Sky-High Oil Will Make U.S. Go Broke

[zengrifter]

ETF Liquidity Review
Sky-High Oil Will Make U.S. Go Broke
Charles Biderman, TrimTabs 06.23.08, 7:00 PM ET

Stratospheric crude oil prices precipitated by speculation are wreaking havoc on the U.S. economy.

It is insane for the world to go broke while oil traders and a handful of gangsters who control their national oil production make huge fortunes.

MORE- http://www.forbes.com/finance/2008/0...mtabs_inl.html

[Opinion]

Now that it appears cheap Middle East oil is coming to an end. It is time for the US to truly strive for energy independence.

Don't listen to the word games that we cannot drill our way to independence.

We have enough shale oil which needs to be mined to cover our needs for about 110 yrs.

I think we should do everything to obtain energy independence.

Speculation probably needs to be tightened up some, but what about speculators in other nations?

[QFIT]

Silly article. It blames producers and speculators and says it's insane that they cause such high prices. Oil is incredibly cheap. $4 for a gallon of gas that takes millions of years to create is nothing. What is insane is our use of oil. We have known for decades that we use too much oil. Seven years ago, Chenney literally laughed at the concept of conservation. He thought it was some hippie-commie-tree hugger idea. The Bush/McCain's solution is still to drill. Meanwhile, we use vast quantities in automobile engines, whose basic principles haven't changed in 100 years. Look at the progress we have made in other areas. Computers didn't exist 100 years ago. Transistors didn't exist. The first radio broadcast was made 100 years ago. Look at the progress in telecommunications since. Not so in the automotive industry. The Model T Ford got 25 miles per gallon. The average car 100 years later gets 21 MPG using the same basic internal combustion principles.

And look at the power industry. We still generate power by burning fossil fuels. There is enough deuterium to generate the world's power for 150 billion years in fusion reactors. But, the US shut down its only fusion power generator and no one has the guts to suggest a serious research effort. Just drill until we've sucked out every drop.

[aslan]

The technology for nuclear reactors has improved significantly since I was in the in that involved in that energy sector (auditing). There is no good reason to hold back in this area.

According to NRC there are 13 nuclear power plant applications that have already been reviewed and approved, 2 under review, 2 applications received but not yet under review, and another 17 applications anticipated before the end of 2010. Most are for additional units on existing sites, and 6 are for brand new sites. http://www.nrc.gov/reactors/new-lice...plications.pdf

Cost considerations due to NRC-related delays and the expensive nature of the beast are still a problem, but apparently these hurtles no longer make construction prohibitive. Environmentalists beware--whereas a major problem in the past was perhaps over-reaction to safety concerns (especially in the wake of 3-mile island), now the climate is becoming right for too little concern for safety issues. We at least know better in the 21st century not to trust any government agency (in this case, NRC) to always have our best interests at heart. Be kind to our watchdog environmentalist friends as they witness and insist on due diligence for this nuclear power plant construction frenzy.

[aslan]

Trivia:

Obscene profits? Exxon, with all the billions in profits, had only a little under 8% profit margin. Coca Cola had a 21% profit margin.

Fortunately, you don't have to buy coke. Can you imagine $4 a bottle coke? Lol

[aslan]

The energy policy in this country should be to do the sure thinge now (drill for oil, build nukes) and invest heavily in the not-so-sure thing, alternative energy sources hoping to gradually switch from oil, nukes, natural gas, and coal to cleaner, more environmentally friendly alternatives--
fuel cell - hydrogen and other
advanced battery/capacitor technology for solar, wind and automotive needs
"thin-film" photo voltaics for capturing solar power
synfuels, beyond ethanol which has limitations
wave energy
geothermal
tidal power
carbon capture and storage (CCS) for clean coal
etc

[InPlay]

Dodd: Government Can Mandate What Profit is 'Fair' for Business
Senate Banking Chairman targets oil firms for windfall profits tax.

By Jeff Poor
Business & Media Institute
6/10/2008 1:12:53 PM


When a high-ranking U.S. senator sounds more like Karl Marx than Adam Smith over the issue of energy prices, it must be an election year.



Democratic Sen. Chris Dodd, the chairman of the Senate Banking Committee, appeared on CNBC’s June 10 “Squawk Box” pushing government control of corporate profits. Dodd said he considered a company to be “doing very, very well” with profits above $8 or $10 per barrel of oil. He said he advocated a windfall profits tax, where Congress would determine what amount of profit is fair and what isn’t.



