Many things in the economy are misunderstood, and the price of oil/gas is no exception.  The only thing worse than the media peddling half-truths and falsehoods, is when their ‘fact-checking’ suffers from the same ignorance with a dash of bias. 

And so it is with the San Antonio Express-News, syndicating from the Houston Chronicle this week.

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“American presidents have little control over fuel markets. Petroleum products are global commodities and their prices are dictated by supply and demand.”

Partial BS. 

They are indeed “global commodities,” which undercuts the goal of so-called “energy independence.”  Different countries produce slightly different grades of crude, which determines the type of refining capacity we have. 

The main reason we became a global leader in production and export (not a bad thing if you support the domestic industry) is where the president absolutely has control: the condition of the dollar.

Crude is priced in dollars worldwide.  In the absence of set exchange rates, such as when the dollar had solid gold backing, when a presidential administration supports and defends a strong dollar (think Reagan and Clinton), it takes fewer of them to purchase goods and services.  When they let it flail, and weaken, as has been the case this entire century so far, it takes more.

This is acutely true when it comes to commodities.  It’s no coincidence that hydraulic fracturing took off, unlocking vast quantities of American oil and natural gas, when President Bush failed to defend and support a strong national currency. 

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“Prices are high because supplies are tight and demand is high.”

BS. 

As measured in barrels per day, the demand for, and supply of oil is nearly identical.     

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“One could easily argue these policies are discouraging new investments in oil and gas projects … can and do eventually influence market trends, which could cause more pain at the pump in the future — if you’re still driving a gasoline-powered car.”

Partial slant.

Not only do policies absolutely influence the market, but it starts well before that.  Shrinkage in investment, already obstructed by the main source of high energy prices (the aforementioned weak dollar), starts when pro-government activist policymakers are campaigning for public office.  It sends a signal to owners (i.e. investors) and management of companies. 

The slant comes from the very last passage.

Currently, less than 1% of the automobiles on the road are electric.  The market is moving that way, but unlikely to meet goals set by politicians.  Moreover, such goals usually involved coercing industry to do this or that.  Downstream, government reaches into the pocket of one taxpayer to give to another to ‘influence’ their buying patterns. 

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“The interplay between the loss of Russian supply and recovering post-pandemic economies …”
“Fuel demand tanked when the pandemic hit …”
“Oil producers … also face pandemic-induced labor and supply chain constraints making it harder to ramp up production.”
“The world has lost 3 million barrels per day of refining capacity since the start of the pandemic …”
“COVID-19 changed the way they do business …”

BS.

Blaming everything on the “pandemic,” or “COVID-19,” or the “coronavirus” is pure slant.  People were adjusting to the spread of the coronavirus.  We were never given a chance to see that through, to sift from the millions and millions of actions and ideas from individual decision-making that could have shown the best way to navigate the pandemic. 

Instead, politicians at every level across the world either panicked, or saw an opportunity to seize control of our lives.  There is never any legitimate reason to rob people of their individual freedom, and freedom to associate with each other.  Every time policymakers, the media, bureaucrats peddle such authoritarian BS, citizens should push back fervently.

The post Fact-checking the Fact-checkers: Gas Prices first appeared on Infuse SA.

• The government lockdowns as an “opportunity (for) transformational change.”
• Turning failed government education policy into government jobs.
• A preview of what’s in store for bond debt-funding.

Back in 2008, with the country in the throes of a mortgage meltdown and onset of the Great Recession, incoming White House Chief of staff Rahm Emanuel pounced: “you never want a serious crisis to go to waste.”

So began an explosion of government spending and regulation.  A similar occasion has materialized over the last couple years, with some of the outlays raining down on municipalities.  The latest installment just so happens to coincide with a billion-dollar bond proposal.

City Council is currently trying to figure out how to spend $88 million from the American Rescue Plan Act (ARPA).  It’s nominally earmarked to “determine what impact the coronavirus pandemic had on San Antonio in areas ranging from small business to mental health.” 

There’s no way to ever know that though, because the fallout wasn’t totally related to the virus.  What they will find out is the destruction that followed in the wake of government lockdowns. 

Businesses were ordered closed, some never reopened, and people (especially those with families to support) stressed out over the jobs they lost.  Where’s the mystery here? 

Ahh but wait: the city has received dozens of “unsolicited requests from groups and agencies seeking” 4-times what Uncle Sam has bestowed upon us.  Wiper blades are needed to clean the computer screen of the drooling over who will get what.

Councilwoman Melissa Cabello-Havrda (D6) strikes an opportunistic tone, claiming the pandemic gave us the chance “to improve our communities.” 

If the pandemic gave us a chance for anything, it was to find ways to navigate this new virus that was spreading amongst us.  And we were starting to do that: wiping counters and doorknobs, having more hand sanitizer available, using bandanas and handkerchiefs as masks, etc. 

