Oil Prices And Job Losses

June 6, 2008

The Facts

During the two day period of June 3rd and June 4th, crude oil prices dropped more than $6. Then over the last two days prices jumped about $16, to more than $138 per barrel. Every news source in the country is talking about this today. On top of all this, the jobs report for last week came out this morning with 49,000 jobs lost last week. That contributed mightily to the Dow dropping nearly 400 points today.

My View

So much for the “supply & demand” excuses for rising oil prices. But that hasn’t stopped the propaganda experts; they know there are still millions out here that are still their puppets and gladly mimic the notion that supply & demand is driving the prices up. Then there’s the scare tactics. It seems that the Israeli Transportation Secretary made some off-handed comment today that “bombing Iran’s nuclear sites was unavoidable” and the disinformation experts grabbed onto that as an excuse of rising oil prices. Who would believe our transportation secretary if he made some comment like that? I would think it would take a person in a much higher position than that for there to be any validity to it. Next I expect to hear the night cleaning lady in the UN building being quoted on the shortage of petroleum related cleaning products as the reason for a huge price increase.

There are a few in the media that is starting to question these excuses. However, some are being careful. One female reporter on CNBC today had a slip of the tongue when she used the word “accelerated” in reference to the price increases, but very quickly corrected herself and substituted the word “upsurge”. Not a whole lot of difference in the definitions of the words, but “accelerated” has more of a sinister sound. And she made it even more suspicious by being so quick to change the words (sure, then there’s the teleprompter). But other reporters such as Mark Haines of CNBC’s “Squawk on the Street” is becoming even more skeptical. He doesn’t seem to buy all this “justification” crap. He’s always been one to raise an eyebrow at many of the questionable reports, and he seems to be the only one on that network that isn’t a big business puppet. He often questions some of the things businesses are reporting, and challenges many of the other CNBC reporters.

One CNBC guest this morning, Thomas Higgins of Payden & Rygel, said that for the first time in several years the demand for oil imports have fallen. That doesn’t support the supply & demand theory. He also said that he certainly believes we are in a recession, which doesn’t set too well with the current administration. (Of course, if the Democrats win the White House in November, I fully expect to see the Republican machine come out within the first month or so of 2009 and declare that we are in a recession.)

Another report today put the capacity of oil refineries at only 87%. That can be viewed two ways; either there is not enough oil to refine or there is not a big enough demand for gasoline. I’m sure those who support the supply & demand theory will use the first, and those who say that supply & demand is not the problem will use the latter. But with the nearly 5% drop in the demand for gasoline in the past two to three months, it is easier to believe the latter.

Right along with the increase in the price of oil today, and as mentioned earlier, the Dow dropped nearly 400 points. There were lots of folks willing to offer there opinion today on why that happened. The most popular opinion was the jobs loss report that came out this morning. With the 49,000 jobs lost last week, that brought the total job losses for 2008 to 325,000. With this latest report, this means we have lost jobs every single month for the past two years. And when you take into account that just about all the jobs experts tell us that we need an increase of 100,000 jobs each month just to break even, some might say we have “lost” over 800,000 jobs this year. This brought the unemployment up to 5.5%, which is the highest since 1987. Let’s see now, who had been in the White House for several years in 1987?

I think it’s time to change the “official” definition of recession (and maybe even depression) if we are going to continue to rely on the current definition to determine if we are in a recession or not. Of course, even if that did happen, I wouldn’t expect the Bush White House to acknowledge it. No President, Republican or Democrat, likes to admit to a recession during their watch. But it seems this current Republican President and his diehard supporters are worse than any before.