Co-host Joe Kernan called the Connecticut senator on the idea, asking if he was going to apply the same strategy to other types of businesses. “Are you going to go across industries across the board and decide what Congress thinks is a fair amount of profit and drawing a lines on what’s fair and what’s not for corporations?” Kernan then emphasized the point. “That’s not the way it’s done in this country, senator. It could never be done that way, could it?”



“Yes, it could be,” Dodd said. “In fact it’s been done that way in the past and particularly when you’re trying to get some relief for people out here when the economy is in a tailspin. We’re about to go into a recession here. This is really causing a tremendous dislocation, not only here, but around the world.”



Dodd was correct – such a measure has been tried before – the Windfall Profits Tax enacted in 1980. But, according to the American Petroleum Institute (API), 1.26 billion fewer barrels of oil were produced domestically due to the tax.



Dodd also made the extraordinary statement that these taxes should be taken from the oil companies and invested in other sources of energy or be given back to consumers in the form of a rebate.



“Squawk Box” co-host Becky Quick: “Sen. Dodd, you’re talking about a lot of different things though. The idea of a windfall profits tax itself – the idea if for everything over $50 a barrel or everything over $80 a barrel – that would be taken by the government. That’s a pretty different idea than the idea of cutting back some of the subsidies?”



Sen. Chris Dodd (D-Conn.): “Well no, what I’m talking about here – I think what they’re talking about – is any over that would go either one of two things. Either you invest those additional profits back into development, alternatives – more additional exploration we’re talking about – or a rebate back to consumers to offer them some financial relief. That’s what we’re talking about here, some relief to give people.”



But according to API, these companies are already paying more in taxes than the top corporate rate, as their tax burden has nearly doubled in the last two years.



“Total current income taxes paid by the 27 largest U.S. energy companies increased from $48.4 billion in 2004 to $66.9 billion in 2005 to $90.4 billion in 2006 (an 87% increase in just two years), resulting in an effective tax rate of 40 percent – more than the top U.S. corporate income tax rate of 35 percent.”



Sen. Richard Shelby (R-Ala.), who also appeared on “Squawk Box” with Dodd, said the solution to the current high gas prices is to increase the supply.



“What we need is more supply,” Shelby, the ranking Republican on the Senate Banking Committee, said. “We need more oil. We need to drill. We need to drill in Alaska. We need to drill offshore. We can do all of that and protect the environment. Everybody knows that except for some of my Democratic friends. However, if we just tax everybody and we don’t increase the supply, we’re in a real dilemma for the future.”



The Senate defeated a measure to drill in the Arctic National Wildlife Refuge in Alaska on May 13. The vote, an amendment to another bill, was killed by a vote of 42-56, largely along party lines – including Dodd who voted against it and Shelby who voted for it.



Shelby also pointed out taxing the oil companies more would not lower the price of gasoline or increase the supply of oil.



Related Links:



Pressure Builds on Oil Companies - from Lawmakers, Media and Candidates
'Squawk Box' Guest Warns of $12-15-a-Gallon Gas
Senators Warn Bill Could Spike Gas $1.50 to $5 a Gallon

[moo321]

The cause of the present 'energy crisis' is crystal clear. Government regulation has caused our problems, and more regulation will only make our problems worse. Why is gas $4 a gallon? Because we can't drill, we can't build refineries, so we're forced to go to OPEC.

Get the government the hell out of the whole situation and it will permanently work itself out in a few years. Industry is already working to fix the problem: gas efficient cars, alternative fuels, electric cars, etc. We do not need the government to fix this, or almost any other problem.

[aslan]

One thing to keep in mind that keeps eluding the empty suit newscasters is that if we drill here in the US, the oil then goes on the world market where it gets the best price. With China and others growing at such a rapid rate, it may not change the high cost of oil in the long run. I believe we need to somehow ensure that American oil goes to the American market, not the world market. Is this anti-trade? Anti-competitive? I don't know. But why go to all the trouble if we don't achieve our end goal (speaking only of oil, not the ultimate goal of a switch to cleaner alternative sources of energy), which is inexpensive oil for America?

[Opinion]

As aslan pointed out. If we drill more oil it will go into the international market and price structure.

This move towards hopeful energy independence will probably be in steps:
No longer purchase oil from the volatile Middle East. The US major suppliers of oil are currently Cananda and Venezuala.

Then moving toward complete energy independence. At this point should our price structure for oil separate from the world market?

I would expect that in times of crises US companies can by law be made to only sell domestically.

One potential major advantage is if we keep waiting to drill we may become one of the last holders of major reserves. Then that oil would be extremely expensive and the US could become more powerful then ever.

or

We wait until real alternatives appear and we will have squandered a vast resource.