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Will drilling off-shore and in ANWR have tangible impact on price of gasoline? Depends what traders "feel" more than actual impact on supply/demand...

I agree that it is only in the best interests of everyone to have this bill pass before the end of the summer session, though without the support of the Speaker I find it hard to believe it will pass Conference in time to be signed by President Bush. As with all bills that determine government spending, the Energy Bill must originate in the House, though it is doubtful that the Senate would pass an identical version of the bill, which would send it to Conference Committee, in which it is expected that a hand-picked cadre of veteran lawmakers will expedite a compromise founded on the principles outlined in the original drafts passed by the House and Senate independent of each other.

Unfortunately, the member tasked with making appointments to serve on Conference Committee is the Speaker of the House, and she is under no obligation to appoint any particular lawmakers, and in fact could intentionally appoint the most anti-drilling members of her conference that she can find, who will purposely debate the fine print of the Bill to death and prevent it from ever returning to the floor before the end of the 110th Congress. This would not be the first time ANWR drilling was killed in Conference, but it certainly would be the first time it died under $120/barrell oil and such an overwhelming majority of voters supporting the measure. We will have to wait and see what Pelosi does, but sadly she still holds all of the cards.

I disagree with the assertions that passing the ANWR and Offshore drilling measures will not have an impact on the price of gasoline in the next year, as I think it is very likely that it will in fact have such an impact and the reasoning behind this thought is very simple....

Oil is not a true supply/demand market, it never has been and never will be. The reaction of traders this Friday to the invasion of Georgia by the Russian military was met in the pits with a $4 decrease in the cost of oil, which is the opposite of what conventional wisdom would have led us to believe. In fact, I believe that Goldman Sachs even forecasts the price of oil to settle between $70-$80 dollars over the next 12-18 months, which makes sense if the market is able to digest the increasingly complex global distribution chain and identify the true drivers of demand on global markets. If oil settles and stablizes at $70/barrell by the end of next summer, it is certainly not unreasonable to expect gasoline prices to drop across the US as a result. Perhaps we are talking in terms of dimes or maybe a quarter/gallon, but anything is better than nothing and ANWR/Off-Shore drilling may just be the key to easing the anxiety of futures traders whose whims are the only real drivers of the cost/barrel of oil.

Does anyone think that oil is truly a supply/demand driven market? If so, how do you account for the radical spike in the price without any major hinderence to the global supply chain or sudden/unexpected surge in demand that was not accounted for in the pre-exuberant pricing of contracts? I think that what we are experiencing is a bunch of rich dudes behind computers shorting the welfare and standard of living of the middle class for the benefit of recovering their firm's massive losses in other highly speculative markets (i.e. sub-prime mortgages). The market, though imperfect and only losely worthy of the label "market", is going to level out once the traders have solidified their long positions and the speculative cycle starts all over again. Perhaps this logis is flawed, I do not claim to be an expert on any of these things, but I enjoy financial news and this is how I interpret the experts. What does everyone think?

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Time Travel in Film...

I happened upon this fascinating post on time travel and how it has been used and abused by filmakers over the years with little regard for the "one-dimensional" assumption of quantum mechanics. The "one-dimensional" understanding of time never presents information as if something both is and is not the case at any one point in time.
This is the most basic level of analysis when determining the quantum mechanical honesty of the filmaker and clearly delineates the clever from the convoluted. The post is dated from 2003 and has attracted 45 comments that are all worth the time it takes to sift through the heady concepts being lobbed back and forth between the obviously intellectual readership of the blog. Author makes clear from outset that he is an academic and hopes to illicit comments and suggestions from readers, so I thought it not inappropriate to republish herein to inspire additional comments.
I’m teaching a freshman seminar on time travel at Brown this year, so I’ve been watching a lot of time travel movies as ‘preparation’. I always knew that many time travel movies don’t make a lot of sense on a bit of reflection. What surprised me on recent re-watchings was that some seemed unintelligible even on relatively generous assumptions.

