I was writing comments on the Raising Kaine blog (RK).  For those of you who do no know this blog it is a site for "Virginia's Progressive Community".  You can get to it from my Blogroll.  I was troll rated twice for the following comment

Now show us how prices are locked to that yearly progression. (0.00 / 2)
You don't seem to understand do you?  What is the time lag for your supply/demand theory?  what do you do when things do not correlate?  They often do not.  Please try to be a little more scientific when you spout such theories.

 Here's the rationale for the troll ratings:

Comments like "you don't seem to understand do you" or "spout such theories" are not going to get you very far on this website.  FYI, I worked for 17 1/2 years as an international oil markets analyst, and I think over those years I picked up a few things. I've also explained how this all works numerous times here at RK, and am not going to keep repeating myself.  At this point, if you don't understand how supply and demand work, I'd suggest you take a few basic economics courses.

Look below to see why this is ridiculous!

Back today from the gas station and the grocery store, Phil, returning to my home here in Dallas to find yet another fistful of bills in my mailbox.

As I crack open a beer and settle down to a brisk session of online billpay this evening, I want to take a few minutes first, Phil, to kvetch. To bitch. To moan. And to tell you, as I listen vaguely to MSNBC on the TV across the room cataloguing a long laundry list of the factors -- ranging from the gutting of the Fourth Amendment to $4.11 gasoline to Disney having to fight gun-toting employees to the doubling of insurance premiums over the last three years -- of all the reasons so many of us "whiners" believe America is in decline.

Just a few brief minutes before I get back to work to kvetch. To bitch. To moan. To tell you a little bit about the way life is these days for this Texas single mom. And, then, to tell you to go fuck yourself.

More below:  

Naomi Klein’s speech at the National Conference for Media reform was not included on the conference website. subMedia got a hold of a copy and published it on its website - http://subMedia.TV

This summer is the summer of pain. Families across America are struggling with higher prices for gas and food along with record unemployment rates, flat wages, and the deepening housing crisis. In April 2008, gasoline prices easily shattered an inflation-adjusted record that had stood since March 1981, and they have only continued to soar since then, hitting new record highs almost weekly. Ever-higher food prices, which rose 22.7 percent from March 2001 to April 2008, are taking another bite out of families’ wallets.

A friend of mine sent around an email this morning, and it struck me as one of the most eloquent and pointed queries I have seen in a long time.  I am sharing this with you with his permission.  He raises some great points, and some really thought provoking questions.  So please, give his letter some thought, and share your feelings.  I will share mine too...

Cara

I just got back from the grocery store to do a little staple shopping, the bare essentials kind of stuff.  Not one to really pay attention to prices in the past, but due to my unemployment status, I started keeping track of my purchases.  I don't know about anyone here, and if you all really care, but is anybody else taking a look at how out of control prices are of things?  Here's a little sample of my shopping list.

Seriously, if anyone still thinks that the price of oil (and other commodities, like foodstuffs) is driven mainly by supply and demand, by peak oil and resource scarcity, is an idiot.

"Signs of unusual behavior abound across the commodities markets. Take cotton, for example. In late February, the price of cotton futures jumped by 50 percent within two weeks. But cotton farmers haven't even been able to sell half of their harvest from the previous year yet. Warehouses in the United States are fuller than they have been since 1966. Indeed, all signs point to a price decline."

Say what?

"In late February, the price of cotton futures jumped by 50 percent within two weeks. But cotton farmers haven't even been able to sell half of their harvest from the previous year yet."

Still not convinced?
"In late 2003, they invested only $13 billion (€8.4 billion) in the food commodities business. By March 2008, that number had jumped to $260 billion (€168 billion), an increase of 1,900 percent."

Still think it's peak oil, supply&demand that is responsible?

I received an email from my regular rightwing friend.  The email is based on the Heritage Foundations opposition to Consumer-First Energy Act of 2008 (S. 3044).  I have attached the email below.  I would appreciate any feedback or  directions to get a good analysis of what they say and what reality is.

I'm not sure if anyone noticed this yesterday, what with all the political news and now today with the story from Guantanamo.  But the price of Corn broke a new high.

