on the economy will be and that we won’t be able to see, or measure, them for a year.

The last time inflation was at the rates we have seen for the last year was during Jimmy Carter’s stagflation of the late 1970s into 1980. Inflation was beaten then the hard way: with a steep and painful recession in 1981-82. And that’s what will happen again, regardless of what the Fed tries to do.

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↑1 As I previously noted, we bought a house last December, which was negotiated in November, and the interest rate would have been 2.75%. However, since we weren’t going to be living in the house — it’s rental property for my sister-in-law — the rate became 3.75%.
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If a private business did its accounting the way the Fed does, in which federal prison would the business’ chief financial officer serve his sentence?

While you sometimes see decent stories on economics in The New York Times and The Washington Post, The Wall Street Journal is really the place to go.

Higher Interest Rates Fuel Losses at the Federal Reserve

The central bank is now paying out more in interest expenses than it earns in interest income

by Nick Timiraos | Hallowe’en, October 31, 2022 | 5:30 AM EDT

The Federal Reserve’s aggressive interest-rate rises to fight inflation are leading the central bank to do something it has never consistently done before: lose money.

The central bank’s operating losses have increased in recent weeks because the interest it is paying banks and money-market funds to keep money at the Fed now exceeds the income it earns on some $8.3 trillion in Treasury and mortgage-backed securities it accumulated during bond-buying stimulus programs over the past 14 years.

The paywall hits right here; aren’t you glad you have a writer shelling out his hard-earned money to subscribe for you?

Of course, that $8.3 trillion in Treasury and mortgage-backed securities it accumulated were accumulated via ‘quantitative easing,’ in which the Fed spent money it didn’t actually have, but, with no one to bounce the ‘checks’ — not that checks are written anymore; it’s all done with electronic funds transfers — the money was just ‘created.’

The losses don’t interfere with the Fed’s ability to conduct monetary policy, and they follow years in which the central bank earned profits of around $100 billion, which it sent to the U.S. Treasury. Those remittances reduced federal deficits, and as they end, the federal government could face marginally higher borrowing needs.

If the Fed runs sustained losses, it won’t have to turn to Congress, hat in hand. Instead, it will simply create an IOU on its balance sheet called a deferred asset. When the Fed runs a surplus again in future years, it would first pay off the IOU before sending surpluses to the Treasury.

And there you have it: unlike regular banks, which would have to borrow money from someone else, incur a real liability that they’d hope to be able to pay off in the future, our central bank simply creates “a deferred asset,” something that you or I or commercial banks can’t just do. If a If for some reason the Fed didn’t run a surplus again, the deferred assets would simply be deferred longer.

In accounting for real people, a deferred asset is something very different:

A deferred asset is an expenditure that is made in advance and has not yet been consumed. It arises from one of the following two situations:

  • Short Consumption Period: The expenditure is made in advance, and the item purchased is expected to be consumed within a few months. This deferred asset is recorded as a prepaid expense, so it initially appears in the balance sheet as a current asset.
  • Long Consumption Period: The expenditure is made in advance, and the item purchased is not expected to be fully consumed until a large number of reporting periods have passed. In this case, the deferred asset is more likely to be recorded as a long-term asset in the balance sheet.

In other words, a deferred asset in the real world is something completely opposite of what the Fed could do. In the real world, a deferred asset is created when an individual or business spends money it already has for something before that something is actually acquired. What the Fed would do is claim that money that it is spending that it does not have is an asset it will have in the future. A private business could take out a loan, based on anticipated future revenues, but to simply declare that the asset is there just doesn’t work.

If a private business did that, the Chief Financial Officer would go to jail.

The arrangement is akin to an institution facing a 100% tax rate and offsetting current losses with future income, said Seth Carpenter, chief global economist at Morgan Stanley.

The losses stem from some obscure monetary plumbing. The Fed’s $8.7 trillion asset portfolio is full of mostly interest-bearing assets—Treasury and mortgage securities—with an average yield of 2.3%. On the other side of the ledger—the liability side of the Fed’s balance sheet—are bank deposits held at the Fed known as reserves and overnight loans called reverse-repurchase agreements.

Before the 2008 financial crisis, the Fed kept its portfolio relatively small, at less than $1 trillion. Its main liability was the amount of currency in circulation. The Fed shifted reserves up and down in incremental amounts if it wanted to lower or raise short-term interest rates.

