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Archive for the ‘Energy’ Category

More Oil!

We need more oil. This is not secret. In fact it hasn’t been a secret for the last 30 years.
We’ve just been denying it:

News Link

The energy crisis is real. It is worldwide. It is a clear and present danger to our nation. These are facts and we simply must face them.

That was Jimmy Carter speaking about the Oil Crisis then in 1979.
Carter was a horrible President, but he had that right at least. We are in an Oil Crisis. His solution though was about as dumb as the solutions by the Democrats today in Congress. Do nothing.

This week Bush stepped up the stakes in the Drilling for more Oil game.
He lifted the executive order by his Father Bush that placed a moratorium on drilling along our coasts. A moratorium that held for 18 years and even longer for congress. 27 Years has been too long.

Now, I nor anyone else for that matter is saying that it is the magic bullet. But the reality is that if 28 years ago we were drilling along the coast, we probably would not have this problem right now. Like most things though, people and govt all look at things in the NOW.

This from Obama a month ago:

It would have long-term consequences for our coastlines, but no short-term benefits, since it would take at least 10 years to get any oil,” he said.

There are so many arguments floating around that the drilling now won’t fix the current problem.
Reality check people (and Obama). NOTHING we do right NOW will fix the CURRENT problem. Well other than reducing our debt, but even that is not a NOW fix.

But it won’t get any better by doing nothing. Which is the Obama proposal. Don’t drill at all. That is stupid.

We have not Built a refinery in the US for 30 years. Not a single new Nuclear Plant in 30 years. We basically just STOPPED doing anything or rather banned companies from doing anything. That hasn’t worked at all. In fact its made things worse. Now over the next 20 years (if Congress lifts these bans) we will see a huge spike in Nuclear building, clean energy building and Oil production.

Its not if, but when. Its not why its how fast.

With Bush playing the first card it puts the pressure back on Congress (with already single digit approval numbers) to do something. Its time to lift the ban, we can do it responsibly, we can do it now so that my kids in 20 years aren’t writing in some blog as well on the same problems his dad talked about. Meanwhile Oil is at 500 a barrel.

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Over the years I have found out that I tend to be fiscally conservative and socially moderate. That means, of course, that neither party has much use for me. Not socially conservative enough for the Republicans and definitely not liberal enough for the Democrats. Heck, I have absolutely no reason to vote for Obama and I suspect he has absolutely no intention of doing anything for me other than making me, my income, and my success into one of the bigger problems in America requiring “change”. I’ve learned to live with it and over time, the country tends to plow a middle of the road course which suits me just fine. So why wouldn’t I be for drilling in ANWAR and shooting every ecoweeny on sight? It’s not difficult to understand but it does take a little bandwidth.

I do run a business and I am a physicist by training which means I prefer to view reality for what it is, and not delude myself into believing there is alternate reality just around the corner. So here is reality one, we aren’t going to pay the deft off. Without up to the nanosecond calculation, let’s say the debt is four trillion dollars. Let’s also say that the Democrats and the Republicans arrive at a new view of life and become fast friends. Let’s say that they trim spending and generate a $400 million surplus. They would have to keep things that way for maybe twelve years to pay the debt off, with interest. And the voting taxpayers would have to make the agreement that they will be happy paying their tax burden with no expansion of any programs to pay the debt off. My view – it will never happen. I don’t think we will ever have a government that could consistently generate a $400 million surplus and even if they did, we’d kick them all out of office if they didn’t either expand programs people want or cut taxes.

Social Security is in about the same boat. I don’t want to get into the debates of the SS funds going into the general fund and one part of the gov writing another part of the gov an IOU or the fact that the program pays out more than it takes in. I have my own ideas about how we could make some progress on it but, in truth, I doubt anything will change. For elected officials, SS is a third rail. Propose cuts and you’re not long for office. Obama wants to increase the level of contribution, almost certainly without proportionate return for those who will be required to make the contribution, but I doubt that his increase will do anything other than play accounting sleight of hand and make things appear better for a longer period of time. But he won’t fix anything.

