Setting the Record Straight

May 22, 2008

Fuel Crisis Redux

A Solution to Our Fuel Crisis

Saudi to Bush:

 No Crude Shortage, It’s U.S. Refinery Shortage

          The economic mess in the United States, a mess reverberating throughout the world, should bring a renewed focus on the basic element of the mess–fuel prices on the verge of having quadrupled since 2000.
          The federal government may not yet have the figures to declare a recession or to measure a huge rise in inflation, but the public from the middle-class on down know both already are here. The housing crisis was only fuel to a fire made inevitable by a steady and unconscionable increase in fuel prices.
          This may be the time to give the federal government a new tool. It would be a tool to be used not necessarily to make more oil available, but to allow the government to prevent manipulation and gouging of the supply and price. 
          It used to be the oil industry made convoluted, confusing excuses for price increases, throwing around various figures and arcane reasons few people could ever unravel. Notice you do not hear any of that today. They say almost nothing, and when they do say anything, they simply shift the blame to speculators in the stock market. And, as they did before Congress recently and anytime they are put on the spot, the use the occasion to be freed for more domestic oil exploration.
          This is the second time around for a modern-day U.S. oil crisis. Between the other one and now, the federal government failed its citizens. We are suggesting a correction of that failure and a new way of thinking this time around. It may not work, it may not be feasible, but it is worth a look. Just the fact it is an option on the table could have an impact on the current mess.
          The U.S. government should build its own oil refinery, preferably away from the current Gulf Coast area where most domestic oil work is concentrated.
          This mess is not new.
          Back in the early 1970s we had the previous fuel crisis. Before the Organization of Oil Exporting Countries decided to impose a year-long embargo on exports of oil to the United States, causing a shortage of gasoline and a concomittant jump in prices, a gallon of gas had cost not much more than a quarter in the United States for decades, a period when the word “inflation” was never uttered.
          The crisis began when OPEC, largely for political reasons, embargoed U.S.-bound oil. Cars were lined up at service stations (they actually provided service up to that time), often for several blocks, to get access to fuel pumps that could run out of gas at any moment. The cars were gas guzzlers by today’s standards, about equal in mileage to most of today’s trucks and SUVs.
          Supply and demand being what it is, the price of gas quadrupled to well over $1 a gallon (an increase that would equal more than $15 a gallon at current prices), and inflation followed close in its wake, leading to interest rates that had been steady for decades at 2 percent or 3 percent, to jump to 20% and more later in the 70s.
          Over the ensuing years, the government responded with laws to encourage alternative energy explorations, coupled with all sorts of subsidies for the oil industry itself to encourage domestic drilling, including greater freedom to explore for oil in formerly off-limit areas. The government also made inflation a major area of concern and enacted stronger fuel-efficiency laws. The inflation rate fell back to more sensible levels, although never to its pre-OPEC level except in odd instances.
          After the change of administrations (Carter to Reagan), the incentives to the oil industry remained, the incentives to explore alternative fuels were dropped. The number of refineries on line had crept up to more than 300 until 1980, when the administration changed. Suddenly, the number of refineries on line began a long plunge to our 149 today.

