What caused the recession?

Was it Bush's fault?

Published on March 24, 2004 By KarmaGirl In Politics

It seems like everyone is jumping on the bandwagon to blame bush for our economic problems. Everyone sees Clinton as the one who "balanced the budget". Unfortunately, what happens while a President is in office is usually not what he did, but what the Presidents before him did.

The decline in the economy started when Clinton was in office. A great article can be found at: http://www.house.gov/jec/press/2004/01-22-04.pdf

So, what has been getting us out of the slump? The changes in tax policies and low interest rates. People blame Bush and his tax cuts for the current state of the economy, but those tax cuts are what is pulling us out. It is also a long term plan. It will be much better in a couple years from now.

What do I think hammered the last nail into the economic coffin? Gas prices. Things didn't get too bad until gas prices raised so dramatically. The cost of everything went up because it cost more to transport it. It cost more for workers to get to work. Businesses had to pay more to ship things and pay more to buy things. People lost trucking jobs because companies had to downsize to stay competitive. Truckers and delivery people saw salary decreases. It effected us globally. If a tax break is needed- it should be applied to gas.

Comments (Page 2)

KarmaGirl

on Mar 29, 2004

This is a blog, but it's on a site intended for serious political discussion.

Actually, it's just a blog. How serious you take it is up to you. Anyone who gets too serious about debating on a blog needs to step away from it for a bit.

I've read the article, and the context supports vincible's points more than yours.

Did you read all the articles that I highlighted? Should I have pulled info and sighted each one. Trust me, I am not the only one that has this opinion. I also have kept it in mind when I saw a local refinery close in 1998 and read an article in a local paper written about how it will effect jobs, local economy, and how it was only one of many that would close withing the next 15 years. That was a long term prediction. A prediction that is showing through in the current gas prices in California.

One of the other articles that I quoted:

http://www.rgj.com/news/stories/html/2004/03/07/65666.php

'“The third quarter is going to be wild,” Kloza said. “The problem with gas isn’t a problem with crude. It’s a problem of domestic refining capability.”

Oil companies cut back refineries in the late 1990s and have enjoyed higher profits and little state or federal oversight, said Charles Langley of the Utility Consumers Action Network in San Diego. The situation is similar to the electricity shortage that hit the West in 2001, when a generator went out of service for maintenance and prices soared.'

If you don't see my point of view, that is fine. But, it's going to bite us all in the butt. People want to think that it is as easy as a crude oil issue, but it's not. We are in spiral of gas cost. The EPA has higher standard on gas cleanliness, emission standards, and refinery pollution. The gas is less efficient, the engines are less efficient, and the refineries won't spend the money to update, and the standards make it almost impossible to build new ones. If you can't see how that effects us all (and the economy) then I am wasting my breath.

vincible

on Mar 29, 2004

My diction is naturally serious. It's just how I've been trained to write. You shouldn't take it as an indication of what I'm feeling.

What arguments? I don't see any other valid points

There are lots of things you're saying that I think are invalid, but that doesn't mean I ignore large portions of your post.

Maybe you could explain why my points are invalid? The decline in gasoline prices after accounting for inflation, *in spite of* increased environmental regulation? The graph that I linked to showing a beautiful correlation between crude oil prices and retail gasoline prices? The Fed paper saying that refining costs accounted for just 13% retail gasoline costs, and crude oil was almost half? I don't see why you cavalierly dismiss these as not worth talking about.

I think you are reading that study wrong. They aren't talking about the decline in cost to the consumer, they are talking about the decline in profit that they make, which causes them to close more refineries.

Yes, they conclude that compliance costs are very small for refineries, *compared to* other factors. "The main factor affecting margin from 1988 on has been a near continual decline in the spread between refined product prices and raw material input costs." So if anything's causing refineries to close, it's the decline in the spread between output costs and input costs.

It explicitly says that only 9% of the decline in return on investment for oil companies is due to increased environmental regulation. So 91% is due to other factors. Why do you single out environmental regulation for special blame?

Finally, I will reiterate that the things you cite--California, Chicago, etc--again, are temporary and regional price swings. Obviously if a refinery closes temporarily or cuts output, there will be a price jump in the area. But most of the nation doesn't feel it. Remember that we're talking about nationwide prices here, at least, if you're going to blame the recession on gas prices you need a nationwide price jump.

JeremyG

on Mar 29, 2004

What happened to fuel efficiency laws?

vincible

on Mar 29, 2004

As far as I know, there's been no major change to fuel efficiency laws in the past several years.

