The Liberal Lie, The Conservative Truth

Exposing the Liberal Lie through current events and history. “Republicans believe every day is the Fourth of July, but the democrats believe every day is April 15.” ****** "We will always remember. We will always be proud. We will always be prepared, so we may always be free." RONALD REAGAN

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Location: Myrtle Beach, South Carolina, United States

Two Reagan conservatives who believe that the left has it wrong and just doesn't get it!

HISTORICAL QUOTE OF THE WEEK - "Always bear in mind that your own resolution to succeed is more important than any other." ABRAHAM LINCOLN

Sunday, June 22, 2008


Facts are facts. No matter how one tries to spin them otherwise the plain and simple fact is that The United States has an oil based economy period. Every aspect of our economy from transportation to food finds a basis in some form or another in oil. Like it or not we need oil to survive as a Nation and whether that oil comes from foreign sources or domestic sources, we have to have oil.

The recent rise in the price of oil and the effects that it has had at the grocery store, the pump, the Airline Industry and even road maintenance proves how dependent we are as a Nation on oil. Here in my State of South Carolina it was announced last week that much needed road improvements that had been slated for this year have been drastically cut because the price to pave a road has risen from $ 70 K per mile to $100 K per mile because of the increase in oil prices.

Good bad or indifferent we are a Nation that consumes and is economically dependent on oil. The question now is whether we will continue to follow the road of no control over our economic destiny, "oil wise that is, " and purchase nearly 48 % of the oil we consume from other countries or take control of our oil based economy and begin using our own resources.

We consume approximately 20 million barrels of oil each day which means that roughly 9.6 million barrels are imported from other countries each day with Mexico and Canada being the top two oil importers to The United States. Yes our own hemisphere and NOT the Middle East take the top two slots.

The search for alternatives is all well and good. I would love to drive a hydrogen fueled vehicle in the future but that as well as most other alternative sources will not be viable for decades. Ethanol is a joke because the process to refine into ethanol uses a gallon and a half of oil for each gallon of ethanol made and because of huge government subsidies to encourage farmers to field their corn for ethanol, food prices rise and a shortage of corn on the food market has become a reality.

So with alternatives either a joke as with ethanol or well into the future we need oil. The only way to decrease our dependency on foreign oil an reduce or better yet eliminate that 48 % that is imported is to drill from our own resources. An accounting of those resources add up to billions of barrels in the Continental US with billions off shore and billions more in Alaska. A total of more than 1,238 BILLION barrels of oil and that is a conservative number This is more than Saudi Arabia, Iran, Iraq, Du far and Venezuela COMBINED! All right here at home.

The industry that builds off shore rigs and begins the drilling process because of the 30 year ban is almost non existent but the equipment is easily acquired from other sources and can be started fairly quickly if the ban is finally lifted. There are deposits in the upper mid west states especially Montana that are located on sites in which we are currently drilling and with new technology that allows horizontal drilling from already existing sites this oil could be available within months and not years as with offshore deposits.

Of course those on the left who bow to the environmental lobbies claim that the environmental impact offshore would be devastating yet after Hurricane Katrina hit the Gulf and went through an area off of Louisiana containing more than 135 oil rigs, destroying two not ONE DROP OF OIL was spilled. The advancement in safety of these rigs is so far superior than the technology 30 years ago that spills are a thing of the past.

Yet the left in their backward thinking still claim environmental impact from offshore drilling. Anwar which has been so controversial is another left wing cry for environmental impact. The claim is that it will damage the pristine wildlife preserve yet the area of the oil deposit is in a non wildlife region of the preserve and is minuscule in size. In fact if you take your morning paper and call the front page Anwar then pick any one letter in any one story that has normal not headline print, that is the size of the Anwar drilling area in the preserve.

Add to that the fact that drilling would take place only in the dead of winter and trucks to carry the oil will be using an ice highway more than SIX FEET thick and anyone can see there IS NO environmental impact. Even the Caribou who inhabit the rest of the preserve have shown that they actually breed more frequently around oil entities. Those in the areas of the Alaskan Pipeline have increased in number because the heat of the pipeline actually encourages breeding and the numbers of Caribou have actually grown since the building of the pipeline. Additionally the reason that Alaska was purchased in the first place was for this country to use its massive natural resources including OIL!

So the next argument that the left spins is that oil will not be available for years. I have already mentioned the deposit available by angle drilling from already existing sites which counters that. But even setting this aside, if we don't not start now than ten years from now the problem will be far worse.

In 1993 the Congress passed legislation allowing drilling in Anwar and Bill Clinton VETOED the bill. Had than not happened we would have one million barrels per day of domestic oil for our consumption today.

The next argument by the left is that domestic drilling will not reduce the price because futures markets are controlling the barrel price today. There is a resemblance of truth to this but it is only a half truth. While the oil future speculators are driving the price of oil rather than supply and demand with supply still out distancing demand, the left neglects to mention that future action in bringing oil to the market WILL effect oil prices.

Right now the future prices are being driven by panic over the huge consumption by China and India and their willingness to pay any price for oil and their recently acquired gluttony for the product. Although China has tried to slow their use by increasing pump prices by 25% last week, speculators still fear a shortage in the future because of the huge increase by China and India.

So it stands to reason that if The United States the largest consumer of oil in the world finally begins to drill for oil adding to future supplies as well as taking a large percentage of US oil consumption off the world market and shifting it to our own domestic market, the future panic will quell as speculators realize that more oil will be available ? With some of that oil , if deregulated by the government actually available in months and not years.

