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Oil Down $2, Speculators Bet on Kerry Win

Old 11-01-04, 01:02 PM
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Oil Down $2, Speculators Bet on Kerry Win

LONDON (Reuters) - Oil prices fell heavily on Monday, taking U.S. crude below $50 on speculation that a U.S. election win for Senator John Kerry (news - web sites) could ease the geopolitical friction that helped spark this year's record rally.


U.S. light crude fell as low as $49.40 a barrel before retracing to $49.90 a barrel, down $1.86. U.S. crude has spent nearly a month above $50 and peaked a week ago at $55.67.


London Brent lost $2.18 to $46.80 a barrel.


Energy analysts said a win for the challenger Kerry in Tuesday's U.S. poll could mean lower crude prices than if President Bush (news - web sites) is re-elected. Most opinion polls put Bush narrowly ahead.


"Under a Kerry administration we'd likely have a much more interventionist SPR (Strategic Petroleum Reserve) policy," said Jamal Qureshi, market analyst at PFC Energy in Washington.


"And when you look out a bit further, Bush is more likely to be aggressive in the Middle East, particularly in Iran."


PFC is forecasting an average U.S. crude price of $43 a barrel in 2005 should Kerry win, compared to $48 a barrel in the event Bush triumphs. It sees $52 on average in the first quarter 2005 under Bush compared to $45 under Kerry.


PFC says a Bush win could stoke nervousness about U.S. policies in the oil producing Middle East while Kerry is seen as more likely to work through conventional diplomatic channels.


Another difference between is the two candidates' approach to the nation's emergency crude oil stockpile.


The Bush administration continues to add oil to the 670 million-barrel Strategic Petroleum Reserve (SPR) despite high prices.


Kerry says he would stop filling it at current prices to keep more crude on the market. That difference is important for the world oil market, now suffering a shortage of light, sweet crude, which makes up about 40 percent of the SPR.


A Kerry victory could also mean more financing for energy sources like wind and solar and trigger a push for tighter mileage standards for gas-guzzling sport utility vehicles.


The Massachusetts senator backs a 10-year, $30 billion energy package that includes $10 billion to build cleaner coal-fired power plants and $10 billion to help U.S. auto makers retool to build more fuel-efficient cars.


With U.S. prices holding above $50 a barrel for the past month, traders also are wary of economic data that shows signs higher energy costs are eating into economic performance, curtailing oil demand growth.


A Reuters survey released on Monday showed growth in manufacturing slowed from the euro zone to Japan in October.


October's surveys of manufacturers around the world showed a fall in manufacturing for the euro zone, the world's second largest economic bloc, signaling the slowest growth in 10 months.


"Primarily we suspect this is an oil price-induced global downturn which is hitting export growth," said Chris Williamson, chief economist at NTC Research, which compiles the data for Reuters. "Secondly, there has been some evidence of demand cooling in China."

China's surprise decision last week to raise interest rates is thought unlikely to have a major impact on fuel demand from the world's second biggest user, partly because retail prices remain heavily subsidized.

http://story.news.yahoo.com/news?tmp...markets_oil_dc
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Old 11-01-04, 01:17 PM
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The Massachusetts senator backs a 10-year, $30 billion energy package that includes $10 billion to build cleaner coal-fired power plants and $10 billion to help U.S. auto makers retool to build more fuel-efficient cars.
Kerry's energy proposal -
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Old 11-01-04, 01:22 PM
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automakers are already doing a ton of research into hybrid engines and other fuel efficient technologies. what is kerry going to do?
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Old 11-01-04, 01:27 PM
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Originally posted by al_bundy
automakers are already doing a ton of research into hybrid engines and other fuel efficient technologies. what is kerry going to do?
Regulate the shit out of them, causing them to be more expensive and less efficient than they would have been, and then take all the credit for them when he runs for re-election.
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Old 11-01-04, 01:29 PM
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Originally posted by al_bundy
automakers are already doing a ton of research into hybrid engines and other fuel efficient technologies. what is kerry going to do?
Haven't you heard? If we'll only adopt his 'plan' we will be energy independent in 10 years.

One of the many problems (besides being totally unrealistic) is that he does not address the need for explanded exploration and drilling for oil & natural gas in this country.
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Old 11-01-04, 01:29 PM
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Originally posted by al_bundy
automakers are already doing a ton of research into hybrid engines and other fuel efficient technologies. what is kerry going to do?
that's such horseshit and you know it. The auto industry will let like 1% of technology go forward and hold back the rest. It's the same assholes that are making huge profits off the war in Iraq.
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Old 11-01-04, 01:34 PM
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Originally posted by dick_grayson
that's such horseshit and you know it. The auto industry will let like 1% of technology go forward and hold back the rest. It's the same assholes that are making huge profits off the war in Iraq.
Do you have a clue as to how long it would take for either increased CAFE standards or any alternative 'fuel' to seriously impact the need for gasoline to power our vehicles in this country?
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Old 11-01-04, 01:36 PM
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Originally posted by classicman2
Do you have a clue as to how long it would take for either increased CAFE standards or any alternative 'fuel' to seriously impact the need for gasoline to power our vehicles in this country?
6 - 8 weeks (depending on the wind)
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Old 11-01-04, 01:43 PM
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Wont matter because the Japanese companies are kicking arse on this and the fuel prices are driving the market without need for CAFE standards.

