Well, don't blame me!

Retail Purchases in U.S. Unexpectedly Decrease 0.5%

Retail sales in the U.S. unexpectedly fell for a third month in June as limited employment gains took a toll on consumers.

The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline exceeded the most pessimistic forecast in a Bloomberg News survey that called for a median 0.2 percent gain in sales. Other reports today showed manufacturing in the New York region picked up this month and U.S. inventories increased in May.

The retail figures prompted economists at Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse to lower their forecasts for economic growth in the second quarter. A cooling job market is sapping the household spending that makes up 70 percent of the economy, curbing sales at retailers such asTarget Corp. (TGT) and Macy’s Inc. (M) 

(h/t Instapundit.)

Not. My. Fault. I just dropped close to a grand at Bass Pro Shop and Cabelas. And Terry and I just purchased a new carpet for the dining room from Lowe's. Then there's the upcoming bill for the ATV repair...Oh, wait, all that was since July 1st. In June we just had a ball spending money all over the country for gas, meals and motel rooms. (Don't know if those count as "consumer spending" but I've nothing to show for it except miles on the odometer, a couple of extra pounds on the waist and several good night's sleep.) I guess we can expect the report for July to be a bit better since we did our part and will probably do even more. (There's a new dining room set in the near future. You know, to go with the carpet.) Unless you guys are slacking off, that is!

I blame Mayor Bloomberg and Michelle Obama!

Twinkies Maker Preparing for Chapter 11 Filing

Hostess Brands Inc. is preparing to file for Chapter 11 bankruptcy protection as soon as this week, said people familiar with the matter, a move that would mark the second significant court restructuring for the Twinkies and Wonder Bread baker in the past several years.

Hostess Brands is preparing to file for bankruptcy protection. Shira Ovide joins Markets Hub to discuss a brief history of the company that gave the world Twinkies and Wonder Bread.

The privately held Irving, Texas, company, which employs roughly 19,000 people and carries more than $860 million in debt, has been facing a cash squeeze amid high labor costs and rising prices for sugar, flour and other ingredients, according to people familiar with the matter. Those costs together have proved higher than the company's roughly $2.5 billion in annual sales, creating losses and cash shortfalls, the people said.

More jobs heading down the drain. This is the second time Hostess has been in bankruptcy. They reorganized between 2004 and 2008, emerged from bankruptcy in 2008 but are heading back to Chapter 11 in 2012. Why?

Once in bankruptcy court, Hostess will try to reduce debt and renegotiate labor contracts, many of them with the International Brotherhood of Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, the people said. Hostess plans to file court papers soon threatening to reject or modify labor contracts under applicable bankruptcy rules, the people said. Such moves provide troubled companies a bargaining chip to try and get concessions from unionized workers.

A Teamsters spokesman declined to comment. A spokeswoman for Hostess's other main union didn't immediately respond to a request for comment.
....
One sticking point for the baker: It pays about $100 million a year into so-called multi-employer pension plans that cover workers at a wide array of companies, the people said. Hostess, whose pension plan is underfunded by about $2 billion, wants to rescind its obligations to that plan and start paying into a plan that only covers its own workers, one of the people said.

Overall, Hostess carries hundreds of separate labor contracts that the company believes impose cost burdens, people familiar with the matter said; the company also wants to reduce benefits costs.

Aaah. Unions.Pensions. Anchors.

Then there's the Nanny State/Health Food Crazed:

Sales of Hostess's signature Twinkies have recently declined a bit while the overall bakery snacks category has been about flat. Nearly 36 million packages of Twinkies were sold in the year ended Dec. 25, down almost 2% from a year earlier, according to data from SymphonyIRI Group, a Chicago-based market-research firm. The data captures sales from supermarkets, drugstores, mass-market retailers and convenience stores, but exclude sales from Wal-Mart Stores Inc. and club stores.

Hostess also has had trouble attracting consumers who have migrated away from white bread to whole grains and other healthier foods. Hostess released a whole-grain bread called Nature's Pride, but it hasn't sold well compared with some rivals amid a small presence on shelves, according to Mitchell Pinheiro, a Janney Montgomery Scott analyst. Still, Nature's Pride's overall sales have ticked up, increasing 12.3% over the past year or so, said a Hostess spokesman.

About that poverty report by the AP...