The market will react positively and the price of a barrel of oil will reflect that positive response! With our oil based economy needing a massive infusion of black gold from our own resources then the only logical answer from our government, our representatives and the oil industry is to drill. Recent polls show that more than 60% of Americans both conservative and liberal agree that drilling is the answer.

The environmental lobby has controlled this situation far to long and the price at the pump is the result of that control as Democrats have catered to this lobby for 40 years. We are an oil based economy and it is time to take back control of the very substance that drives that economy and drill!

Ken Taylor


Blogger Rob said...

Jeez Ken, where do I start? We do not consume anywhere near 389 million barrels of oil per day. I would love to know where you came up with that one.

The world's oil consumption is about 85 million barrels per day. Google it and look at the DOE's numbers.

There isn't much point in debating this if you believe that your numbers are correct. Please, anyone who reads this post, do a little research for yourself and at least get the facts right.

Also, RIGHT NOW - the big oil companies have off-shore drilling leases on coastal waters and oil leases on federal lands that they are not drilling on. Literally millions of acres are not being developed. Do a little research and look at it yourself.

Our problem is not a supply problem - it is an unregulated commodity market problem and a falling dollar problem, as I have stated in recent posts on Ken's blog on this subject.

2:41 PM, June 22, 2008  
Blogger The Liberal Lie The Conservative Truth said...

Rob, first I wrote the wrong numbers from the reaseach figures I was looking at and they have been corrected to about 20 million per day with 9.6 imported.

Next those vast leases that you mentioned are not developed and still in the , "finding,"stage. The 1238, billion barrels mentioned in the post are from existing areas developed and oil found but not tapped.

Again if you had read the entire post and not just skimmed, you would see the part where I mentioned the futures market controlling price because of panic over China and India cunsumption.

Then it is followed by the paragraph that mentions that the same futures market would react in the positive to The US finally adding new domestic oil to the market and in using these resources for our own consumption taking a large portion of the US market off the table the futures speculators will be forced to react positivly because of additional supply and the US market using its own resources.

Next some of these resources are not way off in the future but only months away as horizontal drilling from already existing sights like those in Montana will make the oil available in months and not years.

3:01 PM, June 22, 2008  
Blogger Rob said...

I read your post, but my contention is that there is no supply problem whatsoever. We don't need to open up more lands to big oil companies.

I'm glad you corrected the numbers. But, here are some basic facts.

1. There are literally millions of acres of federal land and costal water areas that have already been leased to big oil companies that they have not tapped. Until they tap that, there is little reason to open up more lands/coastal areas.

2. American oil companies are currently exporting 1.8 million barrels of oil per day out of the country.

3. Our refineries are working to capacity and there is no oil shortage. We need more refineries if we are actually going to produce more fuel. But big oil companies are not going to plow their billions of dollars of profit into new refineries because there is little financial incentive to do so - it would reduce their profits.

Do you actually think that giving big oil companies greater access to more land and coastal areas will result in them producing oil that will only be used in the U.S.? With all of your railing against socialism in recent weeks, please don't tell me that you are now looking to nationalize oil.

We don't have an oil supply problem at all, but if they produced more oil, all that would happen is that the oil companies would sell the oil on the world markets or ship it off to the highest bidders. That is just capitalism at work. That is what they want, and they are using the current spike in prices and the fact that Bush is leaving office soon to try to hurry it through.

4:21 PM, June 22, 2008  
Blogger Rob said...

This comment has been removed by the author.

4:24 PM, June 22, 2008  
Blogger Rob said...

I am trying to understand your logic - you believe that the environmental lobby is causing the problem.

And, you want to nationalize or at least prevent the free flow of oil away from our national borders. Right now, American oil companies are exporting almost 10 percent of our daily oil needs to foreign markets. You would prevent that from happening by law - because big oil companies won't do that voluntarily.

I thought you were against socialism. When did you change your mind?

4:30 PM, June 22, 2008  
Blogger The Liberal Lie The Conservative Truth said...

Rob, where did you even get the impression that I want to Nationalize the oil companies ?

I have also never stated that there is an oil shortage but the only way that we as a nation will get off the foreign oil import problem is to drill for our own oil and use domestic oil. This is not nationalizing the oil companies but using our own resurces here and with the huge amount availabe at the numerous deposits totaling billions of barrels we can also become a major exporter to the world.

I would never even suggest stopping oil exports but would encourage exports as we tap the vast resources in our own country fulfilling our needs as well as exporting to countries who do not have the resources that we do.

That is not nationalizing but free market meeting domestic demands as well as selling to international markets as well. In other words Capitalism. You are the one who mentioned regulation not me.

Also the environmental lobby has been using Democrat politics for 40years to push their agenda. That is why we have not built nuclear plants which have been proven safe and clean as even the French have done.

Also these same lobbies have through Democrats created regulation that has kept this country from building a refinery for 30 years which is one reason why our suppply though available has trouble meeting demand because there is not enough refinery capability to meet that demand.

Also this same lobby has through Democrat politics stopped offshore drilling through the ban that is being fought now and has been in place for 30 years as well as using the claim of environmental impact problems to prevent drilling in more places than just Anwar.

Lifting these cumbersome regulations will free up research and development tapping our own vast resources meeting our own demand AND having plenty to sell outside of the US. We can meet our needs and become a major world expoter at the same time. Letting the free market handle the situation and ease the problem instead of government which has helped greatly to create the problem by liberal environmental regulations.