In otherwords the US automarket are in trouble for the next few years. Seen the US rebates on some large vehicles? 4K
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Old 11-01-04, 01:47 PM
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We're operation on a very dangerous assumption, IMO - the assumption that oil will be sold.
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Old 11-01-04, 01:57 PM
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We are paying less for oil now than we were 20 years ago when you adjust for inflation. That is why are all car makers including the Japanese are building SUVs and Minivans. They are following the dictates of the market. When those dictates change, so will the cars produced.
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Old 11-01-04, 02:02 PM
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WHY KERRY'S GREAT ON ENERGY.
Turn On


by Gregg Easterbrook

George W. Bush and John Kerry probably differ more on energy policy than on any major issue except abortion, yet news organizations have said barely a word about their positions. Energy policy ought to be a limelight issue this election year. Congress has not passed an energy bill in more than a decade. Oil consumption and oil imports continue to rise. Natural gas prices are high and supplies are tight. Average fuel efficiency of new cars is the lowest in 15 years. The United States continues to supplicate to Persian Gulf dictators for petroleum. And greenhouse gases from fossil-fuel use continue to accumulate.

Early in his term, Bush called energy policy his top concern: "We're in an energy crisis now," he said in March 2001. But, since September 11, 2001, energy has vanished as a White House priority, though production and consumption trends remain unchanged. Even the infamous Cheney energy plan--the content of which is nowhere near as bad as pundits made it sound--has been forsaken by the White House. Meanwhile, Bush has offered only token gestures toward the greatest need in energy policy: higher miles-per-gallon (MPG) standards to restrain America's ever-growing thirst for imported oil.

Kerry, by contrast, has made that need the centerpiece of his energy policy--for years. Detractors often ask what Kerry has done in the Senate; one answer is energy policy. In 2002, Kerry joined with Senator John McCain to advocate higher fuel-economy standards for cars, pickup trucks, and SUVs. The Kerry-McCain MPG proposal was one of the big Capitol Hill events of 2002, not least because Democrats from SUV-producing states fought it furiously. That, on energy policy, Kerry showed the political courage to oppose his own party--and the United Auto Workers--while preparing a primary run is a sign of character that deserves notice in the presidential race.

If elected president, Kerry might be the nation's first executive since Jimmy Carter to offer meaningful reform in energy policy. Today, Carter is remembered as a well-meaning bumbler, but his energy decisions had historic impact. Carter deregulated oil and natural gas while imposing a big increase in vehicle MPG. These actions converted the oil and gas shortages of the 1970s into the surpluses of the 1980s, and cracked the Oil Producing and Exporting Countries (opec) "price maintenance" monopoly. One reason four consecutive presidents--Ronald Reagan, Bush 41, Bill Clinton, and Bush 43--have been able to pay little attention energy policy is that Carter's decisions worked out so well.

But the time bought by Carter's energy reforms is running out. In 2003, the United States burned about 20 million barrels of petroleum each day, of which 11 million barrels, or 55 percent, were imported--almost double 1974 levels. Rising global demand for oil, especially Chinese demand, suggests that petroleum will become ever-more expensive in real-dollar terms. Increasing U.S. imports ensure a worsening balance of trade, and increasing consumption raises fears of an artificial greenhouse effect. Maintaining the energy status quo, the central trend of which is ever-higher petroleum consumption by gas-guzzling SUVs, is a formula for constantly rising oil prices, as well as endless wars and entanglements with dictators in the Persian Gulf.

All presidential candidates since Richard Nixon, including Bush and Kerry, have promised energy independence. That goal is unrealistic. "Politicians talk about energy independence because this phrase polls extremely well, but the whole idea is nonsense," says a former White House energy adviser. But, with moderate improvements in the gas mileage of new vehicles, it is possible within a single decade to eliminate the amount of oil the United States imports from our most dangerous, and least stable, suppliers: The Persian Gulf states. Kerry is the first major presidential candidate in a generation to offer a serious plan to make this happen.

_

In four years, Bush has done nothing to change America's craving for Gulf oil. Bush has opposed significant strengthening of MPG standards for vehicles, continued to hold SUVs and the misnamed "light" pickups to lower MPG strictures than regular cars, continued to exempt some altogether, and enacted a tax break for those who buy the heaviest SUVs. Bush supports oil-drilling in the Arctic National Wildlife Refuge (anwr), but, in even the best case, anwr production will only supplant depletion of domestic oil fields in the contiguous 48 states; the reason to drill anwr is to maintain domestic production, not to provide an alternative to Saudi oil. When the topic is oil efficiency, Bush always brings up "fuel-cell" cars that run on hydrogen. But, while it is an important research area, hydrogen has no immediate value to energy policy. It is an energy medium, like electricity, not an energy source; and, at present, there is no way to obtain hydrogen without expending substantial amounts of fossil fuels. Changing the subject to hydrogen is Bush's way of diverting attention from his inaction on vehicle MPG.

Kerry's energy proposals are dramatically different. Most important, Kerry advocates substantial improvement in the fuel efficiency of vehicles, including SUVs and pickups. Kerry would ban anwr drilling but build a pipeline to Alaska's North Slope natural gas fields (which Bush also says he supports, but hasn't done much about), cancel the Yucca Mountain facility for atomic-reactor wastes (though he is not necessarily anti-nuclear power), mandate that 20 percent of electricity be generated from renewable sources by 2020, and invest billions more than Bush in cleancoal technology. Though Kerry rarely mentions greenhouse gases or global warming--political consultants fear "global warming" has become code for "surrender authority to the United Nations"--his plan would reduce U.S. carbon emissions, which are proportional to fossil fuel burned. Kerry's ideas would cause the United States to cut carbon emissions through domestic policy-making: In the Senate, he voted against the Kyoto greenhouse gas treaty. Energy policy and greenhouse reform have become the same issue, and Kerry's proposal recognizes that fact--one of its major advantages over Bush's energy plans.

To be sure, there are problems with some of Kerry's suggestions. His opposition to the Yucca Mountain facility may be driven by the fact that no vote-seeker can campaign in Nevada unless he is anti-Yucca. But the United States must have a permanent storage place for waste from power reactors, and, at this point, the objections to Yucca Mountain are either farfetched (we can't be sure what the geology of Nevada will be in 10,000 years!) or based on scientific illiteracy. Plus, if you really believe that storing atomic waste deep underground in sturdy containers in a modern facility 100 miles from the nearest population center is too dangerous, where do you think atomic waste is being stored now? It is sitting in rusting holding ponds at nuclear reactor stations, most of which were designed in the 1950s and are located close to cities. If you're against Yucca Mountain, you're in favor of keeping atomic waste in rusting holding ponds.

