Here we go again:

CRUDE oil prices above $US120 a barrel are "abnormal" and could fall to about $US78 under the right circumstances, OPEC president Chakib Khelil said in Jakarta yesterday.

"If the dollar continues to strengthen and the political situation (regarding Iran) improves, then the long-term prices will be about $US78," Mr Khelil said, adding the market was well supplied with oil.

One could argue that the qualifying ifs make this prediction meaningless. Who really thinks the US dollar will continue to strengthen, or that we will all hold hands with Iran? But putting that aside, just consider the silliness of his last assertion:

"There's a balance in the market," Mr Khelil said. "I would say stocks are at a good level and there hasn't been any disruption in demand."

Yes, there has been a "balance" in the market . . . at $130. Why should we expect it to return to $78? Because an OPEC official says so? One only need consider the performance of recent past comments to gage their credibility. For instance, less than a year ago we heard this:

The $80 record high reached by crude oil prices is not sustainable because it is not supported by market fundamentals, the Organisation of the Petroleum Exporting Countries (Opec) said.

Abdalla el-Badri, Opec secretary-general, linked the price jump on Thursday to US refining bottlenecks, the hurricane season in the Gulf of Mexico and attacks against several natural gas pipelines in Mexico.

"We don't think this is a permanent $80 a barrel. The fundamentals do not support the price at this time," Mr El-Badri said.

So one year ago an OPEC official said that $80 was unsustainably high, now $78 is considered to be an achievable "normal" price, if the all bad stuff works itself out.

It's interesting that these insiders are continually missing their price targets on the downside. What will OPECs stated price floor be next year? $90? $100? Time will tell. But it will undoubtedly be higher than what it is saying today.

Posted by Brian at 11:26 AM | Permalink

An interesting talk by Mr. Kunstler on tragedy of suburban design:

I'll leave it to others to debate the aesthetics of modern architecture. But with energy prices surging, his point about suburban sprawl is even more salient than it was four years ago. The mile upon mile of McMansions and strip malls we've been building around American cities is simply not economically sustainable. Moreover, it may be bad for our health:

A new study found that the year your neighborhood was built may be just as important as diet and exercise for shedding pounds. Those who live in neighborhoods built before 1950 are trimmer than their counterparts who reside in more modern communities, the study reported.

"The older neighborhoods had a reduced level of obesity because they were generally built with the pedestrian in mind and not cars," said Ken Smith, a co-author of the study and professor in the department of family and consumer studies at the University of Utah. "This means they have trees, sidewalks and offer a pleasant environment in which to walk."

In the study, which appears in the September issue of the American Journal of Preventive Medicine, the researchers found that on average men weighed 10 pounds less if they lived in older, more walkable neighborhoods while women weighed about six pounds less.

The older neighborhoods also tend to have a variety of stores and businesses located within walking distance, so people wind up traveling by foot to do errands, go to local restaurants or other activities, Smith added.

This is the model to which our cities must return: high density residential housing, scattered mixed retail/commercial businesses, sidewalks, greenways, modest-sized public spaces, and revamped public transportation.

Posted by Brian at 12:39 PM | Permalink

Via AOL, someone had a video camera rolling at a Bush appearance when it was prohibited. The result, more candid comments caught on film:

It would be newsworthy--and refreshing--if he said this kind of thing in public:

"There is no question about it. Wall Street got drunk," the president said. "That's one reason I asked you to turn off your TV cameras."

"The question is, How long will it (take to) sober up and not try to do all these fancy financial instruments?"

If he believes this, why didn't he use his power to try to crack down on the problem much earlier?

On another note, it appears the Bush days at the Crawford ranch are numbered.

He segued to problems in the housing market but said they weren't an issue in Houston. "Evidently not in Dallas because Laura's over there trying to buy a house today." Bush has six months left in office and is expected to return to Texas.

Bush expressed his fondness for Crawford, where he owns a ranch, and referenced his wife, first lady Laura Bush. "Unfortunately, after eight years of asking her to sacrifice I am no longer the decision-maker," he said, amid laughter from the crowd. "She'll be deciding -- thanks for the suggestion."

It should come as a surprise to no one that the "ranch" has been a prop in Bush's presidential production.

Posted by Brian at 11:17 AM | Permalink

Spread the word.

Posted by Brian at 11:20 PM | Permalink

In this clip Matt Simmons laments that there hasn't been a greater public policy response to high oil prices.

It is remarkable. Think back just a few years, before hurricane Katrina. If someone had told you that oil would soon be selling at $140/barrel, and gas at $4/gallon, you probably would have surmised that such a price shock would really shake things up.

