Everything is politics, and after blaming the previous administration for higher fuel prices, the current one is struggling to explain why the massive increase in the cost of diesel fuel isn’t their fault, and doing so on the eve of an important midterm election. The solution being floated is a temporary diesel ban, which would probably lower the cost of the fuel for a while for some people, but at what cost?
The Morning Dump this morning will shed its usual hopefulness temporarily as I pause to consider what could happen if the pursuit of a short fix leads to long term problems. Not that it would be bad for everyone. An export ban could be great for China, and the timing is wonderful now that China’s President is en route to the United States. In addition to meeting with American political leaders, GM CEO Mary Barra will reportedly also be in attendance.
While no reasonable person wants a military conflict between the US and anyone (especially China), GM Defense is ready to supply some more trucks to the Department of War, just in case. Speaking of China, our neighbors to the north are gearing up to send a lot more business that way considering they no longer trust the US as a partner.
The Price Of Lowering Diesel Prices Could Be A Global Recession And A Stronger China
The chart above comes from my buddy FRED, and it shows just how high diesel fuel prices have gotten. Going all the way back to 1994, the price of diesel has never been above $6 a gallon on average, and it’s now closer to $7 a gallon. Not great.
While this is a real and present risk for people who use a lot of diesel–farmers in particular–this is viewed as a major political problem for the GOP. As Nate Silver observes, the places where diesel price shock is the strongest also happen to be places where Democrats seem to be polling better than usual:
In Iowa, for instance, the combined price shock is 62 percent instead of 48 percent. It’s 63 percent in Nebraska, 62 percent in Michigan, and 61 percent in Kansas and Texas. And the diesel adjustment moves Maine and Alaska up substantially, to 54 percent from 42 and 30 percent, respectively. What these states have in common, of course, is that they all have competitive Senate races.
This is one of those cases where the charts pretty much tell the story, so I’ll leave it at that. But it helps to explain why Democrats’ polling has been especially strong in the heartland.
What’s a ruling political party supposed to do about it? The global energy crisis was caused by President Trump’s ongoing war with Iran, and the main reason why regular gasoline prices aren’t worse is because of China’s decision to use its strategic reserves to, seemingly, avoid creating a global recession. Remember that, because it’s going to come back again quickly.
I’m not going to get into the complexity of crack spreads, gravity, et cetera, but just be aware that the amount of diesel, gasoline, jet fuel, or other petroleum products you get from a refinery depends on what kind of raw crude is going into it. Right now, the United States produces a lot of diesel, and it does so for both internal and external customers, and many of those internal customers happen to be farmers.
You can see where this is going. There’s a growing movement to put a temporary export ban in place, as Politico notes:
Sen. Chuck Grassley (R-Iowa) posted over the weekend that high diesel prices are “KILLING FARMERS INCOME” and urged Trump to “put an embargo on diesel exports like presidents in the 70s put embargoes on ag products bc food prices were inflated.”
Rep. Ashley Hinson (R-Iowa), who is running for the Senate, called Monday morning for using “every option at our disposal to provide some relief from high prices,” including suspending diesel exports and the federal gas tax.
Would it lower the cost of diesel in some agricultural states? Yeah, probably. That’s the good news. The bad news is everything else that happens when you attempt a quick export ban. That bit about the ’70s embargoes on agricultural products Sen. Grassley mentions is interesting because this paper from the University of Illinois makes the case that this ultimately hurt producers in the US:
The embargo raised questions about the U.S. as a reliable supplier of staple commodities. In particular, Japan responded to its over-reliance on the U.S. by introducing the concept of food security and initiating policies to address it. Maybe the most far-reaching of these actions began in 1974 when the Japan International Cooperation Agency was formed and began a large-scale investment in the development of the Cerrado region in Brazil for soybean production; underway from 1979 to 2011 it helped push Brazil into a leading export role in the world soybean market (Akihiko 2017). Also in response, the European Community—another major customer of U.S. soybean exports—began dishing out large subsidies to increase production of oilseed crops in Europe (Madigan 1994).
