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REALITY CHECK FOR E85 PUMPS IN CALIFORNIA, 1 OUT OF 10,000 Gives information on the history of efforts to promote alternative fuels in California. Along the way the focus in California was on reducing emissions and scrubbing the air. The oil industry and the auto industry have not fully supported the shift to alternative fuels even in a small way, most of the experiments have failed, efforts to legislate watered down, and as E85 is promoted by GM the problems loom larger than ever. Only one private station in San Diego provides E85 for the public to use, and even this station does not sell much because even though it costs 6% less at $3.10 a gallon than regular gasoline at $3.30, it provides 25% less energy and so costs more per mile. GM is trying to get Chevron to build a small number of pumps that give E85, but Chevron is not willing to make a large investment. The upshot is only halfhearted efforts in this direction and no leadership from auto companies, oil companies, and not enough enthusiasm in the larger public that would create momentum in that direction, even as there is so much talk about reducing gasoline consumption. California has 10,000 gas stations, 1 E85 gas station! ...

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Arthur Brooks, president of the American Enterprise Institute, gives an eloquent tribute to James Q. Wilson, by saying that he gave America social science with a soul. Brooks says of Wilson's book "The Moral Sense," that it truly ranks with Adam Smith's book 'Theory of Moral Sentiments,' as the most significant thinking on this subject. It synthesizes the work of hundreds of scholars in many fields to conclude that man is in his essence a moral creature. In all of creation and man's world there is this profound sense of man grounded in his moral being. It inspired most of his own work as it did for Adam Smith in his time.

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It makes for good political rhetoric, but in reality the flow of money goes both ways. A lot of investments are made by American companies overseas. This time the flow of oil money because of high oil prices, from the USA and Europe to the Middle East is being recycled back to the USA in the form of investments in the US through small equity stakes in companies and more so through purchases of capital equipment and services to build Saudi infrastructure projects. The $500 billion investment plan over several years in Saudi Arabia is to build everything from new cities, aluminium plants, electricity generation plants and chemicals and plastics plants. The fears and rhetoric are overblown, as the USA also invests overseas with holdings according to the Treasury department of $6 trillion of foreign stock and debt. The acceleration of foreign investment in the US is to be seen in the numbers, as the dollar gets weaker, and its more advantageous for Canadians and Euuropeans to invest here. Last year $414 billion of foreign investors money went into buying stakes in American companies and building factories and purchasing stock, according to Thomson Financial. Thats up 90% from 2006 and represented one fourth of all announced deals. This year in just 2 weeks foreign investors poured $22.6 billion in just the first 2 weeks of January, and that represents one half of all deals. Shows how quickly the picture is changing. One way of looking at it is that Americans buy a lot of foreign goods and the money Americans use to pay for a lot of imports is now being returned to the USA in the form of foreign investments. Note that foreign investment is desirable because it brings new ideas and technology and new management methods to the host country from other countries. These foreign investors in many cases are able to make these investments overseas because they are good at what they do, having them in the host country benefits the host country and shakes up competition in the particular industry in the host country that is receiving the investment. This is why economies once relatively unfavorable to foreign investors like Japan and S. Korea are now passionately seeking foreign investment to make their economies thrive through the exchange and inflow of new ideas and ways of doing things. The same can be and is true for the USA. The other aspect is that most of the investment is still from countries like Canada, Germany, Japan, S. Korea which are big free trade partners of the USA. Manufacturing investment is heavily skewed to European and Japanese companies. Foreign multinational investment (Sony, Toyota etc) grew to $43.3 billion in 2007 from $39.2 billion in 2006 according to OCO Monitor, and will accelerate significantly as companies like VW and other German companies find it cheaper to build in the USA and shift more manufacturing here. To get an idea why the rhetoric is overblown Canada spent the most in buying American companies, $65 billion in 2007, according to Thomson Financial. Russia spent $572 million and India $3.3 billion. How will this improve the chances of the USA making it out of this recession? Five million American work for foreign companies in the USA. Of these one third are manufacturing jobs. These jobs pay about 30% more than jobs in American owned companies. Figures from Treasury Department. There will be more of these jobs as companies like VW build plants here. Roubini Economics estimates that an infusion of about $300-400 billion is needed for the USA to overcome the effects of the current mortgage and credit crisis. $414 billion was invested in the USA by foreign investors according to Thomson Financial in 2007, going up from something like $200 billion in 2006. If this pace continues becasue of some of the same underlying reasons as the weaker dollar, stronger economies overseas, then $200 billion additional investments this year would add that much to a stimulus package of $150 billion by one estimate, to provide a boost of somewhere around $350 billion. In the range of the needed boost. Companies like IBM and GE which have significant investments in India and China and investments in software or infrastructure industries that are growing rapidly or Caterpillar with growth in construction overseas, may keep growing through this downturn. This recession may hit selectively and differently, not be a complete hit to the USA economy, and could prevent it from going beyond 2009 with recovery in 2010. ...

