It’s the News, Stupid!!

Paraphrasing that Democratic strategist, James Carville … and, by the way, he was right about the economy … if the Democrats would just quit lying about it, “It is the News, Stupid!!!

Hey, Barack, I’m talking to you!!

Barack Obama repeatedly says that drilling won’t make any difference, no more than two or three cents per gallon of gasoline … sometime in the future. You’ve heard him. He says it repeatedly … speaking of someone being stale.

Last week, President Bush rescinded the executive ban on offshore drilling. Since then, the price of oil has dropped from over $147/ barrel of crude to around $125/barrel. In about a week, the price of gasoline in my local area has dropped from over $3.90 a gallon to $3.79 at one of the pricier stations that I noticed this past afternoon. That’s a decline of $22 a barrel for crude and over 11 cents a gallon for regular gasoline … in a little over a week … not years.

That means that some simple news which brings the hope, or threat, of greater drilling by the United States has reduced the price of gasoline by three to four times the effect predicted by Barack Obama of the United States actually drilling in banned areas.

So much for Barack Obama’s great judgment and wisdom … as well as that of his advisors.

Imagine what would happen if Congress would actually vote to remove the ban that they have on drilling offshore and in ANWR?

I predict that, If Congress would stay in session and vote next week to remove the ban on offshore drilling alone … forget about ANWR, in two weeks or probably less the price of crude oil would be around $90 a barrel or less.

Unfortunately, that wouldn’t suit the Democratic strategy to win the presidency and maintain their control of Congress. They need at least the illusion of a bad economy to maintain the illusion that they are the salvation of the country with Obama as its savior. What better way to maintain their credibility than prevent as much as possible the price of oil from being lowered?

It’s time to get rid of the “Harry and Nancy Show” in Congress and finally get about the business of relieving the oil crisis and our dependency on foreign oil so we can afford to pay for alternative forms of energy in the future. Harry Reid and Nancy Pelosi need to stop their obstructionist tactics and allow Congress to respond to the will of the American people.

Barack is Concerned about the Economy?

Senator Obama is sticking barbs into General Petraus with whom his disagrees about troop withdrawals in Iraq while defending his stance saying that General Petraus doesn’t have to deal with the $10 billion that is being taken away from the American economy by the Iraq war each month.

That’s right. Barack is worried about the $10 billion that the war in Iraq is costing the United States.

Hey … over here … back in the good ole’ U.S. …

How about the $78 billion or so that the price of crude oil has been costing the American consumer each month … which, by being an advocate for higher fuel prices, you have been favoring. How did I get $78 billion … $130 avg. per barrel of oil (well below avg. cost of oil this week) x 20 million barrels (this week’s newly announced daily U.S. consumption (down from 22 million) x 7 days x 4.3 (avg. # of weeks per month). That is nearly $940 billion a year … more that $200 billion greater than Boone Pickens’ estimate. Can the United States afford the loss of 15 or 20 trillion dollars in wealth over the next 20 plus years waiting for Obama’s … and the Democratic parties’ … plan to “possibly” reach fruition? And that’s assuming that their hypothetical will work in the first place.

And let’s get this straight … I’m doing more than my share. I’ve filled up my car once so far this month … 7.5 gallons … 170 miles. I literally have to dust my car off every time I use it. If there were some rational form of mass transportation ( like rail), I would be using it. But that’s another blog.

I agree with you totally about wind and solar … but what are we going to do in the intervening 22 years before these sources of energy meet their maximum potential … in the year 2030?

How long can we afford … your wisdom, Senator Obama? You’re looking for foreign policy experience this week “over there”? How about a little domestic reality?

Why is Crude Oil Priced So High?

That’s the trillion dollar question … literally.

I’ve expressed my opionion several times … and listening to the talking heads on the television … at least some of them agree with what I’ve said in the past. Congress is now trying to construct legislation to regulate the speculation going on in the commodities with oil.

The price of oil has doubled since last year, probably tripled from it’s low of last year around $45 a barrel. Has the demand for oil double d or tripled in the past year? Not just no, but hell no!!

So … what’s changed?

The market was riding high until the end of October. Then it got the jitters and started heading south fast with a few slight rebounds in late November and December. This was related to the sudden realization the the financial markets might be in trouble of the housing markets … which proved to be very true.

