By on March 11, 2015

OLYMPUS DIGITAL CAMERA

A handful of Republican presidential hopefuls converged upon Iowa last weekend to discuss the pros and cons of ethanol.

Autoblog reports U.S. Sen. Ted Cruz of Texas, former governors Mike Huckabee of Arkansas and Jeb Bush of Florida, and Govs. Chris Christie of New Jersey and Scott Walker of Wisconsin debated ethanol and the federal standards linked to them at the 2015 Iowa Ag Summit in Des Moines.

While most of the hopefuls supported keeping the standards as they are or increasing them, Cruz was the only one to reject the notion, comparing the program to “corporate welfare.” He added that private businesses could continue to successfully compete in the marketplace “without going on bended knee to the government.”

Cruz’s remarks follow a recommendation by the Environmental Protection Agency to reduce a proposed increase in corn-based ethanol use in gasoline, stating that the biofuel can only go so far when blended with petroleum-based fuels. Meanwhile, both sides of the aisle object to the reduction, citing the economic damage that would hit Iowa — the largest producer of said ethanol in the United States — if the reduction were to go forward.

Get the latest TTAC e-Newsletter!

Recommended

78 Comments on “Republican Presidential Hopefuls Discuss Ethanol In Iowa...”


  • avatar
    kvndoom

    So can we rename the phrase “pork barreling” to “corn barreling” now??

  • avatar
    shaker

    “Cruz was the only one to reject the notion, comparing the program to “corporate welfare.” He added that private businesses could continue to successfully compete in the marketplace “without going on bended knee to the government.”

    Energy policy reduced to dog whistle catchphrases – a good start.

  • avatar
    Lie2me

    A bunch of self-serving politicians pandering to their audience, big surprise. Except for the Texan who for obvious reasons would be against Ethanol

    • 0 avatar
      Pch101

      It’s probably not what you think.

      Ted Cruz’s strategy is to carve a niche within the conservative base by articulating contrarian views that endear him to them but that make him unelectable. He did this most recently with gay marriage, and now he’s doing it with ethanol.

      The other guys want to be in the White House, and they need to do well in Iowa in order to have a shot. Ted Cruz wants to be a talk show host on Fox News, and he’s honing his brand. Acting like a presidential contender just raises his profile for when he gets his prime time slot.

  • avatar
    dwford

    We subsidize the growers, then subsidize the refiners, then also mandate its use. Is any other product receiving such favorable treatment from the government? Well, ok, healthcare springs to mind.

    • 0 avatar
      heavy handle

      Healthcare, defense, telecommunications, power generation, education, food production, construction, and a whole lot more. Basically, anything that can earn a few votes at any level of government will get a subsidy and/or tax break.

      It’s not a new thing. Generally speaking, people complain about that stuff when the subsidy doesn’t apply to them, but they consider their own subsidies to be an inalienable right.

  • avatar
    319583076

    I live in Omaha, just across the river from lovely Council Bluffs, IA. Ethanol money runs heavy propaganda on local radio claiming: ethanol is good for your car, your car runs better on ethanol, and not supporting ethanol might just cost you your job.

    World War III is here, but it’s not a conventional war. It is a continuous war of sophistry for the support of purposely uneducated, spoiled, imbeciles.

    Believe nothing.

  • avatar
    lostjr

    Ethanol isn’t going away. Corn prices are way down, and Chuck Grassley has some serious seniority

    • 0 avatar
      DeeDub

      Seniority is inversely proportional to longevity. When he dies/retires, his replacement will be at the bottom of the totem pole.

      • 0 avatar
        highdesertcat

        DeeDub, what you say is true but there will always be more politicians FOR corn ethanol than against because of….. the corn-vote demographic. A lot more people derive their incomes and livelihood from corn than from the US auto industry.

        Hey, what’s good for the corn-hole demographic is good for America. That’s why we are where we’re at with corn-based ethanol.

