Free Markets, Free People

Energy

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Imagine a president who puts the needs of the country before a political agenda

Jeffery Folks at American Thinker begins his article with:

Imagine a president who gets behind drilling, welcomes the cutting-edge technology of companies such as ExxonMobil, and offers generous 15-year tax breaks to ensure that new drilling projects move forward.  That’s the kind of energy policy America needs in order to achieve energy-independence.

I’d love to imagine that.  In fact and unfortunately, we have a president who does exactly the opposite. 

If you want someone like Folks is wishing for, you’ll have to go to Russia:

Unfortunately, it’s not Barack Obama who’s behind those positive energy policies; it’s Vladimir Putin.

As Russian president-elect, Putin has made it clear that he intends to open his country’s arctic and Black Sea regions to drilling.  The potential is so great, and the necessary investment so immense, that even Russia’s giant state-run oil companies, Rosneft and Gazprom, lack the resources and technology to proceed.  So, with Putin’s blessing, Rosneft and Gazprom have entered into joint-production agreements with Exxon, Italian major Eni, and other Western companies.  The stakes are huge — not just for these companies, but for the Russian economy.

The arctic and Black Sea fields being jointly developed by Rosneft and Eni contain an estimated 36 billion barrels of oil equivalents.  Those under development by Rosneft and Exxon, which may ultimately require an investment of as much as $500 billion, contain estimated reserves of 36 billion barrels in the arctic Kara Sea fields alone.  (Total recoverable arctic reserves have been estimated at 134 billion barrels of oil equivalent but will likely go higher as exploration proceeds.)  In addition to the arctic and Black Sea fields covered in the Exxon and Eni agreements, president-elect Putin has expressed an interest in the possibility of joint ventures to develop vast Siberian tight shale formations.

The US has an incredible amount of natural resources including huge reserves of oil and natural gas.  We’re already the number 3 oil producer in the world.  And guess who actually leads the world with recoverable fossil fuel reserves?   Yes, that would be the US.  Imagine an energy policy that made extraction of that fuel a priority?  With aggressive exploration and drilling (as well as approval of the Keystone XL pipeline) we could have a 92% secure liquid fuel sources by 2030.  Not to mention, in a time of high unemployment, a jobs bonanza.

But what do we get? 

Not that, that’s for sure.   We instead get a president who talks about an “all-of-the-above” energy policy while his actions belie his claims.  He’s turned lose a executive agency (EPA) on the fossil fuel industry that has already been slapped down numerous times by the judiciary for over-reach.  Drilling and permits on federal land have gone down dramatically.

In an oil market that has seen supplies tightening and prices going up, his administration has done everything to keep it that way.

And voters aren’t happy with his performance at all.

If this is going “Forward”, I’d hate to see backward.

~McQ

Twitter: @McQandO

Reid: “No Keystone for you!”

Can’t pass a budget in three years, is pretty sure the biggest reason to keep the financially insolvent USPS open is senior citizens like getting junk mail and wants the government paying your tax dollars to keep cowboy poetry alive, Harry Reid is a poster boy for the arguments against seniority as a means of picking leaders. 

But when it comes to screwing over the best interests of the United State, well, you can definitely count on Harry to be on the side of those doing the screwing.

Senate Democrats will hold firm and reject House Republican demands to include approval of the Keystone oil pipeline in transportation funding legislation, their leader said Tuesday.

Senate Majority Leader Harry Reid (D-Nev.) said he would not in any way help Republicans move Keystone approval across the finish line.

“Personally, I’m not — I’m not one of the conferees — but personally I think Keystone is a program that we’re not going, that I am not going to help in any way I can,” Reid told reporters. “The president feels that way. I do, too.”

I’m sure the president does indeed feel the way Reid does.

Which should tell you all you need to know about where the President’s priorities are as well.

~McQ

Twitter: @McQandO

Another example of why government picking winners and losers normally ends with #FAIL

The other day this sort of slipped under the media radar:

First Solar Inc. will lay off 2,000 workers and close its factory in Germany following a collapse in solar panel prices that has erased the industry’s profits and forced some smaller companies into bankruptcy.

America’s biggest solar manufacturer said the layoffs amount to 30 percent of its global workforce.

