Oil, Gas and Lies

By Alan Caruba

Why some people are having difficulty identifying the cause of the present high cost of gasoline at the pump as the direct result of the last three years of Barack Obama’s energy policies is one of those great mysteries.

By “energy policies” I mean his administration’s opposition to access to the billions of barrels of oil on federal lands.

I mean his Energy Secretary’s earlier opinion that high gas prices are good for the economy, abandoned as they climb to and passed $4.

I mean Obama’s lies about the recent increase in oil production when he knows it is occurring on private and state owned land, not federal land.

I mean his opposition to the Keystone XL pipeline.

I mean the waste of billions of taxpayer’s dollars on “renewable energy” firms, many of which have already failed, along with the sales of the Chevy Volt, whose production has been discontinued.

I mean two amendments to the Senate transportation bill that would have created new taxpayer-funded subsidies for natural gas vehicles, extended the production tax credit to underwrite wind energy, and revived the Treasury grant program that gives taxpayer money for the installation of solar panels and other renewable technologies.

I mean the impact his policies are having on everyone’s wallet and its drag on the economy as his policies drive up the cost of gasoline and everything dependent on transporting goods anywhere…and that is everything!

Just how dumb do you have to be not to grasp that when Obama took office on January 20, 2009, oil was selling at $38.74 a barrel and the average retail price of gasoline was around $1.90 a gallon. Today, oil is trading at more than $108 a barrel and gasoline is closing in on $4.00 a gallon. As they say, do the math.

In early March, speaking in Nashua, New Hampshire, Barack Obama said, “Let’s put every single member of Congress on record. You can stand with oil companies or you can stand up for the American people.” This consummate liar is using the same pathetic message and damage done by Jimmy Carter---who got voted out of office after a single term as president.

In his 2005 book, “Why Your Gasoline Prices are High”, Seldon B. Graham, Jr, a graduate of West Point, used his fifty years of experience in the oil industry described what happened when, in 1981, Congress passed a windfall profits tax. “It was a death notice for USA oil. Many U.S. oil and gas companies went bankrupt…and those which survived were forced to go overseas to explore and drill in foreign countries.”

At the very time when the Middle East is in turmoil, the Democrats want to repeat the same blunder of 1981.

In a nation that sits atop billions of barrels of untapped oil in federal lands such as the Arctic National Wildlife Refuge, domestic oil reserves in the lower 48 states, the Gulf of Mexico, and the vast untapped reserves off the nation’s continental coasts, the Obama administration has restricted oil companies from exploring and drilling in areas where new reserves of oil and gas are known to exist, shortened lease terms, and has slowed down permit approvals.

That is the equivalent of declaring an energy war on the nation. Moreover, in a virtual secret, the Obama State Department is involved in a deal to turn over seven Alaskan islands to Russia. One of them is the size of Rhode Island and Delaware combined and who knows how much oil lies beneath them?

Oil prices are set by the market principles of supply and demand. By aggressively thwarting access to America’s abundant oil reserves, the Obama administration is deliberately keeping prices high and forcing them higher.

As Jack Gerard, the president of the American Petroleum Institute, said in a press conference on March 8, “When crude prices are high, the price at the pump is also high. With a 42-gallon barrel of crude oil topping $106, refiners pay more than $2.50 for each gallon of crude they must purchase. Add in the almost 50 cents per gallon on average in gasoline taxes and you have over $3.00 of what consumers are now paying at the pump.”

Simply by announcing his intent to open new areas for exploration and production, President Obama could signal the market and put downward pressure on today’s and tomorrow’s gasoline prices. This is exactly what happened when President Bush lifted the moratorium on the East and West Outer Continental Shelf back in July 2008. It resulted in a 12% decline in the price per barrel.

Why are we paying more? Why are U.S. dollars going to oil-producing nations that do not like America? Why are we competing for oil with China, India and other emerging economies when we have enough oil, gas, and coal to be energy independent for the next century or longer?

