On one of our recent programs, I spoke with Mike Joyce of OOIDA’s Washington, DC, office about speculation in the energy market.
Experts, public officials and others have serious disagreements about how much of the crude oil price is caused by speculation. But it’s certain that a good part of the price is directly rooted in market manipulation. The question is, how much.
It’s caught the attention of Congress, it’s been the subject of a hearing in the U.S. Senate, it’s on the minds of truckers across the United States.
Several truckers who have called in have suggested that we force people who buy commodities on the market to take delivery, rather than simply buying oil on paper and then selling before it even reaches our shores.
Another said, why not just eliminate the futures market altogether?
I have to admit, it’s an interesting idea … but highly unlikely to happen.
Unfortunately, the futures market is so well established in so many commodities, that I doubt we could ever dislodge it. It’s kind of like a tick that really has its head dug in.
Farmers have complained about this for years. The farmer plants the crop, weeds the crop, fertilizes the crop, raises the crop, harvests the crop … and then gets less income out of it than a trader on the futures market.
And none of those traders ever have to take possession of a single bushel of wheat or a single pork belly.
So what can we do?
For one thing, we can restrict who can trade, or the number of seats on the market. OOIDA’s Todd Spencer pointed out recently that number has increased fivefold in the past few years.
We can also increase the amount of their own money they have to spend to invest in futures.
According to Fox News and other sources I checked, if a trader wants to buy oil on margin – essentially, to buy the oil using borrowed money – that trader has to put up 5 percent to 7 percent of the total in his own money.
On the other hand, on the stock market, regulations require that the trader put up 50 percent of the cost of a stock purchase bought on margin.
That requirement was put in after the big stock market crash in 1929, because one of the many causes of the crash was the huge number of people who had bought stock on margin.
And now, look at our current situation. The price of oil – driven in part by speculation – is causing enormous harm to the economy.
Why should oil traders get by with this when stock traders have been regulated in this fashion for nearly 80 years? Why should these traders be allowed to endanger our economy the same way it was endangered 80 years ago?
We stopped this kind of irresponsible behavior before. And there’s no reason we should hesitate to stop it again.
Monday, June 9, 2008
Friday, June 6, 2008
‘Please, sir, may I have some more’
We recently ran an encore of our investigative series into highway funding in Pennsylvania.
One of the aspects of highway funding in places like Pennsylvania is the use of road taxes for so-called “transportation enhancements” – things like bike and hike trails, parks, street beautification, museums, historic buildings and so on.
As we’ve made clear all along, this is not a problem restricted to any one state. And it needs to be addressed everywhere it occurs.
Some truckers are taking action, calling their lawmakers and demanding change. And that’s something that’s great to hear.
Calls like that will become more and more important as we inch closer to the next highway bill.
A new highway bill is supposed to be written every six years, not only determining each time how federal road taxes will be spent for those six years, but often guiding how they’ll be spent long into the future.
And while calls to Congress are important, the pressure shouldn’t solely be on them.
State officials are the ones who are making the big decisions on creating new toll roads, tolling existing roads, and privatizing our highways.
We need to make sure they understand that we’re watching how they spend our highway tax dollars, and that we expect those dollars to be spent responsibly.
When they misspend our money, say then that they’ve run out and then return to the trough asking for more, it’s a little like someone finishing a 12-course gourmet meal, letting out a huge belch, and then walking up to the waiter like some bloated, overfilled version of Oliver Twist and saying “Please, sir, may I have some more.”
Until they spend what they have properly, it makes no sense to give them any more. It’s time to say no.
One of the aspects of highway funding in places like Pennsylvania is the use of road taxes for so-called “transportation enhancements” – things like bike and hike trails, parks, street beautification, museums, historic buildings and so on.
As we’ve made clear all along, this is not a problem restricted to any one state. And it needs to be addressed everywhere it occurs.
Some truckers are taking action, calling their lawmakers and demanding change. And that’s something that’s great to hear.
Calls like that will become more and more important as we inch closer to the next highway bill.
A new highway bill is supposed to be written every six years, not only determining each time how federal road taxes will be spent for those six years, but often guiding how they’ll be spent long into the future.