As energy economist Philip Verlger points out, the possible outcomes of this are far worse than merely lowering your potential customers over time:
Initially, a diesel ban would send global prices skyrocketing. Today, the US exports around 1.4 million barrels per day to countries that require diesel imports. Our shipments may account for as much as 20% of the market. A ban could raise world prices by as much as 100%, given the fuel’s low price elasticity of demand.
Nations hit by the price increases would suffer economic recessions or worse. They would not forget the experience, just as Japan did not forget the soybean embargo.
Also, if you live on the East or West Coast there’s no great way to get you heating oil or diesel fuel from American producers so, as Marketplace reports, the global increase in prices would make things way way worse for you:
Diesel is a global market, and if the U.S. pulled its exports out of that market, “you would see global prices for diesel skyrocket,” said Bob McNally, founder and president of Rapidan Energy Group.
That would immediately push prices up on the East and West Coasts, where most diesel is imported. Even though the U.S. produces plenty of diesel, there’s no good way to transport it across the country.
If you’re worried about how I’m going to heat up my place, please don’t. I have the ability to use natural gas instead of heating oil, which has been the way better choice lately. Other than farmers and Republicans in the middle of the country, who else benefits from this?
China. Verleger goes onto add this little tidbit:
The world’s energy consumers would also respond as Japan did, in this case turning away from the US to suppliers of renewable energy capital, primarily China, and pursuing an energy agenda and infrastructure that do not depend on the whims of an outside country. US energy exporters would see markets shrink, just as American farmers did when Brazil became the world’s go-to soybean supplier.
From a global perspective, maybe this isn’t a bad thing for the environment. A lower reliance on the US as an energy producer doesn’t necessarily mean more oil production in China. Rather, it means that countries start to adopt policies similar to what’s happening in Australia, and invite more Chinese cars, more Chinese solar power, and use less oil.
Mary Barra To Reportedly Have Dinner With China’s President
I will probably be talking about China a lot given that a delegation from the country will be meeting in Washington this week, including a state dinner at the White House tomorrow. According to Reuters, GM CEO Mary Barra is going to be there.
Will any other car execs be elbowing up to the buffet? Maybe not:
Barra will not be joined by Stellantis CEO Antonio Filosa, who is out of the country, two sources said. Ford declined to comment on if CEO Jim Farley would attend the dinner. The automaker recently came under fire from US Transportation Secretary Sean Duffy for its business partnerships with Chinese companies.
It’s an odd spot for Farley, given Sec. Duffy got so mad at Ford for working with China, and then the White House invites you for a nosh with Xi Jinping. I wonder what they’re going to talk about…
GM Defense Scores $700 Million More For Enclosed Trucks
GM Defense’s Colorado-based Infantry Squad Vehicles seem to be growing in popularity with the US military, and the company just got a new order to modify the vehicles for colder weather operations.
The $697.7 million modification brings GM Defense’s contract with the government to make vehicles “cumulative face value” to $915,597,166, the military agency said Sept. 21.
Erica Mitchell, a spokeswoman for GM Defense, told the Detroit Free Press that the company is the prime contract holder for the ISV-Utility variant and the winch solution.
The engineering changes in the updated contract include the addition of a windshield, heater and defrost system as well as options for a full crew enclosure kit.
I wonder where the vehicles would need to go that’s cold?
Canada Trying To Make It Easier To Import From Asia And Europe
I don’t imagine there’s any future where Canada and the United States aren’t major trading partners, but let the lessons above be instructive about what the future could bring. Specifically, a future wherein the ongoing trade war encourages Canada to get closer to Asia and Europe.
A new proposal from the Canadian government would have the country invest in port infrastructure with a pretty obvious bent, as Bloomberg reports:
“It’s really inspired by this imperative to diversify our overseas markets, to diversify away from the United States,” Transport Minister Steven MacKinnon said in an interview, alluding to the tariffs and other trade disruptions imposed by US President Donald Trump.
