Category Archives: Obama

Oil and Gas Politics: Just The Nonpartisan Facts

I’ve been writing a series for Fortune in recent weeks tackling questions like, if the U.S. is now selling more petroleum products than it is buying for the first time in more than six decades, why is most of the country paying around $4 a gallon for gas? And if 30% of U.S. oil is drilled from federally owned lands and territories (read: areas owned by us, the taxpayers) why are we not being paid competitive rates for them by the oil companies? 

With the Senate recently voting down a measure to eliminate billions of subsidies for Big Oil, for those not looking to attack either Republicans or Democrats, the 1% or the 99% – just those operating on common sense – it should raise some questions.

Between 2007 and 2010, more than 70% of the increase in U.S. oil drilling took place on federal territories, representing 3.5 million barrels a day, according to the nonpartisan Congressional Research Service. Since then, oil drilling in the U.S. has climbed higher, topping 6 million barrels a day  this spring for the first time since 1999.

The appeal of drilling in the U.S. has grown in recent years, as oil companies develop new technologies to capture energy resources locked in North America that were previously seen as out of reach. Big Oil also has grown wary of the legal and financial uncertainties that often plague their drilling activities in more exotic and restive regions, such as Venezuela and Nigeria, North Africa and the Persian Gulf.

Bottom line: drillers see America as the promised land compared with the dreary alternatives, because the U.S. is by far a safer and stabler place to do business.

Oil Still Fetches 1987 Rates

Yet Americans might be shocked to learn how much the oil companies are actually paying for the privilege to drill on taxpayer-owned territories. As of this writing, the starting bid for leases on parcels of land that allow an oil company to drill for 10 years is $2 an acre. Yes, the prices can get up into the thousands during the bidding process, but more often the land is sold for next to nothing.

And it’s been that way since 1987.

It is as though oil hasn’t budged from $20, the price per barrel the same year Bon Jovi released “Slippery When Wet” (no pun intended regarding the use of ‘slippery,’ however apropos.) Continue reading Oil and Gas Politics: Just The Nonpartisan Facts

PAST PERFORMANCE IS NECESSARILY INDICATIVE OF FUTURE RESULTS

S also stands for 'sinister,' 'scurrilous' and 'slippery'

It met rarely and whined often. It gave up before the actual deadline (Nov. 23). It sought to shear over a trillion off the national budget, but came up with peanuts. It inspired satire in the form of, among other things, superhero cartoons. It was the “supercommittee.” For these reasons and so many more, America’s elite political body truly lived up to its name in that was super-lame.

This again proves that when Congress gets together and can’t make a deal, guess what? Moving the date back and getting together again — on the taxpayers’ dime, replete with catered lunches — still doesn’t lead to a deal. Funny how that works.

Whenever confronted with the need to make an actual decision, Congress prefers instead to commence lengthy studies, probing inquiries and cerebral surveys — all of which require much munching and lunching and the drinking of fresh coffee and spring water — that rack up bills yet infrequently give rise to any answers… Continue reading PAST PERFORMANCE IS NECESSARILY INDICATIVE OF FUTURE RESULTS

Debt Deal ‘Achieved’…By Leaving Tough Decisions To A Yet-To-Be-Convened Special Committee

Turns out it is not at all hard to find a picture of a sweaty wad of cash on the Internet.

The good news: in a deal yet-to-be-passed by either house, Obama and Boehner’s Raucous Caucus have finally agreed to raise the debt ceiling by $2.4 trillion in two stages, in exchange for an equal amount of spending cuts — with $917 billion of the cuts to span the next 10 years.

How will the rest of the cuts be administered? By special committee. (That’s the bad news.) Why rush these cuts when we were all starting to have so much fun?

Part of keeping the fun going is that Americans will continue to live in the shadow of the sword. Due to a small proviso cleverly tucked into this legislation, if the special committee doesn’t come up with at least $1.2 trillion in additional cuts (the goal here, is actually more like $1.5 trillion in cuts) or Congress doesn’t agree to green-light them, something akin to martial law will kick in.

What will this look like? Think of a nail-bomb set in advance, designed to spray cuts to the military and Medicare if anyone makes one ill-advised move.