Kerry's call for 20 percent of electricity to come from renewable sources by 2020 also has problems. Kerry defines renewable power as "wind, solar, geothermal, and biomass," but, together, these sources account for only about 1 percent of electric generation. Even a successful effort to develop them might only double that number to 2 percent. Because environmentalists despise dams, Kerry doesn't discuss hydropower, which today generates far more zero-emission energy than wind, solar, geothermal, and biomass combined, and which offers much more immediate potential for increased production. In particular, there are many old facilities where output would increase if 1930s-era generators were replaced with modern equipment. Yet, instead of demanding that power dams be modernized, environmental lobbies are demanding that they be taken down. It's a small disappointment that Kerry does not show the same valor in opposing anti-hydro sentiment as he does in facing MPG needs.

Finally, there are two flaws in Kerry's plan to provide $10 billion to develop so-called "clean coal"--systems that burn coal while producing fewer greenhouse emissions. First, Washington has been sponsoring clean-coal research for years. A Bush-backed project with the incredible name Integrated Sequestration and Hydrogen Research Initiative--just imagine it: "My fellow Americans, this administration has made our nation a leader in integrated sequestration!"--is already building a pilot plant that will burn coal to manufacture hydrogen and be nearly greenhouse-neutral, injecting carbon by-products back into the Earth. The second problem with Kerry's clean-coal program is that there are already clean-coal systems that work, but utilities are reluctant to use them because they are so expensive. A generating process called "gasification combined-cycle combustion" is available now and offers big reductions in pollution from coal, but it costs notably more. Most likely, the board of directors of any publicly owned utility would not let the company build combined-cycle facilities, since this would violate their fiduciary responsibility to maximize returns.

Market forces alone will never cause utilities to adopt the most advanced clean-coal combustion or carbon sequestration. Government must require such technology, either directly, by imposing greenhouse limits on utilities, or indirectly, by placing a cap on carbon emissions and then allowing utilities to trade permits. This "cap and trade" approach was spectacularly successful in reducing acid rain. But Kerry's energy plan says nothing about it. Of course, neither does Bush's. Until a president stakes his credibility on binding action to put advanced coal systems into use, clean-coal talk is just pleasant political blather.

_

Its flaws aside, Kerry's plan is remarkable in its willingness to face the gas-mileage issue. No politician wants to be the one to say that monstrous SUVs and high-horsepower vehicles of any size are bad for national security because they entangle us in Gulf politics, bad for the greenhouse effect because they release great quantities of carbon, and bad for drivers and passengers because they increase highway fatalities. Fear of making these statements is why Reagan, Clinton, and both Bushes shunned action on fuel efficiency.

Official overall mileage of new U.S. vehicles rose from about 14 MPG in the late '70s to a peak of 22 MPG in 1987 and has since declined to 21 MPG. These figures, however, are based on unrealistic tests in which cars are accelerated gently and are never driven above the speed limit. The real-world overall mileage of new vehicles is probably 20 percent lower: a pathetic 17 MPG. As more SUVs and other guzzlers have been added to the roads, and as the number of miles the average driver logs each year has risen, oil demand has continued to grow.

A 2001 National Academy of Sciences study says that overall mileage can be improved by about one-third, using existing technology, without sacrificing safety or comfort and without forcing people into tiny, crash-vulnerable cars. But, when the Academy released its findings, Bush shelved the subject, employing the time-honored dodge of requesting further study. Kerry, in contrast, offered legislation to implement the improvement.

The Kerry-McCain proposal, introduced in March 2002, raised the federal MPG standard for new vehicles by one-third and dropped the loopholes that allow SUVs and pickups to meet lower standards than regular cars or to avoid standards entirely. Democrats from auto-making states were unhappy because, regardless of whether Detroit made a mistake in emphasizing the mammoth-vehicle market, that's the decision Detroit made, leaving new mileage rules unpopular in the Midwest. After a Senate showdown, the Kerry-McCain mileage plan lost 62-38, with 19 Democrats voting against it.

The Kerry-McCain proposal raised mileage using the existing "corporate average fuel economy" (cafe) system, which in theory requires the total number of vehicles a manufacturer sells to have a target MPG average. Economists dislike that system, and some believe it contains perverse incentives that harmed Midwest auto production. As a Massachusetts senator, Kerry didn't need to care about Midwest auto production. As a presidential candidate, he must: Thus, his new energy policy drops cafe and instead offers tax credits of up to $5,000 to anyone who buys a fuel-efficient vehicle, plus $10 billion to the Big Three to help them retool factories for production of high-MPG cars and trucks.

This new plan is less definite. Whereas Kerry once favored strong, binding MPG restrictions, he has now backtracked to an incentive-based system that may or may not work. Kerry's plan would make fuel-efficient vehicles cheaper than guzzlers and then let the market decide. But it's not implausible that consumers would be attracted to vehicles that cost $5,000 less and burn less gasoline--and therefore that Kerry's system could inspire a market shift toward higher MPG. A simple one-third increase in the mileage of new vehicles would have a remarkably beneficial impact on the United States-Persian Gulf relationship, and quickly.

Here's the math. About 17 million new cars and "light trucks" (SUVs, pickups, and minivans) are sold in the United States each year and driven, on average, about 12,000 miles annually. If the fuel efficiency of 17 million vehicles driven 12,000 miles annually rose by one-third, from a real-world 17 MPG to a real-world 23 MPG, that would save about 200 gallons of gasoline annually per vehicle, or about 3.4 billion gallons of gasoline. Since a barrel of petroleum yields 20 gallons of gasoline, about 170 million barrels of oil would be saved.

