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It's Going To Be A Long, Cold, Hard Winter Ahead

Reported by Donna - October 4, 2005

Today on Studio B with Shepard Smith he had a discussion with Patricia Powell of Powell Financial Group about the rising gas and energy prices. While Powell managed to get in some talking points (India and China are to blame), Smith managed to get to the point - the little guy is the one being hurt.

The following is my transcript (paraphrased, but pretty much verbatim between Shepard Smith and Patricia Powell on the energy crisis.)

Under the banner: 'Energy Secretary Says 6 Months Before Prices Fall'

Shepard Smith: Are the days of $2.00 gas gone? Are we ever going to get down again?

Patricia Powell: I don't think we're ever going to get down to $2.00 a gallon for gasoline but I do think the Secretary is right. We've got six months of dislocation, we've got six months of things to worry about, particularly more than gasoline, particularly we need to worry about heating our homes. Over the next six months we are going to be eneering winter, oil prices are up, natural gas prices are up. You name it, it's up.

And, what we are going to be looking at is people are going to be cold this winter. There are going to be those people who are just on the fringe, they just barely could afford that house. They did that 100% mortgage and now they're going to get stuck with a bill that's maybe twice what they would have expected when they were first buying the house.

So, I think there are going to be some really tough times in middle America. I'm not talking abou the poor, (Comment: Of course not, they are going to be even worse off) necesarily, I'm talking about the middle class who have overextended themselves not being able to heat their homes.

Shepard Smith: Big oil companies, combined in the last quarter made a little over 20 billion in profits. Think maybe they'll give some of those people some of that money? That would help them out? I mean, is there embarrassment in the industry, an embarrassment of riches among the oil companies?

BB: You might think that, but........

SS: Is there?

BB: I don't think so.

SS: They're not ashamed that they're making billions while everyday Americans are suffereing?

BB: Well, I think they may have some very good PR firms help them create an image that they do care about this but it's not going to change the price of oil and it's not going to change the price of gasoline. This is their job. We live in a capitalistic society and these companies do not owe it to us to bring lower prices. The interesting thing, though, about high prices is the cure for high prices is high prices. As prices stay up we will start to do things that will change our behavior and will start to bring the prices down.

SS: Well, not all of us, though. I mean, the people who can barely afford gas as it is now, they're the ones who are hurt.

BB: Absolutely.

SS: People making millions of dollars a year are not going to drive the Hummer fewer miles as a result. Once again, it's the little people, the ones who can barely afford it, that are hurt by the fact that they are making billions and billions in profit. Nobody is ever going to convince me that this is all about shortages in the U.S. Gulf region.

BB: It's not about shortages in the U.S. Gulf region and there's probably a risk premium built into the current price of oil.

SS: Right.

BB: But what I would suggest to you is there's been a longterm dislocation of supply and demand and that started more than 2 years ago. And what we're seeing now is just the edge. We're starting to really see it come home. I suspect we will see two things. I suspect that we will see the price of oil for under $60, maybe $50 - $55 a barrel. And that's because China and India don't care about whether we can afford to heat our homes or whether we can afford to drive, they care about their own economies. (Comment: Just like the US? We use way more than our fair share of fossil fuels)

Barring a world wide recession, I think the long term is in one direction until we can find some other alternatives from fossil fuels to give us the ability to keep our economy going. (Comment: In the meantime the working class and poor should do what?)

SS: And, we're out of time, when you're talking about $100 a barrel that's $5.00 a gallon, isn't it?

BB: Sure is.

SS: And that's not that far away, is it?

BB: No sir, maybe 2 years.

SS: And that's real trouble, that's real trouble this nation, for everyday, good, hard working, Americans that can't afford gas for their cars right now. It's a huge problem. That's an economy breaker, isn't it?

BB: Yeah, the little guy always pays for the big guy. That's the way it always is. (Comment: Is it me, or does she sound like Barbara Bush?) There's not much we can do in the short run to help that little guy. In the long run, we can change our whole energy policy. We have lots of opportunities.

SS: Yeah.

BB: Like you to bear in mind we've been on notice, though, since 1973.

SS: And what have we done?

BB: Zip.

SS: Nothing. Not a darn thing. We've known this was coming since those made up fuel lines and those made up prices in the 70's. We've known ever since then that they weren't making anymore fuel. And what did we do? Sit around like MOrons (his emphasis) and do nothing about it. Just keep sucking it up out of the ground. Well here comes China, get ready.

Comments: Aside from blaming China, I thought Smith did a good job in portraying what the poor and working class are going through and will continue to go through in the coming months and years.

We are currently in emergency mode. Heating oil and natural gas are going up (some estimates of 30 - 71% this winter) and the crunch is already showing up. I know of people who have lost their jobs due to slow retail traffic. I know people on fixed incomes who have no idea how they are going to pay for heating their homes this winter.

This financial analyst has no short time solutions for this problem. Does our president? It's way too late to say, conserve. The poor and working class are all conserved out -- this is a case of need. It's only going to get worse as winter comes upon us.

I had to laugh when the financial analyst said the oil companies had good PR companies to say they care because while I was doing this report it was announced that the president was going to run commercials advising people how to conserve fuel this winter. Instead of wasting the money on commercials, how about putting the money into the hands of the people who are going to suffer and can't afford to even buy that extra insulation?

Keep in mind that the conversation never steered towards what the president could do to help the American people in the this time of crisis.

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