This too will give speculators pause in panicing about oil futures as they see that the supply will not fall short of demand because of the vast resources that we can supply as well as those already in use throughout the world.

6:57 PM, June 22, 2008  
Blogger Rob said...

Exxon Mobil had $40 billion in profit last year. They have adequate resources to build refineries and to tap into their vast U.S. leases. Yet, they have failed to develop oil fields on lands and leases that they already have with the government. There is a major battle brewing with Alaska where the State of Alaska is in a legal battle with the firm to pull back the firm's leases at Point Thomson in Alaska.

You think that they aren't tapping the oil fields there because of environmental concerns? Please!

You seem to agree with me that there is no supply problem. Your solution is that you want to flood the market with oil so that the speculators will stop driving the price up. THAT WILL NEVER, EVER, EVER, HAPPEN. You know why? There is no way in the world that Exxon Mobil, BP, Gazcom, or any other oil company - let alone nations and the OPEC cartel would do that. There is no financial incentive to do it.

If Exxon Mobil tapped more oil, Gazcom (Russia's state owned oil firm) would cut production. OPEC would cut production. Others would cut production to keep supply constant.

So unless you are advocating nationalizing oil and/or requiring American oil companies to only supply U.S. consumers (which would require new laws), you should really let go of your pie-in-the-sky idea about American oil companies producing only for the U.S.

American firms export 1.8 million barrels of oil per day right now. If they had more they would export more, because there isn't any profit in keeping it in the U.S.

10:13 PM, June 22, 2008  
Blogger Rob said...

Ken, if you agree that there is no supply problem - which I think you agree with me on - then we just have to agree on what the solution is.

Let's set aside the need for a stronger dollar policy from the U.S. Treasury Department. Bush's administration has failed miserably on this front and we will have to hope that the next President will lead on this issue. I'm not sure whether you agree or disagree that this is necessary.

But, we both seem to agree that the commodities trading is a problem. It is crazy to think that oil companies will willingly and knowingly flood the market with too much oil. So then we have to look at other realistic options.

Why not just regulate the commodities markets as we do the stock markets? It would be a Hell of a lot cheaper than building hundreds of new oil wells. It would be immediate (as opposed to waiting 10 years for oil fields to come online). It would lower the price by 1/3 to 1/2 right away.

If you don't like that option, then what other option can you offer?

10:19 PM, June 22, 2008  
Blogger Mike's America said...

Poor Rob... He does a fine job of regurgitating the latest DNC talking points. I heard the same mush today on all the Sunday Shows.

I'll just pick on one glaring misleading point so as not to totally humiliate Rob the parrot:

If he thinks that the oil companies want to lease millions more acres of offshore land so they can NOT drill, than he's dumber than a post. The reason they are not drilling on every acre already under lease is that THERE ISN"T ANY OIL THERE in a quantity that would make sense to drill for it.

But it's nice to know that Rob and his DNC friends are willing to accept that drilling can take place. But their hangup seems to be that they just don't want us to drill where we KNOW the oil is.

That doesn't make sense to me, but then, Rob and his buddies rarely do.

11:51 PM, June 22, 2008  
Anonymous ablur said...

Refineries are the real need. Regulation both state and federal keep this off the chart as a possibility.
We export all that oil for refinement. Check the numbers on refined product imported.

Notice all the current leases are in/on sites of high cost to utilize. We have cheaper and more available locations that would accelerate the product to market but we can't drill there.

Becoming energy independent should be a priority. Drilling our own oil would make that possible. We need to be a net exporter and not a net importer.

Look at the profit percentage of the big oil. Did you happen to notice the percentage hasn't changed much. Yeah, it may be a record but the profit margin has stayed almost the same. Now they could have played nice and reduced their percentage take but every 401k owner would be ticked at their investment not paying off. They expect big returns when they invest in energy stocks.

Stop swatting flies and fix the problem. The democrats have held up all energy producing systems in the US and now we are beholden to foreign powers just to go to work. Nuclear would be great.
Refineries are desprately needed.
Turning America around as an energy exporter would go a long way in dealing with national debt.

12:20 AM, June 23, 2008  
Blogger Rob said...

Mike shows up and again proves his ignorance. Mike, do you actually understand the profit motives for oil companies to NOT DRILL? Or are you too obtuse to understand why they want to control the oil reserves and not extract the oil?

I gave the example of Point Thomson, Alaska. Exxon hasn't drilled there and 3 companies want the lease so they can pull the millions of barrels out. That is why the State of Alaska is fighting Exxon in court. For Exxon Mobil, there isn't any reason to commit resources to bump up production and shave profits.

I'm just laughing that Mike thinks that there is no oil on those leased lands. Please explain to me why the big oil companies leased them. You think they decided to pay billions of dollars for leases on lands that have no oil? If you believe that then you are dumber than a doorknob.

Read the linked report.

At $135/barrel and with $40 billion in profit, Exxon Mobil has plenty of cash and plenty of profit potential (it does not cost anywhere close to $135/barrel to extract oil - even in difficult locations and with environmental regs) if they actually wanted to drill. THEY JUST DON'T WANT TO.

1:23 AM, June 23, 2008  
Blogger Rob said...

Ablur - I agree we need more refineries. It costs about $2 billion to $2.5 billion to build a refinery - easy for big oil companies to do so if they wanted to. THEY JUST DON'T WANT TO.

