Will The Drilling Moratorium Become Wonderboy's Schecter Case?

Yesterday's news that a federal court judge had overturned Wonderboy's drilling moratorium could be big, big news for the Rookie's presidential career.

Of course, his DOJ immediately filed an appeal. I didn't notice if the venue is one of the dyed-in-the-wool liberal appellate panels, or not.

But the news reminded me of Amity Schlaes book, The Forgotten Man, which I was reading at this time last year.

Unbeknownst to most people, the event which began to unravel the New Deal, and, most significantly, the NRA, was when the government lost its suit against the Schecters, Jewish butchers in New York City. The details wouldn't seem to be important anymore, but the nature of them actually could be.

New Deal regulation was so minute that it forbid butchers to offer customers a choice of which fowl to purchase and have, well, butchered. The Schecters were found to be in violation of this, which was a 'wages and hours' type of crime. When the whole mess ended, the Schecters went free and the NRA's basis was undermined.

I heard some of the language of yesterday's superior court decision. The judge rather sensibly noted that just because BP's rig exploded is no reason to believe that every offshore rig in US waters is also about to explode.

I don't know the basis on which the appeal has been lodged. It matters, of course, because appellate courts judge and rule on the application of laws, not the full case, itself.

Should be an interesting show to watch, because you can bet the company which brought the suit, a drilling services firm, if I recall, is sure to appeal any reversal of the superior court up to the Supreme Court.

FDR's larger New Deal fell apart on a case involving plucking and butchering chickens.

Will Wonderboy's term lose momentum and begin to die over a hastily, ill-advised and deceptively-presented (i.e., the lie that seven engineers had argued for the ban) offshore drilling ban?

Glenn Beck's Allegation Concerning Brazilian Oil Exploration

Fox News employee Glenn Beck made a rather stunning set of allegations last week which would seem to be real breaking news about Wonderboy's oil and energy policy. If true, you'd think it would be on headlines in major print and network media. If false, you'd think Beck's unfounded allegations would be there, instead.

Here's what Beck contends. He claims that George Soros, through, I believe, one of his funds, has long positions in Petrobras, the Brazilian oil company.

It is alleged by Beck that Wonderboy had the United States loan or give $2B to Brazil for Petrobras to drill for oil in deep waters off of their coast.

Beck's point was the incredibly obvious corruption involved. Soros has funded think tanks which have written legislation passed by this Congress, at our First Rookie's behest.

Now, it appears that he has given US money to a foreign country and/or its oil firm, in which that adviser has a position, thereby apparently endorsing and facilitating Brazil's own deep water drilling.

Oh, yes, while Wonderboy has issued a moratorium on US deep water drilling, wrongly claiming seven engineering experts called for it.

This is terribly corrupt.

Why hasn't any major news outlet pursued this story to crucify either Wonderboy and Soros, or Beck?

Joe Barton & The GOP House's Gutless Leadership

Yet another reason John Boehner has to exit from the House GOP leadership.

Yesterday morning, I happened to be fortunate enough to hear, live, Texas GOP Representative Joe Barton, castigate Wonderboy's "shakedown" of BP for $20B. Here's the video from YouTube.



Late yesterday, the media reported that John Boehner threatened Barton with his 'ranking member' status on the committee if he didn't retract his statement.

Personally, I found Barton's original statement to be refreshing. Joe Biden's objection to it tells you Barton was on the right track.

After so many lies and outrageous statements from Frisco Nan these past few years, why would John Boehner care what Barton said? Especially when it was true, even though Barton prefaced it with many disqualifiers, distancing it from the GOP or his role as a House member.

Boehner seems to have his head up his ass on this. And so much else. The GOP House leadership should be proud that one of their own had the guts to call Wonderboy's thuggery for what it is, and uphold the rule of law in our republic.

Not take Barton to the woodshed and demand that he retract a statement which reflects reality.

This is the sort of behavior, by Boehner, to which I referred in my prior post, when I wondered whether a change in party domination of the House will really change anything of importance.

The Mugging of BP by Wonderboy & Co.

It seems to be nearly-official. Wonderboy's administration has mugged BP and extorted a rumored $20B escrow fund to be overseen and disbursed by Democratic party hack Ken Feinberg.

Feinberg last worked to damage private enterprise as the First Rookie's "pay czar," a totally unconstitutional invention used to strong-arm those banks unwise enough to have taken TARP money. Including those forced to take it, such as Chase and Wells Fargo.