  • avatar
    redav

    I don’t oppose ethanol as fuel. I prefer that ethanol be used as a primary fuel (not an additive) in dedicated engines that take advantage of its higher octane rating. If Iowa & friends want to turn corn into ethanol, that’s fine so long as they are the ones who use it. Let them build high compression engines, generators, etc., that run on E85 or higher.

    If that works for them locally/regionally, then let’s talk about expanding ethanol’s use and consider building pipelines.

  • avatar
    Duaney

    I wish I could have attended the meeting. I would have displayed rusty fuel tanks, rotted out fuel line hoses, destroyed carburetors. Ethanol has no place for a motors fuel in our vehicles.

    • 0 avatar
      Drzhivago138

      And how many of those things are used on modern vehicles? And how much of that damage can you attribute beyond a shadow of a doubt to ethanol?

      It’s 2015. All vehicles can run safely on at least some percentage of ethanol. Get over it.

    • 0 avatar
      Crabspirits

      They would roll their eyes and say something like:

      “What is this stone-age stuff? I’ve had no issues with any of my brand new sparkling 2015 John Deeres OR 2015 King Ranch.”

      • 0 avatar
        Crabspirits

        Edit: ^Looks like I was too late.

      • 0 avatar
        Drzhivago138

        Forget 2015, our mid-60s JD utility tractors run on the same fuel as my ’02 Mazda and the ’06 FFV F-150 with no discernable drop in HP or MPG, or degradation of fuel systems.

        Not to mention that every major tractor manufacturer made tractors that could run on anything burnable (kerosene, distillate, probably hot lard or whale oil would be fine) until the mid-’50s (at the expense of horsepower, of course, but for most of those farmers it was a question of even getting decent fuel, never mind how much power they might lose).

        /anecdotal

    • 0 avatar
      heavy handle

      “rusty fuel tanks, rotted out fuel line hoses, destroyed carburetors”

      You just described my 81 Corolla and 84 Subaru. Only trouble is, both of those were scrapped before ethanol became common here. Haven’t had those issues in any car/bike since.

      The big gas tank and radiator supplier in town changed their name 15 years ago. They now only do rads, there’s no demand for fuel tanks anymore.

  • avatar
    TW5

    Pandering in the corn belt undermines everything that might be useful about the Republican Party. Cruz is the only person who gets it right. If you want to win over people in other areas of the country, who see the Republican Party as the face of Machiavellian power-brokering, your spine can’t turn to jelly when the ag lobby shows up.

    Obviously, the Reagan strategy of complete neglect for farmers will never work, but don’t pay farmers to screw up our gasoline and reduce the supply of arable land.

    • 0 avatar
      FreedMike

      I’ll buy it when Cruz campaigns in his home state – Texas – against tax rebates for Exxon and Company when they’re making billions in profits.

      I’ll be waiting for that…

      It’s easy to be against “corporate welfare” when the “welfare” isn’t in your own state.

      • 0 avatar
        TW5

        Don’t confuse a thimble-full of water for torrent of spending. Ag subsidies are enormous, and they encompass far more than just direct payments to farmers.

        Furthermore, I didn’t argue for the elimination of ag-subsidies, I said stop paying people to screw up our gasoline.

        • 0 avatar
          highdesertcat

          I could see the use of ethanol in corn-producing states, but we have so much oil that the US government may run out of room to store it for the NPR. It should not be mandated for nationwide use.

          Yesterday, I drove through the desert on a horse with no name, and passed these piles and piles of railroad ties stacked along existing rail lines. The Railroad was building secondary and tertiary tracks along existing routes to store oil in tanker cars.

          It would appear that all the tanker cars filled with crude and already parked in the desert are not enough.

          • 0 avatar
            FreedMike

            This site posted a really good article on the oil supply situation the other day. Lots of oil is apparently being stored by speculators betting the price will go up.

          • 0 avatar
            28-Cars-Later

            Possibly, but some have speculated it is being intentionally stockpiled.

          • 0 avatar
            highdesertcat

            I learned that oil kept afloat in oil tankers off the coasts of the US and other continents is stored there until the price of crude rises.