So why do I bring those issues up when I say I am against drilling in ANWAR? The other part of reality is that some of you reading this are going to pay for my retirement just like I have paid for your parents and grandparents retirement by my payments to SS and taxes for civil servant retirement. And your children are going to pay for yours, and so on. At the same time, the gov will keep increasing the debt and the borrowing will get more expensive – those developing countries are going to find that they can buy their own bonds to build their own roads instead of buying ours so our costs will go up. I view the US oil reserves, whether you talk about ANWAR or shale or any other resource that, with technology development, will be available to those children and grandchildren that pay off the bills they accrue as well as the ones we leave to them. I don’t mean to diminish the suffering that people are suffering today with the increase gas prices but we are handling it. There are people that are seeing 15% of their income go to just gasoline and that is a tragedy in the making. For all the squealing of the conservatives playing “I told you so” about not opening up ANWAR they don’t seem to have any interest in anything other than today’s balance sheet. We are feeling the pain with oil at $130/barrel. What happens when it gets to $230 or $330/barrel? Regardless of whether you think today’s prices are driven solely by speculation or not, I can guarantee we will get to those prices for oil eventually. So, as long as anyone is willing to sell us oil and we can somehow make it work, let’s make it work. Transportation costs are going to go up and maybe not come down. After years of everyone telling me how stupid I was for keeping a manufacturing facility in the continental US, some of the brightest guys in the room are starting to bring their manufacturing, and the jobs, back here to the US because of transportation costs. WSJ had an article just yesterday on that. Fortunately, the company hadn’t held the auction and sold their manufacturing equipment off at 10 cents on the dollar so they have one leg up bringing their manufacturing back home from China. But eventually we may get to the point where people won’t sell oil, at any price, but keep it for their own uses. And that is a much different situation. I don’t have a problem with sitting on significant oil reserves at that time. Hopefully, at that time, the ecoweenies will not be able to make much of a case for using our reserves. Maybe we can remind them of what they did to food prices with  their perfect solution of ethanol. No, let’s debate and wrangle and get whatever sound bites there are to get but let’s leave those oil reserves to future Americans. It’s little enough for having them pay off our bills.

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News Link

RALEIGH, North Carolina (Reuters) – Democratic presidential candidate Barack Obama said on Monday he would impose a windfall profits tax on U.S. oil companies as he sought political gain from Americans’ pain over high gasoline prices.

Launching a two-week focus on the economy after clinching the Democratic presidential nomination, Obama drew a sharp contrast between his economic policies and those of John McCain, his Republican rival in the November election.

“I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills,” the Illinois senator said.

Obama charged that McCain’s support for extending President George W. Bush’s tax cuts means he is in favor of $2 trillion in corporate tax breaks, including $1.2 billion for Exxon Mobil Corp.

“If John McCain’s policies were implemented, they would add $5.7 trillion to the national debt over the next decade. That isn’t fiscal conservatism, that’s what George Bush has done over the last eight years,” Obama said.

Recently on Money.com the Shell CEO said this: “If our profits are taxed, that means we’ll have less capital to invest in new production” and it could raise gas prices.

In that same Article from Money.com it mentions how over a period of 3 years (2003-2006) oil companies spent LESS on oil exploration. The reasons are pretty clear. Its not cheap to drill in deep ocean. Not to mention that the easy oil is restricted heavily here in the US.

Lets go back to this tax thing. Because it seems like Democrats solutions for everything is to institute a tax on everything. It doesn’t matter what it is. The solution is to tax the crap out of it, have more money to spend and well, spend it.

Someone needs to have the answer on this. Maybe someday Obama will.
Please explain to me what is a ‘Windfall profits tax’?
What will be the level that determines a ‘Windfall’?
What is the percentage of this out of the blue tax?
Will this tax be assessed only to Oil companies?
Why no Google with is BILLIONS for really doing nothing. They sell clicks on a search engine. They don’t really MAKE anything. Its the internet its already there, they just make it so you can search easier. How about Visa, will you windfall profit tax them too? Or farmers that have seen a spike in their earnings from global food prices doubling and tripling.
Or is this another one of those, lets say some crap to make voters vote for me, but they mean nothing speeches.

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U.S. gas: So cheap it hurts

Interesting article by Money.com

NEW YORK (CNNMoney.com) — Despite daily headlines bemoaning record gas prices, the U.S. is actually one of the cheaper places to fill up in the world.

Out of 155 countries surveyed, U.S. gas prices were the 45th cheapest, according to a recent study from AIRINC, a research firm that tracks cost of living data.

The difference is staggering. As of late March, U.S. gas prices averaged $3.45 a gallon. That compares to over $8 a gallon across much of Europe, $12.03 in Aruba and $18.42 in Sierra Leone.

The U.S. has always fought to keep gas prices low, and the current debate among presidential candidates on how to keep them that way has been fierce.

But those cheap gas prices – which Americans have gotten used to – mean they feel price spikes like the ones we’re experiencing now more acutely than citizens from other nations which have had historically more expensive fuel.