As I write this, on day 58 of the BP oil gusher crisis, Wonderboy's scheduled 30 minute meeting with senior BP executives has lasted for over four hours. You might wonder why it took the smartest president in history 57 days to manage to squeeze a meeting with the chairman and CEO of BP into his schedule.

Probably because Wonderboy is a campaigner and speechifier, not a problem-solver. And the BP mess is a problem. Thus, a situation from which to distance himself for as long as possible. Until, that is, the poll numbers have gotten so bad that he has been forced to even give an Oval Office address to explain his dismal, inept performance.

But, back to corporate mugging.

One CNBC guest put it eloquently this morning when he suggested that BP decide how to manage its financial exposure to the Gulf incident, and let investors appropriately set the company's share price in reaction to those management choices.

As I finish this post, the BP officials are speaking after the meeting. Reports now claim that BP agreed to a $100MM initial fund, with the earlier-rumored $20B commitment, and a third party to administer it. The BP chairman has announced the suspension of BP's dividend for the remainder of 2010.

Mugging on a smaller scale, but mugging, just the same. Were BP's rights to continue exploring and producing oil and gas in the US used to intimidate the firm into this settlement? Will we ever know this, if they were?

Time will tell.

But this much is certain. Rather than invite BP to work with the administration early on to stop the oil gusher, clean up the damage, and make arrangements to pay for the costs of these efforts, Wonderboy instead chose to bully, intimidate and generally threaten a private, publicly-held corporation to do government's bidding without appeal.

As a recent Wall Street Journal editorial noted, this is how third world countries operate. Not how the world's companies and investors have come to expect the United States to behave.

Until Wonderboy & Co. came to town.

Vermont's Congressman Welch Attacks Free Enterprise

A very liberal Democratic Congressman from Vermont named Welch was all over cable news yesterday insisting that BP, at the federal government's behest, suspend its dividend and public image advertising during the duration of the containment efforts and cleanup of the Gulf Coast oil spew.


As I wrote only yesterday, Wonderboy has also been busy intimidating BP and trying to coerce the company's management to do his bidding out of fear of federal government power.


Let me state this clearly: both Welch and Obama are wrong.


This is the type of government behavior that belongs in a banana republic or some African dictatorship. Not the United States of America.


When one network anchor suggested to Welch that his energy was better spent investigating why government regulators were asleep on the job, the Congressman promptly attempted to blame the Bush administration for the lack of regulatory oversight.

Welch is embarking on a very dangerous and, frankly, completely unconstitutional path. That is, government intervention in private sector activity out of frustration and anger.

Welch blathered about how BP wasn't doing its image any good by paying a dividend or spending money on ads. Just how would Congressman Welch, a member of one of the American institutions with the lowest public approval ratings on record (23%) know anything about how to improve the image of any other entity?

Further, in America, publicly-held companies answer to shareholders, not to government. If BP, by paying a dividend, causes acrimony among customers and, thus, by extension, investors, then its share price will fall. That will be sufficient penalty.

It's totally wrong-headed and politically dangerous for our society to have the president and/or members of Congress demanding that BP change its internal managerial decisions on subjects in which it has not acted illegally.

If it's BP today, which company will be next, and on what totally subjective, arbitrary bases?

Wonderboy Grasps At Straws In The BP Oil Mess

Wonderboy has begun to look more and more like a tyrant concerning the BP Gulf Coast oil rig disaster.

Last week, he crossed the line between government and private industry, demanding that BP cease spending money on public image ads, and fuming over the company's payment of dividends to its shareholders.

Funny, but I thought private sector, publicly-held companies answered to their shareholders, not the federal government. That shareholders retained management to run the company for them, not for the whims of the president of the US.

Later that evening, on Fox News, a guest noted how much the federal government has spent on pamphlets mailed to seniors lying about new medical care coverage and declining costs of said coverage. The cost of that mailing dwarfed BP's image-related ad spending. The guest noted that the money for these pointless mailings was deficit spending, since the government has spent far beyond any incoming revenues this year.

I guess it depends on who is doing the spending whether or not it's deemed wasteful, eh?

Then, yesterday morning, I caught repeated clips of the First Rookie on a network morning program claiming he'd been down to the Gulf, worrying over the rig and its spewing oil, way before any "talking heads were onto it."

