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July 15th, 2008

From Bloomberg: http://www.bloomberg.com/apps/news?pid=20601109&sid=a4f4NqjVsrW8&refer=exclusive

Adam Sieminski, chief energy economist at Deutsche Bank AG: "What price does it take to have demand growth go to zero to match zero supply growth? That's very scary because it might take a really high price."

Yeah. That _is_ very scary. It might take a _really high price_. Independent of oil speculation, which might or might not add a noticeable amount of froth. So how come it has taken so long for the analysis to reach this really very basic point? Well, because typical discussions of supply and demand assume elasticity of _both_. Sieminski has reached the point where instead of _worrying_ that demand destruction might happen (oh, woe for the economy! Remember, Reagan taught us all that the American Economy Runs on Wasted Fuel and Jr. has been doing his best as Fidei Defensor -- did I spell that right?), he's worrying that it might not happen _fast enough_. Why has this suddenly happened? I would point to the recent BusinessWeek article documenting what Simmons and the doom-and-gloomers have been saying for several years now. Supply is hitting a wall. And if supply is inelastic, what happens to price when demand and supply crossover gets really hairy and ugly -- unless demand is _very_ elastic.

Realistically, Sieminski is still not seeing the real problem, any more than BW did. And while the doom-and-gloomers saw the real problem, they have failed _horribly_, by and large, in understanding what would cause it and how it would manifest in our mundane lives. The real problem is that supply will probably start shrinking PDQ, and will absolutely continue to rise in price due to the price of production, if a plateau can be maintained at all.

In other news. the Chevy Volt is go, with a probable price tag of $40K in 2010, but requiring a price of more like $48K to be profitable. Because remember, what GM needs now is another car it can only sell at a loss.

Fosamax might be causing bone problems

http://www.nytimes.com/2008/07/15/health/15well.html

I don't consume milk products because I'm allergic to them. I'm also lactose intolerant, which took a while to discover because if you don't consume milk products, you have to be a bit of a label reader and run into some oddball products to find out you have an issue. And now, off on a tangent.

One of the things that really set me off with Kleiman/Patel the other day was the discussion of supermarkets, shopping the perimeter vs. the center, etc., and Kleiman (who, I should say, is _white_) said re: milk that everyone drinks it. She said this to Patel (who, I should say, is subcontinental Indian at least by heritage). Alert, awake, informed people who have (a) had their morning stimulant and (b) don't drink the coffee being pushed by the US medical establishment, know that outside descendants of Europeans and a very small number of other scattered groups, most adults don't and _can't_ drink milk without serious problems. Now, Kleiman may have been including yogurt in the milk department and Patel may have been open-minded and tolerant and assumed that. But I get really peeved when people say everyone-eats/drinks-x in generally, and milk products because of my own particular issues (yeah, and my ancestry is Dutch/Fries with a smattering of other Germans and Europeans tossed in. Go figure).

Returning to the topic at hand. As a child, my pediatrician and mother concluded that I _had_ to consume milk products and therefore they should be repeatedly reintroduced and I should be fed them up to whatever threshhold I could "tolerate". Let's just say I grew up expecting to be on allergy medication and miss several weeks of school (and, eventually, work) for the rest of my life and probably die of respiratory related illness (not caused by smoking) at a fairly young age. When I was old enough to stop consuming milk products, I was able to entirely get off the allergy medication, and my colds are now on the level of most other people around me (i.e. don't _all_ turn into bronchitis requiring antibiotics), often milder. Until I quit having any contact with my mother, she harassed me constantly to take calcium supplements and other vitamins (I think I mentioned she's crazy), which generally had the effect of upsetting my digestion. Once I quit taking those, I felt a whole lot better and went about my life much happier, reading articles about why supplementing single nutrients was a bad idea and how this whole calcium thing was blown way out of proportion and in fact partly an artifact of consuming too much protein. I also learned, along the way, that it's short, petite, light white women who get osteoporosis primarily -- I'm not short, petite or light. And I learned about the importance of vitamin D from the sun or fish blah blah blah. Whatever. (She was obsessed with sunscreen, too, did I mention?)

