Inflation and its Effects are Worse than Most People Think

You know that the government's consumer price index leaped up to 7.9% in February, compared to a year ago.  We have all heard that this is its highest level in 40 years.  Frequently, the government likes to remove the effects of food and energy prices, because they can fluctuate greatly and because they affect the non-elites the most.  That gasless, foodless inflation rate leaves an inflation rate of 6.4% for February compared to a year earlier.  The Producer Price Index went up even more at 9.7% compared to a year ago.  This promises price increases going forward.

Barron's has stripped out all the costs except those that are not necessary goods for everyone.  Essential foods, housing, gasoline, and utilities constitute these necessary core items.  The inflation rate for these critical items for February was 16%.

Since then, about one-tenth of the world's oil and about a quarter of the exported wheat has vanished, thanks to the Russian invasion of the Breadbasket of Europe, namely Ukraine.

It is not enough that less than wealthy Americans lost their jobs and small businesses in horrific waves of brutal Covid-19 mandates.  Now the senseless over-spending of the Biden administration and the Democrat-controlled Senate and House of Representatives has drastically diluted the value of the dollar.  The same Americans most hurt by the Chinese Communist Party generated and released Covid-19, the Democrat fear-driven response of mandates directed at small businesses, and the rising energy costs due to the irrational belief in catastrophic man-made global warming are being slammed to Earth. 

The Democrats are brutally unfeeling and staggeringly irrational.  About half of all Americans voted for them and gave them the power to do this this evil work.  Many of them are now the greatest victims of the Democrat misuse of their rule.

Biden Administration Misdirection on US Oil Production

 The Biden administration is making a habit of misdirecting Americans on the causes of the increases in the cost of oil in several respects.  They have repeatedly made the claim that U.S. crude oil production is at an all-time high, for instance.  Here is the actual data on U.S. Crude Oil production per week according to the U.S. Energy Information Administration:

The peak in average daily crude oil production was in the weeks of 28 February and 13 March 2020 when the average daily oil production was 13,100 thousand or 13.1 million barrels of oil.  Oil production was reduced after that due to the Covid-19 pandemic and expected lowering of demand for oil as people stayed home or at least stayed closer to home.  The week of 29 January 2021, Biden's first full week in office, the daily average oil production was 10.9 million barrels of oil per day.  The week of 25 February 2022 the daily average crude oil production was 11.6 million barrels.  This was due to some recovery in oil demand and the price of oil due to the easing of the Covid-19 pandemic.  This is still 1.5 million barrels per day below the U.S. peak oil production.

Another Biden administration misdirection is the claim that 9,000 oil leases for oil production means that any shortfall in oil production is the fault of oil production companies.  The Biden administration has made it abundantly clear that they want the prices of oil and natural gas to skyrocket, which means they want their production to lag the demand for them.  They want this to encourage the massive mistake of a false belief in an existential catastrophe due to man-made global warming.  Oil and gas production has no long-term future according to their belief system.  Twice the Keystone XL pipeline was put on track for construction and twice its construction was halted by the Democrats and the Russian-funded environmentalist special interest groups with whom they collaborate.  This has caused the loss of massive sums of capital to its investors.  Other pipeline projects have also suffered as the Democrats ruined the investment climate.

One cannot make use of a lease to drill oil if one is not allowed to produce on that lease under reasonable environmental rules.  One cannot make use of an oil lease if one cannot build a pipeline to deliver the oil to a refinery.  One commonly cannot drill or build a pipeline if one cannot borrow money from banks and other lending institutions.  The Biden administration has been strongly discouraging banks and other lenders from making loans for purposes tied to oil production, oil transport, and oil product production.  They have discouraged liquification facilities and liquified gas transport capability.  They have also placed a moratorium on further leases on federal land and on offshore oil drilling. 

If the Biden administration were to give you the go ahead to invest a billion dollars into an oil and gas production effort, would you feel comfortable that they would not halt you in the midst of your investment or at a late stage in that investment?  If you were not very cognizant of that risk, you would certainly not be someone who should have any control over the investment of a billion dollars.

The Biden administration is definitely responsible for an unfavorable climate for oil and gas production.  It is extremely dishonest of them to claim that any shortfall in oil and gas production is due to the failure of the oil and gas industries.

  

No Plan B for Planet A by Paul Driessen

Replacing fossil fuels with “renewable” energy would devastate the only planet we’ve got

Environmentalists and Green New Deal [GND] proponents like to say we must take care of the Earth, because “There is no Planet B.” Above all, they insist, we must eliminate fossil fuels, which they say are causing climate change worse than the all-natural ice ages, Medieval Warm Period or anything else in history.