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Following president Trump's decision to increase tariffs on $200 billion of Chinese goods on May 9, 2019, the WSJ looks at the mistakes made by both sides in misjudging each other's negotiating position. Mr. Trump says he is willing to increase the pressure on China by imposing tariffs on all Chinese imports into the U.S. after what he sees as China reneging on its commitments on trade by deleting key sections on enforcement provisions and Chinese legislation for enforcement to take place in the 150 page agreement prepared for both presidents to sign.  Early on in the negotiations between Liu He and Mr. Lighthizer, China misread the thinking on the U.S. side. Chinese thinking was that president Trump's urging for the Federal Reserve to lower rates was a perception sign of the weakening U.S. economy. It also may have misread the extent to which Mr. Trump trusts Mr. Robert Lighthizer, who Mr. Trump respects for winning a good deal with the Japanese in similar situation of Japanese rejection of U.S. demands. Mr. Trump also thinks the U.S. has a strong economy, is the largest world producer of oil, strong economic growth in the last quarter of 2018, is also negotiating better deals with other countries including the ones with Mexico, Canada and South Korea. It is also much less dependent on exports to China, giving it a stronger position with more experienced negotiators. China has whole sectors of its economy dependent on exports to the U.S., and crucial numbers of jobs at stake.  China also misread the signals from its stronger than expected economic growth from stimulus efforts in the last quarter, leading to it staking out a tougher position than the U.S. would accept. The U.S. position was set after decades of waiting for China to change and was unlikely to be affected by any temporary considerations.  As a result the U.S. not anticipating the Chinese response of deleting key sections agreed to in advance from the 150 page written agreement gave a strong response. Mr. Mnuchin who accompanied Lighthizer in talks says Mr. Lighthizer "read them the riot act" to the Chinese side. For the Chinese side the effort now shifted to continuing good faith talks without appearing to back down. ...

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Biden's ultimate faith in the fairness of the American cause and the American people gets him two big wins with the $280 billion semiconductor bill, and the $369 billion climate change action bill. Biden says about this when many had given up hope- "The work of government can be slow and frustrating, and sometimes even infuriating. Then the hard work of hours, days and months from people who refuse to give up pays off. History is made. Lives are changed." With Europe at war and struggling to get through the winter with gas rationing it was up to America to lead the way as the world faces ever increasing floods, fires and heat waves that affect food supply and environment. And Schumer? The New York Democrat asked about the effort quoted his father who passed away last year. "As my late father said: you need to persist. God will reward you." For months Mr. Manchin a critical vote in the US Senate had opposed the Democrats proposed bills. Then Senators Mark Warner of Virginia, Chris Coons of Delaware, John Hickenlooper of Colorado took a different approach. They did not openly criticize Mr. Manchin, and appealed to his sense of history, his zeal for playing a leading role in a high stakes legislative deal. Schumer and Biden were willing to make some concessions for fossil energy now that with the war in Ukraine the US needed to export LNG to Europe to replace Russian supplies. China and India were still going to be using fossil fuels after COP26 and after the pandemic induced lower growth. The US had to find a different approach some fossil fuel concessions would make it possible to use it as abridge towards the larger goal of getting ahead on renewable energy in a big way. This opened the way for a deal that centrists could support.  ...

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This is the biggest climate bill in history. The NYT looks at the $369 billion Biden Climate bill to show how it will cut carbon emissions by 40% by 2030 over 2005 levels.