            And it will eventually.

            And that could be why we in my area import much of our gasoline from PEMEX refineries in Mexico; because it is cheaper to buy from them than refine it ourselves in El Paso, TX, or Artesia, NM.

            My American-born Mexican Foreman told me the price of gas where he fills up in Mexico is the equivalent of $1.09 a gallon (in liters).

            So he buys at least 100 gallons at a time, sometimes more, and brings it across the border into El Paso, TX. where the price of gas is $2.199 a gallon for RegUnl, for his other trucks and private vehicles.

  • avatar
    FreedMike

    “While most of the hopefuls supported keeping the standards as they are or increasing them, Cruz was the only one to reject the notion, comparing the program to “corporate welfare.” ”

    Well, so much for Cruz winning the Iowa caucuses. And that’s too bad – the country desperately needs a repeat of the 2012 GOP whack-job circular firing squad.

    • 0 avatar
      psarhjinian

      “And that’s too bad – the country desperately needs a repeat of the 2012 GOP whack-job circular firing squad”

      Oh, you’ll get that, don’t worry. The Republican party has drifted so very far to the right, and since the primaries actually boost the profiles of extremists, it’s pretty much assured we’ll see another Bachman-Santorum Overdrive.

      Heck, all the Democrats basically have to do is say that they _agree_ with the most moderate GOP candidate, and the Republican base will do the assassination for them.

      • 0 avatar
        FreedMike

        As a Democrat it’d make me happy to see that play out. But I think they’ve learned a bit since 2012.

        If for no other reason, we need a Democrat in the White House so that when those idiots Thomas and Scalia ride off into the sunset, they’re replaced by judges disinclined to declare corporations have individual constitutional rights, or gut voting rights legislation. The current court is ludicrous.

      • 0 avatar
        highdesertcat

        Neither s!de has a candidate worth beans for 2016 at this time. Where I would have voted for Hilary BEFORE O’b*m*, I think she has way too much baggage now. And at this point, “What difference does it make?” The fans of Elizabeth Warren will vote against Hilary, just for spite. And Elizabeth Warren has a great number of believers, followers and fans within the Democrat party, but not enough to get elected.

        My candidate of choice would be either Scott Walker or Rick Perry for 2016. But neither has a chance to be elected for dog catcher, and the unions would throw billions of union-dues bucks into the arena just to torpedo these two potentials and keep them out of the race.

        • 0 avatar
          FreedMike

          Under Walker, state GDP growth from 2011 (when he took office) has lagged behind the rest country and shows no upward spike.

          http://research.stlouisfed.org/fred2/series/WINGSP

          Meanwhile, GDP growth in Minnesota, which has a bad old liberal governor who took office about the same time Walker did, has handily outpaced Wisconsin, despite not going on a jihad against unions.

          http://research.stlouisfed.org/fred2/series/MNNGSP

          Overall, since the recession, GDP in the country is up 18.7%, Minnesota’s is up 20.3%, and Wisconsin’s is at 14.8%.

          Clearly attempting to eviscerate unions doesn’t guarantee economic success. But it does help GOP to potentially out-fundraise the Democrats…right, HDC?

          But he did manage to drastically cut funding for K-12 and university education in the state. I mean, who cares if the state was well known for having some of the best public schools in the whole country? No one cares about that when they want to move jobs to Wisconsin…right?

          The only bonafide Walker has is that he is a bonafide union hater. That’s about it. But for some folks, that’s all they need to see.

          • 0 avatar
            highdesertcat

            It’s a moot point. Neither of the political parties have a candidate today that can win.

            I believe that by Nov 2015 we will have seen a new cadre of potential candidates emerge.

            In case you don’t know, I’m a political Independent with equal disdain for both political parties.

          • 0 avatar
            PrincipalDan

            Whatever. I think the Republicans do have a candidate who can win the GENERAL ELECTION, just not the primary.

            Jeb Bush. J.B. has been going around saying that anyone who could win the primary in the GOP would be un-electable because of the hard line stances they would have to take.