From the beginning of November through the middle of January literally trillions of dollars made an exodus out of the stockmarket and was “sitting on the sideline”. Speculators, hedge fund manangers and managers of other funds as well as individual investors had a lot of cash sitting around not making any money.

They looked at oil, gas, gasoline and other commodities … like corn … and decided that was a good place to put their money. Betting that the U. S. government, run by the Democrats and with two Democratic candidates firmly opposed to increasing the U. S. supply of oil, and with the odds favoring a Democratic victory in the fall, they felt they had found a sure thing. The money is being placed on the bet that the Democratic controlled Congress will do nothing to relieve the pressure on the price of crude oil, gasoline or corn. To the contrary, Congress has tried to pass a bill to continue subsidies for corn as well as continue the tariff on importing ethanol from Brazil … both actions contributing to the current $7.50 or so price of a bushel of corn now and the concurrent rise in food prices.

The results of the later “action” of Congress is that the price of corn has nearly doubled since last year. You have to keep in mind that two years ago, ethanol producers were virtually loosing money with ethanol selling around $1.60 a gallon.

We are all feeling the results of Congress’ “inaction” with the price of gasoline hovering around $4 a gallon now. I’ve previously stated that “news” has a profound effect on the price of crude oil and gasoline like the nearly $10 rise in the price of crude the day after Boone Pickens said it would go to $150 a barrel. The inaction on Congress’ part continues to feed the negative news with the resulting inverse rise in the price of crude oil.

While Congress decides how to regulate the speculators, they happiily continue with their profitable feeding frenzy knowing that Congress moves slower that pond water. Billions, if not trillions, can be made while Congress debates the issue … all at our expense.

What is the Democratic line. Drilling is harmful to the environment. It won’t make any difference for ten years or, more optimistically, until 2012. It’s okay to import so much oil from the Middle East. We need to levy windfall profit taxes on the oil companies. We’ll be better off with alternative sources of energy … wind and solar. The high prices are good for us. We will consume less gasoline and oil.

While they’re preaching the evils of oil, America is being stripped of tens of billions of dollars a week. And we are consuming less oil and gasoline … as well as less meat, eggs, cheese and everything else. Their approach is destroying the U. S. economy.

We need to use hybrid cars and electric cars. Well, hybrid cars run on a mixture of ethanol and gasoline. The price of corn has doubled. Guess what? My car runs on premium unleaded gasoline. What is premium unleaded gasoline? Well, it’s the old gasohol of the 1970’s. And guess what? It’s more expensive than regular gasoline.

Well, just buy an electric car. Well, how do they think that electricity is made? It’s made primarily from burning fossil fuels That’s right … natural gas and coal … with a little nuclear power (that they’re opposed to) thrown in on the side. Honda has a hydrogen car. buy one of them. Well, where does that hydrogen come from that those cars run on. Right now, it made from hydrocarbons. You guessed it …  crude oil and coal.

The Democrats don’t want to begin drilling more for oil and they’re opposed to building new nuclear reactors. Well, nuclear reactors don’t last forever. They have a life span of about 50 years and many of them have already eaten up about 30 of those years … so, without new reactors being built, we won’t have nuclear power in another 20 or so years.

Wind and solar power can provide as much as 30% of our energy requirements by 2030 … if there aren’t any obstructions to their development. But you have special interests that Democrats cater to … including their own self interests …ergo Senator Kennedy … that will obstruct their own professed salvation to our energy crisis.

Correct me if I’m wrong … but the last time I checked it’s another 22 years until 2030. What the hell are we going to do in the mean time? Hey … 22 years … that about the time all the current nuclear reactors will have to be deactivated. Oops!!

One day this week, I actually heard a Democratic pundit actually say it wasn’t the goal of the Democratic party to drive us all back to the Stone Age … living in caves. Well, I hope not. There aren’t that many caves for us all.

Another thing … the wind doesn’t always blow and the sun doesn’t always shine. What are we going to do to have continuous uninterrupted power? Nuclear …..????

Regardless … we’re going to need oil and gas. They speak of using “renewable” sources of fuel … ethanol and biodeisel. With these providing less than 3% of our current fuel requirements, look at what their use has done to the price of food. What’s going to happen to the price of food when that percentage increases? Are we going to have to choose between eating versus going to work to try to afford the cost of the food? How is that food going to be produced … with horses and mules? Or maybe we can all start a “victory” garden to celebrate our independence from oil … and so we won’t starve.