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Iraq's Kurdish Parliament approved anew constitution and scheduled a referendum for this year. Iraq's federal constitution allows the Kurdish people the right to their own constitution, but what is new in this document is the claim to 3 Kurdish provinces and the oil rich area in Kirkuk. THe Kurds may be saying that they will resist pressure for concessions from the government in Baghdad and the Americans.

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William Burns, a former Deputy Secretary of State, and a former ambassador to Russia 2005-2008, looks at the U.S. and European Union relationship with Russia following the expulsion of Russian spies in 2018. He says the U.S. and the European Union should take strong action, yet hopes this is a passing phase so that a healthier relationship can be built with Russia in the long run through diplomatic channels. Expressing views expressed by former president Obama and other experts, Burns says Russia lacks the alliances and broader support that the U.S. and European Union have, and is much smaller than the larger economies of the Western alliance. Under Putin a strong interventionist position has made Russia look better at home but may not be the best for Russia in the long run, says Burns.   Burns calls for stronger sanctions on the economic elite and business leaders under president Putin. Yet the sanctions have not deterred president Putin and a long run solution needs to be found, including issues such as Ukraine and issues that affect the Russian economy so that the change in relations since 2014 can be reversed. After the Berlin Wall collapsed hopes for integration of the Russian economy into the West were raised yet were not realized for Russia in the years following the Yeltsin government and the Russian economy suffered, first during that period and then during emerging market crises. Russian disillusionment with the West was followed by a more inward looking economy under Putin to help stabilize the Russian economy, accepting devaluation of the ruble to make the Russian economy more competitive in a period of low oil prices. Foreign investment collapsed following the Ukraine crisis but the Russian economy adapted to the shock from oil prices. This was followed by efforts to preserve these gains with an interventionist policy that made the Putin administration look better at home and win popular support with strong action in Crimea and Ukraine. This interventionist policy has played out too far with the meddling in U.S. and European elections creating a backlash that is now taking place. With the European Union, having a traditional policy of restraint and good relations with Russia, openly questioning Russian policy under Putin. Much of that period when Russia responded first to the collapse of the Berlin Wall with the collapse of the Russian economy, and in the following decade facing emerging market crises and collapse of foreign investment -which created a more inward looking Russia under Putin in his third term- is shown in Lyrarc.com. In some ways the Russian response in Ukraine, the effort to bolster popular support at home in elections, and the interventionist approach are linked to the efforts to find a Russian response to the economic crises Russia faced since the fall of the Berlin Wall. Seen in this way a shift to better relations is still possible as a broader perspective is gained.  ...

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Sanger, Erlanger and Rudoren describe in detail the differing interests of Congress, the Obama administration, the Iranian hardliners around Khamanei, the Israelis, the Europeans, and the Russians each quietly pushing its own interests. Beyond the physics of a deal, a Republican Congress, Democrat Obama and Iranian hardliner Khamanei, each are trying to get their own narrative to look right with public opinion they face, that they have not backed down. The Israelis find any deal unacceptable and reject even a small lifting of sanctions, because of the "existential" threat. Add to this Sunni Saudi Arabia which says it will match Shiite Iranian capabilities with their own uranium enrichment facilities if Iran is allowed to retain capabilities. And economic interests also figure into this- Russian interest is in keeping Iranian oil off the market as long as possible so that oil prices do not fall further in 2015, which means delay an agreement as long as possible. The French see the Obama administration as likely to give too much away for an agreement and want tougher terms....

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Paul Krugman points out in the NYT that September 2022 high inflation numbers for core inflation excluding energy and food of 6.6% on annualized basis, is still not a good way to measure actual inflation. This is because housing costs as measured by the core inflation index used by the Labor Department are represented by housing rental costs. The rental costs have a time lag in this index and after a sharp spike are now cooling off. Add to this slowing economies and recessions in European economies and the situation suggests that the economy and inflation may be moderating more than expected. Additional factors are that the effects of sharp prior 2 increases in interest rates by the Fed of 0.75% and a third of 0.75% expected soon, are still not fully realized in the economy. This view was also expressed by experts in the WSJ. It was widely perceived that the high inflation that we are seeing is a result of temporary factors such as the war in Ukraine, food and oil supply constraints, supply chain bottlenecks, new adjustments to manufacturing at home after covid. As these factors ease and after the Fed's action to raise interest rates, slowing economies in Europe adjusting to climate change actions,  the moderating effects on the economy of the costs in switching to renewable energy also a factor, this high inflation has prospects of moderating. The successful switch to renewables particularly solar, and better agricultural practices, could set along term trajectory of moderate inflation in costs of energy and food supplies.  ...