          • 0 avatar
            highdesertcat

            My Republican friends said the same thing to me and find J.B.’s appeal in the fact that his brother and father already served as presidents.

            Just like the push was on to elect GW Bush after WJ Clinton so he would be couched between Bush the Elder and GW Bush, the GOP strategy may be to push JB to couch the current Democrat between GW Bush and Jeb.

            Like you said, whatever. I won’t be voting for JB, and I won’t vote for Hilary this time around. After all this time, no substance.

            I may vote for the Third Party candidate like I voted for Gary Johnson last time.

          • 0 avatar
            FreedMike

            I think Jeb might be un-electable anyway. He’s going to have a very tough time with anyone who’s not going to vote a straight Republican ticket, particularly with that last name. Clinton will have the same problem, but to a lesser extent – Bill Clinton is remembered far more kindly than W.

          • 0 avatar
            FreedMike

            If you’re voting for Gary Johnson, then you might as well vote for Hillary, HDC – it’s one less vote for whoever she faces off with.

            And I’m not looking forward to voting for her either – for me, she has plenty of substance, but I’m tired of the status quo.

          • 0 avatar
            CarnotCycle

            “Under Walker, state GDP growth from 2011 (when he took office) has lagged behind the rest country and shows no upward spike.”

            I don’t think governors or presidents are commissars that run economies. Not yet, anyways. It would be rather foolish, I am sure you agree, to ascribe Texas’s relative economic success to Governor Perry, correct? Same thing.

            Such executives, however, do run their respective governments, and as a fiscal operation Wisconsin is in far better shape than otherwise with its old labor arrangements.

            And fact is, Scott Walker is a nobody without all the Democratic targeting of him. The donkeys have struck out where it counts, at the ballot box, after taking three wild, rabid swings at him.

            All the donkeys have done, at vast expense, is construct a formidable opponent into a national entity and accelerate the political hollowing out of a formerly liberal stronghold.

            I am hardly a Scott Walker fan, but in this case Democrats can’t complain – they made their monster.

          • 0 avatar
            highdesertcat

            FreedMike, it is important to me that I vote in every election, and vote for the best candidate for the job.

            Barring that, I offer a protest vote like so many Independents do.

            Bes!des, we’ve known Gary and his wife for decades. They’re from our area in the state.

            For most residents of New Mexico, Gary was a good governor and effective at moving our state forward.

            Then again, what was good for me, may not have been too whoopee for the freeloaders.

            For instance, I did very well with Gary as governor, and I am doing very well with Susanna as governor.

            But I didn’t do well at all with Bill Richardson as governor even though he removed tax on food.

            That’s because we rarely pay for our food, and to make up the loss of revenue, there was a healthy property tax increase to make up the difference. So the cost of food got cheaper but the cost of property ownership was raised more than the cut on food costs.

          • 0 avatar
            FreedMike

            Carnot, the big difference between Walker and Perry is very simple: Walker inherited a flat economy and hasn’t done much with it, and at the same time Texas has been booming because of energy. Texas is to energy what L.A. is to entertainment or NYC is to banking and finance – if you want to be in that business, that’s where you have to be. And the energy boom has created huge amounts of new employment – not just in production, but all the corporate jobs too.

            The problem that Walker confronts is that you don’t have to really be in Wisconsin for any reason, and the only reason he’s given to businesses to expand there is a deep, abiding hatred of unions. Not all companies want to play in that sandbox.

            Walker’s little anti-union jihad has one simple purpose: to de-fund the Democratic party.

        • 0 avatar
          TW5

          Both Walker and Perry have a nice sheen, but neither would be useful at the national level, and I’m saying that as someone who voted for Perry every time he was a gubernatorial candidate.

          Walker thinks austerity is magical fairy dust, and Perry is accustomed to using Texas’ surprisingly authoritarian rules to push a growth-at-all-costs technocratic agenda. His administration also features an army of competent federal lobbyists. Perry’s methods would never work in Washington. Authoritarianism doesn’t work in DC, and he has no other government to lobby for funding. He’d probably spend federal monies to make Texas the crown-jewel of America so he could move back home and declare himself emperor for life.