Really? I think that's an outright lie. If memory serves, the first governmental employees sent down to the Gulf were lawyers from DOJ. The rig fire and resulting oil fountain were news well before Wonderboy flew down in his natty dress to stand on a beach and whine about the incident.

It's not like nobody else noticed, until he discovered the oil leaking from the sea bottom.

This guy just can't stop himself from crossing boundaries, threatening and intimidating private sector companies, or just plain lying, can he?

Krauthammer On The Effects of Environmentalists On Drilling & Accidents

I caught Charles Krauthammer's appearance last night on Bill O'Reilly's Fox News program.

Krauthammer wove together a very sensible, obvious thread which has been, heretofore, overlooked by most pundits.

To wit, he noted that environmentalists have, over time, wrung their hands over potential oil spills close into shores, and, thus, had shallow-water drilling off US coasts banned.

Then there is the ANWR. The greenies have managed to prevent meaningful exploration of that Alaskan land resource, as well.

The result?

BP and other oil companies must venture offshore into deep waters. Over a mile deep. Pushing technological frontiers and operating under unfamiliar conditions.

Rather than let oil companies explore for and pump oil in relatively well-known conditions on land or in shallow waters, we thus have the first major deep water oil spill.

As Krauthammer observes, the environmentalists, ironically, brought this on all of us due to their refusal to let the oil industry tap known, safer deposits.

Instead, we now have a pipe spewing oil a mile down in the Gulf, and no prior experience with how to stop it.

So much for sensible liberal Democratic energy policies and regulation. Hopefully, someone in the GOP will publicize Krauthammer's points and galvanize public opinion behind them, and against the liberals who brought us the policies that created the conditions leading to the BP Gulf spill.

Wonderboy's Growing Damage From The Gulf Coast Oil Spill

Late in April, I wrote this post asking whether the BP oil spill in the Gulf of Mexico would become Wonderboy's Katrina.

I wrote, in part,

"How much intelligence does it take to realize you should be mobilizing federal assistance instantly to try to minimize leakage from the well, and damage to the local environment?

This little faux pas should, hopefully, bring down Janet Napolitano, the current head of FEMA, and a few other Wonderboy cronies who were asleep on the job for the past nearly-two weeks."

It's gotten much worse for the First Rookie since then.

Karl Rove, among others, noted that Wonderboy's press conference last week, on the day that BP was trying to cap the well with its 'top hat' approach, was a calculated move to show leadership and command as BP succeeded in steming the flow of oil.

Unfortunately for the administration, as well as the Gulf Coast economy and environment, the BP approach didn't work.

Meanwhile, Republican governor of Louisiana, Bobby Jindahl, came out swinging about how Wonderboy's administration dithered on various permits, wasn't responsive to requests for equipment and, generally, showed no responsiveness to the crisis.

Most people would probably have liked to see the federal government announce, early on, that it would accelerate necessary permitting processes, pay for whatever manpower and equipment was needed, authorize the locally-affected states to take charge and manage their efforts, and generally provide money and assistance as asked, leaving local management to local authorities.

If only.

Instead, Wonderboy's administration's first response was from the AG. But in terms of actual help, it's been way late. It has become clear that, over a year into his term of office, Wonderboy is not treating this apolitically as a crisis to handle, in concert with the states, but yet another campaign opportunity.

I believe the bulk of independent voters have seen enough, and no longer place any trust at all in this administration. Its response to the Gulf oil spill is just more evidence of the president's, and his administration's total lack of experience governing anything.

Regulatory Zeal

I've been following two separate but equally important regulatory actions lately. Perhaps you have been, too.

The first involves Goldman Sachs. This weekend's Wall Street Journal carried a very extensive article detailing Mary Shapiro's rabid pursuit of the investment bank. Shapiro is portrayed as feeling the need to rescue the SEC's image and reputation from the stain of missing the Bernard Madoff fraud.

The other regulatory actions involve the Gulf coast oil spill from the rig hired by BP and partially operated by Haliburton.

In that case, while the regulatory agency is getting a black eye from possibly becoming too cozy with industry firms, our First Rookie and his henchman, Ken Salazar, have wasted no time letting voters know that they consider any and all companies involved to be untrustworthy and generally badly-intentioned entities.

While believing in capitalist economies, I also believe such economies need to be well- and effectively-regulated.

In the case of Goldman, if it can be proven, to the satisfaction of a jury or judge, to have clearly engaged in material fraud of customers, then it should be penalized appropriately.