Perhaps you think, Aha! With U.S. petroleum demand at 20 million barrels daily, this MPG initiative has saved just about one week's worth of oil. Yes--in the first year, the MPG increase would have little effect, in much the same way that, in their first year, few investments yield much return. But remember the miracle of compounding! In the second year, with two model-years' worth of vehicles at the higher MPG, 340 million barrels of oil are saved. The next year, the savings is 510 million barrels, the next year 680 million, and so on. In just the fifth year of this initiative, we would need to purchase about 850 million fewer barrels of petroleum--approximately the amount the United States imports each year from the Persian Gulf states. If future vehicle sales are about the same as current sales, it would only take seven to eight years for there to be more vehicles on the road with the new standards than without them. Then, a tipping point might be reached, and national petroleum consumption could actually start to decline. (Note to econ majors: Yes, this is a simplified calculation that does not include the effects higher MPG standards might have on auto markets.)

In short, eliminating U.S. dependence on Gulf-state oil is not a granola-crunching fantasy. All that's needed is a one-third MPG improvement, an extremely doable goal. Moreover, this goal is achievable within roughly a decade: Five years' notice to automakers to allow them to adjust plans and production (this avoids harm to Detroit), five years of sales of higher-MPG vehicles, and then the United States can kiss the Persian Gulf goodbye. When Kerry promises "a secure America independent of Middle East oil," he is not blowing smoke. He is setting a realistic goal that can be achieved in the near term.

Of course, if the United States stopped buying Middle East crude, the oil sheiks might simply sell to someone else, notably China. But then the sheiks would be China's problem. The United States would no longer need to offer its soldiers' blood in defense of Gulf oil fields, nor coddle corrupt Gulf dictatorships. In addition to improving U.S. national security, an end to purchases of Persian Gulf oil could improve economic security. If rising Chinese demand for oil causes a long-term rise in prices, to perhaps $75 per barrel, the U.S. economy may be severely damaged--unless fuel efficiency reduces our need for oil.

_

But wouldn't higher MPG standards force people to drive econo-box death traps? No--mileage standards could rise by one-third with hardly any outward change in cars. Godzilla-class SUVs, such as the Hummer and the Excursion, would be history, but full-sized sedans and large SUVs, such as the Ford Explorer, could still grace auto showrooms.

Consider that, from 1981 to 2003, the average horsepower of new vehicles sold in the United States rose 93 percent, average acceleration time improved 29 percent, and average weight rose 24 percent, while average MPG remained essentially unchanged. That Detroit has been able to make its products heavier, faster, and more powerful while essentially keeping mileage the same means that engine efficiency has improved significantly: It's just that improvements have gone into power, not MPG. The main changes needed for vehicles to show a big rise in MPG, yet remain full-sized and comfy, are reductions in horsepower and acceleration.

That today even family cars accelerate 29 percent faster than cars of two decades ago is a leading reason franticness has taken over U.S. roads--almost every new car has the power to drag race from stoplights and cut others off in road-rage style. Is this a beneficial development? Certainly not for young people, whose high risk of death in traffic accidents traces partly to the increase in car acceleration. Raising vehicle fuel efficiency one-third by reducing horsepower would not only allow the United States to bid Riyadh farewell, it would make U.S. roads less dangerous and rage-stressed. Everyone would be better off.

Already, there are hints the market is shifting toward improved MPG. The Hummer is having a bad sales year, while the hardest car to get--as measured by waiting time--is the 40 MPG Toyota Prius sedan, which uses a "hybrid" gasoline-electric drivetrain. But, if you're wondering why Toyota is not rushing to stamp out more Priuses, it's because the company loses money on every one it sells: Manufacturers have not yet learned how to build hybrids at a profit. This, in turn, is why fuel-efficiency improvements based on established technology are the key to moderating oil demand. Someday, automakers will manufacture hybrids profitably; someday, hydrogen power and other advances will be practical. But automakers and White House officials talk futuristically about hybrids and hydrogen because it indefinitely postpones MPG reforms, implying that significant increases in fuel economy are not practical now. They are.

_

Last month, the California Air Resources Board mandated that, by 2016, passenger vehicles sold in California emit, on average, one-third less carbon. Since, with current technology, the only practical means to reduce greenhouse gases is to reduce fuel consumption, this was the same as ordering a one-third increase in MPG. Automakers are already complaining. They will file dilatory lawsuits and predict exorbitant costs. But automakers complained, filed dilatory lawsuits, and predicted exorbitant costs about seat belts, smog reduction, and air bags--and all turned out to be feasible and affordable. For decades, California has been the leader in automobile trends: in styles and tastes, in safety and pollution control. Now California demands a one-third improvement in fuel economy. The entire country should join this initiative.

Weaning ourselves from Gulf oil or combating the greenhouse effect only seems impossible today because we have not yet tried to face these challenges. With a wise and forward-looking energy policy, we can preserve our comfortable lifestyle and protect the climate. But nothing will happen until genuine changes in energy policy are made. Western society is living in a pleasant interregnum, during which fossil energy is cheap and artificial global warming has so far done no harm. Neither condition is likely to last. John Kerry proposes to act while there is yet time; George W. Bush proposes to leave the problems for someone else.

http://www.tnr.com/doc.mhtml%3Fi%3D2...terbrook101804
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Old 11-01-04, 02:50 PM
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Originally posted by dick_grayson
that's such horseshit and you know it. The auto industry will let like 1% of technology go forward and hold back the rest. It's the same assholes that are making huge profits off the war in Iraq.
Just like the car that runs on water but the automakers won't let us have it, right?
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Old 11-01-04, 02:53 PM
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Originally posted by dick_grayson
that's such horseshit and you know it. The auto industry will let like 1% of technology go forward and hold back the rest. It's the same assholes that are making huge profits off the war in Iraq.
so automakers have all this great technology that people are waiting for and that they can make billions on, but they aren't selling products based on it.

now why won't they sell it if there is this huge market demand for it?
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Old 11-01-04, 02:55 PM
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Originally posted by dork
WHY KERRY'S GREAT ON ENERGY.
Turn On


by Gregg Easterbrook

George W. Bush and John Kerry probably differ more on energy policy than on any major issue except abortion, yet news organizations have said barely a word about their positions. Energy policy ought to be a limelight issue this election year. Congress has not passed an energy bill in more than a decade. Oil consumption and oil imports continue to rise. Natural gas prices are high and supplies are tight. Average fuel efficiency of new cars is the lowest in 15 years. The United States continues to supplicate to Persian Gulf dictators for petroleum. And greenhouse gases from fossil-fuel use continue to accumulate.