They have no financial incentive to bring down the cost of gas.

I don't understand what point you are trying to make about the margins. The fact is that Exxon's profits in 2000 were $7.9 billion. Last year they were $40 billion. The fact that their net margins are the same is still great for big oil - it tells me that they are not suffering in any way.

But let's also get real - it is very easy to "hide" profits in order to reduce net. If you issue a dividend, pay out hefty bonuses to executives, buy back stocks you can count that as operating expenses and reduce the amount of net income. I don't know if that was done or not, but I wouldn't be surprised.

I teach entrepreneurship and we discuss ways to reduce profit in order to avoid paying tax. It is very easy to manipulate profits.

On a more fundamental level, even without any environmental regulations whatsoever, please explain to me how/why Exxon Mobil would be willing to spend capital and cut profits by building a refinery (or even drilling for more oil) when you argue that "every 401k owner would be ticked at their investment not paying off."

Sure that would be great for the American people, but why do you believe Exxon Mobil would actually do that?

1:41 AM, June 23, 2008  
Blogger Gayle said...

Ken, I'm going to leave it to you and Mike to reason with your liberal visitor here. I gave up beating my head against stone walls awhile back. It causes headaches I can ill afford. :)

It's a very good post, my friend. The bottom line is that socialists don't want us to utilize our own resources because ultimately they want to damage our economy and thus make us peons dependent on Government programs and thus turn us into a completely socialist country. GAG!

2:18 PM, June 23, 2008  
Blogger The Liberal Lie The Conservative Truth said...

Rob, while we agree that oil shortage is not the problem we do disagree on the solution.

Speculators are driving the market because of a perception that we will have a shortage because of China and India and their massive expansion of oil use.

Oil companies like any other busines are in the business to make profit. Is it not then logical that if these same companies no longer have to purchase oil from over seas because deregulation of existing environmental laws that prevent drilling AND the building of new refineries, (refineries are regulated from being built not the oil companies choosing thanks to Carter!), oil companies who live by profits like any other business will use the resources in this country to supply our need s AND have an abundance to sell on the open market.

The free market will always solve problems in economic situations if government will get out of the way and let it happen.

It is a proven fact that if the free market would have been allowed to work during the Great Depression that would have lasted only a couple of years instead of stretching into and finally ended by WWII. Government programs and regulation solve nothing only exasperate the problem.

Oil companies will understand the massive profit potential in using domestic oil for US use and selling over seas at a far greater profit because the price will be less than having to purchase at current world oil prices because we are tapping our own domestic resources.

Using the old widgit analogy. If you are selling widgits and they cost ten bucks to buy them from France for instance and then pay 5 dollar shipping to sell them in the US for 20 bucks then the clear profit would be 5 dollars.

If that same widgit could be purchased for 2 dollars in the US and the avoid shipping or at least only a minimul fee like say 2 dollars the the price passed onto the consumer could be 15 rather than 20 with the seller making a profit of 11 dollars rather than five because the cost was less from a domestic source.

Oil will work in much the same way using our own resources and the selling the massive excess making us an exporter rather than an importer.

The flood on the market will also lower prices. Even the Saudis understand that that is why to, "help, " they increase production from time to time to LOWER the world price for crude.

More means less in a commodities know that!

4:55 PM, June 23, 2008  
Blogger Rob said...

OK Ken, it seems we will have to disagree but you make a couple of very suspect comments and have not addressed my basic points.

1. Big oil companies have millions of acres of leases on oil-rich American lands that they are not developing. This is a fact.

2. I don't believe that you fundamentally understand how the unregulated commodities futures markets operate - most experts are coming to the conclusion that it is market manipulation in the swap process that is driving up prices and NOT a belief that there is a shortage of oil.

3. Expecting the oil companies to flood the market with crude oil liquidity is completely at odds with basic principles of capitalism. But if you actually believe that American oil companies are going to do that by their own volition than more power to you. IT WILL NEVER, EVER HAPPEN WITHOUT GOVERNMENT PRODDING.

We'll see who is right.

6:19 PM, June 23, 2008  
Blogger Rob said...

Gayle, it is not socialism that stops drilling, it is basic capitalism. Big oil companies won't drill because it would lower their profit margins.

6:20 PM, June 23, 2008  
Anonymous Anonymous said...


Massive lies, and once again the satan worshipper who administers this piece of shit blog is a mass murderer of your own babies.

What fucking planet do you moronic idiotic evil fucks live on.

Y'all hid the 4 TRILLION BARRELS of oil in Alberta for the last thirty years, while losing your arms and legs and balls in the Middle East chasing their tiny resources and killing the planet for profit.


Wikipedia estimates that the minimum potential recoverable supplies are 3.6 TRILLION barrels of tarsands oil. This estimate will be a minimum maximum and not a maximum maximum speculative estimate.

The extraction costs are between 24-28 dollars per barrel and also include some of the early refining in the costs. cnn claimed it was $ 50 a barrel.

american blue chips have $ 91 Billion dollars of investment already in the Sudan, but in Alberta where all the worlds oil is located and there's only $ 75 Billion dollars planned in the next ten years to develop the largest supply of oil on the planet.

I grew up in Ft McMurray, Alberta and swam in rivers of oil. The Hangingstone river cuts through the tarsands river banks and the oil oozes down the banks and into the water in the same process that big oil uses for extraction. Oh wow, lots of non research there for decades and still mother nature beats them.