I snorted fluids through my nose when I read this over at Instapundit:

THE HORROR: When half of all households are below the median income. I blame Barack Obama, and I want a president who won’t rest until everyone is above the median income! But how likely is that when most people are perfectly satisfied to live in a society where twenty percent are in the bottom quintile?

Posted by Glenn Reynolds at 2:57 pm

The I read the linked article and didn't know whether to laugh or cry.

The other day AP published an article titled, "Census shows 1 in 2 people are poor or low-income," which pointed to a US Census Bureau report showing that half of all households earn less than the median national income. Yes, you read that correctly.

The AP's Hope Yen reported:

Squeezed by rising living costs, a record number of Americans -- nearly 1 in 2 -- have fallen into poverty or are scraping by on earnings that classify them as low income.

The Census Bureau's definition of a 'low-income household' is less than $45,000, as the AP's Yen wrote:

Many middle-class Americans are dropping below the low-income threshold -- roughly $45,000 for a family of four...

As we noted in a post on the AP 'story,' the US Census Bureau estimates that the median 2009 US household income was about $50,000.

Sounds like a report on Lake Woebegone:

Lake Wobegon is characterized as the town where "all the women are strong, all the men are good looking, and all the children are above average."

My goodness! Half the US households are below the middle (median) income level! Who would have thunk it!

Lies. Damn lies. And statistics. (Although that usually only works if you can confuse people with the statistics--not your stupidity.)

The $100 Bill

I've no idea what the provenance of this little piece is as it came over the transom from my (younger) sister this evening. I found it amusing and instructive.

The sun is beating down, and the streets are deserted.. Times are tough, everybody is in debt, and everybody lives on credit.....


On this particular day a rich tourist from back east is driving through town. He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.


As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.


The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.


The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.


The guy at the Farmer's Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.


The hooker rushes to the hotel and pays off her room bill with the hotel owner.


The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.


At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town.


No one produced anything. No one earned anything.


However, the whole town is now out of debt and now looks to the future with a lot more optimism.


And that, ladies and gentlemen, is how the United States Government is conducting business today.

This would, of course, not work in the real world because each of these folks (except the hooker) would have had to take sales tax out of the transaction and forward it to the state and/or county authorities.

Then again, our federal, state and local politicians are all currently taking their cut as they distribute that $100 earmarked for "shovel ready" jobs in the bills they write in D.C., until the people actually in need are receiving far far less if anything at all.

Good idea!

[Allow me to rephrase]: Actually, I think this is a good idea: Obama administration aims for high school financial literacy. [Every member of the administration should be conversant in economics.] I see it as a major improvement over the way this administration has tackled the economic problems we curren...

What?

Oh! They mean for high school students to get an understanding of economics!

I guess that would be a good idea too since then the graduates could avoid the long, steep learning curve necessary to turn most 18 year old liberals into conservatives. Of course, that could mean the end of the Democrat's hold on the youth vote.

Wouldn't hurt if more teachers learned a thing or two about Economics 101 either.

Huh?

I had to shake my head (and bite my tongue) when I overheard a conversation about all the energy activity going on in the area while waiting to get my Tundra reshod the other day.

Seems this older couple were complaining that with all the windmills, gas wells, and pipelines being constructed all the electricity and gas would be going out of state and "we aren't going to get any benefit at all" from the changes being made.

All I could think of was the influx of cash from leases/sales being signed by landowners for the mineral rights and land for all the well sites and windmill sites (including to the state, since some of these sites are on and beneath state forest land), the money being paid to laborers and construction crews in the area, the money being dropped by those specialists who have come from out of state and rented up every hotel/motel/spare apartment, etc. Yet these folks could see "no benefit" to the state or local economy? How narrow minded can you be?

And let us not even speak of the fact that, at least as far as the natural gas is concerned, more supply means lower cost across the board.(Windmills are a different kettle of fish because of the government subsidies on their construction and operation.)

Say WHAT?

What is wrong with this title:
Obama seeks $17 billion in U.S. budget savings (Reuters)

It is not "savings" any more than it is a "cut". What we are talking about here is a reduction in the increases. True "savings" and "cuts" would be below previous outlay levels, not below projected increased outlay levels.

(Example: If you are currently spending $100 on X but want to increase that to $125, have second thoughts, and "reduce" your new payout to a mere $120, it is NOT a 20% cut or savings.)