Philosophers normally break time-travel stories into two categories: those that do make sense within a ‘one-dimensional’ view of time and those that don’t.
The ones that make sense on a ‘one-dimensional’ view never have it the case that at a particular time something both is and isn’t the case. They don’t require that the direction of causation always goes from past to future, that would stop them from being time travel stories after all, but they require that there be a single complete and coherent story that can be told of the history of the world. Some philosophers are known to reserve the label ‘consistent’ for these stories, but that’s probably a bit harsh.[1]

Some stories keep to this constraint, even when they are under a lot of pressure to break it. The first Terminator does, the second Terminator might (though it’s normally interpreted as violating it), and both 12 Monkeys and it’s inspiration _La Jetée_ display quite a bit of ingenuity in telling an involved time-travel story that has a coherent one-dimensional history.

But obviously this kind of constraint is not a universal norm among time-travel stories. For example, the whole point of the Back to the Future movies is that what time-travellers do can change the course of future history. (If you need, or even want, a refresher on what happens in the movie, one is available here, though be warned that site launches a very annoying MIDI file unless your browser is configured to block that kind of thing.)
In Back to the Future in 1985 the first time around George works for Biff, and the second time around, after Marty has changed the past, Biff works for George. So this is a violation of the one-dimensionality principle. I had always assumed that the movie could be made sense of on a ‘branching time’ model. Indeed in the second movie that’s exactly the kind of model they say they are using.

The idea is that the history we are familiar with is only one branch of the tree of time. This isn’t a wholly unknown picture. I’ve been told that Aristotle believed something similar, and (if you believe everything you read on the web) a few quantum mechanics specialists also hold a similar view. (Personally I think it’s about as plausible as the world-rests-on-a-giant-turtle theory, but the history of philosophers making speculations about physics is not great, so I’ll be a little restrained here.) On this picture the other branches exist, and the only thing that’s special about our branch is that we’re in it. Before a branch point it isn’t determined which branch we will end up on. The full story of the world includes a whole array of things totally unlike anything we know – our history is the story of a particular climb up the tree of time, a climb that could have turned out very very differently to how it actually did.

It should be easy to fit Back to the Future style time travel into this picture. When Marty goes back into 1955 it isn’t pre-determined whether he will stay in the branch from whence he came. And he changes his world enough that he more or less has to move into another branch – ultimately a branch in which his parents are much more successful than they actually are. (Or were. Or something. Ordinary tense words don’t handle this kind of situation very well, as Douglas Adams pointed out somewhere.)
So far so good. Now obviously one part of the movie isn’t compatible with this picture. If Marty is safely and soundly in his new branch, there’s no reason to think he will ‘fade away’ if in that branch his parents don’t meet and marry and conceive etc. He’s there and that’s all there is to it. So a major plot line of the movie becomes a little incomprehensible. But apart from that, I thought it was going to be possible to make sense of it all.
What surprised me on re-watching the movie [2] was that even granting them a branching time universe, and ignoring the lack of reason for Marty to ‘fade away’, the story in the movie still didn’t make sense. Here’s why. In the new branch that Marty moves onto, his parents meet, he is conceived, born and grows up in a successful family, rather unlike the family he remembers growing up in. Marty also travels forward in time in that branch from 1955 to 1985. The Marty that got to new 1985 by time travel is around at the end of the movie – we see his surprise at how different new 1985 is. But the Marty that was born, raised etc is not. On the branching time model, there should be two Martys around now, but the movie only gives us one.
Maybe the movie could make sense on an even stranger metaphysics than regular branching time. What we need is a metaphysics with not only branching time, but also some cross-branch relations that determine who (in one branch) is the same person as whom (in a different branch). And we need those relations to have enough causal force that when a person is in a branch they shouldn’t be in, or are too often in a branch they shouldn’t be that often in, the relations somehow make the world fix things. But even this doesn’t explain why new 1985 Marty should not remember growing up in a successful household. It’s really all a mess, even granting a really wild metaphysical picture. What amazes me is how it seems to work under its own logic while one is watching it. Some enterprising grad student should work out just what that logic is – they could probably justify anything whatsoever using it.
[1]There are several interesting aesthetics questions related to this distinction. For instance, is it a vice in a time-travel story that it does not make sense on a one-dimensional view of time? I used to think the answer was yes, then I decided that was much too snobby. But after my recent bout of time travel movieing, I’m drifting back to my former position. At the very least, it’s a virtue of those stories that do keep to one-dimensional time, just because one-dimensional time-travel stories are so pretty when done well. The plot devices in the last two Harry Potter stories may have been fairly awful, but the time travel story at the end of The Prisoner of Azkaban is rather good for just this reason. That story gets bonus degree of difficulty points for having the characters interact with themselves (admittedly at a distance) in a more-or-less psychologically plausible way.