From a person named Armory Lovins, here is an idea Kevin is highlighting:

For cars, the most effective thing would be a "feebate": In the showroom, less-efficient models would have a corresponding fee, while the more-efficient ones would get a rebate paid for by the fees. That way when choosing what model you want you would pay attention to fuel savings over its whole life, not just the first year or two. It turns out that the automakers can actually make more money this way because they will want to get their cars from the fee zone into the rebate zone by putting in more technology. The technology has a higher profit margin than the rest of the vehicle.

Every time I see a news report which says gas is averaging something like 4 dollars p. gallon, I wonder where, exactly, people are paying 4/gal or less. I have no idea what gas prices are like in the rest of the USA so I thought I would ask.
Please, where do you live and how much is a gallon of unleaded gasoline?

(In Sacramento CA it was ranging, last I saw, it was between $4.40/gal and $4.55/gal, depending on which station.)

edit: sorry, I forgot about diesel pricing, which has been well over $5/gal for at least a month (where I live.)

I trade commodities - just finished up a one year engagement helping a firm trade their international feedstock and offtake contract in biodiesel. I was a guest speaker at a major natural gas industry function in 2005 - the title of my talk "Is Volatility Really Due to Hedge Funds" (the answer was yes).

So, when I hear people saying that hedge funds are the cause of energy prices going up in "the face of the supply/demand balance", I gnash my teeth. Why? Because hedge funds define the supply/demand balance.

Ok, you say: "But I see the oil storage numbers going up, I see demand dropping - that means there is more supply than demand." The answer is you are correct but only in part.

I used to trade but I also originated for the firm - that means I went out and sold structured transactions to other companies. The discussion I had with them has relevance to this discussion.

More below:

The Food and Agriculture Organisation (FAO) Food Outlook report published a couple of days ago confirms that wheat prices should decline in the new season. I thought to myself: Wow! That's great news! I promptly logged onto the FAO site (I'm a regular there) and I got this:

International prices of most agricultural commodities have started to decline, but they are unlikely to return to the low price levels of previous years, Food Outlook reports. The FAO food price index has remained stable since February 2008, but the average of the first four months of 2008 is still 53 percent higher when compared to the same period a year ago.

And this:

Increased hunger likely in some poor countries

I smell a rat! Some financial entities (read speculators), like the oil producers, are making a killing. Somewhere.

Last week I posed a diary challenging the recent meme that the high price of oil had "nothing to do with supply vs. demand" (Senator Dorgan on the Ed Schultz show last week) and that instead it's all those evil wall street speculators that were to blame.

Several commenters took issue with some of my points.

A day or two later, Senator Dorgan appeared once again on Ed's show to then proclaim (flip-flop) that his bill to compel the President to stop diverting "supply" into the national strategic oil reserves, would help pressure prices downward - due to do this small, but apparently now significant change in supply.

You can't have it both ways, Mr. Dorgan!

[I provide an update to all this in my own comment at the bottom]

Okay...the other day on Ed Schultz I heard this (supposedly) intelligent senator (Dorgan?) say that 'the price of oil has nothing to do with supply and demand' and went on to talk about "speculators" in the market being to blame for everything!!!

Such blinding ignorance from one of our elected leaders in congress...

...or could it be propaganda instead by one of the water-carriers for big oil interests?

Most cities in this country were built around the automobile, and in many places public transportion is now almost non-existent, even in large cities.

Public transportion that existed prior to the automobile were dismantled by the emergent automobile industry in a move that came to be known as the Great American Streetcar Scandal; General Motors managed to remove over 100 streetcar systems nationwide by 1950. By the time antitrust investigators could go to work, the deed was done. American mass-transit was "dead".

Great American Streetcar Scandal

I think all three presidential candidates are wrong about the gas tax holiday simply because they don't understand how prices work. There will not be any $30 savings to consumers if you eliminate the gas tax. If anything, the price of gasoline will go up.

The fundamental role of economics is that demand will always exceed supply, therefore some people have to be dissuaded from buying and price is the ultimate dissuader. Therefore total price, the price the consumer actually sees, rises until enough consumers are dissuaded so that the remaining demand balances the supply available.

Total price is determined by that balance and if you lower the tax, or raise the tax, total price will stay the same. The price you see today is the price that balances the demand to the supply. However, removing the gas tax can make supply go down.

John McCain and Hillary Clinton think you are stupid.  They are proposing a ‘gas tax holiday’, which means about $0.20 a gallon federal tax relief for the three months of summer.  At first glance, this seems like a good deal.  Upon further review, it is only political grandstanding and means absolutely nothing to the average consumer.