After the crisis, the Fed cut interest rates to zero and purchased large quantities of bonds to provide additional economic stimulus. Those purchases flooded the banking system with reserves. To maintain control over interest rates with a larger balance sheet, the Fed revamped the way it manages rates. The new system, which was already in use by many other central banks, controlled short-term rates by paying interest on bank reserves.

For the past decade, relatively low short-term interest rates meant the Fed earned more on its securities than it paid out as interest on reserves or other overnight loans. After covering its expenses, the Fed last year handed back about $107 billion to the government.

Did you understand all of that? Well, the WSJ commenters were almost all laughing at the article, with at least one CPA noting that this was the way to jail for a private corporation.

The United States gets away with this because the dollar is the world’s reserve currency, and our debts are all denominated in dollars. Five American territories and eleven independent nations use the dollar as their official currency. We can always pay our debts, because we control our own currency, and the ‘checks’ are all written on a ‘bank’ that doesn’t bounce them. But I’m old enough to remember when OPEC floated the trial balloon of requiring payment in euros rather than dollars, and the panic concern to which that led. In one way, the entire world’s economic system is being propped up by the United States Federal Reserve. But if we keep up with the acco9unting tricks, that could change.

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Joe Biden has earned exactly what he’s getting from Saudi Arabia Are there no adults in the White House?

We have previously noted that the oil production cut by OPEC+ was primarily engineered by Russia and Saudi Arabia, and that President Biden’s statements condemning Saudi Crown Prince Mohammed bin Salman, the country’s de facto ruler, might not have exactly persuaded that nation to work charitably with the United States. Now, from Business Insider:

The US and Saudi Arabia traded petty insults in an feud over oil after a reported secret deal fell apart

by Tom Porter | Thursday, October 27, 2022 | 7:00 AM EDT

A US official mocked a comment by a Saudi prince who claimed the White House was acting immaturely, the latest exchange in an embarrassing feud between the nations over oil.

“It’s not like some high school romance here,” John Kirby, the communications coordinator at the National Security Council, said when asked about a comment by Saudi Energy Minister Prince Abdulaziz bin Salman.

The prince had criticized the White House for releasing some of its vast oil reserves to reduce prices, painting the move as childish and describing Saudi Arabia as the “maturer” country.

Kirby was not happy. “We’re talking about a significant, important bilateral relationship, a partnership that has survived over 80 years,” he said. “I don’t think talking about it in terms like that necessarily lends the gravity of how important this relationship is, to the way that we’re considering it.”

The New York Times reported on it from a different angle:

U.S. Officials Had a Secret Oil Deal With the Saudis. Or So They Thought.

After Saudi leaders pushed to slash oil production despite a visit by President Biden, American officials have been left fuming that they were duped.

By Mark Mazzetti, Edward Wong and Adam Entous | Tuesday, October 25, 2022

WASHINGTON — As President Biden was planning a politically risky trip to Saudi Arabia this summer, his top aides thought they had struck a secret deal to boost oil production through the end of the year — an arrangement that could have helped justify breaking a campaign pledge to shun the kingdom and its crown prince.

It didn’t work out that way.

Mr. Biden went through with the trip. But earlier this month, Saudi Arabia and Russia steered a group of oil-producing countries in voting to slash oil production by two million barrels per day, the opposite of the outcome the administration thought it had secured as the Democratic Party struggles to deal with inflation and high gas prices heading into the November elections.

So, President Biden went through with what the Times called a “politically risky trip”, but while on that trip, raised the Jamal Khashoggi killing at the very beginning:

“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.”

Somehow, some way. no one in the Biden Administration was adult enough to realize that the President’s supposedly private conversations with the Crown Prince, which Mr Biden then reiterated publicly, might just sabotage the deal that had been previously negotiated to help “justify breaking a campaign pledge to shun the kingdom and its crown prince.”

The move led angry Biden administration officials to reassess America’s relationship with the kingdom and produced a flurry of accusatory statements between the two governments — including a charge by the White House that Saudi Arabia was helping Russia in its war in Ukraine.

Lawmakers who had been told about the trip’s benefits in classified briefings and other conversations that included details of the oil deal — which has not been previously disclosed and was supposed to lead to a surge in production between September and December — have been left fuming that Crown Prince Mohammed bin Salman duped the administration.