I think that stories that violate this constraint too frequently rely on our assumption that causality always moves forward in movie (or book) time. I’d be surprised if someone could tell a decent time-travel story in a movie where the order of scenes didn’t match up with what happened in real time or in any character’s personal time. (Think Pulp Fiction meets Back to the Future.) I imagine that the result would be incomprehensible. I’ve seen some people argue that the final scenes of Tim Burton’s Planet of the Apes should be understood this way, but since those scenes are incomprehensible, that doesn’t really hurt my point. On the other hand, I imagine that with some ingenuity one could chop up a good ‘one-dimensional’ movie like 12 Monkeys into all kinds of rearranged scenes and it still be tolerably coherent.

[2]Well, not the only thing. As has been noted here previously, the 80s were a really strange time. The ‘fashions’ are … well the less said the better. But the thing I’d totally blacked out was that in the movie they try and make Marty look cool by having him play in a Huey Lewis cover band. It’s hard to comprehend what they were thinking. I was rather shocked to hear a Huey Lewis song on a ‘classical rock’ station in Seattle, but the idea that at one time associating with his music was a way to impress pretty 17 year olds is just wild.

On the other hand, I shouldn’t play up the fact that I remember much of this time at all. Many of the students in my course won’t have been born when Back to the Future was released. Hopefully that means they won’t ask too many hard questions about why the plot doesn’t seem incomprehensible on first viewing.

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Neighborhood Politics: Party Politics, Oil Markets and Iraq...

This is the second open letter I have circulated among friends and family, wanted to invite everyone to comment freely. E-mail is an awful way to really debate. I invite people in the Skompton Political circle to publish openly and open each of their thoughts individually to comments to publish here, because it is much easier to parse each person's argument openly and even attract an outside perspective on our interesting local dynamic.

First of all, thanks for allowing me to participate in this debate, it is fascinating to learn more about each of you and incredibly entertaining to read Mr D and Mr M strangle each other via e-mail. I have many points to make, each directed at specific arguments (assumptions) articulated in a previous participants argument. However let me preface with some general comments and facts that all of us would be well served to have readily available so we can maintain factual consistency. Following each indisputable fact, I will apply the wisdom found within the realities of that fact to our ongoing debate.


1. The Great Depression in 1929 that occurred under Republican President Herbert Hoover and the Republican Congress set the stage for a more liberal government; the Democrats controlled the House of Representatives nearly uninterrupted from 1931 until 1995 and won most presidential elections until 1968. Since 1968, the GOP has dominated presidential elections, with Jimmy Carter being the ONLY Democrat to win 50% of the electorate (Bill Clinton interestingly won two consecutive elections with just 42% and 46% in 1992 and 1996 respectfully). Republicans in fact did not have control of Congress from the beginning of the FDR Administration until Newt Gingrich's Contract with America in 1994, though GOP majority only lasted 12 years and only half o. So Mr. Dammrich's assumption about congressional control was both correct and faulty, though I think that in terms of laws on the books, the vast majority passed in the 20th century were written, debated and voted on by a Democratically controlled legislature.

George W. was in fact the first President in modern history to see his party gain seats in both mid-term elections during his two term presidency. Having worked for Speaker Hastert in Washington, I think that this is a historical anomaly because when a president and a speaker have too close of a working relationship, the institutional dichotomy that is supposed to exist between those two offices disappears and each just assumes the other is doing the right thing rather than guaranteeing it through tough deal making and political posturing (ala Newt and Bubba). Bottomline, it is not ever good to have a monopoly on power, so if Barack cannot lose the White House as many seem to think, we better hope that Harry and Nancy take a nose-dive; which isn't an unrealistic possibility.

Here is the much more interesting part of my argument this evening...