Their Plan A is simple: No fossil fuels. Keep them in the ground. More than a few Democrat presidential aspirants have said they would begin implementing that diktat their very first day in the White House.

Their Plan B is more complex: Replace fossil fuels with wind, solar, biofuel and battery power – their supposedly renewable, sustainable alternatives to oil, gas and coal. Apparently by waving a magic wand.

We don’t have a Planet B. And they don’t really have a Plan B. They just assume and expect that this monumental transformation will simply happen. Wind, solar, battery and biofuel technologies represent the natural evolution toward previously unimaginable energy sources – and they will become more efficient over time. Trust us, they say.

Ask them for details, and their responses range from evasive to delusional, disingenuous – and outrage that you would dare ask. The truth is, they don’t have a clue. They’ve never really thought about it. It’s never occurred to them that these technologies require raw materials that have to be dug out of the ground, which means mining, which they vigorously oppose (except by dictators in faraway countries).

They’re lawyers, lawmakers, enforcers. But most have never been in a mine, oilfield or factory, probably not even on a farm. They think dinner comes from a grocery store, electricity from a wall socket, and they can just pass laws requiring that the new energy materialize as needed. And it will happen Presto!

It’s similar to the way they handle climate change. Their models, reports and headlines bear little or no resemblance to the real world outside our windows – on temperatures, hurricanes, tornadoes, sea levels, crops or polar bears. But the crisis is real, the science is settled, and anyone who disagrees is a denier.

So for the moment, Let’s not challenge their climate or fossil fuel ideologies. Let’s just ask: How exactly are you going to make this happen? How will you ensure that your Plan A won’t destroy our economy, jobs and living standards? And your Plan B won’t devastate the only planet we’ve got? I’ll say it again:

(1) Abundant, reliable, affordable, mostly fossil fuel energy is the lifeblood of our modern, prosperous, functioning, safe, healthy, fully employed America. Upend that, and you upend people’s lives, destroy their jobs, send their living standards on a downward spiral.

(2) Wind and sunshine may be renewable, sustainable and eco-friendly. But the lands, habitats, wildlife, wind turbines, solar panels, batteries, transmission lines, raw materials, mines and laborers required or impacted to harness this intermittent, weather-dependent energy to benefit humanity absolutely are not.

(3) The supposed cure they say we must adopt is far worse than the climate disease they claim we have.

Using wind power to replace the 3.9 billion megawatt-hours that Americans consumed in 2018, coal and gas-fired backup power plants, natural gas for home heating, coal and gas for factories, and gasoline for vehicles – while generating enough extra electricity every windy day to charge batteries for just seven straight windless days – would require some 14 million 1.8-MW wind turbines.

Those turbines would sprawl across three-fourths of the Lower 48 US states – and require 15 billion tons of steel, concrete and other raw materials. They would wipe out eagles, hawks, bats and other species.

Go offshore instead, and we’d need a couple million truly monstrous 10-MW turbines, standing in water 20-100 feet deep or on huge platforms in deeper water, up and down our Atlantic and Pacific coasts. Not as many of the beasts, but each one a lot bigger – requiring vastly more materials per turbine.

A Category 4 hurricane going up the Atlantic seaboard would wipe out a lot of them – leaving much of the country without power for months or years, until wrecks got removed and new turbines installed.

Using solar to generate just the 3.9 billion MWh would require completely blanketing an area the size of New Jersey with sunbeam-tracking Nellis Air Force Base panels – if the Sun were shining at high-noon summertime Arizona intensity 24/7/365. (That doesn’t include the extra power demands listed for wind.)

Solar uses toxic chemicals during manufacturing and in the panels: lead, cadmium telluride, copper indium selenide, cadmium gallium (di)selenide and many others. They could leach out into soils and waters during thunderstorms, hail storms, tornadoes, hurricanes, and when panels are dismantled and hauled off to landfills or recycling centers. Recycling panels and wind turbines presents major challenges.

Using batteries to back up sufficient power to supply U.S. electricity needs for just seven straight windless days would require more than 1 billion half-ton Tesla-style batteries. That means still more raw materials, hazardous chemicals and toxic metals.

Bringing electricity from those facilities, and connecting a nationwide GND grid, would require thousands of miles of new transmission lines – onshore and underwater – and even more raw materials.