The reason is the policies of the present and past administrations going back to the days of Jimmy Carter in the 1970s. The answer given by the White House is greedy oil companies and Wall Street “speculators.” It is a lie.

The worst of it, as a recent Wall Street Journal article explained, “Oil can’t go much higher without derailing the economy…at some point, oil prices overwhelm everyone,” wrote Liam Denning. Keeping them artificially high can have no other purpose than to continue the destruction of the nation and the President knows it.

© Alan Caruba, 2012

U.S. Hostages Abroad and High Gas Prices at Home--It's Jimmy Carter Redux

By Alan Caruba

A lot of things that a President cannot control can gravely affect his chances of being reelected. In 1979, the combination of an oil embargo and the Iranians taking U.S. diplomats hostage ended any hope of a second term for Jimmy Carter.

As this is written, there are 19 U.S. citizens being held hostage in Egypt, but you are hearing little to nothing about that in the mainstream media.

The economy is going to affect President Obama’s odds of being reelected this year and Americans who are notorious for gaging the impact of inflation by watching the cost of gasoline at the pump rise are going to blame Obama. An attack on Iran’s nuclear facilities and a possible conflict will drive prices through the roof.

When Obama took office, the average price of a gallon of gasoline was $1.61.Averaging $3.50 at present, the price of a gallon of gas is predicted to rise to $4 and even $5 by summertime.

If the U.S. was not dependent on imported oil, we could control our own fate, but for decades every effort possible has been made to drive up the cost of automobiles and gasoline, led by environmental organizations like Friends of the Earth and the Sierra Club, two notorious anti-energy foes, in combination with the Environmental Protection Agency.

Little wonder they are in a full war against the Keystone XL oil pipeline from Canada or that the Obama administration has been trying to convince Americans it favors opening access to existing and new oil reserves.

Dan Kish, vice president of the American Energy Alliance, recently took note of the political maneuverings over the American Energy and Infrastructure Act of 2012, saying “At the end of the day, the American people don’t care whether federal lands are opened in one large piece of legislation or in separate smaller pieces.”

“The bottom line is that the Federal government currently leases approximately 2.4 percent of the land owned by U.S. citizens, while lands equaling ten times the State of Texas are kept off limits by Federal regulators. With reports coming out that gasoline could approach five dollars a gallon by this summer, we cannot wait any longer to begin tapping these resources.”

If the Obama administration really wanted to create jobs and improve the economy, it would “lift the embargo on American energy,” said Kish, “and open our onshore and offshore resources for robust exploration and development.”

“The U.S. Geological Survey estimates that the nation has six times the proven oil reserves of Saudi Arabia”

In 2010, while oil, natural gas and coal accounted for 78 percent of U.S. energy production, its producers received 11 percent of all federal energy subsidies. By contrast, subsidies to the wind industry increased 10-fold, from $467 million in 2007 to $4.9 billion in 2010.

Closer to the pump for Americans was the deal the Obama administration struck with thirteen auto manufacturers in July 2011 to boost new car fuel economy standards from 35.5 miles per gallon (mpg) in 2016 to 54.5 mpg in 2025.

The claim made was that it would save Americans $1.7 trillion over the lifetime of vehicles and $8,000 per vehicle by 2025. Higher gas prices as the result of increased costs of imported oil and higher automobile prices that will result from this deal will cancel out any alleged savings.

Who wants to be fooled again by this administration?

And what business is it of the federal government how much mileage an auto gets?

The U.S. government has been messing around with the fuel economy program—believe it or not—for forty years. The result was the rise in sales of Japanese auto companies and European imports while Detroit saw General Motors and Chrysler come so close to collapse they had to be bailed out with billions of taxpayer dollars.

The culprit has been the Corporate Average Fuel Economy program and Marlo Lewis of the Competitive Enterprise Institute calls it “a case study of unintended consequences. If the fuel-saving technologies requisite to meet the new standards are such a great bargain, why do we need a law forcing automakers to adopt them?” Good question!