Early in his term, Bush called energy policy his top concern: "We're in an energy crisis now," he said in March 2001. But, since September 11, 2001, energy has vanished as a White House priority, though production and consumption trends remain unchanged. Even the infamous Cheney energy plan--the content of which is nowhere near as bad as pundits made it sound--has been forsaken by the White House. Meanwhile, Bush has offered only token gestures toward the greatest need in energy policy: higher miles-per-gallon (MPG) standards to restrain America's ever-growing thirst for imported oil.

Kerry, by contrast, has made that need the centerpiece of his energy policy--for years. Detractors often ask what Kerry has done in the Senate; one answer is energy policy. In 2002, Kerry joined with Senator John McCain to advocate higher fuel-economy standards for cars, pickup trucks, and SUVs. The Kerry-McCain MPG proposal was one of the big Capitol Hill events of 2002, not least because Democrats from SUV-producing states fought it furiously. That, on energy policy, Kerry showed the political courage to oppose his own party--and the United Auto Workers--while preparing a primary run is a sign of character that deserves notice in the presidential race.

If elected president, Kerry might be the nation's first executive since Jimmy Carter to offer meaningful reform in energy policy. Today, Carter is remembered as a well-meaning bumbler, but his energy decisions had historic impact. Carter deregulated oil and natural gas while imposing a big increase in vehicle MPG. These actions converted the oil and gas shortages of the 1970s into the surpluses of the 1980s, and cracked the Oil Producing and Exporting Countries (opec) "price maintenance" monopoly. One reason four consecutive presidents--Ronald Reagan, Bush 41, Bill Clinton, and Bush 43--have been able to pay little attention energy policy is that Carter's decisions worked out so well.

But the time bought by Carter's energy reforms is running out. In 2003, the United States burned about 20 million barrels of petroleum each day, of which 11 million barrels, or 55 percent, were imported--almost double 1974 levels. Rising global demand for oil, especially Chinese demand, suggests that petroleum will become ever-more expensive in real-dollar terms. Increasing U.S. imports ensure a worsening balance of trade, and increasing consumption raises fears of an artificial greenhouse effect. Maintaining the energy status quo, the central trend of which is ever-higher petroleum consumption by gas-guzzling SUVs, is a formula for constantly rising oil prices, as well as endless wars and entanglements with dictators in the Persian Gulf.

All presidential candidates since Richard Nixon, including Bush and Kerry, have promised energy independence. That goal is unrealistic. "Politicians talk about energy independence because this phrase polls extremely well, but the whole idea is nonsense," says a former White House energy adviser. But, with moderate improvements in the gas mileage of new vehicles, it is possible within a single decade to eliminate the amount of oil the United States imports from our most dangerous, and least stable, suppliers: The Persian Gulf states. Kerry is the first major presidential candidate in a generation to offer a serious plan to make this happen.

_

In four years, Bush has done nothing to change America's craving for Gulf oil. Bush has opposed significant strengthening of MPG standards for vehicles, continued to hold SUVs and the misnamed "light" pickups to lower MPG strictures than regular cars, continued to exempt some altogether, and enacted a tax break for those who buy the heaviest SUVs. Bush supports oil-drilling in the Arctic National Wildlife Refuge (anwr), but, in even the best case, anwr production will only supplant depletion of domestic oil fields in the contiguous 48 states; the reason to drill anwr is to maintain domestic production, not to provide an alternative to Saudi oil. When the topic is oil efficiency, Bush always brings up "fuel-cell" cars that run on hydrogen. But, while it is an important research area, hydrogen has no immediate value to energy policy. It is an energy medium, like electricity, not an energy source; and, at present, there is no way to obtain hydrogen without expending substantial amounts of fossil fuels. Changing the subject to hydrogen is Bush's way of diverting attention from his inaction on vehicle MPG.

Kerry's energy proposals are dramatically different. Most important, Kerry advocates substantial improvement in the fuel efficiency of vehicles, including SUVs and pickups. Kerry would ban anwr drilling but build a pipeline to Alaska's North Slope natural gas fields (which Bush also says he supports, but hasn't done much about), cancel the Yucca Mountain facility for atomic-reactor wastes (though he is not necessarily anti-nuclear power), mandate that 20 percent of electricity be generated from renewable sources by 2020, and invest billions more than Bush in cleancoal technology. Though Kerry rarely mentions greenhouse gases or global warming--political consultants fear "global warming" has become code for "surrender authority to the United Nations"--his plan would reduce U.S. carbon emissions, which are proportional to fossil fuel burned. Kerry's ideas would cause the United States to cut carbon emissions through domestic policy-making: In the Senate, he voted against the Kyoto greenhouse gas treaty. Energy policy and greenhouse reform have become the same issue, and Kerry's proposal recognizes that fact--one of its major advantages over Bush's energy plans.