Even so, how is $17 billion such a big deal when the projected deficits from stimuli and budget proposals are in the neighborhood of $4 Trillion

And for a person who has just signed on to quadruple the deficit (from $1 Trillion to $4 Trillion) this is just jaw droppingly ironic:

"We can no longer afford to spend as if deficits don't matter and waste is not our problem," Obama told reporters. "We can no longer afford to leave the hard choices for the next budget, the next administration or the next generation."

I only wish there was some real believe in that statement, but it is clearly all for show. (Then again, perhaps those tea parties are beginning to have some effect.)

The proposals to trim 121 programs identified by the White House as wasteful or unnecessary amounted to only a half of 1 percent of the $3.55 trillion budget that Obama has submitted for the fiscal year that begins in October.

Just "only a half of 1 percent", a dust mote in the sea of red ink.

Of the $17 billion in budget savings the White House identified, about half were in the defense budget.

Yet fully half of the "wasteful" spending is in the defense budget? Why am I not surprised that this is the focus of the "cuts" the Won has found necessary to make?

How much was that group ACORN supposed to be getting? $5 Billion? $6 Billion? Almost as much as the defense "cuts", no?

Related:

Obama touts $17 billion 'lot of money' budget cuts (Associated Press)

Obama budget to slash 'stunning' waste in US (AFP)

WTF?!??

Obama aims to control 'exploding' deficits

This headline made my head ache this morning.

We've just seen the passage of a "stimulus" bill that will increase the deficit by at the least $750 Billion, GM and Chrysler come back to DC with their hands out asking for more, a plan for Billions of dollars to help deadbeat and or idiotic mortgage borrowers and their enablers in the banking industry, etc., etc, etc. all before the government budget is even discussed and NOW he wants to control/cut the deficit?

It's akin to an addict promising to control his/her drug use while not actually going into rehab or taking any steps to quit.

Wait a minute...

...wasn't one of the reason for not having more of the "stimulus" money go directly to the taxpayer the fear that the average Joe would merely use it to pay down his personal debt or sock it away in savings?

Va. budget shortfall increases, but federal stimulus will offset

Gov. Timothy M. Kaine says Virginia may not have to cut its budget any further, thanks to a rich uncle in Washington.

Kaine, in a noontime interview with reporters, said dollars to the state from President Barack Obama’s plan to jump-start the economy should more than offset a continuing decline in state revenue.

So it's okay if the states do it but not if the man in the street does it?

Economics 101

I'm not an economist, but I bleive in my water that I could have written a better bill than the one trotted out from the House cloak room where I'm sure it was posted on a bulletin board with some title like: "Suggestions." It must have been there for several years as there certainly were an awful lot of them.

Let me first state that I believe that we did need to do something but that the package (as I understand the parts that have been revealed) that was voted on is the exact opposite of what we needed to do. First we needed to act responsibly and not willy-nilly. There is far too much pork in this baby aimed at social change rather than job creation. Some of the projects that would create jobs won’t do so for years because of the regulatory paper work that needs to be filed and hearings that need to be held to clear them. One method I've heard for testing spaghetti is to throw a single strand of the stuff at the wall. If it sticks, it's done and the rest can be served. This package is too much like throwing the whole pot of spaghetti at the wall to see what will stick. If it's not done it will fall off the wall. Even if it sticks, there's nothing left to serve and it'll all end up on the floor eventually. In short, it's a waste of money coming and going.

The quickest way to stimulate this economy would be to return taxpayer money to the taxpayer (not to those who didn’t pay any in the first place) so they can spend it as they see fit. If that includes a new car, carpeting for their home, a vacation, whatever, or just paying down their personal debt, so be it. How to return that money? Tax cuts. And don’t go dropping more people OFF the tax rolls for god’s sake! Over 40% don’t pay anything now. EVERY single person in the US should pay some federal tax. (Yeah, I know that everyone pays sales tax—at least in some states. But an awful lot of people are not stake holders in the good old US of A and yet they are permitted to cast a vote worth just as much as the guy paying a million dollars.)

(I read somewhere that the average taxpayer will get $13 a week through 2009 and $8 a week in 2010 in the form of a tax reduction. If gas prices go up again to the $4 per gallon, that might just cover the increase. Which brings us to...)