          Good candidates would be Paul Ryan for the Republican Party and Cory Booker for the Democratic Party. Both are a bit too young, and only Booker has executive experience, but they are both pragmatic and interested in creating policy that works.

          • 0 avatar
            highdesertcat

            TW5, I just don’t see any winnable candidates on either s!de at this point in time.

            But, I would like to see the next president, regardless of party, have actual governing experience, like Bill Clinton had, like Shrub had, like Reagan had.

            I realize that some Americans think that Community Organizer in Chicago is the best qualification a candidate can have. And that could be why we’re in the mess we’re in.

            But this is what America wanted. This is what the majority voted for. So I’m cool with that as long as they don’t ask me to contribute to it or help pay for it.

            With only 65.3% labor participation, my guess would be that 34.7% of America’s labor force is letting the working 65.3% pick up the tab for them as well.

  • avatar
    Lou_BC

    Bachman-Santorum Overdrive – as a Canadian and BTO fan I resent that remark…

    not really……. thanks for making my day. LOL

  • avatar

    It might be difficult to develop alternative fuels without the government getting involved.

    Who thinks its a good idea for our country to be so dependent on a single petroleum based fuel?

    Gasoline enjoys a dominant position since it won out early on over steam, EV, etc. in the beginning. This makes us dependent on the global market price of fuel as controlled by OPEC. Why not phase in availability of fuels that aren’t based on oil like non fungible commodities like natural gas and/or ethanol?

    • 0 avatar
      Lou_BC

      ruggles – OPEC is no longer in control. if anything, the USA carries more weight in pricing than they do.

      I do agree that there needs to be alternatives but corn is a highly inefficient to convert to alcohol.

  • avatar
    Russycle

    ” Meanwhile, both sides of the aisle object to the reduction, citing the economic damage that would hit Iowa ”

    Both side of the aisle. Meaning Democrats and Republicans in congress? Dude, if you’re going to jump from discussing Republican debutants in Iowa to talking about Congress, don’t use a euphemism to refer to your new subject, it’s confusing to your readers.

    Today’s Lesson in Journamalism is brought to you absolutely free, and worth every penny.

  • avatar

    RE: “ruggles – OPEC is no longer in control. if anything, the USA due to fracking carries more weight in pricing than they do.”

    Ask the frackers how much weight they carry now that OPEC has allowed their own production to continue at previous levels. High cost producers like frackers are highly vulnerable.

    Ever wonder why OPEC doesn’t produce any more oil now that they did in 1930 when they had fewer members? If you figure that one out you’ll understand why OPEC still controls price via their spigot. The low cost producer has the advantage. Guess who that is.

    • 0 avatar
      CarnotCycle

      @ruggles:

      “Ever wonder why OPEC doesn’t produce any more oil now that they did in 1930 when they had fewer members?”

      Maybe because OPEC didn’t exist in 1930?

      “If you figure that one out you’ll understand why OPEC still controls price via their spigot.”

      I rest my case.

      “The low cost producer has the advantage. Guess who that is.”

      He who controls the Straights of Hormuz dictates cost of production for all the sandbox. Guess who that is?

    • 0 avatar
      Lou_BC

      @ruggles – not all of the oil in the Middle East is low priced and the OPECkers aren’t too fond of the lower oil prices either. Saudi feels that they can hold out for a few years. They did not want to cut production to boost prices and then loose market share. That is something they did in the past.
      Saudi needs money pouring in because a wealthy fat and happy middle-class is what is needed to keep radicals like ISIL at bay.
      How long do you think it would take to get fracking up and running once prices climb?
      Yes it hurts frackers but what will happen is similar to any industry with tough times. You get consolidation. The big boys will get bigger and the rest will die.
      Did you read David Obelcz’s several articles on the subject of the oil price crash?
      It isn’t as simple as blaming PEC.

