$5 for a gallon of gasoline in 2012 –

  $5 for a gallon of gasoline in 2012 – — The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.

In an interview with Platt’s Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases. "I’m predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices," he said. Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade, but not by 2012.  "That wolf is out there and it’s going to be at the door…I agree with him that we’ll see those numbers at some point this decade but not yet." Kloza said.

The Gulf of Mexico is Dying – The Gulf of Mexico (GOM) does not exist in isolation and is, in fact, connected to the Seven Seas.  Hence, we publish these findings in order that the world community will come together to further contemplate this dire and demanding predicament.  We also do so with the hope that an appropriate global response will be formulated, and acted upon, for the sake of future generations.  It is the most basic responsibility for every civilization to leave their world in a better condition than that which they inherited from their forbears.

After conducting the Gulf Oil Spill Remediation Conference for over seven months, we can now disseminate the following information with the authority and confidence of those who have thoroughly investigated a crime scene.  There are many research articles, investigative reports and penetrating exposes archived at the following website.  Particularly those posted from August through November provide a unique body of evidence, many with compelling photo-documentaries, which portray the true state of affairs at the Macondo Prospect in the GOM.

 
Partying Like It’s 1923: Or, The Weimar Temptation – Krugman – There’s an observation I’ve tried to make in a number of columns and blog posts, but maybe haven’t gotten across as clearly as I should: namely, the extent to which current economic discourse is being warped by what we might call the Weimar Temptation, the desire to see everything in terms of the evils of deficits and the money printed to cover them. The hyperinflation story is, after all, satisfying both intellectually and morally. A weak, spendthrift government can’t limit its spending to match its revenues; it loses the confidence of investors, so it has to print money to make up the difference; and too much money chasing too few goods leads to ever-higher inflation.  But there’s always the temptation to apply the story too widely. Partly this is the drunk-and-the-streetlight effect: you look for dropped keys where the light is brightest, even though that’s not actually where you dropped them. Partly it’s ideology: the hyperinflation story is a comfortable one for people who want to make government always the problem, never the solution.
 

The military failure machine –Nicholas Kristof has a column in the NYT putting forward the heretical idea that the US should spend less on the military and more on diplomacy and education. The argument is obviously right as far as it goes, but it leaves one big question unasked. An obvious reason for the focus on military spending is that Americans have massive confidence in their military and much less in their education system, particularly the public school systems.Yet judged by results, the opposite should surely be the case. Why is this so? The US military has fought five large-scale wars in the past fifty years, resulting in a draw in Korea[1], a defeat in Vietnam, and three inconclusive outcomes in Iraq (twice) and Afghanistan. That’s a record that makes the worst inner-city public school look pretty good. At least the majority of students, even at the worst schools, end up more or less literate.

Petroleum Prices and the International Dimension – Paul Krugman observes that there are many real side factors that should drive oil prices higher (in an article that cites Jim’s 2009 paper). I certainly don’t have much to add in terms of thinking about oil prices and domestic macro implications, but Krugman’s note did impel me to examine more closely the international aspects of the underlying demand factors. Figure 1 depicts the changes (not percent changes) in oil consumption in millions of barrels per day, by economy. Clearly, in 2008 and 2009, due to the slowdown and then deep recession (which even in September 2008, Don Luskin was still disputing), oil consumption declined. As Figure 1 illustrates, 2010 is a year of rebound in petroleum consumption growth, with Chinese consumption resuming its growth. One interesting highlight is that the pattern that held before the Great Recession, of Chinese consumption growth exceeding US growth, has re-asserted itself. Given the resumption in world consumption, it’s no surprise that prices have re-established themselves since mid-2009, as shown in Figure 2. (For an earlier discussion of China’s role, see this CBO report from 2006).

Can Washington get America’s economy moving again with cash rewards?… In the flurry of activity at the end of the 111th Congress, the reauthorization of the "America COMPETES Act" went mostly unnoticed. But it is a little bill that Washington hopes will prove transformative. The law—its cringeworthy official name is the America Creating Opportunities To Meaningfully Promote Excellence in Technology, Education, and Science Act—overhauls the way the federal government supports private-sector R & D, and one of the main ways the government hopes to support R & D is with prizes. Lots of prizes. So-called "inducement prizes" (as opposed to "recognition prizes," like the Nobel or the MacArthur or the Pulitzer) make up a major part of the Obama administration’s grand Strategy for American Innovation. Last year, outlining its vision for a more competitive America, the White House said the government "should take advantage of the expertise and insight of people both inside and outside" Washington by using "high-risk, high-reward policy tools such as prizes and challenges to solve tough problems." This fall, Challenge.gov, a portal featuring agencies’ cash rewards for new ideas, debuted. And the COMPETES Act, which first passed in 2007, included a provision clarifying some legal issues around such contests.

 

Facts or Fallacies? Part I: BLS Data v. the Zombie Lump-of-Labor Fallacy-Fallacy In the third quarter of 2010 real GDP in the U.S. was 21 percent higher than it had been in the fourth quarter of 1999. Labor force participation grew during the same period by 9 percent, an increase of nearly 14 million people. However, between December 1999 and September 2010, total non-farm employment fell by just over 200,000.Here is what Bill McBride at Calculated Risk ("Older Workers and the Lump of Labor Fallacy") thinks is supposed to happen:The number of jobs in the economy is not fixed, and people staying in the work force just means the economy will be larger.McBride suspects we will see more of this age-related fallacy. Indeed, we are already seeing more of this kind of fallacy rhetoric just in the last few months from the minions of right-wing Thinktankia urging that the Social Security retirement age be raised. (Pay attention, Bruce Webb and Coberly!)

| Paul Krugman and Robin Wells Are Really Unhappy with How Obama Has Played His Hand… exerpts from PK and RW: Where Do We Go from Here? :

  

Why the Surge in Commodity Prices? – Paul Krugman explains the main reason for the rising commodity prices:  the primary driving force behind rising commodity prices isn’t demand from the United States. It’s demand from China and other emerging economies. As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies.  There are many observers who disagree with this interpretation.  They argue it is loose U.S. monetary policy and speculation that is driving the surge in commodity prices.  Krugman notes there is a way to test this alternative theory:  two and a half years ago, many commentators dismissed the price spike as an aberration driven by speculators. And they claimed vindication when commodity prices plunged in the second half of 2008.  But that price collapse coincided with a severe global recession, which led to a sharp fall in demand for raw materials. The big test would come when the world economy recovered. Would raw materials once again become expensive?  If so, then  Krugman’s theory is more plausible.  So what does the data show?  I’d say Krugman has a solid case. 
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