KarmaGirl

on Mar 29, 2004

Remember that we're talking about nationwide prices here, at least, if you're going to blame the recession on gas prices you need a nationwide price jump

See, that is where you are wrong. I am not blaming the recession on gas prices (notice the first part of the article that keeps getting overlooked). I said that it "hammered the last nail into the economic coffin". There is a difference. The difference is that we were already in trouble. Gas prices were on the rise, which was passed down to the consumer in the way of delivery charges (either directly or indirectly). Truckers lost jobs (have you looked at the trucking industry lately) and people started spending more money on gas and less on other things (still takes the same miles to get back in forth to work).

Finally, I will reiterate that the things you cite--California, Chicago, etc--again, are temporary and regional price swings.

If the California refinery closes, it will close for good. And, it will effect the national average.

If you want to read a real fruitcake article that takes my stance to a ridiculous new level, read this:http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=37772

Then there is this rumor that the EPA is going to require all gas to have ethanol in it. I thought it was a total rumor until I read this:
http://www.senate.gov/~schumer/SchumerWebsite/pressroom/press_releases/PR02466.html (Though it appears to be only 1/5 of the states, currently).

Why would ethanol be an issue? Because the MPG is lower. It's not much (like 2 - 3%) but it takes more expense to get it to the pump, so you will end up paying more and getting less.

KarmaGirl

on Mar 29, 2004

Reply #18 By: JeremyG - 3/29/2004 3:11:43 PM
What happened to fuel efficiency laws?

They exchanged fuel efficiency with emissions. If we were actually into fuel efficiency, we would all drive cars like the Jetta TDI (diesel). But, because diesel is smellier than gas, people assume that it has more emissions, but it doesn't. It is also cheaper because it is not as refined. You also can get 50 mpg with the Jetta, but people rather drive the SUV's and complain because our gas supply can't keep up with our demand.

jeblackstar

on Mar 29, 2004

And that, I think more than refineries being shut down is why gas prices are so high. I get 60 mpg on my little hybrid car but I know people who drive Expeditions that get 10.

Cheers

vincible

on Mar 29, 2004

If you want to read a real fruitcake article that takes my stance to a ridiculous new level, read this:http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=37772

I hate to sound like a broken record, but even the main thrust of this article is about crude oil prices. It's all about the need for increased drilling. If increased drilling was to have an effect, it would be to increase domestic crude oil production. This would drive down crude oil prices and therefore gasonline prices.

There's just one lonely paragraph about refining.

KarmaGirl, I'm not going to continue this conversation until you choose to address some--heck, any--of the evidence that's been cited regarding the correlation between gasoline prices and crude oil prices. For every quote in this thread saying "environmental regulations on refineries drive up prices" there are five that say that "other factors affect prices a lot more"--often in articles that you have linked, and which you appear to read extremely selectively, mining for data that fits your conclusions. I've cited several types of numerical data backing up the relationship between crude oil prices and gas prices nationwide, and you've chosen not to respond to these data. My time is too valuable to continue writing comments which, I can only conclude, will continue to be ignored. Good day.

KarmaGirl

on Mar 30, 2004

KarmaGirl, I'm not going to continue this conversation until you choose to address some

That's fine with me. The main thrust of my article wasn't supposed to be about gas, anyway. The other part was my opinion and what I have seen and experienced. I also hear a lot of inside news from the engineers that I know from the big three and a company that designs a lot of the worlds diesel engines. It is my opinion that there is a bigger problem with refining than what you are seeing. I am not the only one with that opinion (as quoted above).

My time is too valuable to continue writing comments which, I can only conclude, will continue to be ignored.

right back at ya' But, I would also have to ask- why did you spend so much time on it, anyway? Since there is info on both sides, and it's my opinion (which was stated from the beginning) why spend so much time on it if your time is too valuable?

Reply #22 By: jeblackstar - 3/29/2004 4:51:43 PM
And that, I think more than refineries being shut down is why gas prices are so high. I get 60 mpg on my little hybrid car but I know people who drive Expeditions that get 10.

But, that is a catch 22. The more fuel that is needed, the more refineries are needed to produce it. It's a long term problem. The EPA has stricter and stricter regulations on both the engines and the refineries. Tighter emissions = less fuel efficient cars which require more fuel causing a bigger strain on the refineries. Until they come up with full size hybrids that will perform as well as a gas engine, I can't see any of that changing.

WiseFawn

on Mar 30, 2004

A matter of we are all in this together.