“There’s a very discernible east-west pattern in this, when we talk about corridors,” he said.
Let’s just say we’ve met MacKinnon in a very Chinese time in his life.
What I’m Listening To While Writing TMD
Our own Peter is going to see Squeeze tonight, and while I’m on record stating that “Up the Junction” is the best Squeeze song, “Cool for Cats” is also pretty good.
The Big Question
When was the last time you’ve heard a car backfire? Have you ever had a car that backfires badly?
Top photo: DepositPhotos.com
I have a better idea – just drop a Chevy Express body on top of that frame – problem solved!
As an American, it’s weird just how much our politics revolves around farmers. Price of diesel goes up, “what about the farmers!” What about anyone else who uses fuel for any purpose? Are farmers a powerful enough collective that they need to be pandered to left, right, and center?
Well, right, anyway.
I don’t really know much about this stuff, but it does seem that if farmers get hit hard with the cost of diesel, it will hit the rest of us in the form of food prices. Also, a lot of “farmers” are actually pretty big financial concerns with enough money to get the attention of politicians with campaign donations and such….
“Family farms” went the way of the Dodo. Corporations feed us. Calling those places “farms” employing “farmers” is stretching the classic meaning.
I’m not usually a greatest hits compilation sort of guy, but I’ve listened to Squeeze’s 45’s and Under frequently since I was a kid. It’s the rare chronologically-sorted greatest hits albums that seems to work for me; the band evolves but always sounds like themselves, and the work doesn’t degrade over time. The sequencing works.
Enjoy the show Peter!
Back when I was in high school last century, my 77 Accord hatchback backfired so badly it blew out the bottom of the muffler. Good times.
The only car I’ve heard backfire is Uncle Buck’s “Beast”, watched it again on Netflix last week.
“every option at our disposal to provide some relief from high prices,”
Including sending actual professional diplomats to engage with Iran and figure out how to wind this pointless war down?
… okay, every option but that one.
– Rep. Ashley Hinson (R-Iowa) sometime in the future
The last car backfire I heard was a few weeks ago. A tuned Golf R floored it past me as I was walking; it seemed incredibly loud, even by the standards of pops-and-bangs tunes.
I covered one ear in time, but not the other for some reason; since I have hearing sensitivity and tinnitus due to a previous loud sound incident, I ended up dealing with ear pain and elevated tinnitus for a couple of days.
One of the Golf-R fools is sometimes in my morning commute. They seem to think causing extra bangs / pops is funny or cool but it’s just annoying as F. The Mustangs that are just loud at all times also get on my nerves. I swear we used to pull people over for loud car stereos that were nowhere near this loud. I wonder why some of these noise makers are legal.
Outside of events like demolition derbies, I haven’t ever heard a real backfire from a regular car. By the time I was born in ’93 all new cars were fuel injected. By the time I was old enough to actually remember things, carbureted cars were mostly gone from the roads. In high school, I was the only one with a carbureted car, my air-cooled Beetle (that I still have). And it wasn’t even my daily.
My wife’s 72 Buick century used to burn points out regularly . that resulted in backfires which also resulted in a new muffler
Hey MH, I see you, seeing me, seeing you. And it’s appreciated.
The damage done by this administration will echo for generations in the US
I was just saying to my wife the other day that we need like 20 years of unusually competent Democrat majority governance to undo what this administration has done, realistically at best we might get four before the average “low information” voter gets mad that their life wasn’t somehow magically turned around and switches sides again.
A huge part of what’s so disheartening about this is the collective delusion of so many people who have somehow convinced themselves that the USA will come out of this stronger, better, richer (well maybe a few at the top will). I grew up in a reddish state and a lot of those folks are good pragmatic people if you get them away from politics and it’s really shaken my belief in basic human decency that so many people have basically just accepted and rationalized this administration because they’re somehow convinced that the other side are the harbingers of Venezuelan style socialism.
