Pumping Up Understanding of the Price of Petroleum

Regarding Martin Feldstein's op-ed "We Can Lower Oil Prices Now" (July 1): The single most immediate influence one could have on lowering oil prices would be a curtailment of artificially low interest rates by the Federal Reserve. First, this would increase supply by increasing the carrying cost of storage. Secondly, by strengthening the dollar it would at once lower the cost in dollar terms. Finally, this would discourage artificially rising oil prices as a result of its use as a dollar hedge.

R. Mark Saroyan
Rancho Palos Verdes, Calif.

Prof. Feldstein has analyzed the price of oil and concluded that policies that lower expectations about future demand will lower the current price of oil. His analysis assumes that equilibrium in the oil market requires that the price of oil must at all times be expected to rise at the rate of interest, adjusted for risk. This assumption can easily be tested and disproved. Good proxies for the expected future prices of oil are observable in futures prices. Using the July 1 closing prices for light crude oil on the New York Mercantile Exchange, the expected price for August 2008 was $140.97. But the closing futures prices for August 2010, 2011, and 2012 were $139.47, $137.78 and $137.15 respectively. All of the cited prices are lower than the August price, which contradicts his factual assumption and invalidates the logic on which his conclusion rests. While the policies Mr. Feldstein refers to may be desirable, they will have little or no effect on the current spot price.

Seymour Smidt
Emeritus Professor
Johnson Graduate School of Management
Cornell University
Ithaca, N.Y.

Prof. Feldstein opens his lesson with the admonition that experts agree that speculators are not the cause of the rapid rise in the price of crude oil. Having spent many years in the crude oil purchasing department of a major oil company, I can only say -- baloney. I agree that it is a lesson of supply and demand, but one with too much money chasing too few barrels. There are simply too many players with tons of money who have absolutely no business in the oil market creating a false demand for oil. I would bet there are lots of experts who would disagree with Mr. Feldstein's statement about speculation not driving up the price of crude oil. So, let's test the theory that speculation is a cause.

If producers and consumers alike do not want speculators in the market, then let all the producer and consumer nations get together and agree that only end-users are allowed to buy oil. Back in the day when there were boycott clauses in purchase contracts prohibiting resale of petroleum to Israel or South Africa, the oil majors had to deal with these proscriptions. Even though that boycott should not be followed now, it may offer a template to disallow any entity, which is not an end-user, to purchase oil or refined products or liquefied gases. If all nations involved are sincere, such an agreement can be reached in a week by email.

What do we have to lose? Let's see what the real cause is. I bet it is not in the economics book.

Gene Tompkins
Devon, Pa.

The Perception of Islam Raises Difficult Issues

Regarding Junaid Afeef's "Obama Should Embrace His Muslim Heritage" (op-ed, July 3): As a Christian I wouldn't mind hearing Barack Obama positively acknowledge his father's Muslim background. It could be a very good thing, especially given Mr. Obama's exposure and international credibility. But to do so with a "can't we all get along" ethos, as Mr. Aleef seems to suggest, will be no more helpful than Islamic public relations straining to assure the world that "jihad" is not just confined to a holy war intended to kill unbelievers.

Dr. James Rueb
Moraga, Calif.

It is not irrational to fear Islam when we daily see property being destroyed and people murdered by terrorists, who use Islamic teachings and quote directly from Quranic verses to justify their actions.

Moderate Muslims have not been able to use theology to effectively refute the terrorists. We see the lack of women's rights and lack of freedoms that exist wherever Islam rules. All cultures are not equal and we don't want the Islamic culture introduced into the West. Our ancestors worked too long and too hard for the freedoms that we have, and we don't want to be taken back to a 7th-century misogynistic, totalitarian ideology that cloaks itself within religious doctrine in order to hide its true goal of world domination.

George McCallum
Bethesda, Md.

I believe the anti-Muslim sentiments are not a product of fear or a lack of understanding. Rather they are based on a perception that Islam and mainstream democratic values are somehow irreconcilable.

Maneesha Sharma
Charlotte, N.C.

I can't say that I have read, seen or heard everything, but since 9/11 the Muslim world community has not raised its voice in anger against the terrorist perpetrators of evil. Why not? They raise their voices against cartoonists and authors; why not against killers?

Those in the Muslim world who stay silent are the true Islamophobes. Do they fear their own religion and so do not dare risk challenging the killers?

Mr. Afeef, look inward, and get your imams to issue fatwas condemning Osama bin Laden and all his ilk at every mosque world-wide and Islamophobia will disappear.

Alan A. Fleischer
New Canaan, Conn.

Rather than trying to debunk the bigotry of Islamophobes, I would ask Mr. Afeef to address the shortcomings of his own faith and its lack of a discernible, peaceful direction. Don't smear the African-Americans, Chinese, Latinos and Jews of this country by associating their respective oppressions with the plight of today's Muslim.

Denounce the violence, human rights violations and religious intolerance that are pervasive in Muslim nations, and watch the fear and lack of understanding of Islamophobes in America erode.

Brian Kling
Palatka, Fla.

Let's Hope WTC Isn't a Bellwether

Daniel Henninger's "The Politics of Can't-Possibly-Do" (Wonder Land, July 3) expresses the frustration that many of us have with governments having a hand in anything productive in America. When one recalls that the Empire State Building was built with private money in just 11 months during the Depression, one can only marvel at the infighting and politicking that has created the World Trade Center quagmire.