Another thing…. If I had an industry that was ready, willing and able to go to work tomorrow; that would put people to work at jobs of all skill levels; that would produce a product that could keep the cost of every other commodity made in this country down; that would pay the federal government and the individual states hundreds of millions in fees and a percentage of the raw product for the privilege of going to work; that could, at the same time, help wean our nation of foreign oil…well, if I had such an industry on the sidelines, I do believe I would want to get the hell out of their way. Instead, the Obama administration halted the process leasing the oil shales and sands in Utah and the off shore areas that were opened up last year when gasoline reached $4 a gallon. (Surely you remember that time. Democrats were running around saying we couldn’t do anything because it would take 10 years to bring that oil to the refineries. The same democrats, in many cases, who had halted the leasing of the off shore sites 10 years previously.)

Absolute idiocy. Pure and simple, That's all it can possibly be.

And there’s only 3 years, 48 weeks to go until January 20, 2013.

Are we to be the oysters?

"The time has come," the Walrus said,
"To talk of many things:
Of shoes--and ships--and sealing-wax--
Of cabbages--and kings--
And why the sea is boiling hot--
And whether pigs have wings."

Just a couple of thoughts that have been rattling around in my noggin this weekend.

We’ve seen Congress rush to get the super duper porkulous bill passed before anyone in either the House or Senate had a chance to read it--and some even bragged about that fact. Well, maybe not bragged so much as admitted that there was too little time to read the whole thing because, goldarn it!, some things have to be done right away! And that was followed by the President traveling back to Chicago for the weekend and putting off the actual signing of the damn thing until Tuesday in Denver.

So, what exactly was the big rush for? If I had to guess, I’d say it was because they really, really didn’t want the American taxpayer to read the f*ckin’ thing! If/when the American taxpayer gets to understanding what they’ve just been given as a “stimulus” they will be shitting bricks for years.

In both this current economic “crisis” and the Global Warming “crisis” we are constantly being told that if we don’t do something it will be the end of the world/life as we know it. This is something that puzzles me. Every moment of our existence can be described in much the same terms. Every decision we make changes our future to a certain extent. Every major decision can have huge consequences. When we are delivered from the womb and the doctor/nurse/midwife/policeman/etc. slaps our butt life will never be the same as we knew it. The first day of solid foods brings about another “life will never be the same” moment. As does the first day of school, the first job, the first kiss...well, you get the picture. Not all of those changes are bad. Some of them are unavoidable. (Puberty anyone? How about aging? If you can figure out a way to opt out of either of those without resorting to drastic measures, let me know.)

So it is with the economy. “We must do something!“ we are told. Why? Perhaps if we didn’t do anything things will get better on their own. (That’s what the Congressional Budget Office was saying last week before all the push came to shove.) Perhaps if our leaders (and I use the term loosely) would start looking at the glass as being remarkably full instead of bemoaning the loss of a teaspoon or two, there might be a more harmonious look to the future. To paraphrase the Dean of Faber College in Animal House, “Depressed, frightened and panicky is no way to go through life, son!”

And Climate Change…Is the climate changing? Sure. It does so all the time. Is man to blame…probably not on a global level. Today’s had reports crying that Climate Change is proceeding more rapidly than the IPCC reports projected. Or at least that’s what the headlines said. When you read the article, it turns out that it’s the amount of CO2 measured in the atmosphere that has grown more quickly than the one year old report anticipated. Should be warmer, right? So how come 2008 was cooler than 2007 and the Earth has been steady or cooling since 1998?
Why the push to “get something done before it’s too late”? Probably because the longer we delay the action that will cripple our economy even further, the more likely it is that people will catch on that the Global Warming “crisis” (having changed its name to “Climate Change” since that is more inclusive) is a hoax. Man has had little impact on the global climate and to think we can act to reverse a natural phenomenon is the height of hubris.

What do both of these “crises” have in common? In a word: Control. The powers that be want the power to control you and your life. They will manufacture one “crisis” after another with the sole aim of gathering more and more power a little at a time if need be until they have “enough.”

You may never notice the loss of freedom as they make moves to gather in the reins to take over your life. It will come in the form of billions of dollars to subsidize high speed trains heading into the cities (that they control) with little or no money for infrastructure in the outlying rural areas. Or in tax rebates for hybrid automobiles. Or subsidies for alternative fuels while pulling oil shale and off shore leases away from the oil companies. Or the “Fairness Doctrine” for talk radio but not, interestingly enough, television, movies or newspapers. “Card Check” for unions in the work place…Big Brother literally looking over your shoulder while you vote…what can go wrong!?

