A slightly out of the box solution to our gasoline/energy problem

Imagine a policy where the US drastically cut defense expenditures, increased our dependence on foreign oil, withdrew and stopped entering wars to protect or prop up the petrodollar and pay higher consuming costs not only at the pump and grocery store but everywhere else and in between. Would you believe it? Would you even accept this as remotely possible without destroying our economy? I know it sounds crazy and no, this isn’t a page out of the Obama playbook. This would be the policy going forward if I was sitting at the top of the elitist pyramid. It's not ideal but you have to play the hand that is dealt.

I know there are “greenies” or “tree-huggers” that are reading this and smiling. I hate to disappoint but it’s not a green agenda. No, this is a strategy that would keep America not only at the top of the neocolonial power structure; it would vastly strengthen its grip. How do you suppose this is possible? First and foremost it’s a strategy centered on oil.

We have all experienced the rising gas prices. We have seen the rising prices in commodities. We have felt the gouge in the pocketbook, as trips to the grocery store have become ever increasingly more expensive. The volatile relationship of humans and fuel has taken center stage as the issue of 2012. Emerging economies cannot grow without fuel and established markets crumble if they lose the access.

If it affects everyone, then everyone has an opinion on what to do about our dependency on fossil fuels. Some say, drive the prices sky high so we can jump-start innovation for green tech. While others say “drill baby drill” using our own resources to offset rising costs. Then there are those of us in the middle. While I can see the logic behind the green push and the tapping of our resources, the reality of the situation, unfortunately, is not so pragmatic.

Oil as we know is a global commodity traded around the world. What is traded and receives the most attention is crude oil. Crude oil is by far the most lucrative oil for its producers and the most inexpensive for the consumer. Its diverse applications make in the most valued of all fuels. As far as we go here in the states, it is true; we do have vast reserves of oil, but how much of it is crude oil is a big question mark.

 

The amount of crude oil we have here in the in proven reserves (as you can see above) is nothing like they have in the Middle East. This is why the Middle East remains so vital to the entire world. Just ask Dick, before he became "Vice Dick" back in 1999 while he was CEO at Haliburton.

 “The Middle East with two thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow” - Dick Cheney

 
 However, there are people like Harold Hamm, CEO of Continental Resources, who say the US has billions of untapped crude reserves, just waiting to be put into production. According to Hamm and his exploration and production company, the Bakken region alone has 20 billion barrels of crude. That would equal the entire US total in proven crude reserves according to the EPA numbers. And that is just in North Dakota and Montana. 

Texas, Pennsylvania, Oklahoma, California, Alaska and off shore are all seeing a new oil boom. The amount of oil we have in reserves is rivaled by no other nation in the world. Again, how much of it is crude, is open for debate, there is no denying the vast supply of fuels however.

With crude being the most lucrative and easiest to refine, it will remain the preferred fuel until the time comes when supply of it is vastly outstripped by demand creating equilibrium amongst other types of oil. If you look at the crude oil rich Middle East (who supplies over sixty percent of the world’s oil demands), its crystal clear what kind of clout you receive having the breadbasket of energy in your backyard. 

That region is home to some of the most backwards societies on the planet; yet our President will bow to their king, because he knows how vital they are. Now superimpose that type of power to the US, who already runs the petrodollar scam. So it doesn’t matter really what our reserves are made from. When the supply of crude becomes so depleted you will have all types of oil becoming economically viable. At that point, all oil will be worth not only pursuing but manufacturing and refining as well. 

So, it stands to reason, in a Machiavellian-esque outlook, the US should do all it can to pump the world of its crude, as quickly as possible. This of course will be painful in the short terms but the reality is that the price of oil isn’t going down anymore. The days of cheap gas are gone. 

The US dollar is nothing more then a mirage, its no more valuable then the paper it’s printed on. We are trading paper backed in confidence for tangible assets from other nations that have to invest in our nation just to get oil 66% of the time. Then those nations who take the dollars reinvest them back into this country, yes, that as you know is the short version of the petrodollar recycling process but I think its important to understand the significance of this and the opportunity that lies within it. That’s about as good as a scam as one can devise. If you did it, it would be called counterfeit.

When the Middle East and OPEC lose their stranglehold, the dollar dies. We have accumulated too much debt since OPEC agreed to trade oil for dollars in the early 1970's. The recoil from that action will have a dramatic impact on not only our market but the entire world market.