Both the Environmental Protection Agency and the Department of Transportation crowed that “Today’s announcement is the latest in a series of executive actions the Obama administration is taking to strengthen the economy and move the country forward because we can’t wait for Congressional Republicans to act.” That’s right, they blamed by-passing Congress and the deal on Republicans!

Meanwhile, the only thing CAFE standards accomplish is an increase in the cost of automobiles and a decrease in the safety of their occupants as cars are forced to be lighter and more vulnerable in a crash.

In a February 2nd opinion published in The Wall Street Journal, Alaska Governor Sean Parnell welcomed news that Congress might finally be moving in the direction to permit Americans benefit from access to their own oil.

Opening the Arctic National Wildlife Reserve (ANWR) to oil exploration and production would have obvious benefits. “This legislation opens 400,000 acres of the ANWR coastal plain’s 1.5 million acres” that represent “less than three percent of ANWR’s 19 million total acres.”

The other way Americans have been forced to pay more at the pump have been the mandates for the mix of ethanol in every gallon of gasoline. Why? Because its advocates claimed that this would reduce carbon dioxide (CO2) emissions, but in fact ethanol increases CO2 emissions while at the same time reducing the mileage of every gallon of gasoline. And there is absolutely no scientific justification for reducing CO2 emissions because the mandate is based on the totally debunked global warming hoax.

The cost of building new oil refineries in America was increased exponentially by the Clean Air Act of 1970. There have been no new refineries since 1976. There are currently 149 refineries in the U.S. Requiring them to make different blends for different regions of the nation has done little more than to drive up the cost at the pump. The taxes on gasoline have been a bonanza for the federal government and the states.

The good news is that two new refineries are being developed, one in Yuma, Arizona, and one in Union County, South Dakota. The bad news is that Sunoco Inc has just announced it will continue to exit the refining business due to the lack of profitability. In business for 117 years, Sunoco has been gradually shifting out of refining, reducing its capacity 43 percent since 2009.

Come November, if drivers of cars are shelling out $5 a gallon at the pump, a lot of voters are going to be very unhappy. If our citizens are still being held hostage in Egypt they will be even less happy.

© Alan Caruba, 2012

The General Motors Debacle

By Alan Caruba

I received an email from my friend, Seldon B. Graham, Jr., a veteran of the oil industry, possessing both engineering and law degrees. I first became aware of him through his book, “Why Your Gasoline Prices Are High.”

“After years of my campaigning for transparency and full disclosure, the media still does not give the American public the actual price of OPEC foreign oil or the actual price of U.S. oil. Who in America knows that the actual price of OPEC foreign oil last week was $119.82 per barrel? Who in America knows that the actual price of U.S. oil, which is always lower than OPEC foreign oil, last week was $4.86 cheaper? Now, you are some of the very few who know.”

“Why isn't the media disclosing the actual oil prices to the public? Someone might figure out that American consumers could save $4.86 x 3.3 billion barrels of foreign oil annually = $16 Billion annually if US oil replaced foreign oil imports. Doesn't everyone in America want cheaper gasoline?”

I don’t know anyone in America who doesn’t want cheaper gasoline except for President Barack Obama and his Secretary of Energy, Stephen Chu. And therein lies the problem because, between moratoriums on deepwater drilling in the Gulf of Mexico, obstacles to increased drilling in Alaska (not even including ANWR), and the general ban on any offshore drilling along U.S. coastlines, the likelihood that Americans will have access to their own less costly oil, barely exists.

It really doesn’t get much dumber than this unless, of course, you consider the Obama administration’s bailout of General Motors. Amidst a bevy of costly bailout measures in 2009, Obama stepped in to “rescue” GM when, in fact, all it had to do is step aside and let the company file for bankruptcy, get restructured, and begin again. Countless companies, large and small, do this every year. The rescue, however, was not about GM so much as it was the United Auto Workers, a union that was largely responsible for putting GM in the poor house.

Fast forward to 2011 and reports that the U.S. government, Treasury, plans to sell off “a significant share of its remaining stake in General Motors Co. this summer.” Despite a much heralded initial public offering of stock last November, beginning in January 2011, the stock’s value had fallen 18 percent, “to about $31, which is $2 below its IPO price.

