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Energy talk-bloggers and congressmen part 2

A follow up to the post just below on the conference call I took part in yesterday between 20 bloggers and 5 congressmen.

A couple of points are clear.

Higher energy costs have a direct affect on the cost of most everything else, food, goods, travel, etc.  Each political party is looking at solving this issue in two totally different ways.

The democrats are looking at regulating what we have and how we use it, while republicans want to get more domestic energy sources up and running.  The republicans see high demand and higher prices going hand in hand, thus desiring the country to begin to wean themselves from middle eastern oil and produce more of our own. 

The democrats are bringing bills to the floor which are regulatory in nature:  Telling the CFTC to "do their jobs", (wholly ceremonial) asking for a billion dollars for mass transit, and enforcing a "use it or lose it" stricture to the oil leases. None of these bills adds one drop to the supply.

The democrat majority is exercising their right to control the debate.  This is neither right or wrong, it is the way of politics.  But now everyone has left the capitol for the Fourth of July break and nothing has been accomplished in the way of working through energy and fuel issues.  The republicans took drilling in the Anwar off the table, one compromise.  Other than that, zero results.

My own opinion is that this country has to do something to increase its own supply.  We just can't depend on other countries to sell us our gas.  And, while regulating some things will work for a while, it won't solve the problem in the long run.  Despite what we hear on the news, getting a flow of domestic oil up and running in new areas will not take 10 to 15 years.  The infrastructure is already in place in several offshore areas including California and the gulf which would mean only a one year wait.

Energy talk-Bloggers and Congressmen

I had the opportunity to be part of a Blogger Conference call this afternoon featuring five members of congress and approximately 20 national bloggers.  The issues on the table for discussion were gas prices and energy policy.  The five members of the House who were in atttendance were, John Shimkus, Il-19, Roy Blunt, Mo-House Minority Whip, John Peterson, Pa-5, Thad McCotter, Mi-11, and Michelle Bachmann, Mn-6.

All are Republicans. 

Let me mention what amazed me most about the hour I spend on the phone listening.  It was the passion and energy with which each member spoke on this subject.  Frankly, we rarely get to see or hear this type of passionate discourse from congressmen and we are poorer for it. 

Each member spoke on what they and their party believe should be the direction the country should take when it comes to energy and that is, increased supply, and specifically, increased American, domestic production.

Their frustration stems from the fact the the democratic majority will not even allow dabate on the floor on increasing domestic output from the Anwar, from offshore, from coal, from natural gas fields.   The counterpoint from the democratic side is that the oil people should be drilling on the lands on which they have leases.  This has come to be known as the "use it or lose it" philosophy. 

A Townhall blogger asked about the use it or lose it" leases and the response was that this land is filled with "old tired oil fields which have drills between drills".  "Just because you have a bingo card does not mean you can yell bingo."  In other words, just having the lease does not mean there is much left. 

More later.      

Flood economics

The flood waters swamping Iowa, Wisconsin, Illinois and Missouri are doing much more than forcing people out of their homes. Millions of acres of the best farm land are underwater, a catastrophe which will affect consumers all across the country in the coming year. 

While major cable news channels obsess over Obama's decision not to take public money for his campaign, the part of the country which will have a lot to do with rising food prices, gas prices etc, slowly drowns. 

"You may not load much corn meal or soybean oil into your shopping cart, but you'll pay more for eggs and meat in coming months. Those flooded fields mean that food-price inflation, which has been running at more than 5 percent, will remain a front-burner issue well into next year.

"Corn is the world's most important food crop, and the U.S. is the world's most important producer and most important exporter," said Bill Nelson, a commodities analyst at Wachovia Securities. "Nothing else affects food prices like corn does."

The price of eggs, the price of poultry, the price of beef, the cost of ethanol...all heading up. 

American to charge for that first bag

It looks like American Airlines is on the way out.  They announced today that starting June 15 they will begin charging $15 for the first checked bag.  They recently began charging $25 for a second checked bag.  AA will also cut the number of flights they offer by 12 percent and layoff possibly thousands of employees.

The airline may also begin charging for reservation help (hahahahahaha) and oversized bags. 

Supposedly this is because of the high price of oil.

Could they not just charge everyone the same price?  As much as our family flies, one thing is pretty clear, and it is that everyone on the plane has paid a different price for their ticket.  They may have paid a different price from one week ago when they went to the same place.  When we go to buy a loaf of bread, whether in St. Louis or Chicago or Atlanta we pretty much know how much it is going to cost.  People who eat more bread each week don't get to pay less and people who buy their bread in the morning don't pay less than those who buy at night.