B..b..but why!?  Green shoots, alternative energy, clean energy, what the frack?!

This is the future, the government says so!  How did it all go so wrong?  How in the world could solar panel prices “collapse”?

An influx of Chinese competitors has led to a rapid buildup in supply. At the same time governments in Europe, the biggest market for solar power, are reducing generous subsidy programs that had fueled demand. From March to December last year, solar panel prices dropped 50 percent, said Aaron Chew, an analyst with the Maxim Group.

Oh.

That damn “supply and demand” thingy again, right?

So let me get this straight … cheap foreign product (subsidized by the Chinese government) flooded the market created by government subsidized demand, driving up supply while lowering the price. Meanwhile the false demand that had been supported by “generous [government] subsidy programs” ended (thus ending the “demand”).  Consequently there is no demand for the current over supply and no one is buying the stuff?

Wow … who could have seen that coming?

And the current producer can’t make a profit and thus has to lay off people?

Oh.

You know, when you’ve seen the same thing over and over and over again (see Einstein’s definition of insanity), sometimes you just have to resort to sarcasm.

By the way for the terminally slow – news flash – that supply and demand thingy also seems to work in the petroleum market as well. 

Go figure.

~McQ

Twitter: @McQandO

Scapegoating oil speculators–Obama counts on public’s economic ignorance to shift blame for high gas prices

Icould pretty much stop there and say the title tells you the story.  Obama knows high gas prices are not good for his re-election campaign.  He also knows his energy policies have actively worked against ameliorating or lowering the price of gas.

Therefore, it is necessary to find a scape-goat.  Someone or something he can shift the blame too and demonize.  In other words, the usual disingenuous attempt at distraction.

David Harsanyi explains what “speculators”, otherwise known as commodity traders, do:

Let’s start by being thankful for oil speculation — no matter what the motivation of those involved might be. To begin with, speculation allows companies with exposure to fluctuating commodity prices to hedge against rising costs by locking in. Sometimes the bet pays off; other times it doesn’t. But risk and profit are not yet crimes.

Oil speculation also offers consumers and investors information about the future that can help them make informed long-term decisions. Speculators trade commodities based on the information available in the marketplace. They reflect reality; they don’t create it.

But sometimes, unfortunate as it is, prices will rise. "Gouging," the close scaremongering cousin of "speculation," helps persuade consumers not to use what they don’t need. It incentivizes to modify behavior — our driving habits or the size of our cars. We conserve more when prices are higher, so we avoid shortages, and producers intensify their production. (Funny how Democrats get this concept when writing energy policy designed to artificially spike fossil fuel prices.)

In reality, this sort of trading helps moderate the market.  And, being a zero sum game – i.e. if you make money someone else loses it – it is done carefully.  As Harsanyi explains, they “reflect reality; they don’t create it”.  In essence you’re seeing a relatively free market work as it should.

Of course, what Barack Obama wants to do is have government intrude on that market because politically he doesn’t like the reality it is reflecting because it is politically damaging to him.  So:

Speaking from the Rose Garden, the president announced a proposal to spend $52 million to fund increased government oversight of oil futures market trading in addition to harsher civil and criminal penalties for manipulation in energy markets. “We can’t afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick,” Obama said. “That’s not the way the market should work.”

Or, said another way, if you make a profit based on your foresight, you’d be considered a criminal.  If you lose money, I suppose, that’s ok in Obama’s world.

Of course, it’s all nonsense (I mean how would Mr. Obama regulate oil trading in foreign exchanges?).  It is a calculated attempt to use ignorance of how these markets work to cause voters to shift their rage from him to his designated target.  Successful scapegoating means one less issue the opposition has to use against him (not that he doesn’t provide a target rich environment anyway).  He’s counting on this sort of populism to work.

David Kruetzer asks some questions I’d like to see the press ask:

If speculators are making unconscionable profits on energy, why are they only doing it occasionally and not all the time? Why are there only speculators in oil, not natural gas (whose current price is about half of what it averaged over the last decade)? And given how the petroleum market works — for every speculator who makes money on a trade, somebody else will lose money — the president’s theory “requires an endless string of chumps to take the other side of the speculators’ deals.”