      • 0 avatar

        Of course all of Middle Eastern oil isn’t low cost. Neither is all of the oil OPEC produces. But they ARE the low cost producer.

        The Saudis are sitting on over $700 billion in dollar currency reserves. If they’ve gone this far, the best bet is they’re in it for the long run. If they can hold on for 2 years, the lost production of high cost producers going out of business will take care of the per barrel price on its own.

        This isn’t just about frackers. Frackers have MANY issues. First, train cars full of the volatile sands and shale crude are blowing up because it isn’t “conditioned” before loading. Why is that? Why aren’t they required to “condition” their oil before loading? Better yet, why aren’t they doing it on their own? Why are they burning off $100 million a month in natural gas?

        There are always peripheral issues taking place. The core cause of the current price slump, embraced by consumers and economies around the world, is OPECs decision to maintain production. They gave all sorts of reasons publicly. Behind the scenes I suspect things are different. The Saudis can appear as if the support our Administration in its ongoing issues with Russia over the Ukraine issue. The low oil price has put a dent in ISIS’ ability to fund itself. It has cramped Iran’s ability to fund terrorism around the region. It has given the Administration a bump in the U.S. economy top tout. The list goes on. I suspect the Saudis were thinking the time was right. EV will take a hit. Alternate fuel development will take a hit. Everything that conflicts with oil’s dominate position in the world will take a hit. Frackers and other high cost producers don’t just get cranked back up the moment the price rises. Bankers who finance them require time to “forget” that they are also partners in the oil business.

        Ever wonder where TransCanada would get traffic to pay for Keystone in a world where the global price of oil is less than $75.?

        • 0 avatar
          Lou_BC

          @Ruggles – good counterpoints. Time will tell but you initially were talking OPEC now you just mention Saudi Arabia. They did not want to loose market share by cutting production. It is a well played move by them since it hurts fellow OPEC nations with more pricy oil. It also destabilizes their rivals. That also happens to be the USA. People forget that most of the 9-11 terrorists were Saudi. The Bin Laden family new the Bush family. Big oil is big oil.

  • avatar

    RE: “Good candidates would be Paul Ryan for the Republican Party and Cory Booker for the Democratic Party. Both are a bit too young, and only Booker has executive experience, but they are both pragmatic and interested in creating policy that works.”

    Good call on Cory Booker, although I wonder if he’s ready. Of course, Obama wasn’t ready until be defeated Hillary and the Republican Recession torpedoed McCain, along with Sarah Palin’s mouth.

    I’d like to see Chris van Hollen run, although he has no national profile. Sometimes a lack of resume works, as seen with out current President. But that hasn’t kept the RW from making up a volume of fabrications after he beat them badly.

    The Republicans are again over confident after the 2014 elections, as they were after 2010. They have turned a lot of people off with their vitriol and traitorous ways. As a lifetime Republican, until Obama, I’ve been appalled. They will have to throttle their RW base and go back to becoming the party of IKE before I could ever support them as a party. As it is, I’m an issue by issue type of guy, but I find it hard to support Republicans even in the rare instance when they are right on an issue.

    • 0 avatar
      TW5

      Eisenhower’s America has been dead for a long time. His great ambition was to convert military might into industry and public works. The military has been successfully dismantled, despite lots of misinformation to the contrary. Unfortunately, LBJ threw the funds into the furnace at the senior center and the homeless shelter. Such clever use of funds, which were provided by the lower working classes as FICA tax revenue, has dismantled American industry and entry-level employment. Lack of economic activity led to slumping revenues, which first spawned inflation before monetary easing.

      The Great Society convinced Republicans that Eisenhower’s vision was naive and susceptible to perversion by Machiavellian authoritarians and closet leftists, who were public enemy #1 at the time. The era of Goldwater Republicanism dawned, and it eventually blossomed into the Reagan Revolution.