And while calls to Congress are important, the pressure shouldn’t solely be on them.
State officials are the ones who are making the big decisions on creating new toll roads, tolling existing roads, and privatizing our highways.
We need to make sure they understand that we’re watching how they spend our highway tax dollars, and that we expect those dollars to be spent responsibly.
When they misspend our money, say then that they’ve run out and then return to the trough asking for more, it’s a little like someone finishing a 12-course gourmet meal, letting out a huge belch, and then walking up to the waiter like some bloated, overfilled version of Oliver Twist and saying “Please, sir, may I have some more.”
Until they spend what they have properly, it makes no sense to give them any more. It’s time to say no.
Thursday, June 5, 2008
They couldn’t stop Charlie, but they sure stopped those price hikes
A recent Associated Press story began, “Federal Reserve Chairman Ben Bernanke has moved inflation up on his list of worries …”
When I was in Vietnam, the Saigon government one day announced it was sick and tired of rampant inflation and that, from that day on, merchants who raised prices would face imprisonment or even death.
Yeah … death.
Inflation in Vietnam ground to a screeching halt.
If Ben took a similar approach here, it would be a bloodbath.
After all, the top dogs at Dow Chemical just announced they’re raising prices across-the-board by up to 20 percent – mainly to offset fuel costs.
And we all know diesel fuel costs 40 percent more this year than last, while gas is up 20 percent.
Come to think of it, the price of eggs is up 60 percent.
Milk is up 26 percent, pasta up 30 percent, and fruits and veggies are up 20 percent.
Amy Brunger of Portsmouth, NH, tells The Boston Globe that she fed her family for years on $125 a week. But this year the cost suddenly shot up to $200.
And now, the natural gas industry is warning that this winter our heating bills will skyrocket because the price of natural gas has gone up 50 percent.
Put all those percentage increases together, and we’re talking some Big Time Inflation.
For the sake of a lot of nice grocers, gas station owners and truck stop fuel desk managers, I’m glad Ben’s in charge – instead of the Saigon generals.
Or at least … I think I am.
When I was in Vietnam, the Saigon government one day announced it was sick and tired of rampant inflation and that, from that day on, merchants who raised prices would face imprisonment or even death.
Yeah … death.
Inflation in Vietnam ground to a screeching halt.
If Ben took a similar approach here, it would be a bloodbath.
After all, the top dogs at Dow Chemical just announced they’re raising prices across-the-board by up to 20 percent – mainly to offset fuel costs.
And we all know diesel fuel costs 40 percent more this year than last, while gas is up 20 percent.
Come to think of it, the price of eggs is up 60 percent.
Milk is up 26 percent, pasta up 30 percent, and fruits and veggies are up 20 percent.
Amy Brunger of Portsmouth, NH, tells The Boston Globe that she fed her family for years on $125 a week. But this year the cost suddenly shot up to $200.
And now, the natural gas industry is warning that this winter our heating bills will skyrocket because the price of natural gas has gone up 50 percent.
Put all those percentage increases together, and we’re talking some Big Time Inflation.
For the sake of a lot of nice grocers, gas station owners and truck stop fuel desk managers, I’m glad Ben’s in charge – instead of the Saigon generals.
Or at least … I think I am.
Tuesday, June 3, 2008
Just as smart as fertilizing tomatoes with a bag of salt
The speed limiter issue continues to boil over in Canada, as Ontario continues to flirt with requiring the devices.
The basic premise supporters of the idea are using is that the limiters promote safety – an idea any trucker knows isn’t the case.
Want some real world examples? Try this on for size.
A trucker called in to our office the other day to tell us what happened recently when he tried to pass another truck in Ohio.
Both trucks were moving at very close to the same speed. And although he didn’t say so, I suspect his truck and the other truck were limited.
As he was trying to pass the other truck, a four-wheeler became impatient, veered onto the shoulder, jammed the accelerator and sped around the two trucks.
This is an excellent case study in why using speed limiters for safety is just as smart as fertilizing tomatoes with a bag of salt.
Every study of speed limiters has told us this is the kind of behavior that’s likely if we require them. It’s what every scientist who’s actually studied the issue has said can happen, what all the evidence points to.