This is absolute insanity. I suppose one way to resolve the healthcare crisis is to simply starve people to death. Those with the most expensive health issues will be the first to go. It’s also a way to resolve the purported “obesity” problem in the U. S.

All this week, I’ve heard Democrats like Bill Richardson and others talk about how the oil companies aren’t doing what they need to … simply gouging the public. One said they already had leases on 68 million acres of land … 37 million of those in the west. What they don’t tell you is that in those 37 million acres, much of it doesn’t have projected reserves and what is known to be there amounts to about a 28 day of supply of crude oil at the current consumption rate.

One thing that has been forgotten about in all of the madness is the discovery last year of a massive reserve in deep water in the southwestern gulf. Unfortunately, practically all of the deep water rigs were moved to the Persian gulf and other places prior to Hurricane Katrina. No one is talking about this so the speculators are happy.

Further exploration needs to be done on both the east and west coasts as well as the eastern Gulf of Mexico and in the Florida Straits. Why? We need to be independent from imported oil … period. That doesn’t mean that we shouldn’t conserve and use alternative forms of energy where available and practical. If we can expand our known reserves, we can ensure that the U. S. will have a domestic source of oil for hundreds of years.

Also, if we start building new nuclear reactors now, we will just have some new ones coming on line just before the ones now in operation will have to be shut down.

Last night, I saw Tyson Slocumb on the O’Reilly Factor. For an answer to one of the questions, he smuggly stated he rode the subway to work and it ran on electricity. I wonder how he thinks that electricity is made? He’s one of these “don’t drill, no nuclear” type of people. Unfortunately, probably 280 out of our 300 million people don’t have access to and “electric” subway … or any kind of subway or reasonable form of mass transit at all.  The rest of us that don’t live in Washington, DC, New York, San Francisco, Boston, Los Angeles or Chicago can just walk or ride the bus. Right?

Unfortunately, that horse I bought back in college is probably dead now. Shouldn’t have sold it, though.

Simply put, the Democrats … in some perverse and insane way … and led by Barack Obama now … are savoring the current oil crisis. It is the means for them to achieve their goals of promoting biofuels, energy conservation and development of alternative power sources such as wind and solar. They feel that the American public doesn’t have the discipline or knowledge or intelligence to make coherent decisions about their future so they’re using the current crisis to win the White House and Congress to force their agenda. It’s really that simple. They preach all of these things as available solutions now. But are they? How many electric or hybrid cars are sitting at the car dealers lots? What’s happening to the corn crop with the current weather in the Midwest? Where are all those wind farms and solar farms? How long will it take for all of these promised solutions to become a practical reality?  Well … wind and solar … 2030 … 22 years. Have they priced what it costs to put solar panels on a house? Who can afford a hybrid or electric car? It sounds good until you start asking questions.

Crude Oil Crisis … Hydrogen is the Answer

Water as fuel for your car …

If you “google” “water as fuel” a number of sites will come up offering plans for converting your car to use water as a fuel source. It sounds crazy … but it’s not.

Several years ago, President Bush proposed a national agenda to get a practical fuel cell into production to relieve the United States dependence on foreign oil. This has yet to become a reality and frankly may never be from a practical or cost effective standpoint. The technology is difficult and expensive requiring that cars be run on electricity or a “hybrid” mix of electricity and fossil fuels.

Congress began an initiative to use ethanol as an alternative fuel source not considering the implications of the use of feed grains as fuel in competition to their use as food. We are now seeing the result of this fiasco in rising food prices as the competition to use corn as fuel rather than food. Congress continues to support farm subsidies for ethanol production in combination with tariffs on imported ethanol from Brazil which continue to drive up the cost of food from eggs and cheese to beef and pork. It’s an insanity that only the politicians in Washington can pull off and then have the audacity to brag about.