An obvious point: the Arabs have a completely different culture than do Americans — yes, I know: we Americans do not really seem to have just one culture ourselves — and perhaps it shouldn’t have been expected that the Crown Prince would shrug off a little public insult the way Americans seem to believe he should have. Mr Khasoggi’s murder was arranged sometime after the Saudi exile, who wrote for The Washington Post, essentially called Mr bin Salman a liar. It was a political risk for the Crown Prince to arrange, order, or at least suggest — “Will no one rid me of this turbulent priest?” — that Mr Khasoggi needed to be eliminated, but it happened anyway. A savvy foreign policy expert might have realized that Mr bin Salman took things, took criticism, personally.

Of course, when I look at the silliness, right before an election in which the Democrats are expected to lose control of the House of Representatives, in which the Biden Administration has engaged, I don’t see a lot of savviness evident.

Perhaps those congressmen “fuming that Crown Prince Mohammed bin Salman duped the administration” might start asking themselves: was it Mr bin Salman who duped the Biden Administration, or was that Mr Biden himself?
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Cross-posted on American Free News Network.

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The Democrats are running on everything except what matters

The House of Representatives silly “January 6th Committee” held it’s last pre-election meeting, another meeting broadcast on television, as the credentialed media have teamed up with the Democrats to try to maintain their slender majorities in the 2022 elections. The trouble is that the Democrats have no current issues that are important to the voters. The Capitol kerfuffle, a three-hour demonstration of unarmed people, caused a few million dollars in damages — something far, far less serious than the #BlackLivesMatter riots of the previous summer and fall — and they were then over.

The real current issues are the economy and inflation, but the Democrats don’t want to talk, at least not truthfully, about that!

Democrats’ failure to make 2022 about the threat to democracy

Analysis by Aaron Blake | Tuesday, October 18, 2022 | 11:29 AM EDT

Utah voters who tuned into Monday night’s Senate debate were treated to something relatively rare in the 2022 election: a candidate putting Jan. 6, 2021, front and center in his closing argument. Independent Evan McMullin seized upon texts Sen. Mike Lee (R-Utah) sent to the White House indicating a willingness to help President Donald Trump contest the 2020 election results, saying Lee “betrayed your oath to the Constitution.”

Despite the well-publicized Jan. 6 hearings, including the likely final one, held last week, the insurrection has not been an overarching focus of Democrats’ 2022 campaign messaging. Politico reported last week that Jan. 6 has featured in less than 2 percent of ads run for House Democrats.

Maybe, just maybe, the actual Democratic candidates, as opposed to ‘pundits’ like Amanda Marcotte or formerly Republican #NeverTrumpers like Bill Kristol and Jennifer Rubin who have former President Trump living rent-free in their skulls, need to do something really, really radical like win votes, and they are a bit more in tune with what concerns voters most.

Even President Biden’s handlers minions recognize that truth, not that there’s anything they can do other than lie about it. Yeah, most families are focused on putting food on the table and keeping a roof over their heads, but the ability of the working class to do just that has suffered under President Biden. Most Americans are not better off today than they were in 2019.

This lacuna in their messaging comes even as most House Republicans supported Trump’s baseless last-ditch election challenges that led to the attack on the Capitol, and even as a majority of the GOP’s most prominent candidates have either denied or questioned the 2020 election results.

Indeed, a new poll reinforces that Democrats haven’t really driven the argument home. Many Americans view Trump as a major threat to democracy. But the Republican Party more broadly? Not so much.

Of course, many Americans view that Democrats as a far greater threat, as the far-left wing has pushed ‘transgenderism’ in the schools, in ways that a lot of parents see as personally threatening to their children, which is why Glenn Youngkin rather than Terry McAuliffe is now Governor of Virginia, and Republicans control the state House of Delegates as well. Mr Kristol’s The Bulwark has gone all out pro-transgenderism, to show you just how far the #NeverTrump former Republicans have gone. The Republican neo-conservatism of the Bush years has moved wholly toward the Democratic Party, including their foreign interventionism when it comes to the war between Russia and Ukraine.

A New York Times/Siena College poll shows that 45 percent of Americans regard Trump as a “major” threat to democracy, while just 28 percent say the same of the GOP.