And Kreutzer points out the basics of any commodities market, again something of which Obama banks on your ignorance:

For speculation to drive up prices, the speculators must either cause oil production to slow down (which they haven’t) or to pull oil off the market. If the flow of petroleum and its products remains unchanged, the price at the pump will not change. If petroleum is pulled off the market, which can happen even though there are limits to what can be stored, it will eventually come back on the market.

The question becomes, ‘When the oil comes back on the market, is the price higher or lower than when it was pulled off the market?’ The price will only be higher if the amount supplied at that time is lower or the demand is higher. In either of those cases, speculators have helped moderate price fluctuations and will be rewarded with profits. If the price is lower, then the speculators did a bad thing and will be punished by losing money.

So those are the basics of the issue as it concerns such trades and markets.

As can plainly be seen, Obama hasn’t a leg to stand on.  But that doesn’t stop him from claiming that government is the answer to this made up problem. 

Why?  Well other that it is his political nature, he can’t sell the nonsense without some sort of “action”.   It becomes much more believable to those who don’t know better if he’s going to spend millions to regulate the contrived problem out of existence.

Of course he knows his actions will not have any positive effect on gas prices, and, in fact, may actually have a detrimental effect, which is why he couches this attempt at scapegoating the problem via government with “none of these steps by themselves will bring gas prices down overnight”.

But he can claim to be taking action while continuing to blame speculators for the problem and counting on general economic ignorance to carry the day for him. 

Pretty typical of the man, I’ve come to learn.

~McQ

Twitter: @McQandO

The GOP has a chance to take the White House if it can discipline itself to stay on message

Pew Research as a survey out today that is one taken after Romney became the presumptive nominee for the GOP.  It compares its numbers to a survey taken while the GOP’s nomination was still contested.

Pew entitles it’s piece about the survey, “With Voters Focused on Economy, Obama Lead Narrows”.  It subs it with “Social Issues Rank As Lowest Priorities”.

Hello out there GOP – are you reading this?  There’s your campaign.  What to stress.  What to avoid.

Any chance they’ll actually figure that out?

I mean so far we’ve talked about sluts, contraception, race, wars on women, stay at home moms, even about dogs riding on roofs (well at least the Romney’s didn’t eat the dog).

We’ve been distracted by the outrage of the week – Rush Limbaugh, Hillary Rosen, Ted Nugent, Bill Maher, etc. 

That’s the left’s game plan, for heaven sake – Obama has a dismal, in fact awful economic record.  Horrible.

And yet the GOP is walking into every distraction trap the left sets like they haven’t a clue.

As I’ve been saying for months, once the nomination is settled, regardless of who the nominee is, and the focus begins to turn on Obama and his record, there will begin a shift in voter preference that should (note the word) carry the GOP nominee to the White House -  if the GOP plays its cards right.

Should.

Here’s what I mean:

Obama’s lead over Romney has narrowed since last month, when he had a 12-point advantage, though it is comparable to margins from earlier this year. While Obama’s advantage has declined since March, there is little to suggest a specific problem or campaign event as having a critical effect.

While there have been debates over issues related to gender, the rise and fall in Obama’s support has largely crossed gender lines, with a fairly consistent gender gap over time. For example, since March, Obama’s support among both men and women has slipped five percentage points.

Independent voters remain up for grabs. In the current survey, 48% favor Romney while 42% back Obama. A month ago, it was 47% Obama, 44% Romney.

If anyone would not expect an incumbent president to have some sort of  lead at this point, I’d say you don’t know much about American politics.

That said, as you can see by the change in a month, the lead is at best tentative, soft and narrowing. 

But … there is still a way to absolutely screw up this chance at making Obama a one-term president and, unfortunately, I wouldn’t be surprised to see the GOP manage that.

That is, to concentrate on the wrong issues.  They have a track-record of snatching defeat from the jaws of victory doing exactly that.

I’ll make it as simple as possible.

Limit the main issues of the GOP campaign to three themes: the economy, jobs and the debt.  Talk about how to improve the first two and reduce the third.  Talk about getting the hell out of the way while giving business the green light to lead us out of this economic morass.  Declare the war on fossil fuel to be over.   Talk about exploiting our natural resources and the jobs that will bring.  Put confidence back in the business sector that expansion and hiring will be enabled and supported, not killed with more and more regulation.  Talk about repealing ObamaCare and draconian regulations.  Talk about bringing America back.