In January, Investor’s Business Daily grabbed reality by the scruff of its neck, shook it, and reported, “The bailout of General Motors wasn't supposed to cost taxpayers. In fact, the promise was that taxpayers would profit. Now the government says the bailout's a loser. No one should be surprised. Washington has handed out $50 billion to General Motors and another $35 billion to Chrysler and GMAC to keep those companies in business. Taxpayers were told their money wouldn't end up lost in a rat hole.”

A variety of factors have contributed to shareholder and investor confidence in GM and The Wall Street Journal cited “the rise in gas prices” as one of them because it “hurt sales of big, highly profitable trucks.”

It didn’t help that the Obama administration insisted that GM step up its electric car program, always notoriously unprofitable, or that the steering wheels on some Chevy Cruze models literally came off in the driver’s hands!

Of the 61 percent ownership the government once owned, it is now down to 26 percent, but to break even, the government would have to sell at $53 per share whereas it is now priced at less than $30 per share, a new low as of April 19.

The original “investment” was $50 billion. Estimates of the sell-off of remaining shares suggest a loss of more than $11 billion if the shares were sold now.

It’s one thing if some speculator takes a loss and that happens all the time, but when it is John Q. Public’s money, the expectation is that would be more cautiously managed. Nothing about the GM bailout suggests this. The dismal results of the alleged “stimulus” funding that was supposed to generate thousands of jobs can be summed up in the statistic that only 45% of Americans are working these days.

No matter which way the taxpayer turns, the decisions made by the Obama administration has resulted in the loss of billions, an unemployment rate that resembles some third world nation, and obdurate resistance to the proposed GOP budget that calls for cutting spending and reducing the debt.

Don’t expect anything like that to occur so long as this hapless, clueless gang controls the White House and the Senate.

© Alan Caruba, 2011

Time to End the Ethanol Rip-Off

By Alan Caruba

Psst! Want to avoid $25-to-$30 billion in new deficit spending over the next five years? You do? Okay, then email, fax or call your congressman and tell him you want to let the 45 cents-per-gallon Volumetric Ethanol Tax Credit (VEETC) expire on December 31, 2010.

In the same way you want Congress to extend the Bush tax cuts that are due to expire the same day, letting the VEETC expire will end a subsidy to ethanol producers. It is the only way they can stay in business. It is a hidden tax we pay every time we fill up our gas tank and it is one that deprives us of the full value of pure gasoline.

When Republicans take control of the House and possibly the Senate as well, they will have not just an opportunity, but a mandate to end support for ethanol and biodiesel, two of the worst ideas ever foisted on drivers.

Need it be said that the ethanol scam began with former President Jimmy Carter? He also thought that solar and wind power was a great idea. Ethanol, though, is particularly pernicious because, simply put, it is corrosive to engines. It takes a bite out of every driver’s wallet every time they fill up with a federally required ethanol-gasoline mixture, and it actually reduces the mileage you will get from every gallon.

As a recent issue of Business Week magazine points out “Today the U.S. offers a 45 cent per gallon tax credit to refiners that blend ethanol with gasoline. The government also requires gasoline makers to use a steadily increasing amount of the additive, and it imposes an import tariff to deter foreign competition.”

If you wonder why such stupidity is permitted, Business Week points out that it is a $27 billion industry today. Last year the tax credit was worth more than $4.7 billion.

If the tax credit for ethanol expires on December 31 along with a protective tariff consumers will cease being ripped off. When the $1-a-gallon incentive for biodiesel expired at the end of last year, so did the niche industry making it.

Ethanol is made from corn and biodiesel is made from soy beans. The farmers growing these crops will cry bloody murder, but there is a global market for them so they won’t be selling the farm any time soon. Instead, the cost of the countless food products made in whole or part from corn and soy beans will likely decrease, along with the cost of feed, mostly corn, for livestock.

