Kiss Your Gas Goodbye
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A week that saw the war on taxpayers expand onto to several new fronts also saw US Senate Republicans win a pitched procedural battle to keep gas at the pump grossly inflated.
The US’s minority party routed American taxpayers Tuesday when it mopped the floor with citizen-related issues by blocking a vote that would have:
- Killed corporate oil’s $17 billion tax break.
- Taxed excessive corporate oil profits, unless big oil poured the excess into exploring alternative energies.
- Forced oil futures speculators from big investment banks, hedge funds and brokerages to have a lot more than 5% cash in the margin accounts they use to bet on oil. Such a move would have dramatically cooled speculation, which even oil company executives admit makes a barrel of oil (today) $70 to $80 too much.
- Made it a federal crime to price gouge oil and gas.
On the first two issues, Republicans ignored the minimum $17 billion in taxes that would once again flow to US coffers. Instead, they accused Democrats of merely wanting to punish oil companies as a way of expressing the seething anger most American taxpayers feel over gas prices that have skyrocketed for no apparent reason.
Democrats said, “Yup, making oil companies pay their fair share and punishing them for excessive profits while Americans suffer is exactly what we wanted to do.”
“Why that’s un-American,” screamed GOP senators. All while they rushed to call John McCain in order to congratulate him for admitting that, if elected president, he’d continue a program that secretly wiretaps domestic phone calls made by American citizens.
GOP senators made no comment on the bill’s increased margin account provision. What could they say? Big investment banks, hedge funds and brokerages won. Taxpayers lost a huge one. Best to pretend it never happened.
But, Senator I.M. Forsale did applaud the effort. He said the move is part of an effort to make gas so expensive that “poor people won’t have the gas to drive to the bank to cash welfare checks… perverted homosexxxxxuaaaallls can’t afford to drive to city hall to get married and godless whore women are economically prevented from driving to Planned Parenthood clinics.”
He added, “$5 and $6 gas is finally going to shake the losers, the sinners and the old out of the American family tree.”
Republican leader Mitch McConnell of Kentucky acknowledged that Americans are hurting from the high-energy costs. But, he strongly opposed the Democrats’ response and ridiculed those who “think we can tax our way out of this problem.”
“Republicans by and large believe that the solution to this problem, in part, is to increase domestic production,” McConnell said.
A GOP energy plan, rejected by the Senate last month, calls for opening a coastal strip of the Arctic National Wildlife Refuge in Alaska. Drilling in the ANWR would net the US about 454 days of oil, at its current 22-million-a-day burn rate. And, it would take eight to ten years bring the first of this oil to market.
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Look, I have always leaned toward drilling in the Alaska National Wildlife Refuge. But, only as long as ExxonMobil was not allowed to participate. XOM has done its bad deed for the last millennium up there.And, I never bought into the fact that 2,000 acres was the maximum land that would be disturbed. It will be more like 1.5 million acres, less than 10% of ANWR, which is something close to 2,300 square miles.
I actually believe that oil field technology is advanced enough that it would be fairly safe to drill there.
Of course, there’s the human element to consider… as in shortcuts and corrupt contractors. And, with so much at stake, some people might try to cover up mistakes.
Then, I did some research and discovered just how little oil is in ANWR… modest predictions are 5.5 trillion barrels… best-case predictions suggest 10 trillion barrels.
And, that is quite literally – even at the 10-trillion level – a drop in the bucket.
You see, the US Energy Information Agency reported that if Congress gave the go-ahead to pump oil from ANWR, the crude could begin flowing by 2017. It would reach a peak of 876,000 barrels a day by 2029.
But even at peak production, the EIA analysis said, the United States would still have to import more than two-thirds of its oil.
That’s 21 years until peak. And, that peak would be less than one million barrels a day. That’s less than 1/20th of our daily burn.
And, this is a front-burner issue. For whom?
Now, I rarely share with you the thoughts I send in private to my Asia Business & Investing subscribers… but a bit of what I wrote to them on Wednesday is an extension of my thoughts here.
This is what I wrote
Here in the United States… apparently no one in charge is to blame for the state of the economy… fuel and food prices… except, of course, consumers who pay the prices.
Ron Reagan was known as the Teflon President because trouble didn’t stick to him. Today, US leaders in Washington eschew the Teflon, because no one is throwing anything at the White House or Congress.
It’s you and I that need the Teflon.
After all, it was greedy homeowners who created the credit crisis… not nominally regulated banks and lenders.
It is SUV drivers and soccer moms in mini vans who have run up the price of oil – not totally unregulated oil futures speculators (Google “Enron Loophole” for the whole story) or the threatened veto of a farm bill that included a provision to close the seven-year old crooked loophole, which is well known among Washington highest echelons at both ends of Pennsylvania Ave.
…if you’re like me, when you look around don’t you occasionally wonder who led us to the state we are in today… and why everyone in Washington has escaped blame… or worse, won’t accept responsibility?
Instead, what we get is the Mitch McConnells of the world saying “we know Americans are hurting but there’s not a thing Congress can do about it – except to open up oil drilling in the Alaskan Nation Wildlife Refuge…”
See, there it is again… Washington is not to blame… it’s those pesky, do-gooder, unpatriotic, environmentalists who are pissing in the soup.
So, how about this for an idea?
If this oil is so freekin’ critical to the US’s way of life, then we open up the ANWR for oil exploration, but with two huge restrictions.
They would be that ExxonMobil is not allowed to participate in the ANWR.
And, oil company profits would be capped at 6%.
You see, the US Geological Survey estimates that at $30 a barrel, oil company profits would be about 12% on ANWR oil… but, the Department of Energy, on Thursday, said that oil prices will be $129 a barrel in 2009. It should be $86 in 2010. And it should be back over a c-note at $107 in 2015.
So, who knows how high profits would fly on ANWR oil by 2017 when its initial oil came to market.
But, under my restrictions, every penny beyond a 6% profit would evenly flow directly to the Social Security Trust Fund and Medicare.
And, I am certain that as patriotic Americans with the ability to help sustain the American way of life, US oil companies would rush to accept that deal.
Have a great weekend.
Andy
P.S. To let me know what you thought of today’s article, send an e-mail to: feedback@investorsdailyedge.com.
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Tags: alternative energies, American Taxpayers, Brokerages, Gop Senators, hedge funds, Investment Banks, John Mccain, Margin Accounts, Oil Company Executives, Oil Futures, Oil Profits, Senate Republicans, Us Senate, WiretapsAbout the Author
Andy Carpenter is a contributor to Investor's Daily Edge.
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