Mr. Henninger, however, suggests that Barack Obama believers think of him as can-do. But his can-do is directly related to the government doing, not private people. Sen. Obama is the candidate of can't-do. Americans can't make a lot of money. Americans can't administrate their own health care. Americans can't choose to remain aloof to unions. Americans can't freely plan their own retirement. Americans can't demand liberty through war instead of anxiety through appeasement.

If New York wishes a speedily built and beautiful World Trade Center, I suggest the Port Authority immediately sell the precious 16-acre site and let American businessmen do what they are best at: doing.

David Elmore
Roswell, Ga.

African Program Is Big U.S. Success

In my travels with Catholic Relief Services (CRS), an American humanitarian aid organization, I have seen firsthand the impact of the President's Emergency Plan for AIDS Relief, known as Pepfar ("Coburn of Africa," Review & Outlook, June 28). I've met people living in camps who were displaced by the war in northern Uganda, and folks in rural western Rwanda, whose lives were being prolonged by medication provided by Pepfar through CRS. I can attest that Pepfar is indeed reaching the poorest people living in the most rural and remote areas of sub-Saharan Africa.

But the success of Pepfar is about more than just treatment. It also involves a balanced focus on morally appropriate prevention and care. Although the fundamental structure of Pepfar is sound, the bill before the Senate includes some important improvements based on experience.

Pepfar is a great U.S. foreign policy success and this bill, while not perfect, makes it better. It is imperative that, immediately upon returning from recess, the Senate act on the bipartisan agreement announced recently by Senate Majority Leader Harry Reid.

Art Wigchers
Milwaukee
Mr. Wigchers is a member of the board of the Catholic Relief Services Foundation.

Cultivating Mayhem Via Demolition Derby

The article, "Farmers Enjoy Smashing Success With New Style of Demolition Derby," (June 27), brought to mind a book, "Train Wrecks for Fun and Profit," by F.A. Schmidt, published in 1982. Beginning in 1896, promoters across the country staged collisions for steam locomotives for the amusement of the public. In such exhibitions, two old locomotives facing each other were put on a short track in front of the spectators, brought up to speed, and sent crashing in a head-on collision, often with spectacular results. The shows were widely popular and continued to be held for about 40 years.

James D. Sheppard
Greenville, S.C.

Two Views of the Late Senator Jesse Helms

Jesse Helms was no hero of the Cold War, as claimed by the Journal's editorial "Jesse Helms" (July 5). He opposed engagement with the Soviet Union -- the cultural and scientific exchanges which showed the Soviets how their media had not been telling the truth about the West, and the Nixon-Kissinger détente which prepared the way for Mikhail Gorbachev's glasnost and perestroika, and the end of the Cold War. If Mr. Helms had had his way, we would still be waging the Cold War.

Yale Richmond
Washington

The James Bond movies had "Dr. No," and the U.S. Senate had its "Senator No," Jesse Helms. The negative influence of this North Carolina senator helped defeat many things: political appointments, communist influence, obscene modern art, AIDS research and treatment, and financial aid for abortion. When Mr. Helms said "no" he meant "no," and it carried a lot of weight. Mr. Helms was nearly fearless, unafraid to say no to Democratic opponents, Republican allies and even to presidents.

Kenneth L. Zimmerman
Huntington Beach, Calif.

Protect Japan's Lenders, Please

Japanese media tend to blame consumer finance companies' managers for recent poor performance. But as your June 27 editorial "Tokyo Credit Crunch" argues, the biggest reason Japanese consumer finance companies are struggling is the legal burdens imposed upon them to pay so-called "overcharged interest." The Japanese courts imposed this burden upon consumer finance companies by making them liable for the difference between two different interest-rate caps.

These claims, called "Kabarai," are multiplying and are completely unquantifiable. Major consumer finance companies and credit companies have set aside huge amounts of reserves, but no one knows if these cash piles will be enough to cover future liabilities. Consolidation isn't occurring because companies can't evaluate each others' liabilities. In the meantime, companies still have to foot their operating costs. So they are focusing on collecting current outstanding loans, not making new loans.

To solve this problem, the Japanese parliament needs to pass a law that caps consumer finance companies' legal exposure. Generally, judicial judgments prioritize borrowers over lenders. This must change. The courts must also clarify definitions of what constitutes a "debtor" and the terms on which companies can lend to them.

What's most needed is a change of mindset on the part of Japan's politicians. Many now claim they are "protecting consumers." In fact, they are doing just the reverse.

Masahiro Hashimoto
Head, Public Relations
Japanese Consumer Finance Association
Tokyo

Schizophrenic EU Tobacco Policies

I read with interest John W. Miller's article on EU farm subsidies ("EU rethinks subsidies amid soaring food prices," June 18).

Being a Portuguese citizen and a cigar smoker, I could be writing to favor such subsidies. Instead, I was driven to write this because I found it most peculiar that the EU, having recently legislated against tobacco smoke, provides subsidies for its production.

It is most appalling that an administration bans tobacco from public places and forces tobacco producers to put "Tobacco Kills" labels on packs, yet simultaneously provides major subsidies to the tobacco industry. It would be economically efficient and politically honest to decide once and for all where we stand. Either we support tobacco or not. The current status makes no sense.

Frederico Alcântara de Melo
Lisbon

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