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.

• 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.

Thank goodness for memes!  A witty, well-placed caption on a still frame from a movie, cartoon, etc. provides welcome comic relief amidst the steady drip of stressful news these last few years. 

The latest templates are rich celebrities and bureaucrats who are basically telling us to suck it up, or buy an electric car to counter spiking gas prices in the wake of the Russian invasion of Ukraine.   

Now the press is vying for some of the meme mockery.

A recent editorial in the San Antonio Express-News tells us that it’s “a small price to pay to help save Ukrainian lives and cripple Russia’s invasion.”  What about the “already high fuel and oil prices” they mention in the next breath?

In any case, all of which can be summed up in three words: a weak dollar.

After the chaos that ensued from President Nixon severing its link to gold, both Presidents Reagan and Clinton came out explicitly for a strong dollar.  Remember how much it cost to fill-up then? 

Probably not, because it was negligible.   

Oil more clearly reflected the commodity that it is: one that is in abundant supply (we’re on “Peak Oil 3” by my count), and nearly identical from one producer to another.  That kind of perfectly competitive setting keeps a natural lid on prices. 

Neither OPEC, nor Russia, nor any other producer could do anything about it because oil is priced in dollars globally (though Saudi Arabia and China are trying to shake that up). 

At the dawn of the 21^st century however, our leaders’ support for the dollar started to flag.  With its subsequent devaluation, it took more to buy the black gold.  Hence, its price soared to almost $140 a barrel in mid-2008 before bottoming-out at $31.

We know what else was happening then: the so-called Great Recession.  Incidentally, the mortgage crisis that precipitated that can also trace its roots to the beaten-down greenback.      

When the dollar is destabilized, investors start parking more of their resources in established assets, where returns are more certain.  In addition to gold, the traditional hedge against dollar volatility, housing is another such asset. 

All this seem eerily familiar right now?

Multiple rounds of “quantitative easing,” two more weak-dollar presidents, and another crash (2014-2016) later, owners of energy companies had had enough.  No longer interested in simply financing growth, they started demanding more fiscal discipline.

As so often happens, bankruptcies and consolidations followed.  Some organizations have emerged in private hands, which might help them avoid a new headwind: ESG limitations. 

The environmental, social and governance movement dictates that investment flow only to politically correct ventures.  Needless to say, that doesn’t include oil and gas firms.

That’s ironic given that it has been them, via the deluge of natural gas unlocked by hydraulic fracturing, that have been as responsible for the steep drop in emissions as any other energy source.

Unsurprisingly, that gets as little attention in the mainstream media as does the fallout from a weak currency, which has only gotten more flaccid since the Fed floored the printing press in response to the dictatorial government shutdowns. 

Now we have politicians in self-preservation mode calling for a suspension of the federal gas tax, and naïve bureaucrats imploring the industry to produce “more right now.”  No doubt that includes from the “9,000 approved, but unused, drilling permits on federal land.”

Nevermind that many of those have little potential, or how long it would take to bring product to market from the others.

It’s especially disingenuous after they, buttressed by their media cheerleaders, have erected all manner of regulatory hurdles to push the fossil fuel industry toward extinction.

Supply and demand fundamentals are not out of whack here.  The price at the pump has actually gone down by a dime in my neighborhood recently.  And though it is inexplicable that we’d court the likes of Venezuela and Iran for their oil, it would matter little.

When the conflict in Ukraine subsides, will these elites start to explain the (near-)doubling of energy prices of the last year or so?  Will they put aside political spin, and instead consult facts, figures and history, and level-up with citizens? 

Or are we just supposed to accept it like the unnecessarily heavy-handed government response to the coronavirus? 

We’re being set up for another economic crash, and those don’t make for funny memes. 

The post The Express-News Passes Gas first appeared on Infuse SA.

Newspaper editorial pages generally lean one way or another politically.  Given that they’re made up of individuals with their own leanings, this is no surprise. 

However, even though the New York Times and Wall Street Journal tend to sway left and right, respectively, each have columnists that go against that grain, providing some semblance of balance.  If that characteristic has trickled down to local outlets, it missed us here in the Alamo City.