 

So, I say NO to: “drill baby drill”. 

I say YES, take a hatchet to defense spending and reinvest that money towards balancing the budget or subsidize gas prices for the American consumer (further pushing up consumption).

I say YES to further litigation and regulation, stifling American companies from extracting oil in the US. Bring on Green Peace and bring on the environmentalists.

I say NO to consuming 1.oz of the 695.9 million barrels we have as a nation in the Strategic Petroleum Reserve

Do whatever it takes to use up the rest of the world’s fuels, trading worthless paper for them in the process. The ends justify the means.   

Lets stop with the political hot potato concerning oil.

There has been a lot of talk of late centering around President Obama and the gas price hike we have seen in the US. Many people blame his policies, pushing alternative green energy over conventional energy (like Nat gas, coal and Crude). There has been people in the administration that have actually gone on record admitting as much. Dr Stephen Chu actually said in an interview with the Wall Street Journal in late 2008 (before he became part of the cabinet):

"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,"

According to the WSJ, Dr Chu would do this by quote: "raising gasoline taxes gradually over 15 years to coax consumers into buying fuel-efficient cars and discouraging sprawl".

Now, we haven't seen that happen as of yet. We already have seen however that the Administration does play favorites when it comes to the agenda or promotions of industries they see fit. We have seen that with Solyndra and GM. While that does point to an obvious flaw or at least a blurred line in the relationship between private industry and the state; it is something that isn't unique to the Obama Administration alone. It is also not he reason gas prices have gone up either these last few years.

Just like playing favorites when it comes to energy sources, the Obama Administration is guilty of a double standard in handling or at least blaming the source for fluctuations in gasoline prices. This was a stump speech in Indiana from 2008, one in which President elect Obama was campaigning on the high oil prices pushing blame on the Bush Administration and the oil companies, staying true to his populist ideals:

There have been examples of President Obama deflecting when it comes to what is happening with the price of gas, blaming everyone from speculators to people driving SUV's. So its pretty clear, the Obama Administration has favored alternative energy over conventional and he has also used double standard logic to defend the rise in oil prices.

Again, these are not reasons why gas prices have went up. As i pointed out earlier this year, we here in the US are now actually a net exporter of fuel for the first time since the 1940's, yet prices in gasoline have only went up. The reason is very simple. Its a global economy and oil is the heart of the global economy, there is very little one country can do to offset the global price that is measured in US inflationary dollars. 

Now, with that said, the biggest reasons we are seeing rises in fuel prices specifically at the pump is also simplistic. The world is consuming more oil, the supply has remain unchanged, thus the law of supply and demand have driven the price up. Just look at the demand.

 As we can see the emerging markets and growing economies are consuming more and more oil and we are consuming less. We are seeing now the fruits of their labor that comes from producing our cheap goods. The emerging economies are showing the world what it means when people say "a rising tide lifts all boats". And to the contrary, ours are staying stagnate or sinking. That's just cause and effect. Now what about supply?

 oilprice.com

As we can see here and pointed out by Gail Tverberg:

"Since 2005, world crude oil supply has bumped up against what seems to be a limit of 75 million barrels of oil a day. No matter how hard companies try to extract more crude oil, and no matter how high world oil prices rise, they seem unable to extract more than 75 million barrels a day (MBD)."

So again, supply has stayed level, while demand has risen and while some look at the price of gas and the recession and rise in prices during the recession as proof of something to use as an excuse for blaming the administration its clearly not based on fact. Here is the graph that really tells what is happening.

Chart courtesy of Gecko Software
As you can see above, the demand in oil has increased with the price, nothing fishy or speculative about that. Its just simple mathematics. What we seen in the march from 2002-2008 is what we are seeing now. 2008 wasn't some anomaly; it is reality. That is where the economic equilibrium now lies, but the more reckless spending and the more we rely on credit that dilute savings; the equilibrium will only rise in terms of dollars.

This idea that we can spend and borrow our way to prosperity is going to have some consequences; cheap oil is one of them. And when you factor in the emerging economies, it only speeds the rise in prices that much quicker. Call it cause and effect, call it 2+2= 4.... whatever you do call it, just call it what it really is, not what you want it to be. Stop pretending this is some partisan issue when clearly, this long term, cannot be a political football. Now if you want talk about getting Nat-Gas powered cars... that's a different issue. Natural gas is really where our ultimate prize lies.