Providing those materials would result in the biggest expansion in mining the United States and world have ever seen: removing hundreds of billions of tons of overburden, and processing tens of billions of tons of ore – mostly using fossil fuels. Where we get those materials is also a major problem.

If we continue to ban mining under modern laws and regulations here in America, those materials will continue to be extracted in places like Inner Mongolia and the Democratic Republic of Congo, largely under Chinese control – under labor, wage, health, safety, environmental and reclamation standards that no Western nation tolerates today. There’ll be serious pollution, toxics, habitat losses and dead wildlife.

Even worse, just to mine cobalt for today’s cell phone, computer, Tesla and other battery requirements, over 40,000 Congolese children and their parents work at slave wages, risk cave-ins, and get covered constantly in toxic and radioactive mud , dust, water and air. Many die. The mine sites in Congo and Mongolia have become vast toxic wastelands. The ore processing facilities are just as horrific.

Meeting GND demands would multiply these horrors many times over. Will Green New Dealers require that all these metals and minerals be responsibly and sustainably sourced, at fair wages, with no child labor – as they do for T-shirts and coffee? Will they now permit exploration and mining in the USA?

Meeting basic ecological and human rights standards would send GND energy prices soaring. It would multiply cell phone, laptop, Tesla and GND costs five times over. But how long can Green New Dealers remain clueless and indifferent about these abuses?

Up to now, this has all been out of sight, out of mind, in someone else’s backyard, in some squalid far-off country, with other people and their kids doing the dirty, dangerous work of providing essential raw materials. That lets AOC, Senator Warren, Al Gore, Michael Mann, Greenpeace and other “climate crisis-renewable energy” profiteers preen about climate justice, sustainability and saving Planet Earth.

They refuse to discuss the bogus hockey stick temperature graph; the ways Mann & Co. manipulated and hid data, and deleted incriminating emails; their inability to separate human influences from the powerful natural forces that have caused climate changes throughout history; or the absurd notion that the 0.01% of Earth’s atmosphere that is carbon dioxide from fossil fuel use over the past 50 years is somehow responsible for every extreme weather event today. But they won’t be able to ignore this fraud forever.

Meanwhile, we sure are going to be discussing the massive resource demands, ecological harm and human rights abuses that the climate alarm industry would impose in the name of protecting the Earth and stabilizing its perpetually unstable climate. We won’t let them dodge those issues in 2020.

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (www.CFACT.org) and author of books and articles on energy, climate, environmental and human rights issues.

My Comments:

I cannot fathom the degree to which the proponents of catastrophic man-made global warming are willing to ignore the many and colossal failures of the predictions of their hypothesis and its clear violations of basic physics.  Ignoring reality is itself immoral, but in the name of their failed theory, they are overtly prepared to cause irreparable damage to the welfare of mankind and the welfare of the Earth's many other animals.

They want the power to pursue the GND or similar harmful policies so badly they are willing to absolutely contradict the motives they have often claimed make their environmental and economic policies moral.  The harm to humans will fall most heavily on those who have lower incomes.  They will be most likely to lose their jobs in the extraction, transportation, power, manufacturing, and construction industries.  The harm of the GND will cause an increase in economic inequality.

I do not believe that income equality is a moral goal, but I do believe that it is immoral for government to pursue policies that are particularly harmful to any of its citizens, most certainly including those with lower incomes.  Everyone deserves the exercise of their right to pursue the earning of a living.  Governments should not be constantly erecting barriers to the efforts of the people to be productive.

Those who are willing to ignore the reality of physics and the scientific method are also willing to ignore every rational moral principle.  We see that very clearly in the policies of those who insist upon using force justified by a demonstrated false hypothesis to do horrible damage to the people and other animals of this Earth.

The US-Mexico-Canada Trade Agreement and Compounded Growth

The Associated Press has distributed an article claiming that the International Trade Commission, an independent federal agency, says that Trump's new USMCA trade agreement will only yield an increase to the GDP of 0.35%.  To claim that this is a negligible effect is to be ignorant of compounded growth and the many other possibilities that government has for avoiding putting burdens on the private sector that impede economic growth.

If the US private sector economy grows by 2.9% a year or it grows by 3.25% instead, this can make a bigger difference than most people think it will.  The average American is going to live another 40 years, so let us project the effects of this difference in annual growth rate over a 40 year period.  An economy growing at a rate of 2.9% rate will be 3.138 times larger in 40 years than it was at the start.  An economy growing at a rate of 3.25% a year, or a 0.35% higher rate, will be 3.594 times larger.  This projected higher growth rate economy is 14.5% larger than the projected slower growth rate economy is.  That is a substantial difference.