The battle over ethanol pits its producers and corn farmers, along with the U.S. Agriculture Department against an unusual coalition of environmental groups and cattle ranchers. The former have come to question the alleged benefits of ethanol and the latter have always opposed the way the government’s ethanol mandate forces up the cost of feed corn.

Applauding from the sidelines will be the major U.S. auto manufacturers that worry ethanol will corrode engines that are not designed to handle the stronger blend. Take away ethanol and the cost of an auto will be reduced.

The ethanol tax incentives are just one part of the appalling failure of bad environmental ideas and policies that Americans have had to suffer since the days of Jimmy Carter.

All those “Green jobs” and Green energy projects Obama promised as he rolled out his economic stimulus plan just over a year ago have proven to be a boon…for China! The Department of Energy estimated that 82,000 jobs were created, but government job creation estimates are notoriously wrong. Meanwhile, DOE acknowledged that eighty percent of some Green programs, including $2.3 billion of manufacturing credits, went to foreign firms in China, South Korea, and Spain!

About the only “good” news is that only some $20 billion in stimulus funds have been spent.

Americans are slowly realizing they have been robbed at the gas station courtesy of the U.S. government and that their tax dollars are being shipped overseas to purchase wind turbines and solar panels that, together, produce barely three percent of the electricity used daily.

The problem is that the Greens and the U.S. government have kept Americans in the dark for a very long time regarding all these squirrelly “solutions” they have come up with to save the world from “global warming” (ain’t happening) and dependence on foreign oil (they won’t stop selling it to us and we have virtually stopped drilling here).

The sins are many, the jobs for Americans are few these days, the borrowing continues unabated, government spending is obscene, and, next year, you will not be permitted to purchase a 100-watt incandescent light bulb.

© Alan Caruba, 2010

Major Newspapers Urge an End to Ethanol Subsidy

By Alan Caruba

On Friday, July 23, the Chicago Tribune published an editorial titled “Enough Ethanol” and on Saturday, July 24, The Washington Post editorial said, “It’s time to end the excessive subsidies for corn ethanol.” On Monday, July 26, The Wall Street Journal joined the chorus.

“The best refutation of the theory of the survival of the fittest is probably the corn ethanol lobby, whose annual $6 billion in federal subsidies have managed to outlive both its record of failure and all evidence and argument,” said The Wall Street Journal.

The ethanol subsidy is on the front burner for Congress because it is due to expire and Sen. Jeff Bingaman (D-NM), Chairman of the powerful Senate Energy and Natural Resources Committee, has expressed support for cuts to the tax credit program. A twenty percent cut (nine cents per gallon) is being debated in the House Ways and Means Committee.

Jimmy Carter’s belief that ethanol could replace or reduce dependence on foreign oil imports and reduce greenhouse gas emissions was totally bogus. Nothing about converting corn to fuel makes any sense at all. In July 2007, I laid out the facts, quoting E. Ralph Hostetter, the publisher of American Farm Publications.

“Today, 60 percent of the American corn crop is fed to U.S. livestock,” noted Hostetter. “Therefore, as the price of corn is forced up by the demands of ethanol production and many natural causes such as weather, so is the price of meat, poultry, eggs, milk and more than 3,500 products American use every day.”

I noted that, “Among the products affected by the rise in the cost of corn are cake mixes, pizza, beer, whisky, candies, cookies, corn flakes, cosmetics, instant coffee, carbonated beverages, fertilizers, vitamins, tires, toothpaste, paper products, pharmaceuticals such as aspirin and more than 85 different types of antibiotics. And that’s just a short list.”

The Washington Post looked at the cost to the consumer in the form of “decades of subsidies the government has showered on the corn ethanol industry.” It suggested that “The debate should be about why corn ethanol deserves any federal protection at all.”

Little known or understood is the fact that the federal government gives “companies that combine corn ethanol with gasoline a 45-cent tax subsidy for every gallon of corn ethanol added to gasoline.” The result is that the cost of replacing a gallon of gasoline with one of corn ethanol is $1.78. “The tax incentives alone cost the Treasury $6 billion in 2009.”