Basically, this part of the deal ensures that even you, the taxpayer, will be begging members of Congress to ratify every last spending cut, lest you dial 911 one day and find that nobody answers.

Hey, what’s a bill without a little blackmail?

Still, it is a sad state of affairs that the only way to get things done these days is to hold ourselves at gunpoint.

The bill is expected to be voted on today. Obama, for all his speeches, has been brutally cowed, again. Spending cuts reign supreme, while Bush-era tax cuts remain unchallenged. It is official: our president buckles like a belt.

Americans Quaver As U.S. Prepares To Go Titanic

Lifeboats for senators and bankers only.

Fidelity, which never sends emails, except to market its herd-investing strategies, has suddenly sputtered to life.

This weekend’s missive: “Debt ceiling: what you should know.”

Really. It’s a little late to be sending this now. But what have you got?

It turns out Fidelity is able to direct me to its Web site to get the most clicking, ahem, “best thinking” of its market specialists, who have penned such helpful tidbits as “Inside the U.S. debt drama” and “Fear is not a strategy.”

Fidelity, we know you don’t want us pulling all our money out of our shrinking retirement accounts and stuffing it under our mattresses because that is not good for you. But “Fear is not a strategy”? Come on. That’s pitiful.

We are going down this road no matter what we do now. We’ve heard for a long time something’s gotta’ give. It is just too bad so many people are going to get a lot worse than they deserve.

Just a few letters from the Interblogging universe, written by concerned Americans who now believe their worries will be given more consideration online than by their own congressmen and women… Continue reading Americans Quaver As U.S. Prepares To Go Titanic

The Carnival Is Still In Town

“Concentrated power has always been the enemy of liberty.”  

— Ronald Reagan

Wall Street blames Washington for all the financial crises. And Washington blames Wall Street back. It would be amusing, if it wasn’t so pathetic.

Now we know the truth — that both are taking turns bringing us to the brink, with only their own self-preservation in mind.

As we emerged, rather confused, from the 2008 financial crisis, a posting appeared in the comments section of The Wall Street Journal. It was as prescient as it was disturbing. It appears in my book, but I am re-posting it below.

Whether you are a Democrat, Republican or Independent, it is worth a read. It is also worth considering that while Wall Street bewails any hint of a redistribution of wealth to the unwashed masses, the largest-ever redistribution of wealth occurred right under taxpayers’ noses to the banks by the billion-load   — Wall Street’s greatest coup ever, rubber-stamped by our own elected officials.

“All this goes to show we are now entering the second phase of the world financial crisis. Despite the fact that the anti-social nature of banks has been found out, the corruption of the Fed and the finance committees in the Senate and House are now public, and the solutions to the problems are well known, we still do not possess the political will to carry them out.

“It is clear that a larger problem now looms — the crooks are firmly in power and intend to stay there . . . Americans are again ruled by a plutocracy that has no interest in them other than the money that can be made off them, the same as in 1776 . . . If we cannot kick these people out of power, we are no longer America. And most people sense that. We have become the pleading chickens our founding fathers would have despised.”

U.S. Debt Kerfuffle: It’s Not That We Can’t Pay…We Just Don’t Feel Like It

One of their better moments...

Somewhere in the United States, right now, a billionaire is paying his taxes. This makes some people — not naming any names — very unhappy. In our nation, it is imperative that hedge fund managers, for example, pay roughly 15% on earnings via a handy loophole, whereas someone like, say a writer-girl, coughs up over 30%. That strikes some folks as just about right. Call it pursuit of happiness.

Other people’s happiness.

So we have some disagreement there. Elsewhere, others feel that taxing the daylights out of Americans who can’t afford to pay for gas to get to work sounds about right. And that, at one of the worst moments in financial history, forcing Americans to buy health insurance they don’t necessarily want or need so that the healthy insured can subsidize the less-healthy insured is a great idea.

Not saying that insuring everybody as a solid, pie-in-the-sky ideal is not commendable but, Obama, did you ever hear of bad timing? This is why everyone in the opposition thinks you’re batshit-crazy. Why don’t we entertain nirvana after mastering the merely tolerable? Continue reading U.S. Debt Kerfuffle: It’s Not That We Can’t Pay…We Just Don’t Feel Like It

Minor Wake-Up Call: U.S. Out of Cash By August 2!