Regarding the oil spill, recent news stories cast doubt on the management of the drill plugging process on the TransOcean rig leased to BP.

I'd be the first to insist that BP, Haliburton, or whoever the responsible managing firm which may be found to have been inept at handling the plugging be penalized.

But, surely, it would be better for everyone involved were the president to have waited until various investigations had discerned which entity or entities were culpable in the case of the oil spill, assuming it was not simply equipment failure and natural causes.

Then the president could have met privately, first, with that firm's CEO, and taken a more reasoned approach, ensuring the cooperation of the firm in making restitution and reforming their practices.

It does no good for our politicians to simply demonize private entities, especially in advance of due processes finding guilt.

Instead of calm, deliberative approaches to applying regulations to sectors in which business practices are found to be unacceptable, we have an administration which simply engages in thuggery and public accusations before the facts are known and available legal and regulatory processes have been allowed to operate.

This does our society no long term good.

Wonderboy Demonizes BP

You'd think an attorney who even 'taught' at a major university would understand the necessity of not convicting a firm in the court of public opinion.

Especially one who is now president.

How, then, is it that Wonderboy issued a flat declaration that "BP will pay" for the oil spill cleanup in the Gulf of Mexico?

Has Wonderboy already read through all the pages of the contract between BP and TransOcean, from whom the oil firm leased the rig responsible for the spill?

That would be a lot of reading! More than he managed to do on his own health care bill!

Wow, such a busy little president!

In fact, we all know he did nothing of the sort. He didn't read either document.

More to the point, who is to say that, under the contract's terms, TransOcean didn't violate some clause, or misrepresent the rig's condition, such that it is actually liable?

BP is self-insured, but we don't know about TransOcean. Maybe the latter's insurer will pay.

It just makes no sense for a president to shoot off his mouth with statements that he can't possible know are correct.

An officer of the court should know better. A president who is an attorney should know much, much better.

But are you surprised that our First Rookie exhibits such poor judgement on this matter? Why should the Gulf oil spill be any different for showcasing his naivete and poor judgement than any other governmental matter on which he's spoken since his inauguration?

Is The Gulf Oil Spill Wonderboy's Katrina Moment?

It took nine days for Wonderboy's administration to respond to the recent oil spill resulting from the fire and sinking of the drilling rig leased to BP off the Louisiana coast in the Gulf of Mexico.

Well, technically, as Sean Hannity pointed out this week, that's not quite true. AG Eric Holder dispatched a team of lawyers prior to that to look into whom to sue for the accident.

But in terms of real help to the residents of the Gulf Coast, as the rig spewed 5,000 gallons of oil/day, it took until late this week for the First Rookie's team to act in any sort of helpful manner.

Remember how the Democrats excoriated President George W. Bush for his administration's response to hurricane Katrina?

Well, now the shoe is on the other foot.

As one pundit so eloquently put it the other day, the Exxon Valdez spill was of a known quantity from a stationary tanker.

In this case, we have a pipe drilled into the earth leaking oil.

How much intelligence does it take to realize you should be mobilizing federal assistance instantly to try to minimize leakage from the well, and damage to the local environment?

This little faux pas should, hopefully, bring down Janet Napolitano, the current head of FEMA, and a few other Wonderboy cronies who were asleep on the job for the past nearly-two weeks.

All Energy Sources Are Not Treated Equally

The Wall Street Journal carried an interesting editorial yesterday concerning ecological side effects of various energy sources.

It seems that the oil industry has been hounded for years regarding deaths of wildlife, particularly birds, around its facilities. Of course, we all know about the infamous Santa Barbara channel spill, not to mention Prince William Sound.

However, beyond oil-soaked birds, it seems that simply running refineries often results in various bird deaths. As do some power line configurations, resulting in fines for some utilities.

But it turns out that another form of energy makes those two- oil and electric power- look positively humane by comparison.

Care to guess which one?

It's wind. Windmills.

That's right. Those clean, eco-friendly wind turbines are estimated to kill several thousand birds each year. Not pigeons and starlings, mind you.

No, we're talking eagles and other protected species. And not in red state territory. No, think Altamont pass outside of San Francisco.

Yes, it seems that the federal and state governments have simply turned a blind eye to wind power's destruction of birds.

The editorial notes that, were the usual lawsuits filed against these new-age energy producers, the industry would likely collapse, or shrink significantly, from the prospect of ongoing penalty payments, not to mention the horrific black eye wind power would suffer from the publicity around this news.