Whether out of fear of the virus, fear of poor emergency planning, or fear of being seen as not “doing something,” authoritarians snuffed out the adjustments citizens were making. They brought the bureaucratic hammer down on us instead.  We all remember the hysteria, grocery shortages, and strife that ensued.

Given Uncle Sam’s loose spending standards, it’s not a stretch to say they, and their special-interest and academic cronies saw this “opportunity” coming.  That may be why they fell in line with state and federal officials rather than stand with their constituents.

One could be forgiven for thinking that this kind of gravy train is connected to the repercussions of politicians’ continually pumping more taxpayer funds into higher education: a greater number of college grads possessing degrees of diminished value. 

When kids who might otherwise have explored vocational careers, are instead lured to a university by artificially easy loan terms, you’ll see a shortage of labor in the former, and a surplus in the latter. 

It’s leading some to push for unionization, which tends to suppress economy dynamism, and therefore depress prosperity.  Or worse: to ‘careers’ in lobbying, the kind that depend on government spending for their livelihood. 

Never let it be said that government doesn’t create jobs. 

Concerns have been aired about making sure these ARPA funds are used for their intended purpose, and that we avoid commitments that would put pressure on future city budgets, etc.  That’s beside the point though. 

When you have folks like Councilwoman Phyllis Viagran (D3) who believe the arts are “an economic driver,” or that it’s possible for the public sector to spend “a bucket of money … efficiently and effectively” like the private sector, as Councilman Manny Pelaez (D8) does, there’s a disconnect.

Moreover, when Councilwoman Havrda (D6) feels the aforementioned opportunities “to improve” exist because they had “previously been underfunded,” doesn’t that imply that citizens have been undertaxed?  Given their reaction to recent property tax appraisals, they probably disagree. 

If voters don’t deny the council the $1.2 billion gusher of bond debt they’re so enthusiastic about, while at the same time demanding the property tax be eliminated, this cycle will continue regardless of the source of funny money.

Somewhere Rahm is smiling.

The post The Gravy Train Leading Devalued Degrees to Government ‘Work’ first appeared on Infuse SA.

• An increased debt-load is falling on a shrinking property taxpayer base
• Freeing up homeowners’ savings would genuinely boost area economic prosperity
• Politically-directed spending is inherently less efficient and effective than market-driven investing

Next month San Antonians will go to the polls to vote on $1.2 billion in bond proposals.  It’s a whopper of a debt-binge that includes funding for unfinished projects authorized by prior bond elections, some of questionable legality, and others representing wasteful jurisdictional overlap.

Also on the ballot will be two constitutional amendments, both aimed at reducing property taxes.  The issues are related.

Part of the tax we pay on the investment we put into our homes goes toward paying off that debt.  The city’s ability to continue tapping that source is subject to a couple of cross-currents.

One is soaring property appraisals by Bexar County.  This allows the city to pull in more revenue without raising rates.  Unfortunately, they opt to spend this windfall rather than cut those rates, or at least raise exemptions.

Texas has been picking up the slack on the latter.

In addition to the ones on the ballot in a few weeks, a couple more exemption-raising constitutional amendments were approved in November.  Any reduction in this damaging tax is progress, and it puts citizens on more equitable footing with businesses that get favorable tax treatment.

But only some taxpayers benefit.

To state the obvious, this is unfair, and it increases the burden on the remaining, shrinking tax base, some of whom may eventually say “to heck with this” and move outside city limits. 

Mayor Ron Nirenberg on the other hand, believes this exodus is happening due to a lack of “affordable housing,” and prospective homebuyers “losing … bidding wars … to outside investors.” 

The fact is, those investors are driven to these safer assets by poor monetary policy in Washington D.C. 

City council practically salivates at the opportunity to take advantage of this, and other federal largesse, to spend on their pet projects.  However, they can’t bring themselves to modestly raise exemptions on property taxes without the state compelling them to?       

During the last effort to raise exemptions a year ago, Councilman Manny Pelaez (D8) said the savings to homeowners of the proposed exemption hike to 5% would be “meaningless.”  We agree.  That’s why we believe eliminating the whole scheme would make it meaningful. 

The reaction of most politicians, regardless of jurisdiction or political party, is typically “but how will we fill the revenue hole in the budget?”  Whether that’s due to lack of respect for citizens, envy or ignorance is anyone’s guess. 

We tend to give them the benefit of the doubt that they just don’t know any better.

For one, taxpayers will not simply stuff the reclaimed $400+ million in tax seizures under the mattress.  They’ll inevitably go shopping, thereby pumping up sales tax revenue.  Or even better, some might use it to launch a business venture, hiring more sales tax-paying employees. 

Maybe in addition to appealing to residents to “buy local,” our elected representatives should also urge them to “invest local.”