          Not so curiously, the price of gas never fell, almost defying the laws of supply and demand. In fact, prices continued on a steady rise, notwithstanding the waverings of politics, supply and demand and other factors. All the increases were accompanied by those aforementioned convoluted excuses.
          Part of the government response during the oil crisis included creating, in 1975, the U.S. Strategic Petroleum Reserves for the sake of future security, comprised of a storage of oil now totalling about 727 million barrels of crude and all located in four salt domes below ground, in a single part of the United States, on the coast from Texas into Louisiana. Even when released, to be offered to the oil industry on the commercial market at a set price, it still must be refined by the oil industry.
          This area includes or is close to the greatest concentration of U.S. oil refineries where basic crude oil has to be processed to make it usable, refineries jammed into a highly vulnerable area of the country. There are now 149 refineries in the United States, more than a third of them in hurricane-vulnerable Texas and Louisiana, producing fewer than 18 millions of barrels of usable oil a day. That is the same level of oil refining that existed before the last one new one was completed in 1976, at a time when we had more than 300 refineries.
          Although shutting down those refineries has not changed production levels, overall refinery production level has not been increased in nearly three decades as our usage, and even needs, have skyrocketed. Of course, with half the number of refineries, more than a third in two hurricane states, we are twice as exposed to weather and transport disruptions.
          The U.S. petroleum industry is one of the top profit-making industries in the United States. Individual companies claim they are just passing along their added costs, but never mention they also are including the U.S. norm of about a 100 percent markup. Before the 1970s crisis, the normal business markup was about 40 percent.
          If the U.S. government had its own refinery, it could refine its own strategic reserves, already-refined, with a built-in capability of diverting some of that refined oil immediately to the public market in competition with the private oil industry whenever such a move would serve the public iinterest.
          Such a move bypassing much of the oil industry with which it would then be in partial competition, also would give the government greater power to support alternative fuels and play that power off against the price of oil to make the industry somewhat honest. The government already has the ability to do some of that by releasing supplies from its oil reserve. A refinery would greatly increase that impact, by being able to tweak the price to a level that would discourage increased use, but low enough to help balance inflation and other economic concerns.
          The crude oil it refines could come from two sources, foreign and domestic. With a world crying for foreign oil–check out China and Japan –the U.S. government as a buyer would give it added political leverage, something it badly needs after its recent foreign policy gaffes.
           Domestically, it could force the oil companies to donate crude in lieu of greater taxes, including windfall profits taxes, something that already should have been restored. The cost of all this could be paid for, in part, by ending the subsidies to big oil, in a huge part by ending the massive cost of the fool’s errand in Iraq.
          There would be an ancillary benefit. Remember the oil industry ruse of switching refineries over twice a year between heating oil and gasoline? A government-run refinery could step in and ease the impact of that semi-annual chicanery.
          Or, the federal government could simply nationalize the oil industry and operate it in the public’s interest on grounds no industry should be allowed to hold the nation in a stranglehold.
          Either solution is fraught with all sorts of problems, chief among them lack of a political will. But the federal government is filled with geniuses–yes, among those much-maligned civil servants–who could work on the issue (and probably already have) if asked.








May 21, 2008


Filed under: news,politics — straightrecord @ 3:40 am
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A Reporter’s View:

Ted Kennedy: Maturation of a Senator

         The news that Ted Kennedy has a fatal malignant brain tumor is about to lead to a flood of eulogies about the man. He has been a Massachusetts senator since 1962. While none of the contributors to this site ( has covered Washington, much less Congress, quite that long, many of our reporting careers overlap his career.
          Here are some personal notes from one of us. 
          I have been concerned about Kennedy’s health for many years. He has been overweight to the point of obesity for more than a decade and barely able to take a breath.
          Quite often, Kennedy was one of several senators participating in a news conference about one thing or another. Invariably, he would take his turn at the lectern and then practically waddle over to the nearest seat. That usually meant he took a seat behind reporters sitting in the front row and several times that put him beside me. He would fall into the seat with a powerful sigh. He may not have remembered my name, but he recognized me as a regular of many decades, so he’d give me a friendly poke on the leg and as much of a smile he could muster between wheezes. My instinct was to nod and leave him alone as he caught his breath, but I usually wondered if he would survive the day.
          Reporters do form personal opinions about the people they cover. Readers never know what are the opinions of good reporters, because those opinions are never reflected in the news story. But we do judge people according to many criteria.
          In the early 70s, most of us correctly judged Kennedy as a light-weight. He gave little effort to being informed on the issues and relied heavily on his staff. His staff usually was the best in Congress because the Kennedy name attracted some of the best legislative and issue practitioners. Even then, Kennedy was a liberal, as is the rest of the Kennedy clan, yes even the wife of California’s celebrity governor.
          But, except for giving speeches, Kennedy was not good at his job. As reporters seeking information, we seek out the person who knows the answers and we hope that is the person in charge, the person holding the office. In Kennedy’s case in those years, it was not he, it as a staffer.
          Sitting down for a one-on-one interview with Kennedy or trying to get some substantive comments from him in a hallway or on the run used to be almost fruitless, except to get a quote from the man himself to put in the story. Sitting in his office, he would be surrounded by staffers whom he depended on to answer the questions put to him. Rarely would any of us even try to hold an in-depth discussion directly with him on the issues. He did not have a grasp of details. He was shallow.
          He was elected majority whip of the Senate in 1969 (the same year as the Chappaquiddick incident that will dog him to his grave, and he predictably was a failure at the job. The whip job requires a great deal of effort, making sure members of your party not only know how the majority leader wants them to vote, but knowing if the majority has the votes, including any from the minority, to pass an amendment of legislation. He clearly was not up to the job and was kicked out of it two years later.
          But over the years, we saw him mature and grow into the job. As he moved from subcommittee to committee chairmanships, he became more serious about the job as senator. He appeared to change after the fateful interview with Roger Mudd of CBS when he finally succumbed and entered the race for the Democratic nomination for president in 1979.
          Mudd, one of the few television network reporters who actually worked at the journalistic part of his job, was a jovial sort and not the type to ask a “gotcha question.” When he asked Kennedy in a one-on-one special interview why he wanted to be president, it was a softball question to get the interview started and set the stage for substantive questions to follow. Most of us begin an interview that way to soften up the interviewee. The toughest questions are saved until the end of the interview, in case the interviewee turns hostile and refuses to cooperate further.
          Other than running for president just because he was a Kennedy and could do so seriously, Ted Kennedy had no clue why he wanted to be president and stumbled through his answer, looking a lot like the current president.
          Whereas these days looking like a fool in an interview does not rule you out as a president, in those days it still did. His candidacy was over as quickly as it began. The same year, Kennedy became chairman of the Senate Judiciary Committee simply because the job went, and still does, to the person who has been on the committee the longest.
          It is not clear whether the shock of coming off shallow in the pres- idential campaign or the huge responsibility in becoming chairman of what was then an almost-critical committee of Congress did the job, but Kennedy began to become a knowledgeable member of the Senate, well-versed in the issues before him and someone a reporter could question without having to rely on the senator’s staffers for informative answers.
          Sadly, that maturity began nearly two decades after he was first elected, but his longevity in the office has allowed him to emerge not only as one of the most liberal members of Congress, but one who can safely dare to claim the title “liberal.” Lately, it seems the more his fel- low liberals hide behind other labels and waffle on the issues, the more strident he becomes in speaking out for the cause.
          As the mantle of “statesman” is rarely worn in Congress these days, after Kennedy so will those strong enough to admit to being “liberal” be rare.



May 18, 2008


Filed under: politics — straightrecord @ 3:07 am
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It’s Really Not a Toss-up

News Peg: China Adds To Effective Ban On Grocery Plastic Bags

      The confusion over whether it is better to ask for paper or plastic bags at the

grocery store stems from a failure by most people to complete the recycling circle. For recycling to occur, the entire circle must be completed.
     Separating something into a recycling bin does not mean you have recycled. You have only performed one of the many tasks that go into completing the circle of recycling.
     Similarly, if you do not consider the making of the product in the first place, you have not gathered enough information to make a decision about something such as whether paper is better than plastic.