What does the consumer get? For every gallon of a gasoline-ethanol mix, the price includes less mileage. Ethanol is a poor source of power. FlexFuel vehicles run on E85 or 85% ethanol and, according to the Department of Energy, they get about 25% less mileage than a car fueled by undiluted gasoline.

For those still worried about greenhouse gas emissions, ethanol emits carbon dioxide and, since natural gas or coal is used to produce ethanol, it ends up putting more CO2 into the atmosphere than the production and use of gasoline.

The Congressional Budget Office concluded that supporting ethanol through subsidies means that taxpayers are shelling out about $750 for every metric ton (2,205 pounds) of carbon that, in theory, is kept out of the atmosphere.

It gets worse. I have not read or heard a single climatologist or meteorologist who believes that carbon dioxide plays any role whatever regarding the bogus global warming. As I frequently remind readers, there is no global warming. The Earth has been cooling, due to natural factors, for the past decade.

This is why, behind the scenes, the producers of “clean” or “alternative” biofuels are in a state of panic. There is no justification for ethanol, no matter whether it is produced from corn or cellulose. The same goes for biodiesel fuel.

Who keeps insisting on raising the mandates for the use of these “green” fuels? The Environmental Protection Agency.

Slowly, in the wake of the huge financial disaster called the United States of America, costly former priorities, many sold on the basis of stopping the dreaded global warming, are finally being examined by newspapers and other media. It’s only taken since the late 1970s to finally get around to it, but better late than never.

© Alan Caruba, 2010

Just What You Don't Need! More Ethanol!

Here's a news item from the Ethanol Transparancy Project:

June 9 - ADM has taken its "ethanol game" to a new level with a brazen announcement yesterday the company was "asking" EPA to immediately permit raising the percentage blend of ethanol in gasoline to 12% (up from 10%).

The EPA is currently considering an earlier "request" by one of ADM's mouthpiece groups, Growth Energy, to raise the ceiling to E15 (15%) but EPA's cautious deliberations have frustrated the dominant ethanol producer based in Decatur, Illinois.

ADM, best known for its serial price-fixing and other criminal behavior dating back to an era when the company was run as a family fiefdom by chairman Dwayne O. Andreas, is desperate to force government into providing an expanding ethanol market.

By appearing reasonable in its incremental approach to seizing more federal support (and increasing the deficit), ADM continues to advance its taxpayer subsidized agenda of "ethanol hegemony" while claiming lamely that the company is only trying to comply with federal law imposed through the 2007 Energy Independence and Security Act.

This position is twisted since it was ADM which literally rammed the passage of ethanol mandates, both in 2005 and 2007, by muscling and threatening lawmakers after some of its pocket politicians introduced the carefully crafted provisions (within larger energy legislation) to benefit the company and its so-called "ethanol industry".

Andreas remains "chairman emeritus" and the family controls the largest private stock holding of ADM shares. Although Andreas, now over 90, has receded from view, a number of his hand picked directors, including former Canadian prime minister Brian Mulroney, remain on the ADM board. Mulroney you may recall played a critical role in guiding ADM through the price-fixing scandal of the nineties and remains under clouds of corruption allegations in Canada.

Meanwhile motorists resistance to ethanol in fuel are increasing as downsides of the corn-based additive are becoming more widely recognized, including lower gas mileage, pollution and engine damage.

Higher ethanol blends will likely force millions of perfectly good, older vehicles into crippling retirement to the detriment of those who can least afford to be deprived of personal transportation.

Unfortunately for the nation's interest EPA finds itself practically surrounded by hostile, politicized federal agencies. such as DOE and USDA, which are pushing for more ethanol. Somehow EPA must find a way to resist this latest campaign led by the "Supermark-up to the World" (ADM), and its proxies. The ethanol mandate and the tax credit which buoys this bogus fuel additive should be rolled back and save taxpayers billions at the pump and at the supermarket.

Nicholas E. Hollis
Ethanol Transparency Project (ETP)
Washington, DC