So why can't there be a one price airplane ticket?  One price for first class, business class and economy?

And, this charging for the first bag...doesn't anyone believe this will just cause more flyers to overload a carry on bag, leading to a totally unbalanced weight in the plane?  I don't want to be in a plane with all the weight on the top.

Funniest line in the story:  Chairman and Chief Executive Gerard J. Arpey said, "The fees are an effort to get customers to pay for services they want." What services do customers want?  Just get my ticket stamped to the correct destination and my bags too.  Don't cancel or delay so many flights.  What's so hard about that?

Potatoes rediscovered

Reuters: "As wheat and rice prices surge, the humble potato -- long derided as a boring tuber prone to making you fat -- is being rediscovered as a nutritious crop that could cheaply feed an increasingly hungry world."

The story dismisses rising corn prices with a flat statement that corn is mainly used for livestock feed.  Not exactly true when you take ethanol into account, corn syrup in soda etc, but the cost of many world food grain staples, wheat, rice and corn, is rising considerably and potatoes, which are not yet subject to commodity speculation is now seen as a good alternative.

Potatoes, which can be made into flour as well as cooked in umpteen different ways, are great for absorbing added flavors which is why they don't get tiresome.  Garlic mashed, french fried, rosemary topped, sliced and diced and baked and mashed, cheesed, chipped, red, yellow, white, purple, blue. All good.

While we were watching the oil prices...

...the price of corn has skyrocketed.

Food prices will continue to rise, especially meat.  However corn is so much a part of so many foods, just about everything in the grocery stores will give us sticker shock.

When can you expect to see your stimulus check

The federal government has announced the dates on which Americans can expect to see the promised economic stimulus checks.

The mailing will begin on May 2 and end on July 11.  Many will go into direct deposit.  To those who want a paper check, the day it arrives will depend on the mail's speed.

The last two numbers of a social security number will determine when the checks are mailed.  There are a lot of numbers and dates to look through, but the Kansas City Star has done a pretty good job of laying it all out.

Layoffs in Emporia

Emporia Kansas' largest employer, Tyson Foods, with no warning, laid off 1500 workers last Friday.  This is out of a company workforce of 2400.  For a city of just under 27,000 residents, this will be a huge economic hit. 

1500 individuals means spouses and children so the number of people affected by this "restructuring" will be multiplied many times over.  Where will they go to find another job, what will happen to the schools if 1500 kids leave town with their parents? 

Tyson is shutting down its cattle slaughtering operation because "Cattle production has moved from eastern to western Kansas over the past 20 to 30 years, and the Emporia plant is no longer centrally located."  And, cattle production is down generally.

Some of the workers will be asked to consider transfering to a couple of Tyson's other plants in Western Kansas, Nebraska and Illinois.  Beyond that, what will happen to the city of Emporia?  The city recently hired a new city manager who previously served in Prospect Heights, Illinois.  He has his job cut out for him now.

Got Juice?

It must be January.  You can tell by the news photos of Florida oranges encased in ice.

  Photo for the NY Daily News by Burke

Every year we stop flipping channels and watch Trading Places, a movie about commodities brokers trying to job the Florida citrus crop and starring Eddie Murphy and Dan Ackroyd.  Some things never change.  Have you bought your weekly orange juice yet?  Better do it before those half gallon cartons already on the shelves get their prices raised.

Why is it that a freezing crop or oranges currently on trees makes juice made of oranges already picked, processed, packaged, shipped and on grocery shelves cost more?

Gloomy schmoomy

The most prominent news today, this day after Christmas is economic.  Seems retailers are reported to be "gloomy" after what some are calling a down year for Christmas sales.  Consumer spending was said to have risen only 2.4 percent over last year, much lower than sellers had hoped. 

Woe, tales of woe and consternation.  But.  Wait.

What also occurred and mentioned less prominently if at all, is that the sale of gift cards went out the door at a figure of $26 billion, an increase over last year of 42 percent.  26 billion and up 46 percent.  Gift cards are not figured into sales until they are redeemed so it is very possible, very likely in fact, that this year could see retailer sales going higher than they projected. 

Much hand wringing over how poor sales of clothing has been this season.  Can you say gift cards?  How many shoppers really like trying to pick out clothing items for anyone on their gift list under 3 years old?  Give them a gift card and let them pick out what they want.  And that is what it appears has happened.  Those who report these dire stories so often wrong and maybe they'd learn they have to wait until the gift cards come through.  $26 billion.  Up 42 percent.

Every year around this time we listen to these tales of woe.  Then when we stop paying attention to Christmas, out come the stories of how good the retail season has been thanks to gift cards.