The cycle of plastic:
     1. The plastic bags you receive in retail stores are made from the same crude oil that is refined into the gasoline you burn in your automobile or heating oil that keeps homes warm during cold weather.
     When the crude oil is refined, the stuff (dross) that is left by that process happens to be the highest-quality portion of the oil. But to become gasoline or heating oil, it would have to be refined again. Oil companies consider it more profitable to turn that dross into things such as plastic bags than to run it back through the refining process.
     If that dross were re-refined, it would add enough oil to the nation’s supply that the cost of a gallon of gasoline at the pump at today’s prices would be reduced by about 10 cents. (The first analyses of this issue, which set the cost at four cents a gallon, were performed when gasoline prices were less than a dollar a gallon.)
     Also, by receiving plastic instead of paper, you are at least encouraging further use of finite, not renewable, fossil fuels that also have a gotcha of contributing to carbon dioxide levels, all at a time we are supposed to be trying to become independent of foreign sources.
     The law of supply and demand being what it is, that means that driving up the demand for plastic by accepting it instead of paper at the store costs you an extra 10 cents a gallon for gas.

      2. After its contents are removed, a plastic bag usually is thrown away or saved for use as a container for discarding other material, mean- ing it ends up along with other garbage either disposed of in a landfill or burned or, as is too often the case, to be carried by the wind or water along with other trash.
      People often believe they are doing good and contributing to the environment by “recyling” the bags. They believe they have done so simply by putting the bags in a recycling bin, supposedly to be collected and made into something else. They have not.
      Despite two decades of research, no one has developed a cost-effective way to reuse those plastic bags (thus completing the recycling loop) even on a massive scale. Thus, today just about all plastic bags turned in for recycling are wasting away in warehouses waiting for a profitable solution, or, quite likely, they’ve already been dumped or burned.
      Plastic bags are not recycled.

The cycle of paper:
       Check the fine print on the bottom of a paper bag supplied by a retail store. Safeway’s says its bags include 40 percent recycled content. Most paper bags made today claim similar content.
       That means nearly half of that bag already has gone through a recycling process and that by demanding it instead of plastic, you not only are providing encouragement for continuing that initial process, you are encouraging repetitions of it.
       The 60 percent of the bag that has not already been recycled usually is made from shavings, sawdust and other detritus left over from processing wood into other products. There is a negative impact for asking for that bag, however—you are making it cheaper to produce those other wood products made from trees cut down for those purposes. On the other hand, trees are, in theory, renewable resources.
       Just as with plastic bags, paper bags can be put to use for other purposes—storing items, holding discarded newspapers until the bag and the papers can be recycled together, or reused to carry home the next set of groceries. In those cases, it is best to put one bag inside the other for extra strength.
       Eventually, a paper bag no longer can be used, but it can be recycled and usually is. That is the source of much of that 40 percent recycled content.
       Paper bags usually are recycled, often many times.

       All sorts of money and energy have been spent on life-cycle analyses trying to determine which is better, or put another way, less offensive. Arguments are made that the manufacturing process for making paper bags and later for recycling them consumes more extra energy than does the process for making plastic bags in the first place. But what if the plastic bags actually were recycled? The manufacturing process for paper still might be more energy-consuming than that of the paper bag, but the gap would be smaller.
       It would be nice if everyone could or would “go totally green,” but that is simply not realistic in today’s society. We all make choices, about which charity to support over another, and about which part of “going green” we find it convenient to support, based upon their own experiences or environmental concerns.
       Retail stores prefer plastic because it means they just have to tell the clerk not to put some products in with others, and don’t have to train them in how to load a paper bag. And plastic takes up less storage space at the store than paper.
       Most consumers prefer plastic because it is easier for them to han- dle in most cases.
       It’s nice that these life-cycle analyses have been done, and it would be nice if the environmental issues could be reduced to objective terms. But in today’s society, we have our individual lifestyles and will continue to look at things subjectviely. Given that, few of us are going to delve into the minute study of life-cycle costs, but we do understand what we are willing to do to help the environment.
       If one considers the entire recycling process for each, paper bags are clear winners over plastic ones.



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