Cheap gas prices have also lulled Americans into a cycle of buying bigger cars and bigger houses further away from their work – leaving them more exposed to rising prices, some experts say.

Price comparisons are not all created equal. Comparing gas prices across nations is always difficult. For starters, the AIRINC numbers don’t take into account different salaries in different countries, or the different exchange rates. The dollar has lost considerable ground to the euro recently. Because oil is priced in dollars, rising oil prices aren’t as hard on people paying with currencies which are stronger than the dollar, as they can essentially buy more oil with their money as the dollar falls in value.

And then there’s the varying distances people drive, the public transportation options available, and the different services people get in exchange for high gas prices. For example, Europe’s stronger social safety net, including cheaper health care and higher education, is paid for partly through gas taxes.

Gas price: It’s all about government policy. Gasoline costs roughly the same to make no matter where in the world it’s produced, according to John Felmy, chief economist for the American Petroleum Institute. The difference in retail costs, he said, is that some governments subsidize gas while others tax it heavily.

In many oil producing nations gas is absurdly cheap. In Venezuela it’s 12 cents a gallon. In Saudi Arabia it’s 45.

The governments there forego the money from selling that oil on the open market – instead using the money to make their people happy and encourage their nations’ development.

Subsidies, many analysts say, are encouraging rampant demand in these countries, pushing up the price of oil worldwide.

In the U.S., the federal tax on gas is about 18 cents a gallon, pretty low by international standards.

But those relatively low gas taxes make it hard now for Americans to deal with gas prices that have risen from around $1 to over $3 a gallon in the last seven years.

“Everybody pays more, but the U.S. pays more in absolute terms,” said Lee Shipper, a visiting scholar at the University of California Berkeley’s Transportation Center. If you’re already paying $4 in taxes, said Schipper, then an extra $2 a gallon isn’t that big of a deal.
Talkback: Tell us what you think

Revenues from Europe’s high gas taxes are used to fund a variety of things. One thing they have built is better public transportation, said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private equity firm.

They gave people an alternative to driving, something we don’t have in North America,” said Tertzakian.

Low fuel taxes and prices sprung out of a national love for mobility going back generations, said Robert Lang, director of the urban planning think tank Metropolitan Institute at Virginia Tech.

In fact, the U.S. could not have had the western expansion it did without the cheap mobility railroads and horse carriages afforded long before it became an auto-obsessed culture, said Lang.

“You couldn’t have Manifest Destiny unless you could move,” he said.

The automobile, and its promise of personal mobility, only deepened the nation’s love affair with travel.

“Nobody sang ‘She’ll have fun fun fun until her daddy takes the tokens away,'” said Lang. ‘It’s totally romanticized.”

Gas consumption Europe vs. U.S. There is some evidence Europe’s high gas taxes have capped its oil consumption.

Oil use in the United Kingdom has basically stayed flat from 1980 to now, while in France it’s dropped 17%, according to figures from the Energy Information Administration.

In the U.S., meanwhile, oil use is up 21% over the same period, although the country has added more people and seen its economy grow slightly faster.

Americans have taken advantage of cheap gas prices to do other things – like buy bigger cars and bigger houses further away from city centers, said Schipper.

On a per capita basis, Americans use three times more oil than Europeans, he said. That means Americans are more exposed to rising gas prices than their counterparts across the Atlantic.

“Five-thousand square feet in the suburbs, that’s much rarer in Europe,” said Schipper, referring to big homes. “We dug our hole.”

Still want to complaing about gas prices?

Most expensive places to buy gas
Rank Country Price/gal
1. Sierra Leone $18.42
2. Aruba $12.03
3. Bosnia-Herzegovina $10.86
4. Eritrea $9.58
5. Norway $8.73
6. United Kingdom $8.38
7. Netherlands $8.37
8. Monaco $8.31
9. Iceland $8.28
10. Belgium $8.22
111. United States $3.45

Where gasoline is cheapest
Rank Country Price/gal
1. Venezuela 12 cents
2. Iran 40 cents
3. Saudi Arabia 45 cents
4. Libya 50 cents
5. Swaziland 54 cents
6. Qatar 73 cents
7. Bahrain 81 cents
8. Egypt 89 cents
9. Kuwait 90 cents
10. Seychelles 98 cents
45. United States $3.45

155 countries surveyed between March 17 and April 1, 2008. Prices not adjusted for cost of living or exchange rates.
Correction: A previous version of this chart showed Russia as the 8th cheapest country to buy gas. Russia is the 38th cheapest.

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