Here are the basics again, for those in the Canadian government who have been sleeping or not paying attention:
Speed limiters create speed differentials on the highways.
Speed differentials lead to increased interaction in traffic – more passing, more speeding up, more sudden braking.
And those things lead to only one end: more accidents, and – God forbid – more deaths.
It’s time supporters of speed limiters come out from behind the safety argument. It simply doesn’t wash.
The real reason this is being pushed has been made clear over and over again. The bean counters at larger carriers tell their corporate overlords that limiting speed will save money. But it’s harder to recruit drivers when you use limiters. So these same carriers want everyone to be limited so they can more easily recruit.
It is not the job of lawmakers to help companies with flawed corporate policies to recruit workers. It is the job of lawmakers to look out for the safety and welfare of the general public.
If lawmakers in Ontario, Quebec or anywhere else are really interested in safety, they should reject this back-door form of corporate welfare.
The basic premise supporters of the idea are using is that the limiters promote safety – an idea any trucker knows isn’t the case.
Want some real world examples? Try this on for size.
A trucker called in to our office the other day to tell us what happened recently when he tried to pass another truck in Ohio.
Both trucks were moving at very close to the same speed. And although he didn’t say so, I suspect his truck and the other truck were limited.
As he was trying to pass the other truck, a four-wheeler became impatient, veered onto the shoulder, jammed the accelerator and sped around the two trucks.
This is an excellent case study in why using speed limiters for safety is just as smart as fertilizing tomatoes with a bag of salt.
Every study of speed limiters has told us this is the kind of behavior that’s likely if we require them. It’s what every scientist who’s actually studied the issue has said can happen, what all the evidence points to.
Here are the basics again, for those in the Canadian government who have been sleeping or not paying attention:
Speed limiters create speed differentials on the highways.
Speed differentials lead to increased interaction in traffic – more passing, more speeding up, more sudden braking.
And those things lead to only one end: more accidents, and – God forbid – more deaths.
It’s time supporters of speed limiters come out from behind the safety argument. It simply doesn’t wash.
The real reason this is being pushed has been made clear over and over again. The bean counters at larger carriers tell their corporate overlords that limiting speed will save money. But it’s harder to recruit drivers when you use limiters. So these same carriers want everyone to be limited so they can more easily recruit.
It is not the job of lawmakers to help companies with flawed corporate policies to recruit workers. It is the job of lawmakers to look out for the safety and welfare of the general public.
If lawmakers in Ontario, Quebec or anywhere else are really interested in safety, they should reject this back-door form of corporate welfare.
Monday, June 2, 2008
Putting lipstick on a pig
Some time back, we reported on a problem caused by the fact that some of the fuel pumps now in use were never designed to show a fuel price as high as the ones we’re facing.
Some states are dealing with it by allowing stations to show the price for a half gallon.
Needless to say, that brought in some calls from truckers, one of whom thought it was so silly that he laughed at the idea. Isn’t it funny, he said, that our lawmakers would step up to help out the very people who are charging us over $4 a gallon for fuel.
I thought the whole mess was a hoot, too.
I suppose we could be angry – everyone has a right to be – but it’s not like we all need something else to raise our blood pressure.
I will say this: At least the states allowing this are putting in some protections, such as requiring those stations to clearly mark on the pumps that the price is for only a half gallon.
On the other hand, that’s a little like putting lipstick on a pig.
But that trucker had a good point. Wouldn’t it be nice if those same state lawmakers who are so interested in helping small fuel businesses cope were just as willing to help small trucking businesses?
You might want to make a quick call to your state lawmakers and point that out. It never hurts to remind them that we’re out there.
Some states are dealing with it by allowing stations to show the price for a half gallon.
Needless to say, that brought in some calls from truckers, one of whom thought it was so silly that he laughed at the idea. Isn’t it funny, he said, that our lawmakers would step up to help out the very people who are charging us over $4 a gallon for fuel.
I thought the whole mess was a hoot, too.
I suppose we could be angry – everyone has a right to be – but it’s not like we all need something else to raise our blood pressure.
I will say this: At least the states allowing this are putting in some protections, such as requiring those stations to clearly mark on the pumps that the price is for only a half gallon.