Nice to know our government doesn't play favorites, or politics, with important things like energy sources and the enforcement of environmental law, isn't it?

The Fiction of Green Power

Friday's Wall Street Journal carried an interesting editorial on the misleading promises of Wonderboy's administration regarding "green" power and jobs. Written by Max Schulz of the Manhattan Institute, entitled "Don't Count on 'Countless' Green Jobs," the piece debunks the liberal myth of huge numbers of new jobs that will flow from the 'greening' of our power generation.

According to Schulz, the First Rookie promised, in his campaign, to spend $150B over 10 years to create 5MM jobs involving wind, solar and other renewable energy sources.

As Schulz writes,

"If the green-jobs claim sounds too good to be true, that's because it is."

He goes on to point out that green energy sources are, in truth, uneconomical. They require huge subsidies to become viable.

Schulz notes that solar energy gets a $24.34/megawatt-hour subsidy, while wind power receives $23.37. By comparison, coal gets 44 cents per mwh, nuclear $1.59, and natural gas receives 25 cents/mwh in subsidies.

So, basically, those 5MM jobs are being paid for, by you, the taxpayer, not just by $150B of investment, but untold and literally uncounted, unpublished billions of dollars of subsidy payments.

As Schulz demonstrates, with simple logic, shifting US power generation to 25% "clean sources," as Wonderboy is promising, effectively raises the cost of power generation via these subsidies.

As a result, manufacturing jobs will vanish, because industries needing power migrate from high-cost locations to lower-cost locations. California and New York- two states already financially crippled- can say "goodbye" to some more power-dependent jobs in the next few years, if Wonderboy has his way.

According to Schulz' research, the US oil and gas industry creates some 1.6 jobs, while coal provides hundreds of thousands of direct and derivative jobs.

Gone, with the new focus on inefficient, expensive renewables to power US industry and residences.

Then there will be the effective tax increase of paying for those higher, subsidized rates on power generated with all this new clean, unaffordable technology.

Yes, quite the prescription for a recession, isn't it? The worst, according to Wonderboy, since the 1930s. Another lie, but, by now, who's counting.

The important thing is, amidst a softening US economy, the Democratic administration plans to increase the cost of energy, throw existing oil, gas and coal workers out of work, as well as workers in sectors dependent upon low-cost power, and throw more billions at inefficient new energy sources which still won't be sufficient to do the heavy lifting of American industry.

Joe Kennedy's Treasonous Behavior

Have you seen those stupid "Joe 4 Oil" commercials?

You know, the ones where Joe Kennedy's grandson, modern-day uber-liberal Joe, gives away Venezuelan oil to poor Americans?

Joe makes it clear that he thinks Venezuelan strongman and dictator Hugo Chavez cares more about Americans who can't afford heating oil than we do.

I guess treason is genetic. Joe's grandfather, while US ambassador to the Court of St. James, constantly agitated for Hitler and predicted the fall of Great Britain in the days after France's capitulation.

Now we have his grandson stumping for the younger version of South America's Castro.

It's enough to make you sick.

Congressional Pork In Green Wrapper

The Wall Street Journal's editorial in last Monday's edition, entitled "Cap and Spend," pretty thoroughly eviscerated Barbara Boxer's Senate carbon bill. It's notionally authored by Lieberman and Warner, but Boxer is said to be real driver behind it.


Perhaps the saddest aspect of the legislation is not even its grotesque misrepresentation of the bill as doing 'something' about carbon and global warming, never mind the bad science on that.

No, it's Congress creating an immense $3Trillion slush fund to use to reward some interest groups, and punish others. This is a mind-boggling sum which voters truly do not yet fully comprehend.

Since the carbon permits and capping don't have any solid basis in their origin, this, of course, invites large amounts of corruption and undue influence to favor various groups. And other taxes aren't being cut to offset this magical new tax on a heretofore simple energy/raw material business input.

One of the more hilarious Senate inclusions, which I saw lamely defended on CNBC last week, is $190B for 'green collar jobs.'

When asked if the Senate was now in the business of job creation, whichever Senator Foghorn was speaking began to sputter and insisted that these jobs were necessary to offset the ones they'd kill with this enormous tax.

Fortunately, George Bush will veto this green pork bill.

And, as much as I respect Joe Lieberman for some things, he lost a lot of that when, in reply to criticism for it being such a bad bill, he replied, to paraphrase,

'That's okay. It doesn't really take effect until 2012!'