Now some readers are going to say that the USMCA trade agreement will not increase the economy's growth rate by 0.35% every year over 40 years.  That is probably correct.  A really good agreement might be able to do that, but the Trump agreement probably will not do that.  However, there are a plethora of ways that the federal government can take actions year after year that will allow the economy to grow by an additional 0.35% that year than it would otherwise.  The government can roll back expensive regulations with little rational reason to exist.  It can desist from instituting new regulations that cost more than they are rationally worth.  A decrease in the number of expensive and irrational regulations would give American companies much assurance that investing money in increased production in the USA will be profitable.  It is immensely damaging when a President declares that he intends to wipe out an industry he does not like and in so doing hurt supporting companies and the jobs of tens of thousands of Americans, as Obama did to the coal industry and his party threatens to do to the oil and gas industries.  It could stop over-withholding income taxes so that money could be circulating in the private sector economy at a higher velocity.  It can and should reduce taxes.  It should release many government employees so they can do productive work in the private sector.  It should release millions of acres of land it holds so that land can be put to much more productive use in the private sector.  It could take steps to greatly reduce absurd burdens due to excessive legal actions against companies simply because they may have deep pockets.

There are so many ways the federal government and state and local governments could act to see that future private sector growth rates are 0.35% larger year after year.  In fact, when Obama was suppressing the growth rates to levels of about 2%, the 40 year result compared to a 3.25% growth rate result is even more dramatic.  After 40 years at a growth rate of 2%, the economy is 2.208 times larger, while at a rate of 3.25% growth it is 3.594 times larger.  The higher growth rate economy at 40 years is 1.628 times larger than the Obama normal growth rate economy.  Imagine how much of an impact that added growth then has on the every day lives of Americans.  That larger society will provide much better medical care, produce much more advanced technology, have a much greater understanding of reality, provide individuals with many more options in life, and will surely allow a massive increase in charitable giving.

It is very foolish to minimize even seemingly small improvements in the economic growth rate.  The growth of the private sector is the basis for improvements in the richness and security of our lives.  We have the option of allowing the economy to grow at compounded higher growth rates that will make huge differences in the quality of our lives in our lifetimes and in those of our children.

Climate lunacy takes center stage in Poland by Paul Driessen

IPCC Poland conference presents fictional climate chaos and fake renewable energy salvation 

The unwritten rule seems to be that each successive climate report and news release must be more scarifying than any predecessors, especially during the run-up to international conferences.

Thus Intergovernmental Panel on Climate Change Special Report 15 claims governments worldwide must make “unprecedented changes in all aspects of society,” spend $40 trillion by 2035 on renewable energy, and impose carbon taxes that climb to $5,500 per ton of carbon dioxide (CO2) by 2030. Or temperatures could climb another 1 degree F (0.5 C) and bring utter cataclysm to human civilization and our planet.

Not to be outdone, the 1,700-page 2018 US National Climate Assessment wailed that failure to eliminate fossil fuels and roll back American industry and living standards would send global temperatures soaring 15 degrees F by 2100! Chaos and food shortages would ensue; US economic growth would plummet.

The hyperbole continues in Katowice, Poland – where 30,000 activists and bureaucrats (and a few scientists) are meeting to finalize regulations to implement the 2015 Paris climate treaty and compel wealthy nations to give trillions of dollars in “adaptation, mitigation and compensation” money to poor countries that have been “victimized” by climate change, even as the rich nations de-industrialize.

All of this certainly plays well with those who orchestrated these reports and programs, are ideologically opposed to fossil fuels, or get paid to advance climate chaos and renewable energy narratives. However, a very different response among other audiences is increasingly evident around the world.

People look out their windows and realize the “unprecedented climate and weather chaos” isn’t actually happening, is little different from what they and previous generations experienced, and cannot possibly be attributed solely to fossil fuel use. They know the sun and other powerful natural forces have driven frequent climate changes throughout history, and play equally important roles today.

They understand that the scary headlines are the product of “scenarios” conjured up by computer models that blame climate change on greenhouse gases. They see the boy who cried “fifty 20-foot-tall wolves” far too often. They don’t buy the notion that today’s incredibly wealthy, high-tech, energy-rich societies are somehow less able to deal with climate change than those that lived through the Little Ice Age, for example. They typically put climate change at the bottom of any list of pressing concerns.