This administration is just a very visible and humiliating symptom of a much deeper problem. They have demonstrated that blatant, easily disproven lies aren’t political suicide but, in fact there are so many ignorant Americans that crafting an entire alternate reality, completely removed from facts or logic, can be politically beneficial as long as it aligns with their predispositions or pisses off the people that have been making them look stupid on the internet for years. The flood gates have opened and power hungry politicians have no problem burning it all down if it will satiate their greed while partisan news agencies follow suit for the sake of increasing advertising revenue.
There are those who would gladly live in a refridgerator box, roasting pigeons over a curtain rod; so long as their minority neighbor did not even have a curtain rod to roast a pigeon upon.
A rising tide raises all boats is lost on these people. The cruelty is the point.
Truth to this, my dad has been complaining about “the liberal media” for at least the last 25 years. I remember him telling me in 2016 that the media was conspiring to get Trump nominated during the primary because he had no chance of winning the Presidency. Of course at this time he was also still anti Trump. We’ve stopped talking politics since then.
The next administration will spend four years beginning to repair the damage. They’ll get no credit for their work because it’s hard and boring and the pendulum will swing back. This sucks.
Yep this is my fear, even though I think there’s plenty of meh you can point to with Biden, his administration did a lot of good regulatory stuff that benefits the average person, e.g. Click to cancel, yet he got no credit for it and now it’s all been overturned.
The Biden administration was particularly bad at talking about their accomplishments.
And this is partially something I think you can lay at Biden’s feet, maybe it was just age but imo while his administration did good things Biden himself was not a particularly effective leader or figure head that I can tell. Of course how that merited four more years of Trump lunacy is beyond me…
asian american in southern california los angeles area here. even i have friends who are not white who still think trump shits gold, and they usually make sense and are decent people. i can’t exactly figure out why they buy the bs either, except maybe that they’re pissed off with the problems we have in california under the democrat leadership. however, i can’t imagine what california would be like under trump leadership.
I live in Seattle, and I think a real problem for West Coast liberals that we haven’t reckoned with is collectively we should arguably be this liberal utopia that presents an appealing alternative to all the people who laud the conservative idiocy somewhere like Texas. And there is some of that, but there’s also a lot of dysfunction and idealogy over results governance and well meaning progressives tripping over their own feet. IMO CA seems especially bad about this (though they are also more ambitious than WA or OR) with the high speed rail boondoggle being Exhibit A when conservatives point to their fears about Democratic governance. I can imagine that this pushes a lot of people the other way, maybe especially so because they know California will never go red at the state level so maybe they feel at least they can effect things at the national level? I can kind of get people like that he’s not just another overly polished focus group tested politician…and that there is this perverse way you could see him as being honest about what he’s doing, but like next to nothing he’s done in either term has been good for the average person…
Side note: As Washington becomes increasingly similar to California I really wish we had more 3rd parties, I have no interest in voting GOP as long as it’s even remotely the part of Trump, but I think it’s easy to get dysfunction when you effectively have one party rule.
Agreed. i’m just tired of all this far right or far left stuff that doesn’t make sense for the average person. Like, can we bring back obama? lol Those were actually some decent times and without so much of a divide.
Maybe not supporting some idiot from starting ANOTHER war in the Middle East? Oh, she means “every option” in the way I mean it when I say “I looked everywhere!”.
“The world’s energy consumers would also respond as Japan did, in this case turning away from the US to suppliers of renewable energy capital”
It would be interesting, if this diesel export ban did happen, to see countries immediately start subsidizing the shit out of electric commercial vehicles. Especially Japan considering the smaller scale of their country. Heck, getting some of their shuttered nuclear plants operational again and using that juice to provide mobility sounds like a good potential.
Hell, Japan might push for hydrogen fuel cell trucks since that is a possible application and they have already invested so much energy (pun intended) in that as a source.