Great. Bad legislation is okay if it's delayed sufficiently for everyone to forget what a major error it will be.

God deliver us from Congress- both parties!

More Senate Idiocy on Oil & Energy: Ben Hardin

Yesterday I wrote this post discussing how Rhode Island Democratic Senator Whitehouse made comments on CNBC fully consistent with abrogating the rights of shareholders in major American oil companies by forcing them to allocate their capital according to Congress' desires.


After I wrote that piece, Maryland Democratic Senator Ben Hardin chimed in with even more stupidity.


In a late-day interview on CNBC with Michelle Caruso-Cabrera, Hardin demonstrated his complete lack of understanding of economics in general, and global energy economics in particular. Truly, this man must be an embarrassment to his state and the voters who elected him.

One of Ms. Caruso-Cabrera's salient attributes is her keen grasp of economics. Another is her absolute disregard for the discomfort she will cause with her questions. Both were on view in her interview with Hardin yesterday.

When Ms. Caruso-Cabrera asked Hardin how the US Senate could hope to control, let alone influence, the price of oil, when consumers in China and India are buying and driving more cars each month, consuming more and more gasoline and, thus, oil, Hardin had no effective reply, other than to allege that 'suppliers were colluding.'

When the CNBC anchor noted that the Senate had failed to act on initiatives to open US lands in Anwar to drilling, or our own shelves, thus opening us to criticism from the Saudis that we demanded of them what we won't do for ourselves, Hardin replied that 'now the problem is to bring down the price of oil for our less wealthy citizens,' or words to that effect.

As I have noted in the prior post, by way of a linked post on my business blog, it simply makes no sense to believe that because a company like Exxon or Chevron is dominant in oil, it should therefore invest heavily in unrelated energy technologies such as wind or solar.

This is a point that Hardin, like his colleagues Dick Durbin, Chuck Schumer, Diane Feinstein and Sheldon Whitehouse all fail to understand. From their comments during their witch hunt among American oil company CEOs yesterday, they clearly were more interested in grandstanding than in hearing the truth about global oil economics.

Back to Ms. Caruso-Cabrera's interview. By shrewdly asking questions which pointed to the global nature of demand for oil, its price being set by global supply and demand, and the US Congress' failure to allow for maximum oil and gas production onshore and offshore near the US coasts, she allowed Hardin to demonstrate his focus on demonizing oil companies, rather than truly searching for solutions.

If Hardin and his Democratic colleagues were really concerned about the effects of global oil prices on the less-fortunate among America's consumers, they could easily write legislation to provide a tax credit to lower-income consumers, based upon either their gasoline purchases, or some average gasoline consumption value, which kicked in above a designated price for a gallon of gasoline- perhaps $3.50. In effect, the Congress could choose to hedge gasoline prices for poor Americans, and borrow in capital markets to pay these drivers the excess of gasoline prices over what is a target set by Congress.

What will never work is for Congress to attempt to levy 'excess profits' taxes on oil companies. Durbin et. al. excoriated oil company executives for charging high prices for gasoline and 'maximizing profits' for their shareholders.

What do they expect? Do they really think these CEOs of shareholder-owned oil companies are going to turn socialist and subsidize American drivers to the detriment of those shareholders?

More enlightened production policies for oil and natural gas by both parties in Congress years ago would have lessened this global oil situation. Now, it's too late for a quick fix.

The best that can be hoped for is a Simon-esque rise in energy production, both oil and substitute fuels, brought about by the high prices being currently fetched for the liquid commodity.

The worst is to let the idiotic, stupid Democratic Senators loose with energy 'policy' that will likely reduce oil supplies and further complicate an already difficult global energy situation.

Sheldon Whitehouse Wants To Nationalize America's Oil Companies

This morning on CNBC, Rhode Island Senator Sheldon Whitehouse aired his views on why the US Senate should be directing America's oil companies on how to spend their investment capital.

Though he attempted to deny it, he commented several times during a discussion with the CNBC co-anchors and another guest that oil companies' shareholders' interests were subordinate to those of Congress.

Among Whitehouse's 'ideas' are, of course, Congressional mandates for oil company spending on non-petroleum projects and Federal funding of a 'green economy.'

Can you say "illegal takings," Sheldon? Or "appropriation of private property?"