More and more people understand that fossil fuels provide 80% of US and global energy – and are essential to lifting billions more people out of crushing poverty. They see Asian and African countries building thousands of new coal- and gas-fired electrical generating plants, and making and driving millions of new cars. They know even Germany and Japan are burning more coal, as they realize that wind and solar subsidies and facilities raise energy costs, kill jobs and hurt poor families the most.

People resent being scammed and get angry when they realize their taxes and energy payments often line the pockets of climate activists, scientists, bureaucrats, politicians, and wind, solar and biofuel cronies.

Above all, a growing number see the proposed solutions as far worse than the wildly exaggerated and even fabricated climate disasters. They won’t tolerate having their livelihoods and living standards disrupted or destroyed by carbon taxes, even higher energy prices or fossil fuel bans – especially when the antipathy toward those fuels is combined with plans to terminate nuclear and even hydroelectric power.

In recent weeks, millions of mostly poor, working class and rural French citizens have joined the Gilets Jaunes (Yellow Vests) movement, protesting and even rioting against President Macron’s proposed carbon tax hikes on their driving and living standards. Even a French police union has sided with the protesters. A shaken Macron finally postponed the tax for six months, then scrapped the plan entirely.

The protests are the first serious backlash against international eco-imperialism. They won’t be the last.

In Africa alone, twice as many people as live in the USA still do not have electricity, or have it only rarely and unpredictably. Can you imagine your life without electricity? And yet they are told by the EU, environmentalists, the World Bank and others that they must restrict their ambitions to what is possible with wind, solar and biofuel energy. Would you accept such carbon colonialism? Can actual, real-world climate risks possibly be worse than the horrid poverty, deprivation and disease that afflicts them now?

The World Bank recently said it would kindly give poor countries $200 billion during its FY2021-25 cycle, for “adaptation and resilience” in the face of manmade climate change. But still nothing for fossil fuel or nuclear power. The White House should read it the riot act, especially if US money is involved.

Poor countries don’t need climate cash. They need to develop: energy, infrastructure, factories, jobs, health, living standards. They need to do what rich countries did to become rich – not what (some) rich countries are doing (or at least saying) now that they are rich. Thankfully, many are doing exactly that.

Abundant, reliable, affordable electricity, motor fuels and factory power creates its own prosperity; its own ability to improve roads, hospitals, schools, homes and so on; its own “drop dead money” to tell carbon colonialists to take a hike. “Green” energy is insufficient, unsustainable and ecologically harmful.

With America likely being joined soon by Brazil in rejecting the Paris climate trap, poor nations are on firm ground. Ontario (Canada), Poland. Australia, China, India and other countries have also rejected carbon taxes and coal use restrictions. The Paris deal is fast becoming a climate Potemkin Village.

But what about that National Climate Assessment? Wasn’t that a Trump White House document? It certainly needed some adult supervision, to ride herd on the 1,000 Deep State scientists and bureaucrats who prepared it. However, the White House let them prove how loony climate alarmism has become.

Indeed, as Nick Loris, Roger Pielke, Jr. and other experts have pointed out, the NCA was based on absurd assumptions (eg, vastly increased coal use and no energy technology advances over the next 70 years) and a ridiculous worst-case global temperature increase of 15 degrees F by 2100. That’s twice as high as even the IPCC’s worst-case projections, and far worse than Garbage In-Garbage Out climate models are predicting. It’s more than 15 times the total warming our Earth has experienced since 1820!

The NCA is also based on rampant cherry-picking of data, to wildly inflate climate risks; an almost total failure to factor in the incalculable benefits of fossil fuels; and a refusal to consider the plant-fertilizing benefits of more atmospheric carbon dioxide. It just depicts the CO2 we exhale solely as a dangerous climate-changing pollutant. The NCA also ignored the fact that actual observations show no increases in drought, no increases in the frequency or magnitude of floods, no trends in the frequency or intensity of hurricanes. It didn’t mention the 12-year absence of Category 3-5 hurricanes making US landfall.

Just as egregious, the Deep State NCA claimed continued fossil fuel use would hit the United States with $500 billion in annual climate related costs by 2090. That’s more than twice the percentage lost during the Great Depression. It’s 10% of the US economy in 1971. Even with modest economic growth, it’s likely to be a trivial 0.6% of America’s GDP in 2090. The NCA bogeyman is a little stuffed bear.