Besides its use in a complicated fuel cell to produce electricity for electric or hybrid cars, hydrogen can be used as a fuel in an internal combustion engine. Pure hydrogen produces no greenhouse gases but pure water as the end product of it’s burning or combustion. Much of the research currently being done with hydrogen as a combustible fuel source is using pure hydrogen which has to be pressurized as a pure gas. This necessitates the need for gas bottles and fuel lines where leaks at connections can be seriously hazardous due to hydrogen’s low flash point which is the temperature that the fuel will ignite. Anyone who has had the slightest interest in history will remember seeing film clips of the Hindenberg disaster in New Jersey during the 1930’s, the consequence of Nazi Germany using hydrogen as its lighter than air gas to provide buoyancy for its fleets of dirigibles.

Besides the hazards of explosion and fire, pressurized hydrogen provides specific challenges in its’ delivery to the combustion chamber of an internal combustion engine (ICE). Pre-ignition because of the low flash point is one of the most challenging problems in getting pressurized hydrogen to be a practical consideration for ICE’s as well as timing delivery to the combustion chamber.

In addition, nearly all of pressurized hydrogen is produced from fossil fuels which, in essence, gives it no advantage over conventional fossil fuels since greenhouse gas production is an essential part of the process of producing hydrogen for fuel in this way. Because of this, environmentalists have had a valid objection to its use as an alternative fuel source or additive for conventional fossil fuels whether gasoline, diesel, natural or propane gases.

But, unpressurized hydrogen produced on demand by electrolysis or other means and used as an additive to fossil fuel bypasses the constraints and objections posed above. when mixed with the normal fossil fuel mixture the problem of pre-ignition is eliminated. The hydrogen can be electrically separated from oxygen in water molecules through electrolysis using the electrical system of the vehicle with no additional greenhouse gas production beyond what the vehicle is already producing and providing probably less load on the engine than running an air conditioning unit on the vehicle. It can be drawn into the fuel/air mixture through a vacuum effect eliminating the hazardous need for pressurization and eliminating its own separate timing requirements. Something of this sort is what is now being offered in the many advertisements on the internet.

Hydrogen, whether pressurized or unpressurized, when used as an additive can increase fuel efficiency by 20 to 30% as measured in miles per gallon. This past weekend, I spoke with one of my brothers-in law about this. He owns a business which sells tractor trucks. His initial comment was, “Well … that only amounts to one or two gallons per mile for a diesel truck … but, you know … one gallon per mile could make the difference in a trucker making a profit. ”

A 20 to 30% savings is … a 20 to 30% savings … regardless of where you start from.

In addition, it inhances the utilization of fossil fuels it is mixed with and markedly decreases both CO2 and nitrous oxide emmissions making the currently expensive emission controls on vehicles such as catalytic converters unncessary.

Of interest is the fact that all current internal combustion engines could be retrofitted with a hydrogen producing device at very little cost, probably less than the cost of the catalytic converter alone. One article I read stated that, if this were done a yearly savings of 25 BILLION gallons of gasoline could be saved … which amounts to the quantity of gasoline that could be produced from our entire importation of crude oil from the Middle East. Imagine that … retrofitting all vehicles with a hydrogen producing unit that would eliminate our need to import oil from the Middle East … at the cost of several hundred dollars each … at the most.

Recently, a man in Pennsylvania discovered that hydrogen could be produced from salt water, or sea water by using focused microwave. This was a serendipitous discovery but it could potentially provide what might turn out to be an even less expensive method of producing nonpressurized hydrogen for use as a fuel additive than the currently advertised electrolysis conversion plans.

Currently, millions if not hundreds of millions or billions of dollars are being spent on complex and complicated designs to use hydrogen powered fuel cells or pressurized hydrogen as the source of power for future vehicles whether automobiles or trucks. That means that there are a lot of people who have a vested interest in their pet projects who arent’ going to be too happy with someone coming along with a cheaper and simpler method to solve the energy crisis problem. So, while skepticism is a good thing in all cases the source of the skepticism should be considered.

Yes, water is a source of tremendous combustible energy. It is a very stable vehicle for storing hydrogen. Under the hood of every car are containers which hold an engine coolant, antifreeze, and windshield washing fluid. Isn’t there space for one more container to hold some tap water or a saline solution? How much space would an electrolysis device take … or a small focused microwave?

Occasionally, we don’t have to throw billions of dollars at a problem to solve it … simply a little common sense and initiative. Why try to re-invent the wheel or make a more complicated one when there is a simple economical one available to use?