In any event, I've been following the Story of Fosamax for several years now. Think of me lying in wait, like a hunting cat, or perhaps as a heckler just waiting to laugh my sorry ass off at the misfortunes of those short, petite, white women (or, in any event, women) more compliant than me who dutifully took their Fosamax as their doctors dutifully told them to do so. That Well article is spoor. I am closing in for the kill.

See, the theory is that you need dense bones or you will get osteoporosis. This isn't really actually particularly true. What you need are well-structured bones. When you look at bones of elderly women for structure, rather than just measuring for density, you see a really wide variety. And there's a pattern associated with osteoporosis. You can have birdlike bones with structures NOT associated with osteoporosis -- and dense bones with osteoporotic structure. But they've been measuring the wrong thing, which is hard to stop anyway, and then someone found a drug target.

Fosamax basically stops bone restructuring under the assumption that once you enter a certain risk group (age, race, size, weight), the restructuring is Net Bad (that is, dismantling bone, rather than building bone). I figure that's just stupid. I mean, that _cannot_ be right, at least, not as long as you are asymptomatic. And sure enough, it is looking like it's not right. Fosamax is starting to be associated with a (formerly) rare kind of bone break. Oh, and they _thought_ you were going to have to be on it for life (gleeful manufacturer) but now they're thinking five years and no further benefit (what precisely does _that_ mean?).

Anyway. I'll just sit here with my soy milk decaf mocha and chortle in anticipation. Altho I may start leaning on N. to get off the Fosamax. Soon.

still more gas math

And it is math this time, but first, an interesting bit of commentary.

http://www.thetruthaboutcars.com/suv-and-pickup-truck-buyers-now-owners-for-life/

Conclusion: "Now that the wealthy (who can afford the beating) and the quick-movers (who have already glutted the market) are in their Civics, Camrys and Accords; consumers in full-size trucks and SUVs are pretty much owners-for-life." That's not _my_ punctuation. I copied and pasted. But this is more or less the conclusion I was slowly working my way around to; kudos to this person for putting it so succinctly.

I put together a spreadsheet assuming a person buys a car new and drives it to 100K miles (which is a nice round number, and fairly close to a 7 year loan driven the current average number of miles throughout the lifetime of the vehicle). I was interested in comparing the lifetime gas cost of the vehicle under this scenario, so I put in average mpg price points starting at 10 and topping out at 50. Then I figured the number of gallons consumed based on that average mpg, and total dollars spent on fuel at $2, $4.5 and $10 (no one thinks we're going back below the first number, the second is close to current, and no one wants to talk about any number higher than the third number).

Here are some fairly obvious conclusions:

Someone who could afford to run a 10 mpg vehicle at $2/gallon can afford to run a 50 mpg vehicle at $10/gallon -- it's the same gas cost (that's straight up algebra).

At $4.5, over the lifetime of the vehicle, the 10 mpg car will consume enough gas to buy 2 Priuses.
The Prius, at $4.5, will cost a little less than half its initial value in gas, over its lifetime.
At $10, the 10 mpg car will consume enough gas to buy 5 Priuses (or close to).
The Prius, at $10, will consume almost as much in gas as it cost to buy.

I did it straight nominal dollars, so you can complain at will about that. But I still think the resulting numbers are kinda interesting. These days, when you buy a car, what you are really buying is your gas bill (well, and your insurance premium, licensing, blah, blah, blah). Kind of like, when you buy into DVC, what you are really buying is a stream of maintenance bills. There are a surprising number of things in life exactly like this (for example, you have to buy _very expensive bookcases_ and _very cheap books_ for the value of the case to exceed the value of the books when the bookcase is full). Emphasis on surprising. I had known, for a very long time, that those contests in which you "win a car!" were contests in which you _really_ wanted to take the cash equivalent if it was something like a Porsche, because if you cannot afford to fork out for the Porsche, you probably can't afford all the trips to the mechanic that will be involved, never mind the insurance premium. Turns out you can't probably afford a free car that gets 10 mpg anymore, either. No wonder the lots can't move 'em.