But based on IPCC and NCA fear mongering, America and the world are supposed to keep their fossil fuels in the ground – including what the US Geological Survey says is the “largest continuous oil and gas resource potential ever assessed!!” Over 46 billion barrels of oil, 280 trillion cubic feet of natural gas and 20 billion barrels of natural gas liquids in just part of the Texas-New Mexico Permian Basin.

No one denies that the climate changes, or even that human activities have some effects on climate and weather. But there is no real-world evidence that human CO2 emissions have replaced the sun and other natural forces; that another degree of warming would be cataclysmic; or that humans can control climate changes and weather events by tweaking the amount of carbon dioxide in the atmosphere.

Want some facts and common sense? See what CFACT and Heartland have been saying in Poland, and read books by Dr Roy Spencer, Marc Morano, Anthony Watts and others. They’ll be a breath of fresh air.

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (CFACT) and author of books, studies and articles on energy, climate change, the environment and human rights. 

My Comments:

Dr. Roy Spencer and Anthony Watts are luke-warmers who believe that CO2 causes less warming than the alarmists say it does and that the warming is less than catastrophic.  They both hold the consensus view of thermal radiation, which is seriously in error.  Dr. Roy Spencer engages in discussions with great patience, but some critical physics he just does not understand.  Anthony Watts has called me nasty names because I advocate that the temperature increases caused by additional CO2 in the atmosphere are insignificant and much lower than than what he thinks they will be.  Despite their limitations, however, both of these men have played major roles in opposing the excesses of the global warming alarmists.  So be nice to them.

I am a supporter of and donor to the Heartland Institute and CFACT.

Oil and Gas Industry Tax Breaks: Lies by Democrats

For decades, I have been hearing about the massive tax breaks and subsidies that the government gives the oil and gas industry.  Obama has recently been repeating this wild-eyed claim.  On 2 November 2011, in a reply to a comment claiming the oil and gas industry was subsidized by $2 billion a year to my post North Dakota Oil, Truckers, Railroads, Jobs, I said:

There are frequent claims that the government is subsidizing the oil industry, but rarely does anyone actually attempt to describe what the subsidy is and how it is given to the oil industry. The oil industry gets four tax breaks, the domestic manufacturing break of $1.7 billion, the oil depletion break of $1 billion, the foreign tax credit of $0.85 billion, and the intangible drilling costs break of $0.78 billion. The first three tax breaks are given to every manufacturing company whether in the oil and gas industry or not. The oil depletion allowance is the equivalent of the depreciation of capital equipment, which is reasonable. The intangible drilling cost write-off allows drilling costs to be written off in the first year rather than over the entire time of the investment. This is probably most important to the very many small drilling companies and it is the only tax break really unique to the oil and gas industry.

Merrill Matthews recently had an Opinion piece in the Wall Street Journal entitled About Those Tax Breaks for Big Oil... which notes how a bill submitted to the House of Representatives by the socialist Chris Van Hollen of Maryland is forced to insert special language aimed at the oil and gas industry to exclude that targeted industry from the same tax breaks or options held by and used by many other industries. Van Hollen's bill is the Stop the Sequester Job Loss Now Act and would increase tax rates on higher income individuals (soak the rich) and increase taxes on the oil and gas industry which has been doing yeoman work in keeping the economy from complete collapse.

In the best tradition of the Democrat Socialist Party the bill pretending to end job loss will actually increase job loss by depriving small business owners and investors of the money and incentive they need to hire people and by hobble the oil and gas industry which is one of the few job bright spots in our economy.  In Democrat Socialist logic, it is OK to blow away both feet as long as the bill that will do this has a title implying that it will put great shoes on both feet.  Upon passage of the bill and with its exercise, the people eventually have no feet and no great shoes.  The Democrat Socialists will then claim that is because of some fictional deregulation.

Matthews points out that the oil and gas industry reputed to be unfairly taxed (to Democrats this always means under-taxed) includes the two companies at the top of the company list of the biggest taxpayers, as well as the sixth biggest taxpayer.  Exxon Mobil paid $31 billion of U.S. income taxes in 2012.  Chevron paid $20 billion and ConocoPhillips paid $8 billion of U.S. income taxes in 2012.  These  three oil and gas companies paid more U.S. income taxes than did the remaining 7 companies in the top 10 list.  They did so using the same tax rules used by other industries.