Tighter emissions = less fuel efficient cars which require more fuel causing a bigger strain on the refineries.

http://www.ineed2know.org/clean_cars.htm

"Reducing fuel consumption helps the environment in many ways. Each step in the fuel production and distribution chain - drilling, transporting, refining, and so on - can result in environmental pollution. Increased fuel consumption directly affects the amount of carbon dioxide (CO2) emissions and tends to increase some other pollutants, such as nitrogen oxide (NOx) and evaporative hydrocarbons. Carbon monoxide (CO) and exhaust hydrocarbon emissions are closely related to how a vehicle is driven and how its emission controls are functioning."

http://www.gatewaycleanair.com/mechanic/air3_4/air3_4.htm

"Cutting Down on Car Trips Doesn't Just Save Gas!It reduces pollution: In Washington, motor vehicles account for 43% of our air pollution. ( This is more than the pollution caused by industry, wood stoves, and outdoor burning.) Overall, car emissions are responsible for 45% of the nitrogen oxide and 33% of the hydrocarbons that produce smog, acid rain, and the ozone problem.It reduces dependence on foreign oil: Of approximately 8.5 million barrels of imported oil used daily in the U.S., 24%, or 2 million barrels, are used by passenger cars.It reduces the likelihood of global warming: Car emissions contribute 75% of the carbon dioxide in the atmosphere, the pollutant that promotes global warming via the greenhouse effect.It reduces health care costs: According to the American Lung association, air pollution costs the nation's taxpayers about $40 billion annually in health careIt reduces agricultural damage: Crop losses due to ozone damage are estimated to cost between $1.9 and $4.5 billion a year."

http://cru.cahe.wsu.edu/CEPublications/eb1843e/eb1843e.html

jeblackstar

on Mar 30, 2004

The more fuel that is needed, the more refineries are needed to produce it.

Yeup, but, and this is the kicker, you've shown no evidence that there are substantially fewer refineries than before. I grew up in a refinery town, and, guess what, most of my friends from high school and before now work in the refineries. Except in the mid eighties there were no massive layoffs of refinery workers, and most of those laid off in the eighties now work for the regineries again. I don't know how universal it is, but since you have no documented evidence, my anecdotal evidence will have to do.

Cheers

KarmaGirl

on Mar 30, 2004

Yeup, but, and this is the kicker, you've shown no evidence that there are substantially fewer refineries than before.

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/petroleum_supply_annual/psa_volume1/historical/1998/pdf/table_36.pdf
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/petroleum_supply_annual/psa_volume1/historical/2002/pdf/table_36.pdf

1999 = 159 US refineries with 155 functioning
2003 = 149 US refineries with 145 functioning

10 refineries in 4 year is substantial.

However, since they have upped their manufacturing to maximum capacity, they are almost able to keep up with demand. However, this causes a strain, and will cause a volatile market if more close due to EPA standards or mechanical breakdown. Also, as the need increases, the plants will not be able to cover the need. As stated before, there is a California refinery that is most likely going to close. This is going to have a bad effect on the current gas crisis that California is already experiencing.

We have 145 (as of 2003 - is probably less now) refineries trying to meet the approximate 9 million + barrels a day demand (for car gasoline only). That is a high demand per refinery.

Draginol

on Mar 30, 2004

Tax cuts for the rich create less spending than tax cuts for the poor--this is simple empirical fact.

That's not an empircal fact. It depends on how short term you are looking.

The idea behind a tax cut is to create a positive feedback loop. People who earn more money tend to be people who tend to be able to produce more wealth. Take less of their money and they have more capital to work with to create more wealth.

The Bush tax cut paid for this site. Without it, there'd be no JoeUser.com. It was the Bush tax cut that enabled us to hire the additional person who freed up a person to work on a long term investment project like JoeUser.com.

Aaron Brandt

on Mar 30, 2004

Brad I thank you for this little fact you gave to us. The fact that the tax cuts allowed this site shows how it can help. Now Brad I'm curious, would you be subject to Kerry's proposed tax increases for the "rich"? This also brings up another point. They were able to create another job with their tax cut. The wealthier people are the ones who have the ability to create new jobs. More money will make them more likely to hire more people and therefore decrease unemployment.

jeblackstar

on Mar 30, 2004

10 refineries is a "large" number, if you're talking a total of 20. 10 refineries from 159, is.... 6%.

My point is still good eh?

Cheers

Welcome Guest! Please take the time to register with us.
There are many great features available to you once you register, including:

Richer content, access to many features that are disabled for guests like commenting on the forums.
Access to a great community, with a massive database of many, many areas of interest.
Access to contests & subscription offers like exclusive emails.
It's simple, and FREE!