That 28 percent figure is actually smaller than the percentage who view the Democratic Party as a threat to democracy (33 percent) — despite there being no comparable example of Democrats trying to overturn an election. (And no, Stacey Abrams and Hillary Clinton aren’t analogous.)

Actually, yes, they are. When you consider the definition of analogous, “similar in a way that invites comparison : showing an analogy or a likeness that permits one to draw an analogy,” it’s not difficult to see how those two ladies’ reactions to their electoral defeats were attempts to undermine the legitimacy of the victors.

Some of this is partisanship — along with Republicans’ successful attempts to play up the issue of voter fraud, despite the utter lack of evidence that it’s a major problem in American elections. Polls have long shown Republicans and Democrats view the other side as a threat to democracy, but for very different reasons.

But if you dig a little deeper, you’ll see that isn’t the full story: It’s also the case that many Democratic voters haven’t been convinced that the problem goes beyond Trump.

The poll shows that 71 percent of Trump 2020 voters regard Democrats as a major threat to democracy. But just 52 percent of Biden voters say the same about the GOP.

Also see: Robert Stacy McCain: Denial is not a strategy

Despite his rent-free residency in the brains of the far left, Donald Trump simply isn’t immortal; he’s 76 years old, and will be 78 by the time the 2024 elections come around. He’s significantly overweight, and, despite his wealth, eats garbage. Even if he were elected in 2024, he’d be constitutionally limited to just four years in office. But the policies of today’s Democratic Party, mandating plug-in electric vehicles that most Americans cannot afford, pushing drastic social changes that many Americans dislike, and ignoring increasing violent crime rates, would last a lot longer than that.

After several paragraphs, some of which reveal the author’s clear bias in favor of the Democrats, we come to his conclusion:

But the integrity of the democratic process is something Democrats and the Jan. 6 committee have pitched as being of the utmost importance — going to the core of who we are as a country. Yet at this point, with just half of Biden voters and one-quarter of independents saying the GOP is a major threat to democracy, it’s clearly not something they’ve convinced voters is truly at stake in 2022.

Why do I, personally, believe that the Democrats are the far greater threat? Their responses, primarily by Democratic Governors, to COVID-19 were heavily weighted toward dictatorial control and the blatant abridgement of our constitutional rights. That the government can order churches closed, or restrict our First Amendment right of peaceable assembly, ought to be anathema, but Democratic — and sadly, a few Republican as well — Governors did just that, and thanks to the unreasoning fear instilled by the government, millions and millions of people accepted that as reasonable and legitimate.

At least here in the Bluegrass State, Republican state legislative candidates ran hard against Governor Andy Beshear’s (D-KY) authoritarian dictates, and the voters rewarded the GOP with an additional 14 seats in the state House of Representatives, and two more in the state Senate. I’d like to see that be more important to other voters, but I guess that we’ll see in 20 more days.

Well, who knows? The poll numbers favor the Republicans, but the only poll which really matters will be taken on November 8th, and surprises have been known to happen before.

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Credentialed media are finally starting to see the problems with plug-in electric vehicles Of course, they solve that problem by not letting the plebeians have cars!

I’ve been saying this for a long time now: plug-in electric vehicles will be a nightmare for people without a garage or dedicated parking space. Now the credentialed media are noticing as well:

Extension cords across sidewalks: Charging an electric vehicle in Philly is a challenge

Electric vehicle owners without dedicated parking spaces stretch wires, and the limits of legal codes, to keep their EVs charged.

by Andrew Maykuth | Thursday, October 13, 2022

Anthony Wong and Robert Berkowitz waited several years for a back-ordered Tesla, the popular electric vehicle brand. By the time the new car was delivered in 2018, Philadelphia had canceled its controversial program to set aside curbside parking spots for EVs. That left the Bella Vista residents with few options for charging their new Tesla at home.

Like many urban EV owners without off-street parking, Wong and Berkowitz improvised. They’re retired and say they have more time to charge the Tesla’s battery at public charging stations at such destinations as stores or casinos.

“If we drove the car every day for work, then we might need to charge overnight to keep the car going,” Wong said.

But sometimes they need to charge their car at home. Their solution: Run a cable out the second-floor window of their rowhouse to their car parked in the street. They prop the cable atop a street sign to allow pedestrians to pass underneath. “It’s not really that noticeable, and it’s not in somebody’s way,” Wong said.