      Even now Pubs refuse to channel Eisenhower. They’d much rather redistribute wealth and create new entitlements via refundable tax credits, and they want the IRS to run it all…..funny considering how often they slam the IRS. They hate the IRS so much right now, they even shot down their own EITC expansion plans.

      Republicans will never go back to Eisenhower, and I don’t think they should. The Romney-esque blue blood bureaucrats have more sophisticated policy now. Democrats need to claim the turf vacated by Eisenhower. If you watch House of Cards, you’ll find that the writers of that show are trying to make it happen.

  • avatar

    RE: “Ever wonder why OPEC doesn’t produce any more oil now that they did in 1930 when they had fewer members?”

    Maybe because OPEC didn’t exist in 1930?”

    Sorry, that was a typo and should have read 1973. The question remains.

    “If you figure that one out you’ll understand why OPEC still controls price via their spigot.”

    “The low cost producer has the advantage. Guess who that is.”

    RE: “He who controls the Straights of Hormuz dictates cost of production for all the sandbox. Guess who that is?”

    Control of the straights has nothing to do with the fact that OPEC can crank up production if it wants to lower the price and drive competitors out of business or curtail production if the goal is to maintain a higher price. The frackers are at their mercy. In fact, the depend on OPEC adhering to its usual pattern to even have a business, but every now and then OPEC will allow a glut for their own self serving reasons.

    http://www.wtrg.com/oil_graphs/PAPRPOP.gif

    Why? Global population has doubled. Energy consumption almost tripled. OPEC membership expanded. Yet they still produce about as much now as they did in 1973.

    • 0 avatar
      Pch101

      Hugo Chavez pillaged the Venezuelan oil industry in order to pay for his programs. Consequently, their oil production peaked in 1997.

      Iranian oil production peaked under the Shah. The revolution kept out western expertise; more recently, sanctions and a lack of capital compromise Iran’s ability to increase production.

      Since 1973, Iraq has had war with Iran, two wars with the US and an extended period of sanctions. The recovery of its industry is fairly recent.

      Libyan production has been impacted by its civil war.

      If you think that these guys have their act together, then think again. During the first oil crisis, OPEC had over 50% market share; since 1980, it has averaged 38%. With exchanges now setting the price, it has very little power to do much of anything.

      • 0 avatar

        Act together? Never said it was perfect. There have been many hiccups along the way for OPEC. Members have come and gone. It has mostly been run by the Saudis. And they recently prevailed against the protestations of other members.

        It ain’t about market share. Its about maximizing the dollars per barrel. Driving out competitors occasionally is what cartels do. Most of the time OPEC moderates production to prop up the market price. Who do you think is responsible for the current price drop that is driving out high cost producers…. and OPEC no longer has any power? REALLY!

        • 0 avatar
          Pch101

          You continue to operate under the illusion that the OPEC of today bears some resemblance to the cartel of the 70s.

          I’ve provided several examples of OPEC’s supply issues. Ignore them at your peril.

          At the same time, oil production has become more diversified. The oil shocks of the 70s haven’t been repeated for a reason — OPEC’s loss of market share diminishes its ability to reduce production without shifting it to non-OPEC members. Now OPEC cuts shoot OPEC members in the foot.

          And OPEC no longer controls pricing, thanks to the exchange mechanisms that now set the price. Those contribute to the supply stability that we’ve had since the 70s. The days of cartels fixing prices are gone.

          The oil world has changed substantially since the 1970s. If you keep rehashing 1973 and ignore the considerable changes that have occurred since then, then you’re never going to understand this.

          • 0 avatar

            No I don’t. Members have come and gone. World events have impacted the cartel. OPEC has evolved. What hasn’t evolved is the fact that low cost cartels have the power to drive competitors out of business, in this case, with their spigot. If the current action doesn’t demonstrate that to you, you just can’t be convinced.

            The only “cartel” that “fixed price” was the Seven Sisters during that era. OPEC NEVER controlled price. But they have had a very strong influence.

            Again, it ain’t about market share. Its about maximizing the dollars per barrel. Pursuit of market share depletes your resource prematurely. Do you want to sell 1000 barrels at $100. or 2000 at $50.?