They will nickel and dime you to death and it will be a death of a thousand cuts and of pecks by a multitude ducks. Not one will be sufficient in and of itself to cripple but together they will mean the end of life as we know it.

"I weep for you," the Walrus said:
"I deeply sympathize."
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes.

"O Oysters," said the Carpenter,
"You've had a pleasant run!
Shall we be trotting home again?'
But answer came there none--
And this was scarcely odd, because
They'd eaten every one.

Recession? What recession?

I’m shocked! Shocked, I say that his has even made it through the AP filters.

Durable Goods Orders Rise by 5.2 Percent

Orders to factories for big-ticket manufactured goods soared in December by the largest amount in five months, welcome news for an economy buffeted by talk of recession.

The 5.2 percent increase in orders was a surprise finish for the manufacturing sector at year's end — a segment of the economy considered to have had a poor year.

This has got to be disappointing news for those looking forward to, nay, salivating over the prospect of a recession.

Talk about self corrections in the free market:

I saw this this afternoon on the Yahoo! News website at 3:30 PM EST:

Gas prices spur consumer inflation AP - 30 minutes ago

Oil prices fall on inflation report AP - 10 minutes ago

Hmmmm

GM confirms massive losses

Toyota Reports Strong Profits

Could this be because I chose a Tundra over a Silverado?

It's the Economy.

With Wal-Mart the largest and most convenient retailer in the area of the Aerie, Terry and I have been spending a good chunk of change at the local WallyWorld since our move. Add the many, many miles back and forth to the Bolt Hole I've been traveling and, well, I guess we can take some credit for this:

Stocks hit records on Wal-Mart, oil

Fools rush in….

Despite the hue and cry from the environmental cabal that global warming will doom the earth (a “fact” that is widely disputed—remember when Greenland was, well, green just 1000 years ago?) and that it is man-made greenhouse gases fueling the climate catastrophe at our very door (another widely disputed claim since fluctuations in the sun’s output are conveniently overlooked by the doom-and-gloomers), there are good reasons to tread slowly and lightly as we approach a solution to this “problem.”

For one, we should remember all the experts and doom-sayers prior to the year 2000 who warned us to stock up on food, water and other essentials because the infrastructure of society was going to collapse at midnight, December 31, 1999 when all the major computer systems were going to crash due to the Millenium Bug. Remember that? Didn’t happen.

Or how about those who are still warning us about Avian Flu. Still waiting for that one to happen too and it’s been what, four years or more. (In this case, however, I will grant the preparations for the potential pandemic are quite positive. The warning first went out: “In 2003, world-renowned virologist Robert Webster published an article titled "The world is teetering on the edge of a pandemic that could kill a large fraction of the human population" in American Scientist. He called for adequate resources to fight what he sees as a major world threat to possibly billions of lives.[3]” Since then only 313 cases and 191 deaths have been confirmed as due to Avian Flu.)

Sure bad things could have happened as the calendar turned from 1999 to 2000, but they didn’t. There may still be a pandemic of Avian Flu but not likely anywhere except in third world countries where sanitation is a problem. In either case, the preparations and actions of those concerned didn’t have sweeping effects upon the economy. (Again there were exceptions. Many schemers made a pretty penny by playing to the fears of the gullible in late 1999.)

But now, we have this proposal from members of the US Senate.

Congress is expected to consider climate legislation this fall that would fight global warming. Many businesses worry the U.S. economy would suffer under a measure to impose tough mandatory cuts in emissions.

One proposal, introduced by Sens. Joseph Lieberman and John McCain, would gradually reduce total U.S. emissions by the year 2050 to 60 percent below 1990 levels.

The bill would require companies to report their yearly greenhouse gas emissions and submit a matching number of government-issued allowances to equal the emissions spewed. Companies that emit more would have to buy allowances from cleaner companies that produce fewer emissions.

Oh, it sounds just so…peachy! Let’s cut back on our CO2 emissions to help save the Earth! Forget the coal burning plants being built daily in China. Forget the energy needs of people in Africa and India struggling to pull themselves out of poverty. Forget that the US is the only developed country to reduce its emissions since the Kyoto Accord was signed by all of Europe. Yeah, forget all that. The US will cut its emissions to “60 percent below 1990 levels” and everything will be just fine.