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The WSJ's Laurence Norman talks to Yukiya Amano, head of the UN agency, the International Atomic Energy Agency (IAEA), which has the responsibility of verification and inspection of Iran's nuclear development and facilities. Amano describes the issues raised by a 2011 report which outlined 12 sets of concerns to which Iran has to explain, a condition included in the final nuclear agreement. Iran has to respond by mid-August, IAEA then responds, and does work in Sept and Oct, and submits its report by Dec. 2015. Yamano says he has to fill in all the missing pieces in this jigsaw puzzle to get a full picture of Iran's nuclear development. Iran has denied access to military sites and Mr. Amano couldn't say if he has access to the Parchin military site. A concession that was made in the agreement is the long interval of three weeks before access to a particular site that arouses suspicions-the agreement gives Iran the right to appeal an IAEA request to visit such a site to a special commission. The U.S. and its European allies have a majority on the commission yet three weeks are allowed in which Iran could move material to some other location. For critics the question will be why such a concession was needed if Iran truly has decided not to develop nuclear weapons technologies. The U.S. president's response at a news conference on July 15, 2015, was that with the laws of physics the U.S. monitoring tools would detect nuclear activity at that site. The agreement also gives Iran an earlier than planned lifting of a ban on sales of arms and missiles and missile parts if the IAEA says Iran's nuclear activities are peaceful. Iran could conceivably wait till the ban is lifted and its economy in a much stronger position to withstand any future limited sanctions to pursue nuclear weapons development. This would have delayed development for a few years during which time the hope is that Iran has changed into a more peaceful nation pursuing economic development in its region, yet even if this is the case as as happened with India and Pakistan it could still pursue nuclear weapons development. The alternative is a status quo till a better agreement is reached with the leverage of tight economic sanctions and continuing dialogue during which time Iran continues to get closer to a nuclear weapon, or the use of force to prevent this. Iran added the arms embargo issue during the last weeks of the negotiation in June, a controversial move on Iran's part, as this may have complicated the picture with ballistic missiles technology exports to Iran approved after 8 years in the final agreement, compared to the agreement reached in April 2015 which made no mention of the lifting of the arms embargo. Iran played on the notion that if Zarif returned to Iran without an agreement hardliners including Khamanei would veto any agreement, yet this could just be the Iranian negotiating strategy. U.S. president Obama stated at the July 15, 2015 news conference that it would be hard to hold sanctions for longer. Critics might argue that China was already benefitting from the small easing of sanctions by increasing Iranian oil imports by 30% in 2014, and would have less incentive to withdraw from sanctions, as it is dependent on the U.S. and the EU, major markets for its exports and access to technologies. A WSJ/NBC poll in July shows almost half of the people polled in the U.S. saying they do not know enough to express an opinion, a steady 36% support an agreement, showing that the public has not been educated and taken along during the different steps in the largely secret negotiations....

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The biggest part of oil use in the USA is in transportation and this is where the savings have to come from. Americans were driving twice as many miles a day as they did in the last oil crisis in 1979. So a lot of the savings are to be expected in fewer miles driven as prices rise. The other saving will have to come from more efficient cars with better fuel efficiency and use of alternative fuels. Americans consumed 9.1 million barrels a day of gsoline in April 2008, two million barrels a day more than in April 1979. In 1979 of every 100 barrels of oil produced globally 29 wnet into American transportation, homes and power plants. This figure is only slightly down to 24 barrels so there is much room for significant reduction in a world economy where new technology can be accessed and the Japanese model for conservation shows further gains have already been made in other countries. So Chinese and Indian demand and demand in other newly developing countries will play a part but the US and Europe by showing the way in new technologies that can be adapted for use to reduce overall emissions and to get more out of each barrel of oil would find that these technologies are attractive to China and India in stretching a limited resource for increasing numbers of users in large demographics. Figures from Cambridge Energy Associates....