More than thirty years ago your big oil and government got together and dismantled more than 40% of your refining capacity and have built nothing new in the entire time. The ny times discussed this back about 8 years ago and we've heard nothing since.

Your government and big oil set up this entire mess in advance of any market speculation, as well as hiding the minimum 4 TRILLION barrels of tarsands oil so they can make war in the Middle East.

Before I go, if that little cocksucker baby killer ken taylor buries one more of my pieces I'm going to sick GOD on his evil nation. Oh oh, oops to late america is fucked, GOD regards america as satan and has y'all slated for annihilation before the year 2036 when Apophis makes it's closest visit, personally I originally thought it was headed for Kansas but from NASA's prognostications it looks more like it's going to wipe out hollywood babylon. Oh such sweet surrender, no surrender, and GOD wastes virtually every american. It ain't going to be no terrorist that obliterates america, GOD did it. Do it again, do it again, do it again.

Pud pulling patriotic pedophilia preferring at the pleasure of your precious presidents penis police patrolled prevented perverse performance presented pathetically preposterous prolific pre emptive plans for posterity - petri dish procreating pinnochio plutocratic fascist naziesque orwellian roveianlly infanticidal caligulesque mengelesque masochistic menstruating male mind fucking necrophiliacs stupefyingly stupid suicidally inclined smiley faced sadistic self medicating sociopathic infantile lemming paramecium shit with grandiose beastial desires of amoebaility.

nuff said, snuff aid


7:40 PM, June 23, 2008  
Anonymous ablur said...

No Refineries? Why bother?

We are at capacity now. If you are going to have to ship it somewhere on the other side of the planet to get it processed, why not buy it there?
Exxon still has an issue with the Valdez spill. I wouldn't expect much especially in Alaska.

If I could get it here, process it here and sell it here, I could make money, reduce risk, and turn a better profit. Everytime you put oil in a tanker you are taking a huge finacial risk.(Exxon Valdez mentioner earlier) That risk is offset by insurance that once again costs a fortune.
Don't assume that it is as simple as lease & drill. The picture gets alot bigger when you step back. Carefully examine the bottlenecks and look at how you could get more money to the bottom line.

Yes, companies do buy things up(or lease)to ward off competition. There is no major shock here. I know companies who will cut up multimillion dollar peices of equipment to keep them off the market and away from their competitors.

Don't look for conspiracy theories when the facts and the size of the investment dictate actions.

10:35 PM, June 23, 2008  
Blogger Rob said...

Contrary to what most of the folks who are posting on this subject are saying, there simply is no financial incentive for big oil companies or other oil producers to drill for more oil.

Ablur, I think we can agree that we need more refineries, but I would argue that the oil companies again have no reason to invest in more refineries. Even if we eliminated all regulatory obstacles, there is little incentive to refine the gas. The margins are too low. All the money is made in putting a markup on the skyrocketing price of crude oil.

Here is what is going to happen - the U.S. government is going to provide regulatory oversight over the commodities markets in conjunction with other countries around the world. Even the Saudis are on board with this idea. Once that happens, the price of oil will tumble and we will see oil drop by at least 1/3 of its current price within weeks of that regulation.

We aren't going to have to give big oil companies more excess federal lands or open up any more coastal regions. More important we aren't going to have to pray that they go against their financial interests and drill, so that we may get a little more supply 10 years from now.

12:20 AM, June 24, 2008  
Blogger Mike's America said...

Rob: Talk about comedy. You're sputtering more than usual. You must get tired of repeating all those talking points. What a fine parrot you make.

The idea that the oil companies are deliberately holding back product from the market is so foolish, I'm surprised you bought it. I thought you were more intelligent than that.

Though I am glad to hear you support the idea of offshore drilling. Now, let's expand it. If the oil companies aren't going to drill (even though they are paying billions for the leases) then surely there is no environmental threat now is there?

The bottom line is that your Democrat policy is nothing more than a conservation only policy and that's a sure prescription for even higher prices which impact lower income workers the most. And eventually, it will lead to economic recession and an overall weakening of America's economic power in the world.

That's been the goal of communists for decades comrade!

10:38 AM, June 24, 2008  
Blogger Rob said...

There is no supply problem (Ken and I agree on this). Where we disagree is whether oil companies are going to deliberately flood the market with more oil to lower prices.

If you think that the publicly-traded global corporations and oil producing nations that control oil supply are going to deliberately work to lower the price of oil so they can cut their profits then you completely misunderstand basic capitalism.

As Ablur pointed out above, "companies do buy things up(or lease)to ward off competition. There is no major shock here. I know companies who will cut up multimillion dollar peices of equipment to keep them off the market and away from their competitors."

Contrary to what you may think Mike, big oil companies lease land for a few billion dollars to prevent other smaller competitors from getting control of those lands. Then, they make tens of billions of dollars in profits as the price goes up. Simple capitalism.

Mike think about how foolish the notion you are advocating is. I am on the market for a new big screen HDTV. But the price is a bit too high. Maybe I'll visit Mike's America and ask Sony to flood the market with more of their big screen HDTVs so that I can buy it at a cheaper price. I am sure Sony won't mind cutting their profit margins just so I'll be happy. That is the silly rationale you are pushing.

2:29 PM, June 24, 2008  
Anonymous Anonymous said...