On the other hand, that’s a little like putting lipstick on a pig.
But that trucker had a good point. Wouldn’t it be nice if those same state lawmakers who are so interested in helping small fuel businesses cope were just as willing to help small trucking businesses?
You might want to make a quick call to your state lawmakers and point that out. It never hurts to remind them that we’re out there.
Friday, May 23, 2008
Lessons not learned
Our focus this week is on Pennsylvania, their turnpike, their lease proposal and their highway financing.
But whenever you look at a future possible lease, it’s useful to see how it worked out when it was tried before.
Our best example is the Indiana Toll Road. We kept hearing from the state how the private operator wouldn’t let the road run down, wouldn’t let prices get too high, that private business efficiencies would help them run the road better and make a profit.
OOIDA and others said that was balderdash.
Well, guess who had it right? Just ask the truckers. We did, and this is what one of our listeners told us he encountered:
But whenever you look at a future possible lease, it’s useful to see how it worked out when it was tried before.
Our best example is the Indiana Toll Road. We kept hearing from the state how the private operator wouldn’t let the road run down, wouldn’t let prices get too high, that private business efficiencies would help them run the road better and make a profit.
OOIDA and others said that was balderdash.
Well, guess who had it right? Just ask the truckers. We did, and this is what one of our listeners told us he encountered:
- Long waits just to pay the toll, to get on or get off the road;
- Higher-than-ever prices for goods sold at the service areas;
- Increased toll rates;
- And even some toll tickets that don’t tell you what you’ll pay while on the road.
What a crock.
There’s no reason for that kind of wait, no reason for that level of prices, no reason for the lack of service, and certainly no reason to expect you to run that toll road without knowing what it will cost you.
I wish we could get that road back in the state’s hands. Before this lease was signed, how long had it been since tolls went up? How bad were the lines?
The fact is, while every other cost in our lives went up during the years the state ran that road, the cost of the tolls was stable. The state ran the road well, maintained it well, lines were not so long, things were OK.
We know that some toll roads have problems. And many folks have pointed to inefficiencies in the Pennsylvania Turnpike Authority.
So, here’s how you deal with that: Fix it.
Folks in Pennsylvania's government don’t have the courage to do that. Instead, they figure they can sell the road, get a big wad of cash they can spend to ensure their own political futures, dump the job of fixing turnpike management on a private company with no accountability, and leave the cost to our children and grandchildren.
Privatization won’t fix the problem here. It’s just another way for politicians to avoid their own responsibility for how the government is run.
BMI – a bloody mess, indeed
We reported recently about a proposal that could force hundreds of thousands of truckers to undergo required, annual, expensive medical tests.
Here’s the basic concept: the FMCSA’s medical review board wants to track truckers’ BMI – body mass index – a method of questionable accuracy at best.
Those above a certain body mass index would be required to undergo testing every year for sleep apnea. And those tests can run into the thousands.
If this idea did become the law of the land, then thousands of perfectly safe truckers could be forced off the road.
One of the biggest reasons that this is a bad idea: Muscle weighs more than fat.
I know I’ve said this before, but I can’t say it enough: According to the BMI test, when Arnold Schwarzenegger was Mr. Universe, he was morbidly obese.
And even if these folks are overweight or obese, that doesn’t automatically mean they have apnea or that they’re unsafe.
OOIDA has made truckers’ views on this known. And I think you can count on us to fight this very foolish idea.
Here’s the basic concept: the FMCSA’s medical review board wants to track truckers’ BMI – body mass index – a method of questionable accuracy at best.
Those above a certain body mass index would be required to undergo testing every year for sleep apnea. And those tests can run into the thousands.
If this idea did become the law of the land, then thousands of perfectly safe truckers could be forced off the road.
One of the biggest reasons that this is a bad idea: Muscle weighs more than fat.
I know I’ve said this before, but I can’t say it enough: According to the BMI test, when Arnold Schwarzenegger was Mr. Universe, he was morbidly obese.
And even if these folks are overweight or obese, that doesn’t automatically mean they have apnea or that they’re unsafe.
OOIDA has made truckers’ views on this known. And I think you can count on us to fight this very foolish idea.
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