(I’ve read a number of articles on the above topics and will be adding them to this post for everyone’s consideration. Some are purely commercial but others are based on very valid current research. All point to the practicality of my recommendations so far.)

Speculation Cause of Crude Price Rise, Soros Agrees

On May 7, 2008, I wrote a post stating that speculation in the commodities market was the cause of the dramatic rise in crude oil prices.

The Cause of the Crude Oil Crisis: Speculation

In testimony today, the world’s most famous speculator, George Soros, speaking before Congress, confirmed my assessment.

Soros says speculators contribute to oil ‘bubble’: Financial News – Yahoo! Finance

Quite frankly, I’m surprised that Soros himself isn’t involved in the oil speculation. Although credited with numerous philanthropic endeavors, a review of these and his activities have never shown a disinclination to make a profit where ever available. Since much of his activities are hidden in offshore or foreign based vehicles, that possibility still can’t be ruled out. The current oil crisis is just the situation that would benefit Soros’ political agenda although certain aspects of it might backfire in his support for Obama and the Democrats since they seem to have little grasp of what needs to be done or are lacking in the political will to do anything.

Obama is extremely vitriolic in criticizing the gas tax holiday while proposing his $1000 tax rebate. It’s his version of “Let them eat cake” as opposed to simply offering a crust of bread. Somehow his bigger bribe isn’t supposed to be seen as “buying votes” where the lesser relief is.

According to Obama, we’re supposed to put wheels on our sailboats and hope for a wind to get us where we need to go.

The Oil Company Windfall Profit Myth

While Rome burned, Nero fiddled. Sound familiar. A popular story is that Nero actually started the fires in Rome to clear ground to build his new and improved Rome. The citizenry of Rome were outraged and a scapegoat, the Christians, were conveniently on hand to be given the blame.

Today, with oil prices soaring over $133 a barrel, Congress fiddles and the two Democratic presidential candidates as well as many of the party leaders in Washington have found their convenient scapegoats, American oil companies.

Look at the massive profits they made in the first quarter of 2008. Well, I did look. Everyone should look and see exactly what the Democrats are crying out about. Let’s look at Exxon Mobil as an example:

XOM: Income Statement for EXXON MOBIL CP – Yahoo! Finance

Wait a minute. Where’s that tremendous jump in money that congressional leaders and presidential candidates are crying about? In the first quarter of 2008, Exxon’s total gross revenues are only up by $200 million from fourth quarter 2007 while gross profit is actually down by over $500 million. Since last summer, they’re operating income is up by a little over $2 billion, slightly better than 10% … a respectable increase but not necessarily anything to be upset about or even jubilant about if you own their stock. Since the end of the second quarter of last year their cost of revenue has increased by more than 25% from approximately $55 billion to $70 billion while their total revenue has gone up a little less than 16% from $102 billion to $116 billion.

Exxon Mobile is a BIG corporation:

XOM: Balance Sheet for EXXON MOBIL CP – Yahoo! Finance

It’s total assets at the end of first quarter this year were more than $258 billion. That’s a little over a quarter of a trillion dollars of which nearly half is physical, property and equipment.

Their liabilities or debt is $135 billion leaving net assets of stock holder equity at $123 billion.

The cash flow statement is where Congress plays “gotcha”.

XOM: Cash Flow for EXXON MOBIL CP – Yahoo! Finance

Even though net income has marginally improved from $10, 260,000 at the end of the second quarter last year to $10, 890,000 at the end of first quarter this year, through changes in operating, investing and financing activities, their change in cash and cash equivalents has gone from a loss of over $1 billion to a gain of more than $6.9 billion with it nearly tripling since fourth quarter 2007.

Sure, they’ve increased their stock buy back program from $7 billion to more than $9 billion a quarter … but that’s less than 5% of their total assets. Their change in total cash flow from operating activities seems to have doubled in the past quarter but a close look and removing all of the negatives will reveal that it’s only increased by about $1billion or 5% since the end of fourth quarter of 2007.

Looking back at the Income Statement, on a net income in 2007 of about $70 billion, Exxon Mobil paid income taxes of nearly $30 billion, or about 43% of their net income. What does Congress think is a fair rate for them to pay … 100% … or more?

