Comments on: Today’s Headlines

By: Mark Walker

Mark Walker — Tue, 16 Dec 2008 19:10:48 +0000

rlb, I couldn’t agree more. The good news is that the initial gas-price shock curbed driving somewhat, and though gas prices have dropped, the change in driving habits has persisted. When the next gas-price shock hits, as it inevitably will, people will finally perceive it as a pattern, and I think this will be a game-changing move. Then, I hope, “wisely selected projects of lasting importance” will finally get the action they deserve.

By: rlb

rlb — Tue, 16 Dec 2008 18:34:48 +0000

The link in Larry’s first comment seems like a ridiculously important one.
The wild variety of inputs to oil prices and production (declining biofuels, canadian tar sands not profitable below $90, industry cost lag, decreased exploration funding etc.) and how they themselves are being affected by the decrease in oil prices reveals that feedback loop for oil is totally out of whack, or just plain whack. That alongside the swings of the past few months reveals that, at current demand levels, oil prices will never be a stable function.
I hope the powers that be recognize this and that it gives them a sense of urgency.
Concerning the controversial stimulus, they should be seriously addressing the question of whether it makes more sense to put people back to work as soon as possible on infrastructure of fleeting importance or to produce a slower curbing of unemployment but with wisely selected projects of lasting importance.

By: David_K

David_K — Tue, 16 Dec 2008 15:26:15 +0000

Someone posted this below the City Room story about the NYPD indictment: http://www.sandiegoreader.com/news/2008/dec/03/city-light-2/ — a Critical Mass ride in San Diego in which an auto driver almost bit a cyclist’s thumb off. Police arrived on the scene, witnesses identified the assailant, but they did nothing.

By: Larry Littlefield

Larry Littlefield — Tue, 16 Dec 2008 15:12:40 +0000

“Officials expect residential and commercial property sales this month to generate $37 million in transit taxes – down $27 million from an estimate released just last month. The downward revision – the fourth this year – is ‘sobering’ but the MTA doesn’t yet plan on changing longer-term revenue projections, MTA Chief Financial Officer Gary Dellaverson said.”

I’m writing reports on the commercial real estate market around the country, and almost everywhere transactions have dropped to near zero. That’s right Mr. Dellaverson, zero. The only hope is taxes collected on sales in bankruptcy; if the debts are merely restructured, they’ll be virtually no sales for years.

On the residential side, a falling market goes through a phase where the average sales price remains high but sales drop to near zero, as sellers won’t (or because of their mortgage) can’t cut their price and buyers won’t (or because of their income and real underwriting) can’t pay that much. That’s what we are moving into.

If you didn’t have a lot of exploding mortgages, that phase can last for years — until inflation (we may end up with the opposite) and capitulation match up buyers and sellers. Unless we get a wave of forclosures and a 40% to 60% decline in sales prices (as in California), there won’t be any residential sales to tax either.

The “doomsday plan” isn’t.

By: Larry Littlefield

Larry Littlefield — Tue, 16 Dec 2008 14:03:18 +0000

In addition to possibly destroying alternative energy and conservation (again), the falling oil price is wiping out new sources of oil and gas supply (again).

http://www.nytimes.com/2008/12/16/business/16oil.html?hp

I’m shocked, shocked to find shortsighted thinking going on.

In fact, investment in oil and gas production, distribution and refining never recovered from the mid-1980s oil bust. When prices soared, firms banked massive profits rather than invest.

I’m sure that few on this blog are heartbroken by a collapse of oil investment setting up another economically devastating rise in oil prices. But many forward looking environmentalists, such as NRDC economist Ashok Gupta, look at natural gas as a less damaging transition fuel. Cheap oil stops that transition and the one after, nailing, among other places, upstate New York’s wind farms and Marcus Shale gas.