Not quite:

However, the proposal would cut into the U.S. economy and raise gasoline and other energy prices paid by consumers, according to an analysis of the legislation by the Energy Information Administration.

The legislation "increases the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services," the EIA said.

With companies trying to meet the shrinking emissions levels, U.S. economic output would be $533 billion lower over the 2009 to 2030 time period, the agency said.

Yeah, let’s do this and then we can be on a level of economic “prosperity” matched by, well, China, Africa and India.

We’re already seeing an increase in food prices as we rush willy-nilly into corn based ethanol production, what’s a 10% to 20% increase in fuel cost over present levels due to this emissions reduction scheme when we’ll already see an increase due to the use of ethanol.

Then there’s the $16 Billion tax the House is proposing on the Big Oil (to be paid by each and every consumer) to fund the alternative fuels search. (I know the article says “tax incentives” are being moved from Big Oil, but it’s the same thing as taxing them $16 Billion more. Why didn’t they take the money from the farm subsidies since they have now created an incentive to grow more corn and drive the corn prices higher?

Keep going Senators and Congressmen. Keep adding more weight to the anchor you’ve forged to place about the economy. Both of these acts are "feel-good" legislations that will do little to help the American consumer and a great deal to smack the average wallet a mighty blow.

Supply and Demand

Those are the two things that should determine the price of a commodity. If you reduce the supply, then, by golly, the price of what is available will, and should, go up. That is the way the system works.

I hate paying over $3 for a gallon of regular, but I also know that the taxes included in that amount to nearly a quarter of the price and that there plenty of steps between the ground and my tank and that, reports of "record profits" aside, ain't a whole lot of "price gouging" going on. In fact, the taxes collected by the feds and states are the biggest chunk of money going to the entities that have been doing absolutely nothing to see that that gasoline gets to the pump. That might be considered gouging.

House panel votes to extend ban on most offshore drilling

Remind me again. When was the last oil refinery built in California...or New York…or Massachusetts? Before we go looking for price gougers, perhaps we should look at the supply side of the equation.

UPDATE: Jeez this internet thingy has all the answers. Do a little surfing and they just pop out at you.

Behind high gas prices: The refinery crunch

So why hasn't a new refinery been built in the U.S. since 1976?

So there’s my answer. No refinery’s been built, not just in those three states, but anywhere in the country, since 1976. But there has been an increase in refinery capacity.

While refinery capacity may not be growing as fast as demand, it is growing.

For example, Drevna noted that expansion projects at the nation's existing refineries have had the effect of adding the equivalent of a brand new refinery every year. That increase came despite mandates for cleaner gasoline and diesel fuel, which take longer to make.

But what about new, cleaner refineries here in the states?

First off, experts note, gasoline, like any commodity, is subject to big price swings. After all, in the late 1990s it was selling for less than $1 a gallon, hardly an encouraging number if you're a refinery exec looking at making a decades-long, multi-billion dollar investment.

While retail gasoline prices are currently near record highs at just below $3 a gallon, where they might be five years from now is a matter of debate.

Some experts say new investment, in both alternative energy and conventional sources, will boost supply and could cut prices in half. If a global recession hit, the drop could be even more dramatic.

Others say rampant demand, especially in the developing world, will keep prices from going anywhere but up. For an oil executive trying to decide on a refinery investment, picking who's right is a tough call.

Secondly, stringent environmental laws and effective community organizing have made it very difficult to build a new refinery in the U.S.

"Everyone is quick to say "look at these refiners, they're driving up the price,'" said Phil Flynn Flynn, senior market analyst at Alaron Trading in Chicago. "But if I wanted to build a refinery tomorrow, I couldn't do it."

And then there's the public's newfound concern over global warming and its supposed commitment to do something about it. President Bush himself has called for a 20 percent reduction in gasoline use over the next 10 years.

"What refining executive in their right fiscal mind would say, gee, we need to add refining capacity right now," said Drevna at the refiners' association.

So demand elsewhere in the world where the governments may e more amenable to construction have siphoned off refineries. Then there’s the NIMBY crowd that would dearly like lower prices at the pump but not at the cost of either oil exploration or refinery construction within our own borders. And finally, there are governmental policies at the state and federal level geared toward the reduced consumption of gasoline in the near future.