Archive for August 7th, 2006

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$10 Words

August 7, 2006

Lynne Kiesling

I love $10 words; my favorite is concatenation, as in “an unforeseen concatenation of circumstances”. I know I used it in my dissertation, and I think I lifted it from P.G. Wodehouse (out of the mouth of Jeeves, naturally).

Thus I particularly enjoyed Jack Shafer’s Slate column from Friday on Martin Peretz’s use of $10 words:

Don’t get me wrong: I get a kick out of $10 words, too, and even use them now and again to make my pieces showier. But the psychic surcharge deters me from using them often enough to fall into the faux-erudition trap that bedevils undisciplined, rich writers like Martin Peretz, co-owner and editor-in-chief of the New Republic. He burns through $10 words and phrases like they’re kindling.

The whole column is quite amusing, and well-researched, with many rich links to Peretz’s repeated use of the high-falutin’ word kindling. It was so amusing that it moved me to revisit Peretz’s op-ed today in the Wall Street Journal (subscription required) on Senator Lieberman facing a “peace candidate”. Sure enough, there in the first paragraph:

We have been here before. Left-wing Democrats are once again fielding single-issue “peace candidates,” and the one in Connecticut, like several in the 1970s, is a middle-aged patrician, seeking office de haut en bas, and almost entirely because he can.

Bingo! But he either restrained himself or editor Tunku Varadarajan reigned him in, because that is the sole display of vocabulary ostentation in the piece (which was an interesting read for substance as well as style).

Hat tip to Radley Balko for the Shafer link.

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Copper Prices May Go Up Too

August 7, 2006

Lynne Kiesling

This phenomenon has largely gone unnoticed, but for about the past year copper prices have been rising (prices are in cents per pound). As with other commodities, like oil, gold, manganese, and nickel, much of this price increase is a consequence of rising global demand due to economic growth, particularly in places like China and India.

Now there’s news of a labor strike at one of the world’s largest copper mines, in Chile.

Copper rose $70, or 0.9 percent, to $7,930 a ton on the London Metal Exchange. In New York, copper slid on speculation that stockpiles will enable the mine to weather a strike. Copper for delivery in September slid 1.75 cents, or 0.5 percent, to $3.6150 a pound on the Comex division of the New York Mercantile Exchange at 1:25 p.m. New York time.

This Bloomberg story also points out something interesting about the wage negotiations: the rise in copper prices over the past year has led to unprecedented profits for mining companies; in fact, this story about Rio Tinto’s profits indicates a six-month increase of 75% at the same time as copper prices have risen 79%. The labor union at the Chilean mine, seeing this profit increase, sees this as a bargaining opportunity. It has the hallmarks of a story of labor and capital negotiating to split the Ricardian rents associated with ownership of extraction rights to a scarce natural resource.

Another example of market processes in this area comes from higher prices inducing more mining in places like Australia:

“The list of new mines coming on stream is the longest I can remember since the late 1980s,” said Sandra Close, whose company, Surbiton Associates, tracks gold mining in Australia.

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BP’s Prudhoe Bay Pipeline Shut Indefinitely

August 7, 2006

Lynne Kiesling

This is a humdinger: BP’s Prudhoe Bay pipeline is possibly corroded and leaking, and will be shut down.

Once the field is shut down, BP said oil production will be reduced by 400,000 barrels a day. That’s close to 8 percent of U.S. oil production or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.

As of mid-afternoon Monday, oil prices have risen to over $77. The US Department of Energy is considering a release from the Strategic Petroleum Reserve to help cushion the effect of the supply reduction on oil prices.

Note that this event is unlikely to affect gasoline prices much in the US apart from the effect on oil prices, because much of the production from Prudhoe Bay has been going to Asia.

Still, this is a humdinger. Bad timing too.

UPDATE: Not surprisingly, EconBrowser and Environmental Economics have relevant and informative posts, both providing elasticity calculations of the price elasticity of demand for oil. I think Tim’s EE post overstates the % change in quantity, because the article he cites says that it’s a 2.6% reduction in US supply, not world supply. Thus he overstates the numerator in the elasticity calculation, which leads to the implausible 1.3 that makes him stop and wonder. Jim’s estimate at EB is 0.17, much more plausible.

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