So how does Van Hollen target the oil and gas industry?  His act

• limits the Section 199 deduction which sought to encourage domestic production activities in the American Job Creation Act of 2004.  This gave domestic manufacturers a 9% tax deduction from net income, except for the oil and gas industry, which only receives a 6% tax deduction because the Democrats have a vendetta against oil and gas.  So, the oil and gas industry gets less of a tax break than other U.S. manufacturers on this!
• denies the industry the use of the accounting method for inventory known as last-in, first-out or Lifo, which is widely used by all extraction industries.  It will remain an available choice for all industries except the oil and gas industry.
• denies only integrated oil and gas companies the deduction for many of the taxes they pay to foreign countries.  To avoid double taxation, all companies are allowed a credit for the taxes they pay to foreign countries.  Now, however, the integrated oil and gas companies would not be allowed to deduct the royalty payments they make to foreign countries, though other companies will continue to deduct royalties.

In other words, it is very clear that the van Hollen act discriminates against and targets the oil and gas industry.  This is just a case of a bloodsucking parasite looking for a host with plenty of blood to suck, just as is its soak the productive rich campaign.  Willie Horton is ogling other people's money in the bank and he will steal their money if he thinks he can get away with it.

Election Gitters Cause Obama Administration to End Gulf Deep Water Drilling Moratorium

With the towering tsunami for Democrat office holders rapidly approaching, the Obama Administration ended the Gulf of Mexico ban on deep water drilling.  This is window dressing, a classical socialist Potemkin village, to divert the American voter's attention away from a jobs-killing and over-seas oil price boosting policy of the Obama administration. 

The Gulf of Mexico produces about 30% of American oil production.  The Obama administration has been very effectively reducing new American oil production since it took over by refusing permits to drill and by refusing leases on federally controlled onshore and offshore areas.  The huge tracts of Western federal land have seen a large reduction in oil and gas drilling due to Obama policy.  The shallow water (less than 500 foot depth) drilling in the Gulf of Mexico has been brought to a standstill since few platforms have been able to get their drilling permits approved by the Bureau of Ocean Energy Management for a long time, despite no moratorium in place to prevent such shallow water drilling.  A study by Southern Methodist University shows that the low 10 to 15 permits a month approved prior to the April 20 Deepwater Horizon explosion, has slowed to about a dozen total since then.  This is only about 2 per month and has left many shallow water platforms idle.  The Obama administration has halted the exploration for oil off the Alaskan coast as well.  In 2009, the federal government issued fewer leases for oil and gas than in any year under Clinton or Bush.  Leasing in 2010 appears to be occurring at a similarly abysmally low rate.

A report in the Wall Street Journal of 13 October 2010 says that the government estimates that the new deep water drilling regulations will cost oil and gas drillers an additional $183 million per year.  One always has to wonder what multiplier well above 1.00 should be used to estimate a more realistic cost.  The Interior Department is issuing a raft of new drilling requirements and plan to keep issuing more requirements.  The drilling companies have understand the new requirements and plan on how to comply.  They have to submit the compliance plans to the "over-worked" Bureau of Ocean Energy Management and wait for a yea or nay.  Then as each additional requirement comes along, they have to stop drilling and resubmit a new plan for a permit.  It is expected that many drillers will not be able to afford this and will leave the Gulf, as some have already.

Democrats are as interesting as their symbolic asses in their odd behavior.  They increasingly talk about wanting to cut back on our use of fossil fuels so we will not have to import so much oil.  They propose carbon taxes on this basis as well as in the name of the failed catastrophic man-made CO2 emissions global warming hypothesis.  As more and more people are becoming aware that man-made global warming is a myth, the socialists (Progressives) are using the false idea of energy independence or self-sufficiency as the justification for energy taxes and restrictive mandates.  Yet, at every turn, they oppose any effective attempt to generate more energy in America itself.  They oppose oil drilling and coal mining.  They oppose the development of shale oil deposits out West and they oppose the use of the new rock fracturing process to extract gas from large areas of New York, Pennsylvania, and Ohio.  They even oppose the ineffective, but highly touted, wind and solar power generator plants on environmental grounds in a great many instances.  Of course, they also oppose nuclear power plants as well.  It is of little concern to them that this energy policy is highly self-contradictory.  Such is the way demagogues think, except that this is really a refusal to think.

68 million acres of non-producing oil leases

Nick Snow in the Oil and Gas Journal says that "the independent Petroleum Association of Mountain States charged on 28 August that government red tape and environmentalist hindrances are the primary causes of lease development delays, and it urged Democrats to cease the inflammatory and erroneous claim that US producers are just 'sitting on' 68 million acres of leased land as the fall campaigns get under way." The article is entitled "IPAMS to Democrats: Quit promoting dishonest energy claims."