They could also show more respect to enterprising individuals and businesses by eliminating city programs that are better- and/or already handled by these folks.  As it is, they appear to have more faith in their ability to spend taxpayer money than they do in that of the taxpayers’ themselves.

For example, rather than expanding control and increasing subsidization of “food access” programs, how about removing obstacles to its development, and selling plots of city-owned land to urban farmers? 

Members of council who have owned a business should know all of this.  If not, they’re more prone to cronyism.

If all this is a bridge too far for their ego, they could just add another percentage or two to the city’s sales tax rate.  If they agree with Councilman Pelaez’ aforementioned sentiment, one would assume they’d feel the same about consumers paying a few more dollars for say, another T.V.

If citizens are serious about stopping municipal versions of federal omnibus spending bills, it is critical to also demand the elimination of this coercive tax.  It would bump up the GDP portion of our state–high debt/GDP, which itself calls into question how much more we can take on with a handicapped ability to pay for it.

Shifting to the most efficient form of taxation would force the city to depend on the health of the economy for its spending, rather than on devalued dollars.  It would have more incentive to clear excessively burdensome hurdles to commercial activity.

Otherwise, they can count on us wasting valuable time protesting appraisals, putting on workshops to teach others how to do the same, numbing ourselves to it all by outsourcing the escrow process to our mortgage lenders, etc. 

How much more debt are YOU willing to take on, and how much more debt CAN the city take on?!   The bonds only raise those bigger questions about the tax burdens we already carry, and the burdensome solutions of increasingly higher taxes the city keeps falling back on.  Force the city to look for answers.   

Next month, citizens can put a stop to the city borrowing like a teenager who stole his parents’ credit card.  We should also put them in a timeout until they stop plundering our bank accounts.

The post A ‘No’ on the Bonds is Hollow Without a ‘No’ on Property Taxes first appeared on Infuse SA.

• Increased government involvement in the housing sector will drive up input prices
• More homeowners will be taxed to fund the personal preferences of other homeowners
• San Antonio taxpayers will be left with the tax bill when the housing market settles down

A good friend of ours recently quipped about how she wished she had a good product or service idea to go along with her immense analytical and organizational skills.  No doubt if she did, she’d have little trouble finding financial backing.

All government needs though, is a captive tax base.  Politicians like to refer to these taxpayers as “investors.” 

San Antonio mayor Ron Nirenberg used some form of that word five times in laying out his case for proposition F, the $150 million housing bond on the ballot here in San Antonio in a couple weeks. 

When voluntary investors in the private sector put their resources behind a new or improved gadget, they generally get a return if those who buy the gadget get a big(ger) bang for their buck.  That’s the hope of proponents here, to “fill affordability gaps” in the local housing market.

In reality, politically-directed “investment” tends to exacerbate current problems and/or create new ones.

Rather than “spurring … resources” by intervening in the market, the city is more likely to spur prices of inputs by competing with builders already busy trying to bring 20,000-to-30,000 new units online. 

That’s to say nothing of the organizations he cites (some publicly-funded) that are already working to alleviate this problem, such as it is.

A recent report in the San Antonio Express-News cites people “seeking apartments … after returning to the office, finding a new job, breaking up with a partner or simply wanting their own space.”

Additionally, Mayor Nirenberg implies that some homeowners have a right to stay put if they want to. 

Why is it the responsibility of other homeowners to subsidize these varied groups’ personal preferences?  Make no mistake, they will, because all this debt gets billed to them in the form of the property taxes they’re forced to pay.  Recent appraisals are already sending shockwaves across the area.

The mayor also believes that people are living “farther away from job centers … due to a lack of affordable housing options.”  Odds are just as well that they’re moving out of city limits to avoid being conscripted benefactors for the whims of city council. 

The pressure on those who remain will only intensify as more segments become exempted from this coercion.  It’s yet another reason the whole property tax scheme should be uprooted and scrapped (the subject for a forthcoming column).

At the end of the day, this effort, should supporters convince voters to swipe the city’s credit card, will have about as little effect on local housing prices as the oil market will feel from President Biden tapping the Strategic Oil Preserve for 180 million barrels of crude. 

That’s ironic because both problems are (partially) caused by a similar policy choice in Washington D.C.: a weak dollar.  If the mayor is curious at all why “prospective homebuyers” have been “losing to outside investors,” that’s it. 

The housing market will inevitably come back down to earth when the dollar strengthens, whether due to a president finally standing up for it, or investors fleeing other currencies because of a global downturn (see the Great Recession). 

At the end of the day, these ‘affordable’ housing bond projects will require ongoing subsidization to be kept afloat. They are a terrible financial risk for the city, and a looming  drain on every taxpayer with no end in sight.  VOTE NO to this unwise housing bond proposal.

The post ‘Affordable’ Housing: The Easiest Bond to Vote Down first appeared on Infuse SA.