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Discussion in China's inner Communist party leadership circles about the way forward for democratic reforms, including free speech, and monitoring of government policy through criticism. This follows an unusually frank sppech in Shenzen in August, by premier Wen. A number of party elders call for further action in democratic reforms for better governance, and to curb corruption. The sense that China is reaching an impasse, and further development beyond what has been achieved in three decades requires democratic freedoms for the people of China. This has the potential to be a signifcant development, because it comes as economic policies of the past will have a harder time working now because of western resistance to high level of Chinese exports. The search for a new economic model may involve soul searching, and new thought on the political models that are needed now.

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Portugal showed growth in GDP of 1.1% in the second quarter of 2013 from the prior quarter, according to Eurostat. Higher petroleum exports and better prices were part of the reason for the improvement in exports. At the same time Portugal's business leaders and mid sized businesses are improving competitiveness and exports as a way to create growth. Here the NYT's Raphael Minder shows the progress in exporting olive oil at a midsized olive producing farm business in the Alentejo region of Portugal. Morais de Almeida and Miguel de Almeida shifted direction to export to Brazil at this 127 year old olive farm business called Herdade de Manantiz. Manantiz had to use European and Portuguese rural development subsidies for 40% of the cost to put in its first irrigation system, as banks have reduced credit. The Almeida family tapped into family savings for the rest of the funds. This investment of 197,000 euros will help quadruple production at the 529 acre olive farm and generate exports. Brazil took in 524 bottles, and buyers are being contacted in Sweden and Japan for the oil produced from galega olives, unique to Portugal....

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This report says the 1.5 million barrels a day is actually a 1.16 million barrels a day cut as Nigeria, Venezuela and Angola may just not cut production by their 341,000 barrels a day. To that Iran also has to cut its 200,000 barels a day. So the Saudis may end up having to do the cuts of about a million barrels a day with the Emirates and Kuwait. And Deutsche Bank says that it takes about 15 months for oil prices to stabilize after these cuts. So prices could keep falling well into 2009 as the recession deepens worldwide. Some anaysts say the Saudis ended up contributing to the global crisis through their minimal efforts to restrain oil prices or divert some of the petro dollars to new exploration, rather than to cheap liquidity that fueled the housing bubble.

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More oversight of oil futures markets by the Commodities Futures Trading commission to look for market manipulation.

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Alexei Kudrin , Russia's Finance Minister announced plans to increase procurement from Russian technology companies from the 15% of state procurement orders of $133 billon to encourage technology companies. Russia's overdependence on oil and mineral exports for 80% of its exports creates a dangerous situation exacerbating a technology gap with western countries. See the related article on the report on the 21st century by the Institute for Contemporary Development that sees a drain of talent to the west if current trends continue.

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Jeanne Whalen on the Two Speed Economy in the US September 2025- diverging paths of low and high income Americans. With the new administration in 2025 priorities shift to immigration and what to do about 14 million illegal migrants from Latin America and other places, war on fentanyl and drug trafficking gangs with hundreds of thousands of lives lost to fentanyl and drugs in the US, crime and safety which includes the unprecedented illegal movement of drug trafficking in the Nation, and to a bold posture on using US advantages of its huge market to get European Union, Japan, South Korea, and China to level the playing field on trade bring jobs home.The Biden administration had already conceded to DJT's approach in its one term presidency by shifting on uncontrolled illegal migration but not fast enough, by not removing DJT's tariffs, and failing to take an aggressive posture on fentanyl and drug trafficking. Of the DJT plan US has tariff based revenues of 10--15% for all countries imports into US can that it redirect to groups to soften any effects of tariffs. DJT administration oil transition policy of stretching out the transition to give middle class and lower classes cost of living relief was also accepted by the Biden administration and is now the policy of Democrat run California state government.  The US economy was slowing in 2024 under the Biden administration. What has changed in 2025 is that the US stock markets are responding to steps taken by the DJT Republican administration to lower the cost of doing business by softening regulations, and giving US business the upper hand in different industries, and rebuilding the manufacturing sector with calls for EU and Japan/South Korea to invest more in the US as a quid pro quo for market access. This has led to increase in the value of market portfolios of the income earners above 250,000, or 10% of American households. As this happens the process of trade renegotiation has introduced some uncertainty in 2025 and businesses are looking for more clarity before increasing investment and slowing job hiring which hurts younger people entering the job market and lower income Americans. Were things better under Biden? Government Covid assistance and payouts in the early years 2020-2021 helped lower income workers, as this faded and the cost of living autos, housing increased sharply under Biden in 2022-2024 the situation deteriorated. The situation today is similar to the situation in 2024 with the difference in 2025 that inflation is coming down just as government help is receding. And added factor is the DJT administration plan to tackle head on the increasing cost of Medicaid to about $1 trillion by adding new requirements and reducing subsidies. The federal workforce had a disproportionate share of black workers and the policy changes to reduce the federal workforce have increased black unemployment from 6.1% under Biden in August 2024 to 7.5 % a year later. Hispanics have seen slight improvement in unemployment to 5.3% in 2025, and the middle class incomes also have held up and are holding steady. Meantime Bloomberg points out that one third of people in the top 10% are living paycheck by paycheck because of high cost of housing, university education for children, and inflation.     ...