While it is, perhaps, not in anybody’s way, it’s also not legal, though nobody has been enforcing that law.

Philadelphia had a short-lived program which allowed electric vehicle owners to get a reserved EV parking space in front of their homes, but neighbors quickly complained that this was an undeserved perquisite for EV owners, the vast majority of whom were financially well off. The Inquirer reported that only 68 of these spaces were created before the program was canceled. And here’s the clincher:

After the city abandoned its EV parking program, a task force recommended that the city encourage the use of mass transit and the buildout of public charging stations rather than use its scarce resources to support private electric vehicles.

“In the grand scheme of sustainable transportation priorities, personal vehicles are still kind of low in the hierarchy in terms of what we want to be encouraging people to do,” said Christine Knapp, the city’s former sustainability director. “I don’t think anyone’s vision of a truly sustainable city 30 years from now is that we have the same number of cars on the road as we do now, but they’re running on electricity instead of gas.”

Philadelphia Badlands. Photo via Philadelphia Inquirer Click to enlarge.

Our Betters, you see, don’t want the peons to have their own vehicles, but to be packed on Southeastern Pennsylvania Transit Authority buses and trains, to SEPTA stations filled with litter and used needles, drug addicts getting high, homeless people sheltering there, and a rising crime rate. We have previously noted the Allegheny Avenue SEPTA station in Kensington, with its open-air drug markets, which the city and Philadelphia Police are simply ignoring.

Christine Knapp, I would guess, doesn’t live in the Philadelphia Badlands, so notorious that it was once actually a part of Google Maps, though later removed, removed for telling a politically incorrect truth. She probably doesn’t have to take the SEPTA 30th Street Station, not near Kensington, but Drexel University.

Philadelphia is a rowhouse city, filled with working-class neighborhoods built a hundred years ago, with little in the way of parking. The Patricians have it a bit better than the plebeians, with parking garages for Center City high rise condos, and single-family homes with private driveways and garages in Chestnut Hill. They’ll have their dedicated parking spaces with protected charging stations, so they can advocate electric cars.

The rest of the people? Too bad, so sad, must suck to be them!

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No surprise: fuel prices are beginning to rise again

We noted, on Wednesday, October 5th, that very much contrary to President Joe Biden’s wishes, Russia and Saudi Arabia pushed OPEC+ to set a reduction in petroleum production of 2,000,000 barrels per day:

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.

The United States is hardly a nation President Vladimir Putin wants to please: the US continues to send money and war materiel to Ukraine, which is directly at war with Russia, so the US is, in effect, engaged in a proxy war with Russia. Maybe, just maybe, Vladimir Vladimirovich isn’t in any mood to do favors for Mr Biden.

And, of course, Mr Biden directly accused Saudi Crown Prince of ordering the murder of Jamal Khashoggi, and called teh Crown Prince a liar for denying it. Could it possibly be that the de facto ruler of the world’s largest petroleum exporter is not really inclined to be nice to our President?

Well, now the effects of the OPEC+ decision are becoming known:

Why gas prices are going back up after nearly 100 days of declines

by Rob Wile | Monday, October 10, 2022

It was the longest losing streak for gasoline prices since the early months of the pandemic: For 98-consecutive days this summer, American drivers experienced declining gas prices thanks in part to a slower worldwide demand for oil.

Now, a cut in oil production signaled by the OPEC+ group last week has sent global crude prices higher, bringing upward pressure back to prices at the pump.

According to AAA, the national average gas price climbed to $3.92 a gallon Monday.

Prices are likely to keep going higher from here as oil prices continue to climb, according to Patrick De Haan, chief petroleum analyst at gas price tracking group GasBuddy.com.

“With OPEC+ deciding to cut oil production by two million barrels a day, we’ve seen oil prices surge 20%, which is the primary factor in the national average rising for the third straight week,” he said in a blog post Monday.

For the rest of the country, De Haan said he expects prices to rise as much as $0.30 from their September lows, which would put them at around $4 a gallon.

It’s not all peaches and cream in OPEC+: as The Wall Street Journal reported, Iraq is concerned that it cannot afford the mandated production cuts, but that’s somewhat counterbalanced by a strike among Iranian oil workers. That does mean that projections that gasoline will reach into the $4.00+ per gallon range a bit more guesswork than straight statistical modeling.

The most important point? The election is in 29 days.

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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.