As I wrote in this post on my companion business blog earlier this month,

"ExxonMobil is now a public company. Isn't it the height of arrogance for the great-grandchildren of the company's founder to be dictating strategy to this very successful petroleum-based energy giant?

Additionally, as I wrote in my BP post of last year, there's the question of why a current petroleum giant would have any particular advantage in wind or solar energy generation and transmission. It would seem that neither of these renewable energy sources share much of any technology with oil exploration, refining and distribution. Thus, it's a likely waste of shareholder resources for an oil firm to go chasing after other energy sources. This is precisely the type of mistake that Tillerson and his team should avoid, and prevent a small group of vocal environmentalists with an axe to grind, who happen to be the progeny of the company's founder, from forcing him to make, to the detriment of other shareholders.

Finally, there's Schumpeterian dynamics at work. As my February post noted, ExxonMobil is currently on the way to becoming more of a refiner and distributor of oil and its refined products, as it fails to find and own sufficient reserves to replace its recent production.

In the current environment of nationalistic lockups of oil reserves in the ground, it could well be that ExxonMobil pumps out its own petroleum assets, refines them and what it can buy on the open market, such as it will be, and perhaps even go out of business with one last large dividend, as its reason for being simply evaporates.

That's what happens to companies whose best operating environment and salient reason for being disappears. Then shareholders can use their proceeds to buy other equities which they feel may bring them consistently superior returns."

But, Sheldon Whitehouse is a liberal Democrat. Why would we think he'd look for a "solution" to current oil prices in market dynamics?

To begin with, Whitehouse doesn't seem to understand that market dynamics determine oil prices. Well, he alleges that oil prices are "too high" because of "speculation," suggesting that such buying and selling of oil futures is somehow bad. Is it illegal, too, Sheldon? Or, if not, will you be making it so ASAP?

Here's an idea, Sheldon. If you are so convinced that America needs more wind, solar and other renewable energy sources, why don't you and your upper-chamber-plurality Democratic colleagues pass legislation setting out clear tax preferences for such energy source for a defined time-period. While you're at it, pass legislation to allow drilling for oil and natural gas in ANWAR and off America's coastal shelves, easier construction and operation of nuclear power plants, and easier use of coal and natural gas for power generation?

Both parties have fumbled on these issues. Republicans should have siezed their opportunity when in the majority of both Congressional Houses and pushed such legislation through. Perhaps now that more Americans are concerned about energy prices and sources of supply, even liberal Democrats will come to their senses.

But if Sheldon Whitehouse is any sort of example, I think we'll be waiting a lot longer for this to occur.

Hillary's Misguided Oil Solutions On The O'Reilly Factor

In this recent post, I wondered what Hillary would do as President to address the current high price of oil. As I quoted the Wall Street Journal, quoting Hillary's husband, Slick Willie, he alleged, referring to the oil situation,

"That's why we need Hillary."

Now, thanks to Bill O'Reilly's interview with Hillary this week on Fox News, we know just what Hillary plans to do. And, believe it or not, I correctly anticipated three of them.

First, she will levy a windfall profits tax on oil companies.

Nevermind that these firms are investor-owned. And, being large, are held widely by Americans of all stripes, via pension funds, mutual funds or just simple index funds like the S&P500.

So not only does Hillary plan to punish the average American who holds these equities in a 401K or retirement fund, but she will also disincent the companies to produce, because they will only have to hand over more money to the spendthrift Federal Government.

Next, Hillary plans to lecture, cajole and otherwise make a pest of herself with OPEC.

Nevermind that these countries have legitimate financial needs and plans of their own for their petroleum assets. Nor that they do not 'set' prices- that's done by the interaction of supply and demand for oil.

Hillary will just go over to the Gulf and make everyone see that they must do as she says.

Uh huh.

Then there's a lawyer's favorite weapon- lawsuits!

In order to curry even more favor with those countries which supply oil to us, Hillary plans to sue them for anti-trust violations, after having Congress pass legislation to make that legal. Then she plans to go to the WTO to pursue them there, as well.

Of course, this is the same Hillary who blames our current President for what she feels is an unacceptably low level of regard in which various foreign nations hold America.

So, that's it. Those are our wonk-who-would-be-President's proposed solutions for the current price of oil.

She's going to penalize American companies for finding, pumping and refining the black stuff. Then she's going to go overseas and punish the countries who supply us.

Sounds wonderful, doesn't it?

Does Hillary understand economics, or what?