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Difficult conditions for public sector unions as state governors work to reduce deficits. A weak economy leads to concessions by private sector unions in 2010-2013. This is one of the most difficult periods in union history following the financial crisis of 2008 and large job losses in many industries, especially the auto industry. Maher describes conditions in different industries including telecom, auto, airlines oil, retail,and rail.

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Lower oil prices are reflected in the lower foreign trade numbers for the U.S., but something else is happening in the way foreign trade is declining globally. Citigroup Economist Wieting estimates that the drop in exports in October if sustained across the quarter would have taken 2.2 points from GDP, a bigger hit than declining consumer spending that makes up 70% of GDP.

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U.S. airline stocks surged in 2014. Energy stocks crashed in the 4th quarter of 2014 losing over 30% of their value as oil inventories surged. Russia and Greece were the worst performing countries with losses over 30% for funds in these countries. India stock funds returns exceeded 30%. High yield bonds performed badly, with higher returns on investment grade assets. Apple continued growth following the introduction of the iPhone 6, with the stock value growing by 38% in 2014.

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This WSJ editorial on Muhammadu Buhari, the newly elected president of Nigeria, welcomes the peaceful transition to a new government in Nigeria. This comes at a time when Nigeria faces a crisis, with the Boko Haram insurgency in the north east and the decline in oil revenues, compounding the worsening economic troubles from corruption and failure to build infrastructure. It also reminds readers about Buhari's role as military dictator for 20 months in the 1980's, and the need for a peaceful transition in four years if he fails to deliver on promises.

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The last thing we want to do is to bring back the images of the 1953 American sponsored coup, which ousted Prime Minister Mohamed Mossadegh and returned Shah Pahlavi to power, says Senator John Kerry in an op-ed article in the NYT. He cautions America getting involved in Iran, letting Iranians decide on their own, as the CIA supported coup that overthrew Mossadegh's elected government and put a king in his place because he would be more friendly to American oil and other interests in the region, may arouse bitter memories of America's influence in avery negative way in an earlier period. Most Americans may not remember the American sponsored coup. Mossadegh was a socialist during the Cold War and wnated to nationalize the oil industry run by foreign companies in the country. During those days the interests of American oil companies, the Cold War with the Soviet Union, and British-French colonial era interests in the Middle and Africa and Asia, were all intertwined. The Korean war had just ended, Suez crisis of 1956 with the nationalization of the Suez Canal by Egypt, was a few years away, the French were fighting to keep their colonial empire in Vietnam, and America was supporting Pakistan with Sabre fighter jets bringing a version of the cold war to the Indian subcontinent even though India was the largest democracy in Asia. Partly because its leader Jawaharlal Nehru, was an independent minded socialist, who avoided joining the cold war with his non-alignment policies. Adlai Stevenson, Democratic candidate for President against Eisenhower was very enthusiastic about Nehru in his speeches, but Republican Secretary of State Dulles saw things differently, just as today there are huge differences between the way a Rumsfeld and an Obama see the world. Many of the problems today in places like Pakistan Afghanistan, Iran and Iraq had their beginning during this period....