Typical yanks, oblivious to the simple facts and arguing about the symptoms, dismembered soldiers and bloody families as a result of hiding more than three TRILLION barrels of oil. Y'all sack the world deliberately in every industry. You are the cartel creation kings. You're so proficient at cartels in every industry that you're a mix of a monarchy and communists with king rothschild at the top and his favorite baron henchman rockerfeller distributing the tens of billions of dollars in subsidies. republicans are just americans who aren't shy about demanding their right to torture and balancing the budget by murdering millions of people and stealing Trillions of dollars. I'm sure they'd all proudly agree. It's so typical that you murder, torture, steal, and rape all these people and ignore everything they say.

america is satan and likes the way it fits.

8:20 PM, June 24, 2008  
Anonymous ablur said...

Rob - the simple answer to your question is this:

Oil companies have learned that the ceiling on oil prices should be about $80-90 per barrel anything above that stimulates alternative energy markets and drives away future business. If they want to keep making money they better get some control of this.

You asked for a straight business reason.

I think they could still make more money with less risk by taking advantage of regional supply and production by drilling here. Priority has got to be placed on refineries.

11:44 AM, June 25, 2008  
Anonymous D.S.Harford said...

Wow, Ken you hit a nerve here.

7:04 PM, June 25, 2008  
Blogger Rob said...

Ablur, your position is reasonable, and you may very well be correct.

However, once the commodities markets are regulated the price will fall below your target price of $80-$90/barrel.

Even if that doesn't happen, oil execs are better off collecting their profits, build up cash positions and then just using the excess cash to buy up any promising alternative energy programs.

8:55 PM, June 25, 2008  
Anonymous ablur said...

I don't think comodety regulation is going to work in the world market. The players are too numerous and the possibility of cheating far to great. Regualtion only works in a closed market.

Perhaps the drive for alternative energy has finally stuck. If this is true your position on the oil company is a dead ender. If true adoption of alternative energy/technology fully takes hold, or is mandated, oil consumption will drop by 60%.

It just doesn't sound like good business to take a short term profit and suffer long term consequences.

The real profit takers are the oil sellers. The OPEC group is making money hand over fist. This cost is going straight out as debt against our nation. I think our debt is high enough. We should be pushing hard as citizens to cut this cash stream when we don't need it and we can't afford more debt.

11:46 PM, June 25, 2008  
Blogger Rob said...

Why don't you think it is going to work? It works for stocks, it works for mutual funds, it even works on the options markets (which also trade commodities). The problem right now is that the unregulated trading of commodities is allowing large investors that will never actually take hold or use oil to pour money into oil futures. Essentially there is legal money laundering taking place, which is why there are growing calls even from top trading firms on Wall Street to have congressional action take care of this.

Also, it is not just the U.S. that is looking to regulate, there is a strong push in the EU and in Asia (particularly Japan). It is going to happen - especially if Republicans don't try to hold it up to protect the oil companies.

If you are Exxon Mobil, you may be an American company, but you are really a global oil producer. They don't make their money on retail gas at their stations - they make their real money on oil production. They have no incentive to change price structures in the short term - and I guarantee that they will just plow money into alternative fuels if those fuels become a real threat to the oil economy. That is what $40 billion in annual profits will allow you to do.

I agree we have too much debt - particularly foreign held debt. But I don't understand how you propose we as citizens "cut this cash stream." We - as citizens - don't have nationalized oil production.

As such, to expect the multi-national companies to make any changes out of the goodness of their heart, or some sense of nationalism, seems a little far fetched (if that is what you are suggesting). They are going to sell to the highest bidder on the world market unless they are compelled to sell here at a lower price.

Of course, that would be anti-capitalist and even socialist - so you wouldn't have any support from most of the people on this blog.

3:00 AM, June 26, 2008  
Blogger Rob said...

Just to put some numbers on the foreign held debt. We currently owe more than $2.6 trillion to foreigners.

When Bush took office it was about $1 trillion.

We owe $154 billion to OPEC nations (which include Iran and Venezuela), up about $40 billion from just a year ago.

We owe China $500 billion plus we have a $250 billion trade deficit. So essentially we are borrowing money from the Chinese so we can buy their stuff.

This is what we get for Bush's weak dollar philosophy. That is not Congress - that is Bush's Treasury Dept.

3:04 AM, June 26, 2008  
Anonymous ablur said...

I am not going to entertain Political dissatisfaction with Bush or the Blame it all on the President crowd. We can talk business and deal with the issues.

The question mark that begs asking and dealing with is this: The world runs on oil and everyone is in direct competition for this product. Unless the world agrees to a set price(no possible way) it simply won't work. There will alway be somebody looking to function outside the limits to get assurances that they will not be short. They will find ways to guarentee their supply if rationing or shortages ever become needed.
Oh, it will work temporarily. It won't be long though before some back room deal changes the game. If we donate all the money for a major hospital in your country will you make sure we are taken care of..........

We are talking about the one product that reigns supreme over all others.

The Debt Issue - Your research only gave you $154B in debt to OPEC nations. With the current cost increases this will triple in under a year. This vast growth needs a containment plan. If we could harness our own product and place priority on home grown goods it would do as much and more then regualtion controls on commodity purchases. The supply side manipultaion that will inevitablely occur with a commodity lock will not happen with a home grown rule. This would result in keeping more money at home and less debt.