To be sure, there are problems with some of Kerry's suggestions. His opposition to the Yucca Mountain facility may be driven by the fact that no vote-seeker can campaign in Nevada unless he is anti-Yucca. But the United States must have a permanent storage place for waste from power reactors, and, at this point, the objections to Yucca Mountain are either farfetched (we can't be sure what the geology of Nevada will be in 10,000 years!) or based on scientific illiteracy. Plus, if you really believe that storing atomic waste deep underground in sturdy containers in a modern facility 100 miles from the nearest population center is too dangerous, where do you think atomic waste is being stored now? It is sitting in rusting holding ponds at nuclear reactor stations, most of which were designed in the 1950s and are located close to cities. If you're against Yucca Mountain, you're in favor of keeping atomic waste in rusting holding ponds.

Kerry's call for 20 percent of electricity to come from renewable sources by 2020 also has problems. Kerry defines renewable power as "wind, solar, geothermal, and biomass," but, together, these sources account for only about 1 percent of electric generation. Even a successful effort to develop them might only double that number to 2 percent. Because environmentalists despise dams, Kerry doesn't discuss hydropower, which today generates far more zero-emission energy than wind, solar, geothermal, and biomass combined, and which offers much more immediate potential for increased production. In particular, there are many old facilities where output would increase if 1930s-era generators were replaced with modern equipment. Yet, instead of demanding that power dams be modernized, environmental lobbies are demanding that they be taken down. It's a small disappointment that Kerry does not show the same valor in opposing anti-hydro sentiment as he does in facing MPG needs.

Finally, there are two flaws in Kerry's plan to provide $10 billion to develop so-called "clean coal"--systems that burn coal while producing fewer greenhouse emissions. First, Washington has been sponsoring clean-coal research for years. A Bush-backed project with the incredible name Integrated Sequestration and Hydrogen Research Initiative--just imagine it: "My fellow Americans, this administration has made our nation a leader in integrated sequestration!"--is already building a pilot plant that will burn coal to manufacture hydrogen and be nearly greenhouse-neutral, injecting carbon by-products back into the Earth. The second problem with Kerry's clean-coal program is that there are already clean-coal systems that work, but utilities are reluctant to use them because they are so expensive. A generating process called "gasification combined-cycle combustion" is available now and offers big reductions in pollution from coal, but it costs notably more. Most likely, the board of directors of any publicly owned utility would not let the company build combined-cycle facilities, since this would violate their fiduciary responsibility to maximize returns.

Market forces alone will never cause utilities to adopt the most advanced clean-coal combustion or carbon sequestration. Government must require such technology, either directly, by imposing greenhouse limits on utilities, or indirectly, by placing a cap on carbon emissions and then allowing utilities to trade permits. This "cap and trade" approach was spectacularly successful in reducing acid rain. But Kerry's energy plan says nothing about it. Of course, neither does Bush's. Until a president stakes his credibility on binding action to put advanced coal systems into use, clean-coal talk is just pleasant political blather.

_

Its flaws aside, Kerry's plan is remarkable in its willingness to face the gas-mileage issue. No politician wants to be the one to say that monstrous SUVs and high-horsepower vehicles of any size are bad for national security because they entangle us in Gulf politics, bad for the greenhouse effect because they release great quantities of carbon, and bad for drivers and passengers because they increase highway fatalities. Fear of making these statements is why Reagan, Clinton, and both Bushes shunned action on fuel efficiency.

Official overall mileage of new U.S. vehicles rose from about 14 MPG in the late '70s to a peak of 22 MPG in 1987 and has since declined to 21 MPG. These figures, however, are based on unrealistic tests in which cars are accelerated gently and are never driven above the speed limit. The real-world overall mileage of new vehicles is probably 20 percent lower: a pathetic 17 MPG. As more SUVs and other guzzlers have been added to the roads, and as the number of miles the average driver logs each year has risen, oil demand has continued to grow.

A 2001 National Academy of Sciences study says that overall mileage can be improved by about one-third, using existing technology, without sacrificing safety or comfort and without forcing people into tiny, crash-vulnerable cars. But, when the Academy released its findings, Bush shelved the subject, employing the time-honored dodge of requesting further study. Kerry, in contrast, offered legislation to implement the improvement.

The Kerry-McCain proposal, introduced in March 2002, raised the federal MPG standard for new vehicles by one-third and dropped the loopholes that allow SUVs and pickups to meet lower standards than regular cars or to avoid standards entirely. Democrats from auto-making states were unhappy because, regardless of whether Detroit made a mistake in emphasizing the mammoth-vehicle market, that's the decision Detroit made, leaving new mileage rules unpopular in the Midwest. After a Senate showdown, the Kerry-McCain mileage plan lost 62-38, with 19 Democrats voting against it.

The Kerry-McCain proposal raised mileage using the existing "corporate average fuel economy" (cafe) system, which in theory requires the total number of vehicles a manufacturer sells to have a target MPG average. Economists dislike that system, and some believe it contains perverse incentives that harmed Midwest auto production. As a Massachusetts senator, Kerry didn't need to care about Midwest auto production. As a presidential candidate, he must: Thus, his new energy policy drops cafe and instead offers tax credits of up to $5,000 to anyone who buys a fuel-efficient vehicle, plus $10 billion to the Big Three to help them retool factories for production of high-MPG cars and trucks.

This new plan is less definite. Whereas Kerry once favored strong, binding MPG restrictions, he has now backtracked to an incentive-based system that may or may not work. Kerry's plan would make fuel-efficient vehicles cheaper than guzzlers and then let the market decide. But it's not implausible that consumers would be attracted to vehicles that cost $5,000 less and burn less gasoline--and therefore that Kerry's system could inspire a market shift toward higher MPG. A simple one-third increase in the mileage of new vehicles would have a remarkably beneficial impact on the United States-Persian Gulf relationship, and quickly.

Here's the math. About 17 million new cars and "light trucks" (SUVs, pickups, and minivans) are sold in the United States each year and driven, on average, about 12,000 miles annually. If the fuel efficiency of 17 million vehicles driven 12,000 miles annually rose by one-third, from a real-world 17 MPG to a real-world 23 MPG, that would save about 200 gallons of gasoline annually per vehicle, or about 3.4 billion gallons of gasoline. Since a barrel of petroleum yields 20 gallons of gasoline, about 170 million barrels of oil would be saved.