2. Gasoline is far from the only by-product of a barrel of oil. By definition, each "barrel" of oil contains 42 gallons of "black gold". According to the Texas Oil and Gas Association, each barrel produces 19.2 gallons of gasoline; 9.2 gal of distillate fuel oil (home heating and diesel fuel); 4.1 gal kerosene; 2.3 gal residual fuel oil; 1.9 gal liquefied refinery gases; 1.9 gal still gas; 1.8 gal "coke"; 1.3 gal asphalt road oil; 1.2 gal petro-chemical feed stocks; 0.5 gal lubricants; 0.2 gal kerosene; 0.3 gal for other non-specific use. Extra 2.2 gallons represents "processing gain". (These numbers are based on 1995 usage)

One tragic mistake made by politicians who pander on the rising cost of a barrel of oil is that they assume the only tangible effect that cost increase has on the everyday lives of Americans is at the gas pump. In fact, the numbers above, while providing greater perspective on the use of oil and its importance as more than just the source of gasoline, don't even begin to show the "ripple" effects of the price increase on the international market.

The best example I have yet heard came from Jim Cramer, host of CNBC's Mad Money. Kimberly-Clark, the US conglomerate that produces everything from Huggies, Kleenex, Depends, Kotex, Scott Products and many other "poly"-based and paper products. Despite increasing prices each of the last several quarters to keep up with the rising cost of production, specifically the cost of oil which is the base from which almost all of its non-paper products are created, quarterly earnings are expected to drop 10% in Q3. Essentially, for each dollar increase in the price of oil, K-C realizes one-penny drop in quarterly earnings. That may sound negligible, but this is one of the 5 largest consumer products companies in the world, so pennies/share are a major factor considered by potential investors. K-C's year-end stock price has been consistently above $60 for the last five years (2007-$69.34; 2006-$67.95; 2005-$59.95; 2004-$65.81; 2003- $58.10), though as of this week the price had dipped as low as $55/share.

This is the impact of rising oil prices that is NEVER mentioned by politicians, but I think I just mentioned three different types of Americans that are directly affected by our foreign dependence on oil in a way totally unrelated to driving. 1) Shareholders in K-C have seen a dramatic loss of value since oil prices have increased; 2) Employees at K-C are working for a company with margins that are tumbling, which cannot be good for job security; 3) Consumers that buy Kleenex, Scott Towels and Huggies are going to see prices go up to compensate for increasing costs of manufacturing until K-C can be confident they have covered their loses.

I agree that offshore drilling is neither a long-term, nor a short-term solution, and the only real way to solve the energy crisis is to find another way to transport ourselves that doesn't require ever-increasing oil production. This will probably have to be in the form of transnational high speed railways that connect major metropolitan areas and lessen our dependence on highways. This is a strategy already being employed by the EU, China, Japan and many others. The by-product of such an energy strategy would be less carbon emissions and lower dependence on OPEC oil, which should be a guiding principle underlying all legislation written and passed by the US Congress. However, we live in a world driven by oil (no pun intended), so why buy it from Saudi Arabia, Venezuela, Iran, Nigeria and Iraq (which is now one of the five largest oil producers in the world), which are the 5 largest oil producing nations, when we could produce it domestically and both increase global supply (thus driving down prices for everyone) and become truly unreliant on foreign producers.

One very positive result of the US invasion of Iraq is in fact the oil it is now producing for the global market, which was previously reserved for corrupt UN officials and states that recognized the Saddam Hussein regime. UN sanctions (though now largely believed to have been a joke) kept Iraqi oil out of the international marketplace. Today, largely because of the stability (both political and civil) provided by the US-led coalition, Iraq is producing oil at pre-war levels and making deals with the world's largest companies in the Western world for the first time in a quarter-century. How often do you hear this from the candidates? It certainly undermines Obama's only remaining legitimate point against the success of the "surge", which is that the political process has failed to formulate under more peaceful conditions. If that is so, who is pumping the oil and signing the deals with BP, Exxon and other major oil companies? I suspect not the clerics, but I am not sure, someone please enlighten me.

I have already spent much more time elaborating on these two basic facts than I had planned, but sometimes I get carried away. I may have contradicted myself, but I doubt it and I am not going to proof read so please forgive typos and anything that seems out of place or more relevant to another topic. I am sorry if I rambled, but trust me it could be and might get worse. I will continue my discussion of the facts surrounding this debate tomorrow after some much needed rest, enjoy...

Tomorrow I will focus more Iraq, specifically the merits of invasion and the long-term benefits of our permanent presence in the Middle East...