We as citizens have ownership of the public lands locked up by our congress. We can decide how we want to use these resources. WE are in control. This would be capitalism at its finest. We can write a contract to sell the oil off our land with specific requirements. It does not guarentee a buyer but if the world (middle east) goes nuts again, they will be anixous to deal.

You see, companies need customers and products to sell to customers. It isn't the company changing out of kindness but out of need to survive. Your arguement suggests that they are in control when they are not.

12:44 AM, June 27, 2008  
Blogger Rob said...

The dollar issue is not just "political dissatisfaction" - it is a major factor that Bush's Treasury Dept has failed miserably on. But, we can leave it alone.

The world essentially sets the price currently, but there is a legal way to launder money through the current commodities trading system. When that happens in any publicly traded markets - new laws and regulation are required to correct the problem. It is going to happen.

So your solution is to open up more (excess) federal lands, but require American Oil companies to only agree to sell the product in the U.S. - not to the highest bidder around the globe. Good luck!

Then, using your solution, 10 years from now we will see our gas prices drop by a nickel.

Look, there is no supply problem. The only realistic solution that is out there right now is to regulate the commodities markets.

I even agree with you that we need to build more oil refineries. If Big Oil won't do it then the nation should consider a parallel nationalized gasoline production system. Even better, the millions of acres of undeveloped federal lands could be rebid to companies that will only supply the U.S.-owned refineries. The big boys wouldn't want to do it, but many smaller players and co-ops would emerge which would break the stranglehold Big Oil has on us.

But that would require a certain level of socialism to help the commons.

9:03 AM, June 27, 2008  
Anonymous ablur said...

The treasury department is not a Bush issue. Greenspan was not a Bush appointee. He was pretty good but I didn't agree with all his policies. Bernacke is horrible and has done more to damage US dollar markets then anyone in recent history.

What bugs me about all the Speculator/Commodity Trader BS is the fact that they didn't run up the price sooner.
Why didn't the price run up after 9/11?
Why didn't the price run up during the Afghan war?
Why didn't it run up during the Iraq war?
Why didn't it run up when Katrina cut 10% of our production?
Why didn't it run up when the tsunami hit?
These were each significant enough to effect supply and cost basis analysis.

My solution doesn't have a ten year time table. If congress clears the way we can build a refinery in a year. If we uncapped known wells and restored production, we could increase our output by 10% in 9 mnths.
Currently our refineries are down for retooling 20% of the year. Adding a refinery would reduce that by 3-5% an additional cost savings as well. Capacity would be increased in general and available increase in volume would also help. Decreased transportation costs to move tankers of oil and to insure their cargo is substantial. Remember, you can't take a tanker through the Panama Canel. Our refineries are in the gulf so west coast oil would cost a fortune to transport. These costs are welcome business espense reductions.

11:04 PM, June 27, 2008  
Blogger Rob said...

The U.S. Treasury Dept sells U.S. Securities and they are the ones who finance the government. The Treasury Dept is part of the Executive Branch.

The Fed has a role, but it is the shameful sale of hundreds of billions of dollars of U.S. notes and securities to foreign investors to pay for the excessive spending that Bush and the Republicans put into place. If you don't want to believe that, that is OK with me. But if you just look at the spending and borrowing that took place from 2002-2006 (when there was a Republican Congress) you will see that it is fact.

You ask why it is running up now on speculation. Why does any bubble build up? A situation occurs where too many people are chasing the dream of wealth that is really a mirage.

We are going to find out if there is a speculator bubble within the next year or two. I say there is going to be a major pop in the speculation bubble. When the regulation goes into place across the globe (the U.S. is not the only country that is going to regulate commodities trading), if prices fall dramatically then we will know which of us was right.

I still do not understand whether you want to nationalize a part of the oil production and refinery. With $40 billion in profit, Exxon could VERY EASILY pay for more drilling and another refinery or two. But they don't for very simple profit reasons.

If you don't think Exxon and other oil companies are deliberately manipulating supply, just read about their battles with the State of Alaska over Point Thomson, and their refusal to build the new natural gas pipeline (BP, ConocoPhilips, and the State are all on board, but because of the way Exxon's federal oil lease is written they get to decide if the pipeline should be built).

Unless you are advocating for nationalized oil - or at least a portion of domestic oil production to be nationalized - then you need to recognize that there is little profit motive for private firms to expand domestic production simply for domestic consumption.

10:22 AM, June 28, 2008  
Anonymous ablur said...

Ok Rob
YOU are convinced it is the Commodity Speculators causing all the problems.
YOU are convinced that Big Oil is out to get everyone and congress just hasn't caught them in the act.

It doesn't matter what anyone else thinks, because YOU are of course right on this vast global resource problem.

You continue to pound the same talking points and I simply can't buy the arguement your selling.

The Fed has cheapened the Dollar it wasn't Bush.

Yes, the Republicans spent like drunken sailors, but neither party has been able to stop. It is not a party problem but a government spending mentality that needs to change. We need a shut off valve.
We need to get rid of carreer politicians with term limits.
We need an energy policy that adds Nuclear and Drilling our own oil. With this policy needs to come some reduction in barriers to entry so small business can take hold and restore competition in the marketplace.

I am not a Bush fan. I am a realist. Bush doesn't have control of the purse strings congress does. The president is simply a figure head. He has little to say if congress does its job, but it won't. The president can only put in his two cents when the vote is between 51 and 65%. Either side of that is all congress.
Bush has an approval rating of 27%. Congress has and approval rating of 11%. This election cycle we have to choose between two members of the worthless 11% who aren't going to do anything to make this any better unless we build refineries and build nuclear power plants. The policy of starving our nation out will be met with a hostile populous.