What we have is a media that leans one way, unchecked.  They leverage this to essentially promote government programs, and sugarcoat their inevitable failure.  History is no guide to them.    

The latest example revolves around San Antonio’s “Train for Jobs” (TfJ) program, which itself is a precursor to the “Ready to Work” (RtW) initiative.  The San Antonio Express-News editorial defending it contains slants, omissions, and the failure to connect some dots.

The Slants:

“When COVID-19 brought San Antonio’s economy to a standstill …“

The popular narrative, from the international level down to the local, is that the coronavirus/COVID-19/pandemic caused the massive recession last year.  That is not the case, and we’ll never know for sure the extent to which it was responsible.

Businesses were starting to stock (more) hand sanitizer.  Those in charge could be found wiping down door handles.  People were making adjustments.  It was the primitive government lockdowns that sent society and the economy into a tailspin. 

Whenever we hear of Wall Street gyrating because of a new variant, it’s not the virus they’re reacting to.  From Warren Buffet to the casual day-trader, people putting their resources at risk do so with the utmost diligence.  They’re generally not dumb people.

Most of us, investors or not, know from life experience that viruses mutate, especially as we adapt to them, bolster our immune systems, update vaccines, etc.  What is more difficult to predict is the collective wisdom, to use a term loosely, of officeholders that today’s politics tends to produce.   

The reaction of governments at every level to the coronavirus, regardless of the political party in charge, is merely the latest example of what usually causes such a “standstill.”

“That said, a Dec. 15 city report offers optimism. More than 16K people have expressed interest in the program, more than 9,500 people have completed the intake process, and more than 4,400 people have enrolled.“

A right-leaning publication might just as easily have substituted “cause for concern” for “optimism,” and rounded the figures up to the nearest thousand in order to use “less than” rather than “more.”  “Roughly” would have been the most objective word here.

The Omissions:

”Consider the cost of the status quo — unemployment …”

“The job training was launched in the middle of the pandemic, in spring 2020, when 140K city residents found themselves out of work.  It’s a different job market today. “

The EN does not elaborate on this last point, so we will:

The employment situation in San Antonio is approaching where it was before the government shutdowns.  As the EN reports, roughly 900 of those jobs can be attributed to the TfJ program.  The disparity is obvious.

What explains it?  Actual job creators do, not to mention the pre-existing educational infrastructure.  The former already “invests in people” via training, while the latter regularly “revamps our workforce.”   

Nevertheless, despite the early, lackluster returns of the federally-funded TfJ, San Antonio mayor Ron Nirenberg led activists in convincing three-quarters of voters to commit a portion of sales tax revenue to the RtW program. 

Why?  Do they believe the efforts of employers and schools, with whom they’re reportedly partnering in this venture, to be inadequate?  Was it simply a quest for a ‘political victory’? 

Do they believe in government dependence i.e. “wraparound services”?  Was it redirect more taxpayer money to other public institutions (colleges) as a favor?  In this case, it arguably adds fuel to the tuition-inflation fire.  Shouldn’t leaders, not to mention the press, know all this?

The result is a huge deadweight loss to society to benefit the well-connected.

Connecting the dots:

”The city also was slow to set up it (sic) internal structure and only hired a permanent director … in August.”

”Be critical of the city’s workforce efforts, but also be patient.  Generational change takes time.”

Government faces next to no threat of going out of business, even when it encounters competition.  It lacks the incentive that drives their stiffest rivals (postal delivery, education, book stores) to succeed: the profit motive. 

Private entities in these sectors have found a way to deliver higher quality at acceptable prices even as their customers continue to be poached via taxation to finance the public options.  That’s how inadequate the latter are.

Nonetheless, since these public bodies aren’t going anywhere, they face less pressure to deliver a valuable service in a timely manner.  And the people running them know it.

So do others eager to jump on the gravy train.

Lifetime politicians, bureaucrats and activists who advocate for/run government programs have little inclination to promote private alternatives.  They have every motivation however, to convince voters to pay a ‘tiny’ fraction more in taxes for another government program. 

An objective media would point all this out.

The post Local Media Does Citizens Disservice By Avoiding Balance first appeared on Infuse SA.