            Perhaps you think OPEC is made up of nothing but camel herders and tent dwelling bickering tribesmen?

            If you need enlightenment on the issue I suggest James Woolsey, Anne Korin, or Gal Luft, to name a few.

            Perhaps you’re one who believed the Saudi Prince who recently said, “We aren’t giving up market share?”

          • 0 avatar
            Pch101

            “Members have come and gone.”

            Only three nations have cycled through OPEC membership: Ecuador, Gabon, and Indonesia. Not exactly the top producing members.

            “Again, it ain’t about market share.”

            You can say it again if you want, but I’ve pointed out why declining market share has diminished OPEC’s role as a price setter — there’s competition today that did not exist in 1973.

            “Perhaps you think OPEC is made up of nothing but camel herders and tent dwelling bickering tribesmen?”

            Thanks for the strawman, but I’ve provided you with specific examples of internal issues that have caused their production to decrease. You should learn about their history and current events, as your knowledge is lacking.

  • avatar

    RE: “I realize that some Americans think that Community Organizer in Chicago is the best qualification a candidate can have. And that could be why we’re in the mess we’re in.”

    Obama inherited the mess from the “more qualified” Republicans. I know that’s a minor detail, but ……………..

    • 0 avatar
      highdesertcat

      “But this is what America wanted. This is what the majority voted for. So I’m cool with that as long as they don’t ask me to contribute to it or help pay for it.

      With only 65.3% labor participation, my guess would be that 34.7% of America’s labor force is letting the working 65.3% pick up the tab for them as well.”

      Be it Democrat or Republican governance, Americans always get exactly what they deserve, because we vote for it!

      The trick is to make whatever governance we vote for, work for you. After all, it’s not about how much you make. It’s about how much you actually get to keep.

  • avatar

    RE: “good counterpoints. Time will tell but you initially were talking OPEC now you just mention Saudi Arabia. They did not want to loose market share by cutting production.”

    Its NOT about market share despite the comments by the Saudi Prince made recently. If it were, the Saudis wouldn’t need OPEC. They would simply undersell everyone until they ran out of cheap oil The entire purpose of OPEC is to curtail their production to prop up the global market price EXPECT when they periodically allow over production to drop the price to drive high cost competitors out of business. Despite the fact that members cheat, and they don’t always act in unison, they HAVE succeeded in moderating production to maintain price. A glimpse of the graph I posed a link to shows this clearly.

    RE: “It is a well played move by them since it hurts fellow OPEC nations with more pricy oil.”

    Well, it does for the short term. When a monopoly sells at a loss to drive out competitors, it hurts for the short term. It wins in the long run.

    RE: “It also destabilizes their rivals. That also happens to be the USA.”

    The USA is hardly destabilized by the recent OPEC move and corresponding drop in oil prices. Texas, North Dakota, Oklahoma might use that word but the economy in the U.S. just received a major shot in the arm.

    RE: “People forget that most of the 9-11 terrorists were Saudi. The Bin Laden family new the Bush family. Big oil is big oil.”

    Don’t confuse Saudis in general with the Saudi government, even if members of the Saudi royal family fund terrorists. Bin Laden was once funded by the U.S. I think they left that part out of “Charley Wilson’s War.”


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Hummer: Jeez, I can’t imagine paying that much for 1 vehicle, $1,900 is what one could expect to pay for about 3-4...
  • geozinger: Fnck. I’ve lost lots of cars to the tinworm. I had a 97 Cavalier that I ran up to 265000 miles. The...
  • jh26036: Who is paying $55k for a CTR? Plenty are going before the $35k sticker.
  • JimZ: Since that’s not going to happen, why should I waste any time on your nonsensical what-if?
  • JimZ: Funny, Jim Hackett said basically the same thing yesterday and people were flinging crap left and right.

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Timothy Cain, Canada
  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States
  • Moderators

  • Adam Tonge, United States
  • Corey Lewis, United States