This is a little something from back home we like to call the 'Hawaiian kiss-off'

Hold the phone, we run of cash when? In two and a half weeks? Bah, fie and tut-tut. So that’s what’s behind this whole debt-ceiling/deficit talk getting in the way of my “Mad Men” re-runs. But maybe there’s a silver lining. One humble query: If our entire nation can no longer pay its bills and decides to cut little old ladies’ social security checks, will anyone notice — or care — if I don’t pay mine?

Seems if the U.S. Treasury and Congress can’t get it together, then why should I?

During a pivotal summit with Republicans yesterday, Obama rose, looked around and, well, booked it out the door. (Or as The Wall Street Journal more kindly put it, Obama found himself “abruptly walking out of a key meeting.”)

Key meetings, as far as I can tell, are the kind you’re not supposed to walk out of. But the president’s the president, so what can you do? Continue reading Minor Wake-Up Call: U.S. Out of Cash By August 2!

‘Bogged Down In A Pseudo-Religious, Ideological War Over Whatever’

Not my words, just something an observant Canadian living inside the U.S. had to say today about our country’s death match over the debt ceiling — before remarking that it might be wise to, uh, “back-migrate.”

Instead of an espresso shot this morning, take a gander at our impressive U.S. Debt Clock. If that doesn’t jolt you awake, nothing will.

Remember, no one on this planet even has $1 trillion. Yet, somehow the U.S. has found itself on the hook for more than $54 trillion. Continue reading ‘Bogged Down In A Pseudo-Religious, Ideological War Over Whatever’

How Fear, Greed Factor Into the Price of Gasoline

The price of oil is set not in Vienna at the headquarters of OPEC, but at the New York Mercantile Exchange.

Llewellyn King, PBS

Sunday, May 1, 2011

WASHINGTON — The fate of the Obama presidency hangs not on a birth certificate or the red ink on the federal budget but by the hose nozzle of your local gas station.

Electoral discontent is measured by the price of a gallon of gasoline. Heading past $4 toward $5, that is a lethal trajectory for President Obama.

Enter the demagogues, especially the clown-in-a-business-suit, Donald Trump. Unfettered by the gravity that goes with facts, Trump says that he would fix the oil price — now around $110 a barrel — by facing down the producers, particularly the Organization of the Petroleum Exporting Countries (OPEC). He told an interviewer on television that he would call OPEC and tell them to pump more or face the consequences. The latter, he did not specify. War? Against whom?

In a compelling book by Leah McGrath Goodman, The Asylum: The Renegades Who Hijacked the World’s Oil Market, the author lays out the ugly fact that often — in fact, more often as not — the price of oil is set not in Vienna at the headquarters of OPEC, but in downtown Manhattan at the New York Mercantile Exchange (NYMEX).

Tens of thousands of future contracts are traded in nanoseconds at the NYMEX, and the price of oil is set. This price affects not only the price that will be paid when these contracts expire and delivery takes place, but also, according to Goodman, the all-important over-the-counter market, where sellers trade more directly with buyers without government oversight.

Goodman contends that there is little oversight of the NYMEX because the agency charged with the role is the weak and ineffectual Commodities Futures Trading Commission (CFTC), where many staff and commissioners are busy burnishing their resumes so they can cash in later as market executives.

The over-the-counter market is not regulated at all because of a pernicious interference from Congress known as the “Enron Loophole.” How did it get into law? It is one of those pieces of special-interest protection that owes its existence to legislative immaculate conception. It was not in the committee version of the bill; it slipped in along the way without parenthood, but is largely believed to be the work of former Sen. Phil Graham, R-Texas, whose wife, Wendy, was chair of the CFTC.

In classic theory, a market is where a willing buyer and a willing seller strike a price. In the world of traders, it is something else: It is where volatility is rewarded and myths hold sway.

Today there is no actual shortage of crude oil. Supply and demand, according to those who monitor these things, is in balance. But fear stalks the trading floors because fear is good for traders; and fear is a critical part of the oil price. Continue reading How Fear, Greed Factor Into the Price of Gasoline