Once the incumbent has given his concession speech, talk about whatever else tickles your fancy then. But discipline yourself until then.  Until then narrow the focus and be relentlessly on message.  Refuse the distraction traps.  Just flat refuse them.

Do that and the GOP has a shot.  The numbers will continue to improve.

Fall into the distraction traps and kiss victory goodbye.  If the other side is allowed to frame the campaign and establish the narrative and avoid examining Obama’s record,  the GOP loses.

We’ll see which course they choose.

~McQ

Twitter: @McQandO

D’oh: Union boss suddenly realizes Obama’s war on coal means losing union jobs

Yes, he’s apparently finally realized that as goes coal, so goes his union (via Labor Union Report).  Interesting comparison to Osama Bin Laden.  My guess is the administration see’s coal in the same sort of light as they viewed bin Laden – an enemy.  And thus, the results of their campaign against it – the loss of jobs, even if they’re union – are acceptable “collateral damage”.

The coal industry will suffer the same fate as Osama bin Laden under new climate regulations proposed by the Environmental Protection Agency, the head of the United Mine Workers of America said this week.

The Navy SEALs shot Osama Bin Laden in Pakistan and Lisa Jackson shot us in Washington,” Cecil Roberts, president of the powerful union, said during an interview Tuesday on the West Virginia radio show MetroNews Talkline.

Roberts blasted Jackson, the EPA administrator, over the proposed regulations, which would limit greenhouse gas emissions from new power plants. Opponents of the regulations, including Roberts, say the new rules would be the death knell of the coal industry.

But, will Mr. Roberts actually do anything to actively protect the jobs of his union members?

Uh,no:

While the United Mine Workers of America likely won’t actively oppose President Obama’s reelection bid, Roberts said the new EPA regulation could prevent the union from endorsing the president.

“That’s something that we have not done yet and may not do because of this very reason. Our people’s jobs are on the line,” Roberts said, adding that Obama has “done a lot of great things for the country.”

So United Mine Workers, why are you paying the dues to pay this man’s salary?

He certainly has made his choice hasn’t he?  Unquestioning party loyalty over your jobs.  He doesn’t care about them and obviously neither does the president.

I’m sure you’re surprised.

~McQ

Twitter: @McQandO

Keystone XL: Protest Was Never About “Sensitive” Lands

In Nebraska, where environmental groups had protested the construction of the Keystone XL pipeline because it would pass through the “environmentally sensitive” Sand Hills, they are now protesting a proposed solution as well.

The bill is Legislation Bill 1161

The legislation is designed to restart a state review of a pipeline route that avoids Nebraska’s ecologically sensitive Sand Hills region.

Gov. Dave Heineman has indicated that he would sign the bill. He supports getting the Keystone XL pipeline built as quickly as possible.

But, say the environmental groups, this is just not acceptable:

Such eagerness was one of the concerns expressed by the groups. Under LB 1161, the governor would make the final decision on whether to approve a crude-oil pipeline route through the state.

Jane Kleeb of Bold Nebraska said that would be a clear conflict of interest because an agency under the governor — the Nebraska Department of Environmental Quality — would oversee an environmental review of the new route.

Using Kleeb’s logic, Obama had no right to refuse it in the first place because the agencies that conducted the review process for the pipeline at a national level worked for him.

Regardless, the environmentalists intend to try to tie the law up in court:

Kleeb and others said they would prefer the pipeline regulation bill that was passed during last November’s special session, which would put the Nebraska Public Service Commission — an independent agency with elected commissioners — in charge of reviewing the Keystone XL.

Ken Winston of the Sierra Club said he expects a lawsuit to be filed challenging LB 1161’s constitutionality.

Of course Nebraska, as those who’ve followed this story know, is criss-crossed with multiple oil pipelines, none of which have caused the catastrophic environmental problems the environmental groups claim will come with the approval of this pipeline.