Editing to add: getting their nuclear plants back online would help in the production of that hydrogen tho.
We have the technology today to electrify a lot of diesel stuff. What we’ve lacked is the will. This war is showing why moving away from oil is good for the bottom line.
Last time that I had a car that backfired was a 2005 Mazda 3. Needed a new vapor purge solenoid. Was a $15 part and took 10 minutes to install.
My TL1000S will backfire if I goose the throttle and the throttle bodies are a little dirty. When it had straight pipes people would duck as it sounded like gunfire.
Since the rotary rear damper failed as they are wont to do I haven’t ridden it in a long time. I bet the injectors are fully clogged now.
I’ll save everyone else effort of looking it up. It’s a motorcycle.
I forget not everyone is a motorcycle person here. Nevermind that TBQ asked for cars.
Solidarity man. I always wanted a TL1000S. But every one I went to look at was manky. And I was riding a branded title theft recovery bike the previous owner had bought from an MSF training course company for comparison. So I knew a manky bike when I saw one.
Mine was as well! When my Honda Superhawk was stolen I wanted something similar and found this outside Philly. The seller said the previous owner spray painted it flat black so the cops wouldn’t see him. I eventually removed the fairing, put on dirt bike handle bars, LEDs, and painted it bass boat lime green. It’s rowdy when it is working.
Car people do it too, and it’s kind of a pet peeve of mine. I realize it’s me problem, not yours.
But sometimes people say I have an XYZ 123, and I’m like WTF?
Examples, W201, the whole BMW e whatever number, SN95, NA,…..
The correct strategy would be to take the L while declaring “victory” and simply walking away.
But no, tanking the world’s economy and causing a global depression is a small price to pay so an incompetent narcissist can save face.
Oh, he’s a very competent narcissist.
Well, he is competent at being a narcissist. Sucks at everything else.
I hear Subarus and mustangs as well as Nissian products backfire all the time. Sometimes with a cat back and tune others I’m convinced are stock.
I don’t think I had a car that was regularly backfiring but have had some carb fueling issues in the past that had periods of backfiring. My C10 probably the main culprit. Maybe a something with those terrible Hitachi carbs. My dad had a 440 Chrysler in the mid 90s that would spectacularly backfire. I can’t think of anything I had with fuel injection that wanted to backfire. I had a used up Galant with a cat back that sounded like it came close sometimes.
I suspect clearer heads will prevail with banning diesel exports. They want cheaper crude from Venezuela now. They will probably get it. UAE will probably follow. Other gulf states might be likely sell at cost at this go around. Having crazier then you people lob things at you tends to make you see the bigger picture. I think the real question is do Russian oil sanctions hold up. They don’t have much refinery capacity left. But India and China were using their oil in their refineries. Vietnam is also sitting on a good amount of oil and has some capacity. But is in bed with Russian for now. That could change at any minute as the look towards the west. The refineries that were closed in California might be forced to reopen by administrative action if they can be used. Its almost a question of who’s administrative action.
The way I understand at Venezuelan crude is heavy sour crude and not much good for making lighter products like diesel, fuel, heating, oil or gasoline
Gulf coat refineries have used it for decades and can crack it to make the normal fuel products. Others were built to do the same using heavy sour. Light sweet is easier and the majority of what we produce yet we don’t have as much capacity as we used to for it. So we end up exporting light sweet and importing heavy sour.
I swear oil companies, traders, and some petro engineers try to over complicate and backtalk to confuse everyone. There are also inland refineries that use the light sweet. But they are typically older with less capacity then the coastal refineries.
TBQ:
Well, three times I can remember. The country backfired during the W administration, then again during the first Trump administration, and it’s now backfiring again so hard that I think we blew the entire muffler off and have ignited the fuel tank.
*reads question again*
Oh, you said “car” and not “country”. My bad. My answer is more pertinent. Also the solution–stop electing Republicans to run the country, please. There’s a decades-long pattern here.