It’s a fact that these are gargantuan numbers. Exxon Mobil is a gargantuan corporation. Their cash flow and assets are enormous. So are their expenses.

American oil companies are becoming smaller and smaller players in on the world oil scene when it’s looked at in its totality. With the United States being the world’s largest oil products consumer, it’s their job to see that the needs of the American public are met. In doing this, they have to cater to the rules and regulations of the foreign governments that they deal with as well as our own. They have to stay competitive.

OPEC controls the supply of oil from it’s member nations. Couldn’t it be construed as just a little ironic and frankly two-faced that our Congress wants to sue these nations to try to force them to increase their oil output while at the same time, denying access to our own reserves?

Construed nothing … it’s insanity!!!

Barack Obama woos his supporters with promises of solar and wind energy. Where are those solar and wind powered cars and trucks? Solar collecting farms have to be put where there is abundant year round sunlight … yet environmentalists in the 1990’s blocked the connection of a large solar farm in the Arizona desert to southern California power grids to protect the migrating habits of a desert tortoise. The Kennedys don’t want a wind farm in the potentially highly productive area of Nantucket sound.

You can’t put cost effective solar farms in areas where there’s frequent heavy cloud cover and you can’t put cost effective wind farms where there aren’t predictable and sustainable winds.

I’ve written previously that crude oil prices react to news. Yesterday, Boone Pickens said oil would go to $150 a barrel and predictably it’s gone from $128 a barrel yesterday to over $133 a barrel today.

The only predictable thing Congress has done is … nothing!!!

I still believe that some CONSTRUCTIVE action on Congress’ part would have a profound effect on oil prices … and that’s not sticking the oil companies with so-called windfall profit taxes or ludicrously threatening to sue OPEC. That’s about as stupid and juvenile as the snitch threatening, “I’m going to tell your mother!!” Get real!

It’s time for Congress and our presidential candidates to do a reality check … take a look in the mirror … and see where the problem really lies.

The Cause of the Crude Oil Crisis: Speculation

The only way for the U.S. Congress to have any effect on the price of crude oil in the short term is to end the speculation on crude oil in the world commodities markets.

Anyone who has followed the commodities market in oil knows this. All one has to do is watch the frequently wild fluctuations in crude prices as well as stocks indexed to the price of crude oil in intraday trading to know this.

As I’ve stated previously, crude prices can have marked fluctuations based on worldwide oil related news. For anyone not able to follow the prices daily but who have wanted to invest in these stocks, they could be assured of long term gains in spite of market variability based on one fact alone. And that fact has been that the United States Congress in catering to environmental special interest groups would, in effect, do nothing substantive to give Americans relief from rising prices.

That’s right. The current and future increases in the price of crude oil can be directly attributed to the absolute inertia of the U.S. Congress, it’s complete inability to function effectively, a total lack of will to reach consensus and act responsibly. The Democrats have controlled Congress for two years and done nothing. Even more reprehensible is that the Republicans controlled Congress for six years and did nothing.

What can be done?

1. Open areas for exploration and drilling offshore on the east and west coast, west coast of Florida in the Gulf of Mexico and in the Florida Straits.

2. End ethanol subsidies.

3. Remove the tariff on Brazilian ethanol.

4. Streamline the process for approving new nuclear power plants and provide incentives for power companies to plan new plants.

5. Provide incentives and subsidies for domestic coal gasification and processing shale oil.

6. Remove barriers and streamline process of developing and constructing wind farms and solar farms and provide incentives.

7. Place a moratorium on the exportation of offshore rigs from the U.S. until domestic offshore exploration needs are met which would involve canceling any current contracts for rigs being built for foreign use based on a national emergency.

8. Immediately begin a national program to expand both rail capacity and coverage to markedly reduce or eliminate the use and need for long haul trucking as well as to provide a viable alternative to domestic air travel.

9. Provide incentives for construction of new refining capacity.

There are probably other things that could be done but these would do for a start.

The news of the United States government finally doing something will have an immediate effect worldwide.

Here’s the scenario:

The patient, the American public and the U.S. economy, is hemorrhaging to death and the doctor, the U.S. Congress, is planning his next golf game without even putting pressure on the bleeder with his finger. Frankly, it sounds like malpractice in the form of criminal negligence to me.

When the patient dies, who’s going to be pointing the guilty finger at whom?