An Ant in the Afterbirth

This Monday I was powerless on the bike.

I left so late that the bus wasn't an option, so on the bike I went, directly into a 22 mile an hour north headwind. Here in SACTOWN a springtime north wind is always dry, and it stirs up so much shit in the air because every male green plant alive is ejaculating its pollen (read: sperm) into the air. I am quite allergic to grass pollen, and I arrived at work demoralized from the wind, with bloodshot red, itchy eyes, and with a slight hangover from Mother's day whiskey at my in-laws.

Riding into the wind...sucks. I can't hear a thing, deafened by the howl, and I couldn't see, what with the Sycamore pollen grenades exploding all around, I was blinded. And with all the cars I was dodging, I was powerless. I was just an ant in the afterbirth.

So it was that I still chose to do that instead of drive...so that everyone else's gas is decrementally cheaper. All they have to do to fight the wind is push the gas pedal about 3/16's of an inch farther down, something they won't even notice. But it does have an effect on mileage. So it is that they gas up the Pacer a few hours sooner than they would have otherwise and scratch their heads as to why they didn't get the advertised 19 miles to the gallon.

Oil is priced on the margin. The marginal price is the price that the last buyer is willing to pay and I think this is the pricing we see when we read that a barrel is $126. There are many other contracts and such that are dealt not on this price, but on whatever buyers and sellers agree on. This $126 is a spot market price for next month delivery. There are a lot of ways to play in the Global Finance Casino.

So it also is that Bush II is to visit the House of Saud here shortly, to ask for a capacity handout. The world's largest consumer asking the world's largest producer to produce more. At 10 million barrels a day in production, with a (presumable) 12 million barrel capacity. They are the only swing producer. So, say there's about 2 million barrels in spare capacity against a daily total production of 84 million barrels per day. Growth in oil demand is about 1.5% per year, or 1.2 mbpd. If things continue, even Saudi spare capacity will be wiped out in 2.5 years. We either need to grow supply or curtail demand.

But there are 1.5 billion people in the world that no longer want to ride bicycles. Sure, here in US demand is in a 'tailspin' recently, falling a heretofore unbelievable 1.5% over last year. But do you really expect this from every other nation? If oil is denominated in dollars, and China holds 1.1 trillion of them in reserves...