The obvious point, of course, is this has never been about “environmentally sensitive” areas.  It has been about stopping this pipeline because it will be carrying crude that comes from an area environmentalists have decided produces “dirty” fuel and that we should be denied its benefit.  For whatever reason they seem to think if they stop this pipeline, the oil sands in Canada they will come from will simply cease to produce.  Of course that’s poppycock.  Canada has already said it has plenty of other customers for its oil, to include China.

So this is the latest in the battle to deny this country a safe and secure fuel source for groundless practical reasons, but instead based in ideology which refuses reality for some asinine utopian fantasy world.  They would deny this country the benefit of 800,000 barrels of oil a day because they have decided we shouldn’t have it.

Yet my guess is they’d also claim to be big proponents of “democracy”.  The only problem, as poll after poll demonstrates, “democracy” firmly backs the construction of the pipeline by huge majorities.

So to hell with it.  It’s off to Plan B as outline by Saul Alinsky – use their own rules against them.

Or, in other words, instead of letting the democratic process work and accept the results, tie it up in court.

~McQ

Twitter: @McQandO

Energy: Administration invests in BS

Seriously.  This administration will invest your dollars in every sort of “alternative energy” scheme but that which runs the county (i.e. fossil fuel) is not one of them.  From pond scum to BS.

It’s latest investment:

Western Plains Energy, LLC, a Kansas company, will use the money to "utilize waste energy resources from a local cattle feedlot to replace almost 90 percent of the fossil fuels currently used" at the plant.

"Projects such as this are a key part of the Obama Administration’s all-of-the-above approach to American energy that is supporting the development and usage of renewable energy, revitalizing rural economies and creating an America built to last," USDA Secretary Tom Vilsack said in a statement touting this project as an example of the policies that cut dependence on foreign oil.

"Animal waste from a local feedlot will be the primary feedstock that Western Plains will use for the digester," USDA added. "Support for renewable energy projects such as these is an example of the many ways USDA is helping revitalize rural economies."

USDA expects the project to create 15 permanent jobs and 100 temporary construction jobs.

As Zero Hedge says:

Just when we thought we had seen the epic failure of every single possible "alternative energy" project by this administration, along comes the announcement that the USDA is investing $5 million in a "biogas anaerobic digester" that will use "cow manure to heat an ethanol plant and create 15 permanent jobs." Which for anyone confused, is roughly exactly what it sounds like. Perhaps if "Hope and Change" is a little passé now, a far more appropriate slogan for the 2012 Campaign will be "From Bullsh*t to Jobs, and Back Again."

Got to love it … it’s heating an ethanol plant (another subsidized “alternative fuel”). And how much will each BS shoveling job cost the tax payer?

So how many sh*t shovelers does it take to run a "biogas anaerobic digester"? Apparently 15. At $333,333 a poop, pardon pop.

Oil?  Well, it’s just not something this administration wants to invest your tax dollars in because it’s ideology says it’s bad stuff and while admin hacks will flap their gums about “all of the above” energy strategies, it is, in fact, invested in BS (and here’s hoping the feed lot never goes away or those sh*t shovelers will be out of work won’t they?).

As an aside, one has to wonder if these are jobs “Americans won’t do”.

~McQ

Twitter: @McQandO

Why the Obama Administration’s refusal to allow more drilling effects your food prices

Food inflation continues apace.

Question: Is there a correlation between high oil prices and higher food prices?

You bet there is:

High crude oil prices have fuelled the upward pressure on inflation since the start of this year. Consumer prices in the 17 nations sharing the euro were up 2.6 percent in March from a year ago, despite stumbling economy.

"The food price index has an extremely high correlation to oil prices and with oil prices up it’s going to be difficult for food prices not to follow suit," said Nick Higgins, commodity analyst at Rabobank International.

Energy prices affect the production of fertilizers as well as costs related to food distribution and farm machinery use.

That’s reality (What!? No solar powered tractors?).  And, as the Obama administration continues its war on cheap fossil fuels even while demand for them rises globally, you can expect costs for food to continue to rise as well.

Finally, given all that is true, who gets hurt worst by rising food and fuel prices?

That’s right – the poor and middle class.  The supposed people Obama claims to be looking out for.

So, as prices go up and you’re able to afford less and less food (and gasoline) for your family, you know who to thank.

~McQ

Twitter: @McQandO

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