Superficial logic say’s: Obama one of the best we’ve had

It’s been well documented, Obama owns this economy. The DNC Chair Wasserman-Shultz has said as much, VP Joe Biden has also said it and a vast majority of Republicans all say Obama owns the economy as well. With piling, Trillion dollar deficits and unemployment having maintained historic levels for extended periods of time; the economic malaise Obama reigns over, is one that no President can tout.

Remember, Clinton's sign on his desk when he was in the oval office? Contrary to popular belief, it was not: “The filing cabinet is under the desk, Interns” it was actually: “It’s about the economy, stupid”. If it is truly about the economic outlook of this nation; then President Obama is in trouble come November.

Now personally, I believe the sheer size of the US economy is so vast and lumbering, that the President gets too much credit when “his” economy is running on all cylinders just as much he is unfairly ridiculed, when it’s in the toilet. That however, is not the majority of how Americans feel or think thou. If they can’t find work, it must be the Presidents fault. The truth of the matter is that the average American does not have time to research what really are the driving economic factors behind our economy good or bad; so the person sitting in the oval office is seen as a personification of the whole economy.

Now, since we are going to use this embodiment to signal a "nay or ya" regarding the economy, I would like to use this simplistic strategy to point out something that doesn’t get talked about enough.

President Obama is the first President in 20+ years to see our nation’s top export be Fuel. He is also the first President since Harry Truman (1949) to oversee the US being a net exporter of oil-based fuels. The US has imported 11% less crude then it did in 2005. Ten years ago, fuel wasn’t or barley made it in the Top 25 for US exports, but now it stands at #1?

Regardless of how or why, it doesn’t matter. He was the guy in office when this happened, thus he owns this fast break to energy independence. Never mind the new developments and discoveries in shale oil/gas or the fact that Obama inherited the worst economic situation since the Great Depression. Let’s, not let things like mitigating facts get in the way of our thinking. Mr Obama is set to become one of the greatest achievers in modern presidential history in our quest for energy independence and for that he will be looked back on as a rousing success. Its all about perception isn’t it, or is it context? 

Taliban getting new recruits

I have been on record saying that the war on terror is a front. Sure, extremism is something that does threaten the 99% of us that want to live in peace, but your chances of being killed by a terrorist are about as you being crushed under a vending machine. Although, technically, you stand a 200% more of a chance of a vending machine attack then dying in a terrorist attack.

It is a front for a fledgling empire in its death throes to dominate a vital region for energy and global dominance in the coming future. This isn’t just an educated guess. Richard Cheney was on record saying this before he became VP and was CEO at Haliburton. It was Dick who said in 1999:

“the Middle East with two thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow”

So we picked up progress. Even thou we are facing a decay infrastructure and crumbling and exploding entitlement programs that are facing insolvency. But then again, perpetual war and debt are probably our leading service export, so in some ways we did what we were good at. The reality is our priorities are so twisted and we are so much in debt we have a hard time seeing the difference between in and whats out. Illegal aliens kill soo many more American each year then terrorists yet we do nothing about our borders while spending a fortune defending the borders across the globe. Its nation where heart disease kills half a million, yet our programs to defend from this killer dwarfs in comparison to the “War on Terror”. Coincidence? I think not.

In fact CIA Director Leon Panetta, said recently that he thought we were facing about 75-100 Al Qaeda members. No shit. A nine year war costing over a trillion dollars and counting (and im being generous) not to mention countless deaths of our own boys and girls to fight what would be best described as a mid level street gang… in Omaha. The Mission to take out the Taliban in Afghanistan was a relatively short one. We met the objective and could have been out of there, but we went looking for boogie men. We started the nation building. And here we are, still fighting and creating enemies. We are still bogged down with ridiculous rules of engagements and strategies that look to be coming from a 14 year old kid with a mic playing call of duty and sipping mountain dew in his mother’s basement. The opium production there has went through the roof etc etc etc... etc....etc.

And then we get this. Jihad Monkey!



The first paragraph reads, and I kid you not:

"Taliban terrorists have a secret weapon to destroy the infidel American enemy — monkey marksmen. According to The People’s Daily in China, the Taliban in Afghanistan is “training monkeys to use weapons to attack American troops"

I rest my case.