Meanwhile China’s long term plan of “position ourselves to capitalize on whatever stupid things the Americans will do in the future” seems to be going quite well.
They’re eating the farmers!
“The Big Question:
When was the last time you’ve heard a car backfire? Have you ever had a car that backfires badly?”
We have an MGB with dual carbs. It backfires once in a while, but usually only when it’s hot.
My Craftsman Snowblower used to backfire when I slid the little throttle slider over to ‘STOP’ which was very loud and especially jarring when it was in the bed of my pickup under the topper. I solved this by making sure to slide the throttle to ‘STOP’ and then pulling the little plastic key out before it winds down to the point where it would backfire, then re-inserting the key after it completely shut down.
I had a 1978 MGB with a Weber 45 DCOE, and 18-year-old me liked to play with the screws on the carb to see what they did. On an unrelated note I discovered when I took the MGB into the mountains it could enable “smoke screen mode.” If I coasted down a long hill and then gave it gas, it blew out a bunch of white smoke.
My friend once had a square-body Chevy pickup with a 305 and a 3-speed manual. He picked me up to bring me to school for a month when I was between beater cars. We had to go down a long hill and then across a bridge over a river. The bridge sidewalk would always be filled with children walking to school so halfway down the hill he would turn off the ignition while it was in 3rd gear, pump the gas a few times, and then once we got to the center of the bridge, he would turn the ignition key back to ‘run’. Holy Crap was that loud!
Once it backfired so loudly that it blew the glass-pack muffler right off and we had to go back and get it.
Those were the days…
Could’ve used your car when they elected a pope.
Backfires are heard every damn day as I live next door to a degenerate city, but they’re programmed into a “tune” by morons for scumbags. Some are constantly doing it more like old WRC antilag. I’d bet not one of those losers even knows what it is they’re intended to emulate or why those cars did that. Legit old school backfires from a car that’s out of tune I can’t recall. I know I’ve heard it, but it would likely have to have been decades ago. I remember my uncle had a car that dieseled, but I don’t think backfiring was ever all that common. Maybe because I’m in an inspection state?
Nah I grew up in Montana (0 emissions testing) and I’ve only genuinely heard a backfire like once or twice and it was always some old carbureted car me and my buddies were wrenching on, not some random ’70s barge at the grocery store parking lot. Not sure if I’ve ever heard an honest to god out on the street backfire as I’m thinking about it.
That makes sense. Likely just one of those cliche movie story telling “shows”, like hawk calls and tumbleweeds for any scene that cuts to a remote place.
TBQ: The last time I heard a car backfire was probably back in the 80s around the same time I last listened my Squeeze CD. That is all. If you need me, I’ll be pulling mussels from a shell.
I mean, making everything worse for those goddamn coastal elites and the entire world while temporarily making things slightly better for (white) Americans in the middle of the country before fucking them over even harder is the most MAGA shit ever. Then when those folks finally realize they’re getting fucked over in the long run they’ll obey their handlers, shift their blame to whatever Dem is now in office/whatever the boogeyman of choice is that week, and the cycle will repeat.
I CAN’T AFFORD ANYTHING BECAUSE OF WOKE LIBS AND (insert minority here), GIVE ME FASCISM GODDAMMIT! Honestly it’s not even funny, it’s just sad. A lot of suffering could be avoided but everyone’s just got to get dragged into the godforsaken culture wars…
My integra type s does it from the factory. If you switch into sport+ mode it changes the tune to be a little richer and do pops.
Fun fact: When you line up the timing dots on the cam gears of an OHV Volvo “redblock” engine, that’s TDC for cylinder number FOUR, not #1. That’s the last time I heard a backfire.
Same as on the Lampredi inline 4 used in many Fiats over the years, including my 1980 124 spider. It diesels, but it hasn’t backfired.
I laughed, so I would say your sense of timing is impeccable, but…
What are you, a cop?