11:20 AM, June 28, 2008  
Blogger Rob said...

I'm not sure what your problem is. I hold my opinion and you hold yours - BFD! If you don't agree, I couldn't care less. So don't worry about what I think. Believe what you want and just accept the differences.

However, we will know within two years which one of us was right about the speculators. Within that time there will be regulation and a pop in the bubble if it is going to happen.

Given your response, it seems clear to me that you have no idea what the U.S. Treasury Department actually does. One cannot just say - "THE FED DID IT." That is just silly if one does not recognize the major role the Treasury Dept. has in economic policy and outcomes. But that is fine with me if that is what you want to believe. I don't have any desire to try to convince someone who refuses to be serious about understanding the issue.

You still won't say whether you want to nationalize oil. If you think that Big Oil is going to voluntarily cut into its profits to help the nation that is up to you, but it doesn't stand to reason. These are multinational corporations beholden to shareholders - they are being capitalists pure and simple. Capitalism does not care about nation-states or patriotism. All that happens is that capital flows to the most profitable markets.

11:42 AM, June 28, 2008  
Blogger Rob said...

One other point, even if you somehow break up Big Oil's stranglehold on the nation's oil and gas - and you haven't provided any explanation for how you would do this - and allow small competitors into the market space to drill for oil. They are just going to sell to world markets and the most profitable customers. There is no reason to believe otherwise.

11:47 AM, June 28, 2008  
Anonymous ablur said...

Rob -
Here's my problem. You ask questions but when you get answers you gloss over them as if nothing. Even though the question was used to beat others back and promoted by you as vastly important.
You simply turn and ask more questions with the same vitrial. When again you get an answer you toss it asside as nothing and go at it again.
I will simply accept the fact that your opinion is unchangable and your questions are of no value.

Loose ends-
I believe that open market capitalism would cure much of these issues. Unfortunately, we are no longer dealing with an open market. The players have gotten so big and so few it can be considered monopolistic. With government regulations being what they are it makes the barrier to entry impossible and the monopoistic enterprise is allowed to flurish.
With environmentalism as strong as it is small money cannot fight against this wealthy and often violent group.
Government regulation in the way of limiting boutique blends of fuel would go along way in improving refinery production and reducing costs.
Government deregulation in the areas of refinery building would improve bringing product to market.
To be successful you need a deep water port. You need an access for the largest of ships. Looking over the US coast line offers only 2 or 3 quick and easy options. On my blog I have clearly set out a case for Coos Bay Oregon. Immediate implimentation should be taken to utilize this under used port.

Simply playing with money and the money changers isn't going to do it. On my blog I have been carefully reviewing every form of alternative energy. There is amazing break throughs occuring in almost every area, but most are not ready for the big time just yet. The few that are, are being held up by NIMBY politics.

We have much work to do.

11:29 PM, July 01, 2008  
Blogger Rob said...

Look in the mirror pal. All of your comments can be applied to you.

You don't like my answers and don't believe what I believe. We fundamentally disagree on whether there is a speculation bubble. This is an intellectually honest philosophical difference. Big deal! I still don't know what you are in a huff about. We disagree - that's it - there is no vitriol or anger on my part. But, like I said, we will see who is right within a short period of time.

In my opinion, the speculation bubble will burst and prices will drop dramatically.

If our next President works with Congress to shore up the dollar and address the mammoth deficits and national debt, there will be greater confidence in the U.S. markets. Improving the dollar will have a far bigger impact than drilling or new alternative energies. We can disagree on that issue to if you like. Again, there is no anger on my part about this philosophical difference.

Finally, the "free market" is controlled by the enormous capital controlled by Big Oil. There is no "free market" energy solution that won't be impacted by privately held oil companies. Until Congress breaks up the monopoly of Big Oil, alternative energies will be stifled. If Big Oil is not broken up forcefully, or regulations aren't imposed to keep the influence on energy contained, they will continue to prevent energy alternatives and improvements in oil and gas supply. Any promising technologies will just be bought up by the super wealthy oil companies and/or they will continue to lobby Congress to prevent them from coming to the market. That is what the "free market" has resorted to.

Eliminating all regulations on refineries, markets, oil production, etc., will only serve the purposes of Big Oil. We can agree to disagree on this if you like.

I am not angry or vitriolic about any of this. But if you harbor resentment that is up to you.

10:09 AM, July 02, 2008  
Anonymous ablur said...

Anger was not my intent. Repitition with little movement in the arguement tends to fustrait any attempt to debate the issue.
Life has its aggrivations and some of the ones I have had to deal with lately have made me a bit short at times. No animosity was intended.

The key that we can find the most agreement on is strengthening the dollar. Poor fiscal policy by the government has a major roll in this and until that is brought around there is little that can be done. Much of the solutions we have discussed hinge on the dollar.

Big oil about 30 years ago consisted of about 40 companies who's interaction stabilized and strengthened our energy picture. Currently, it consists of seven companies who have little interest in cheaper, better, faster, which function as keys to success in the business world. They choose to sit back on their laurals and do little. Congress has taken many steps that have encourage this bad behavior and provided the excuses that keep it where it is today. Cutting away some of these legislative pitfalls will cut the excusses and expose the real problems.

Yes, except for the state of the dollar, we may have to agree to disagree.

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