Perhaps you think, Aha! With U.S. petroleum demand at 20 million barrels daily, this MPG initiative has saved just about one week's worth of oil. Yes--in the first year, the MPG increase would have little effect, in much the same way that, in their first year, few investments yield much return. But remember the miracle of compounding! In the second year, with two model-years' worth of vehicles at the higher MPG, 340 million barrels of oil are saved. The next year, the savings is 510 million barrels, the next year 680 million, and so on. In just the fifth year of this initiative, we would need to purchase about 850 million fewer barrels of petroleum--approximately the amount the United States imports each year from the Persian Gulf states. If future vehicle sales are about the same as current sales, it would only take seven to eight years for there to be more vehicles on the road with the new standards than without them. Then, a tipping point might be reached, and national petroleum consumption could actually start to decline. (Note to econ majors: Yes, this is a simplified calculation that does not include the effects higher MPG standards might have on auto markets.)

In short, eliminating U.S. dependence on Gulf-state oil is not a granola-crunching fantasy. All that's needed is a one-third MPG improvement, an extremely doable goal. Moreover, this goal is achievable within roughly a decade: Five years' notice to automakers to allow them to adjust plans and production (this avoids harm to Detroit), five years of sales of higher-MPG vehicles, and then the United States can kiss the Persian Gulf goodbye. When Kerry promises "a secure America independent of Middle East oil," he is not blowing smoke. He is setting a realistic goal that can be achieved in the near term.

Of course, if the United States stopped buying Middle East crude, the oil sheiks might simply sell to someone else, notably China. But then the sheiks would be China's problem. The United States would no longer need to offer its soldiers' blood in defense of Gulf oil fields, nor coddle corrupt Gulf dictatorships. In addition to improving U.S. national security, an end to purchases of Persian Gulf oil could improve economic security. If rising Chinese demand for oil causes a long-term rise in prices, to perhaps $75 per barrel, the U.S. economy may be severely damaged--unless fuel efficiency reduces our need for oil.

_

But wouldn't higher MPG standards force people to drive econo-box death traps? No--mileage standards could rise by one-third with hardly any outward change in cars. Godzilla-class SUVs, such as the Hummer and the Excursion, would be history, but full-sized sedans and large SUVs, such as the Ford Explorer, could still grace auto showrooms.

Consider that, from 1981 to 2003, the average horsepower of new vehicles sold in the United States rose 93 percent, average acceleration time improved 29 percent, and average weight rose 24 percent, while average MPG remained essentially unchanged. That Detroit has been able to make its products heavier, faster, and more powerful while essentially keeping mileage the same means that engine efficiency has improved significantly: It's just that improvements have gone into power, not MPG. The main changes needed for vehicles to show a big rise in MPG, yet remain full-sized and comfy, are reductions in horsepower and acceleration.

That today even family cars accelerate 29 percent faster than cars of two decades ago is a leading reason franticness has taken over U.S. roads--almost every new car has the power to drag race from stoplights and cut others off in road-rage style. Is this a beneficial development? Certainly not for young people, whose high risk of death in traffic accidents traces partly to the increase in car acceleration. Raising vehicle fuel efficiency one-third by reducing horsepower would not only allow the United States to bid Riyadh farewell, it would make U.S. roads less dangerous and rage-stressed. Everyone would be better off.

Already, there are hints the market is shifting toward improved MPG. The Hummer is having a bad sales year, while the hardest car to get--as measured by waiting time--is the 40 MPG Toyota Prius sedan, which uses a "hybrid" gasoline-electric drivetrain. But, if you're wondering why Toyota is not rushing to stamp out more Priuses, it's because the company loses money on every one it sells: Manufacturers have not yet learned how to build hybrids at a profit. This, in turn, is why fuel-efficiency improvements based on established technology are the key to moderating oil demand. Someday, automakers will manufacture hybrids profitably; someday, hydrogen power and other advances will be practical. But automakers and White House officials talk futuristically about hybrids and hydrogen because it indefinitely postpones MPG reforms, implying that significant increases in fuel economy are not practical now. They are.

_

Last month, the California Air Resources Board mandated that, by 2016, passenger vehicles sold in California emit, on average, one-third less carbon. Since, with current technology, the only practical means to reduce greenhouse gases is to reduce fuel consumption, this was the same as ordering a one-third increase in MPG. Automakers are already complaining. They will file dilatory lawsuits and predict exorbitant costs. But automakers complained, filed dilatory lawsuits, and predicted exorbitant costs about seat belts, smog reduction, and air bags--and all turned out to be feasible and affordable. For decades, California has been the leader in automobile trends: in styles and tastes, in safety and pollution control. Now California demands a one-third improvement in fuel economy. The entire country should join this initiative.

Weaning ourselves from Gulf oil or combating the greenhouse effect only seems impossible today because we have not yet tried to face these challenges. With a wise and forward-looking energy policy, we can preserve our comfortable lifestyle and protect the climate. But nothing will happen until genuine changes in energy policy are made. Western society is living in a pleasant interregnum, during which fossil energy is cheap and artificial global warming has so far done no harm. Neither condition is likely to last. John Kerry proposes to act while there is yet time; George W. Bush proposes to leave the problems for someone else.

http://www.tnr.com/doc.mhtml%3Fi%3D2...terbrook101804
most people want a big car to carry family, all their crap and friends. prius is for singles and couples with no kids in the city. you make a family car more expensive, and people will hate you
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Old 11-01-04, 02:55 PM
  #16  
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Originally posted by al_bundy
so automakers have all this great technology that people are waiting for and that they can make billions on, but they aren't selling products based on it.

now why won't they sell it if there is this huge market demand for it?
huh? what I'm saying is that the oil industry decides what is done in the auto industry. I am not saying that there is the super technology out there. I'm saying that very little is done regarding alternative energy sources are put on the back burner so that the oil industry can continue to have the american driver by the balls. it's nothing new.
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Old 11-01-04, 02:58 PM
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so what is evil exxon doing to stop innovation in cars?

