Sunday, May 8, 2011

Fun Facts

Oil and gas: we are a major exporter of gasoline and have been right along no matter the price you pay at the pump. Inventory is at an 18 year high, if demand gets any lower the oil companies will start burning it to get rid of it as they can't stop producing gasoline without running short of the other components of oil. They don't "make" gasoline, about 40-45% of a barrel of oil is gasoline and it has to go somewhere. It is possible to make any hydrocarbon into some other carbon based product but it takes expensive infrastructure to do it. Oil companies are run by bankers and not by engineers. If you have that kind of money it is much easier to manipulate the market than to serve it.

Ethanol: (the bio fuel) is produced almost entirely from corn in the US with huge subsidizes for manufacturers (not farmers) High tariffs protect the American market from cheap ethanol from Brazil where it is produced from sugar cane at 1/7 the energy input. Corn is lucky to break even on the oil consumed per gallon of ethanol produced.

US Dollar and corn: as of late we have been exporting ethanol to Brazil. The weak dollar and high sugar prices (they are exporting sugar instead) make US ethanol a bargain by comparison. At the same time this year's corn crop will probably not meet demand. Texas will have no crop due to the extended drought and North Dakota is under water while the Midwest has been too cold and wet to plant on time.

The rise in unemployment to 9%: all government numbers on employment are produced by surveys. The unemployment rate is determined by surveying households. Cell phones and the increasing number of homeless make this number questionable at best. The claim that numbers fluctuate because of people's mood on whether they are "discouraged" and not looking for work are BS. The "jobs created" number is similarly produced by an employer survey and probably isn't even close as they have no idea how to weight the different sectors of employment to get an overall number. Even the weekly claims numbers are produced by surveying the state employment offices and are always wrong during a week with a holiday.

The only number that means anything is the Workforce Participation number and it is the lowest it has been since Reagan started the war on the middle class and two income families became the norm. 


fype said...

Dear P2, Thank you for all you do. I read the "ethanol to Brazil" comment to a low-tech friend of mine, and he was wondering where you got the info and what volume the US is shipping to BZ. I am somewhat of a chem engr, and was aware of the 7:1 sugar advantage in producing C2H5OH, but seldom see this mentioned in our media. I am a big Malloy follower... Just Emailed Mike about the Liberty U 446M govt subsidy v. the 2.7M NPR "giveaway". (From Harper's Index).