Indeed, the price spike has brought dramatic changes: people are driving less, SUV sales have plunged, airlines are going bankrupt.

But what about in Washington, and in state and local governments? Are we seeing a dramatic sea change in energy policy? I'm afraid not. Yes, there's talk of drilling and more talk of alternative energy. But we need more urgent and comprehensive action.

We need to be dramatically expanding our public transportation system. We need to be making huge investments in electrified rail. We need to be rethinking the way our entire cities are designed.

What will it take to instill in our elected leaders a sufficient sense of urgency to act? $160/barrel oil? $180? $200? Whatever it is, it will come too late.

Posted by Brian at 2:31 PM | Permalink

Accelerated depreciation?

It's not just the American dollar that's losing value. A government agency has decided that an American life isn't worth what it used to be.

The "value of a statistical life" is $6.9 million in today's dollars, the Environmental Protection Agency reckoned in May - a drop of nearly $1 million from just five years ago.
. . .
When drawing up regulations, government agencies put a value on human life and then weigh the costs versus the lifesaving benefits of a proposed rule. The less a life is worth to the government, the less the need for a regulation, such as tighter restrictions on pollution.

Consider, for example, a hypothetical regulation that costs $18 billion to enforce but will prevent 2,500 deaths. At $7.8 million per person (the old figure), the lifesaving benefits outweigh the costs. But at $6.9 million per person, the rule costs more than the lives it saves, so it may not be adopted.
. . .
The EPA made the changes in two steps. First, in 2004, the agency cut the estimated value of a life by 8 percent. Then, in a rule governing train and boat air pollution this May, the agency took away the normal adjustment for one year's inflation. Between the two changes, the value of a life fell 11 percent, based on today's dollar.

I guess this is an argument against claims that we are experiencing hyperinflation.

Posted by Brian at 1:27 AM | Permalink

Yesterday (emphasis added):

Mortgage financiers Fannie Mae and Freddie Mac are adequately capitalized and continue to be active in the mortgage market, said James Lockhart, director of the Office of Federal Housing Enterprise, which regulates the two enterprises.

"Both of these companies are adequately capitalized, which is our highest criteria," Lockhart said in an interview with CNBC. "They have been very active in the mortgage market, and they are continuing to be. And, in fact, Congress has put on them the requirement to do jumbo mortgages and they have been doing those as well."

This comment was a desperate effort to reassure nervous investors about the financial health of these companies. How successful has it been thus far? Not very. You can only lie your way out of a bad balance sheet for so long:

Shares of Fannie Mae and Freddie Mac tumbled Wednesday amid continuing fears the mortgage finance companies will be forced to sell more new shares than anticipated to compensate for losses from the housing slump.
. . .
Freddie Mac shares fell $3.20, or 23.8 percent, to $10.26 Wednesday after earlier sinking to a 16-year low of $9.88. Shares of Fannie Mae fell $2.31, or 13.1 percent, to $15.31.
. . .
Investors are finally realizing that the housing market's troubles are not confined to subprime loans made to borrowers with poor credit and will increasingly affect loans bought or guaranteed by Fannie and Freddie, said Joshua Rosner, managing director of research firm Graham, Fisher & Co.

I wonder what too them so long?

Fortune ponders the doomsday scenario of Fannie Mae and/or Freddie Mac folding. I smell a massive, taxpayer-funded rescue in the air.

Elsewhere, Nouriel Roubini appeared on CNBC this morning and predicted that the credit crisis will get worse, with losses surpassing $1 trillion. Watch the video.

Posted by Brian at 11:17 PM | Permalink

Texas oil mogul T. Boone Pickens has unleashed a public relations campaign promoting his plan to reduce U.S. oil consumption.

In short, Pickens proposes a large-scale increase in the production of wind power in the great plains. This would free up the natural gas, currently used to produce electricity, for transportation use. According to Pickens, this resource allocation shift could reduce America's oil importation by 38% in a decade.

It's notable that an oilman is explicitly acknowledging that more oil drilling will not be enough to stave off the developing energy crisis. Although self-interest may be at play with Pickens' proposal, it rightly advocates a massive expansion in alternative energy generation. I hope the publicity for this plan will help more people see the need for immediate action.

Posted by Brian at 2:19 PM | Permalink | Comments (5)

Benjamin Zander, conductor of the Boston Philharmonic Orchestra, gives a talk on classical music appreciation and shining eyes. I especially liked the end of the presentation:

Posted by Brian at 2:09 PM | Permalink