GE does billions of dollars in business in alternative energy and the CEO says that it is still a tiny piece of the energy puzzle and will continue to be so for many decades. the technology is not at a low enough cost to warrant the investment.

and many rich environmentalists are resisting alternative energy in their backyards, so that is working against it too.
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Old 11-01-04, 02:59 PM
  #18  
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The so-called 'big oil' companies have as much in common with the greenies than they do with the automobile industry.

Both the big oil companies and the greenies don't really give a damn about finding new sources of oil & natural gas in this country. They both argue - import it - for different reasons, but they form an unholy alliance nevertheless.
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Old 11-01-04, 03:01 PM
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Old 11-01-04, 03:02 PM
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don't get me wrong, everyone is corrupt. all I'm saying is if there's money to be made, those with the most power will try to keep it the same way to milk the cash cow.
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Old 11-01-04, 03:11 PM
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Getting back to the point of the original article, what is the estimated dollar amount speculation factor per barrel for the ME violence? $5, $10?
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Old 11-01-04, 03:43 PM
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Originally posted by dick_grayson
that's such horseshit and you know it. The auto industry will let like 1% of technology go forward and hold back the rest. It's the same assholes that are making huge profits off the war in Iraq.


That's just like the tire industry assholes who can make a set of tires last 200K miles, right? And the windshield wiper assholes who can make a set of blades last one hundred years?

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Old 11-01-04, 03:45 PM
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Originally posted by weargle


That's just like the tire industry assholes who can make a set of tires last 200K miles, right? And the windshield wiper assholes who can make a set of blades last one hundred years?

no, it's not....


but thanks for dumbing it down for me
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Old 11-01-04, 04:01 PM
  #24  
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Same news without the pro-Kerry spin courtesy of Rooters.

http://www.forbes.com/work/feeds/ap/...ap1625206.html
Update 7: Oil Prices Sink Below $50 a Barrel
11.01.2004, 02:18 PM

Oil futures prices sank below $50 a barrel Monday, continuing the selloff sparked last week by rising U.S. supplies of crude and easing fears about the refining industry's ability to satisfy heating oil demand.

The downward momentum appeared to overshadow concerns traders had about a possible strike in oil-rich Nigeria and a new setback to Russian oil giant Yukos, which was reportedly hit with $10 billion in new tax claims on Monday.

December crude futures declined by $1.81, or nearly 4 percent, to $49.95 per barrel in afternoon trading on the New York Mercantile Exchange. Oil futures traded as low as $49.40.

"The short-term trend looks negative," said BNP Paribas Futures trader Tom Bentz.

Bentz added that worldwide oil supplies remain tight and that, therefore, "I'd be a little cautious" about declaring the beginning of the end of high prices. "The reality is that not a lot has changed fundamentally," he said.

Aaron Kildow, a broker with Prudential Financial Inc. in New York, said Monday's drop was magnified by selling among institutional investors, like mutual funds, who had to cover earlier bets that prices would rise. Kildow also said that a burst of warm weather in the Northeast may have influenced market psychology.

December heating oil futures plummeted 6.16 cents to $1.4025 per gallon on Nymex, where gasoline futures fell 3.8 cents to $1.2905 per gallon.

Last week, oil prices fell from record closing prices on Nymex after the Energy Department said U.S. crude supplies had increased by 4 million barrels to 283.4 million barrels - roughly double what Wall Street was expecting. Also, data maintained by the Minerals Management Service showed a significant recovery in industrywide oil and natural gas production in the Gulf of Mexico, where operations have been snagged since mid-September due to Hurricane Ivan.

That the market chose to focus last week on rising oil supplies instead of shrinking heating oil inventories suggested a shift in traders' psychology.

China's move to cool its red-hot economy by raising interest rates also eased pressure on oil prices.

While crude prices are still up by more than 70 percent from a year ago, they would need to surpass $90 per barrel to approximate the all-time high, in inflation-adjusted terms, set in 1980. A record Nymex closing price of $55.17 per barrel was reached Oct. 22 and matched Oct. 26.

Prices rose steadily between mid-September and mid-October after Hurricane Ivan caused production outages in the Gulf of Mexico, where more than 26 million barrels of oil output has been lost. Unrest and uncertainty in key producers Nigeria, Saudi Arabia, Iraq and Venezuela have also kept traders on edge.

Underlying the supply fears is the world's narrow cushion of excess capacity, currently at about 1 percent of the global daily consumption of 82.4 million barrels, leaving little breathing space in the event of a production outage.

Oil prices briefly rose Monday morning on word that Nigeria's main labor union had called for a nationwide strike Nov. 16 at the country's largest petroleum producer - Royal Dutch/Shell Group - in a protest over local increases in fuel costs. Royal Dutch/Shell began court action Monday to block the threatened strike but lost a first-round bid for an interim injunction quelling the unions. Nigeria exports around 2.5 million barrels of oil daily.

In Russia, tax authorities raised Yukos' total bill to more than $17.6 billion, the Interfax news agency reported Monday. The Tax Ministry hit Yukos with a fresh bill for 2002 of $6.7 billion, while its biggest subsidiary - Yuganskneftegaz - received new claims amounting to more than $3 billion for 2001 and 2002.

"This is easily higher than we had expected in our worst-case scenario," said Ron Smith, an oil and gas analyst at Renaissance Capital.



Associated Press Writers Alex Nicholson in Moscow and Dulue Mbachu in Lagos, Nigeria contributed to this report.
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Old 11-01-04, 05:14 PM
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Originally posted by al_bundy
you make a family car more expensive, and people will hate you
People already hate me and I haven't even done anything to their cars.
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