IPAMS Executive Director Marc Smith says House Democrats, including Speaker Nancy Polosi (CA) and Chief Deputy Whip Diana DeGette (CO) made this false claim at the Democrat national convention in Denver.

Smith said that 100% of the Bureau of Land Management oil and gas leases in the Mountain States region have been protested by environmental groups. He says "Industry is in a classic Catch-22 situation whereby the government has created a cumbersome process that takes years to complete, environmental groups exploit the process to throw up legal roadblocks at every stage, and then Congress and the environment lobby turn around and blame the industry for not 'diligently drilling.'"

When Obama calls for producing more natural gas and reluctantly allows a wee bit of drilling, it may mean nothing, since he may simply be counting on the bureaucracy and environmental groups to keep any additional oil and gas from being supplied. Until the politicians do something to speed up the process of bringing new finds to production, the granting of a few leases may mean nothing. We must remember that the Democrats have nearly uniformly decided that any use of carbon-based fuels is bad because they result in CO2 emissions. Consequently, they want carbon-based fuel costs to go up, which delays in production accomplishes by delaying production and raising the costs of production.

Thanks to Lemuel Linder for pointing this article out to me.

Carroll - Gore's nutty idea

Al Gore proposed last week that the United States "commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years."

This man is truly insane. I shudder to think what would have happened to the United States if he had become President as he so nearly did. No, I am not saying that this man is simply wrong. I am saying that he is in this world, but he is not connected to it. He has no judgment, no wisdom, few powers of observation, and he is much less intelligent than George Bush. One has to wonder at the severe lack of judgment also generally found in those managing our newspapers and television news programs which has kept them from taking Al Gore to task for this nonsense.

Vincent Carroll, editor of the editorial pages of the Rocky Mountain News, has correctly identified Al Gore's call to kill oil, gas, and coal power generating plants as the equivalent of Mao Zedong's Great Leap Forward in this editorial. This effort, he points out, would require utilities to mothball hundreds of existing plants and institute a crash program of building solar energy, wind farm, and new electricity power transmission lines, that would cause a huge increase in electricity costs to individuals and businesses. What is more, both sun and wind are highly subject to natural variations, so they would require something like huge banks of batteries or capacitors to store energy for later use, which would be very expensive and environmentally unfriendly.

I will repeat that it is lunatic to implement such a plan, even if it were true that carbon dioxide emissions were going to be a significant problem affecting the climate in 100 years. In actuality, there is no good reason to think this will be the case anyway. This makes calling for wrenching energy infrastructure destruction programs and crash construction programs of largely untried or incredibly expensive technology an idiot's delight.

Update on the War in Iraq

Michael Yon, who is an independent war correspondent and blogger embedded with U.S. troops in Iraq for a very long time, seems to understand that war better than any other reporter. He has declared the war won and backs that claim up with a very interesting PowerPoint presentation. In addition to the decreased number of deaths due to fighting, the decreased number of attacks against infrastructure is very important. The lifeblood of Iraq is oil and many of the infrastructure attacks have been against oil facilities. This has resulted in a very high unemployment rate in Iraq, which is commonly a cause of great mischief when many have nothing constructive to do with their time and little hope that they are building a better future. Increased oil and gas production is a key to peace within Iraq and will allow the Iraqis to concentrate on rebuilding a country which has gone downhill for decades under Saddam Hussein and suffered so much at the hands of terrorists since he was overthrown. Of course, increased oil and gas production will benefit the rest of the world greatly as well and will help to bring down the very high fuel prices we have seen lately.

The Chairman of the Joint Chiefs of Staff has determined that the time has come to start pulling troops out of Iraq and building our strength in Afghanistan. The surge has done its job and with some care not to withdraw too rapidly from Iraq and to continue supporting the Iraqi government, unlike what the Democrat Congress did with respect to the South Vietnamese government when we pulled troops out of South Vietnam, Iraq should be able to create a nation in the heart of the Middle East which is significantly more civilized than most there.

In evaluating this important victory in Iraq, we should be careful to note who opposed the surge and who approved and recommended it. The problem of Afghanistan must be addressed with renewed vigor and we should be careful in assessing who has the judgment and strength of determination to see that project through. There are also major problems to be addressed with respect to Pakistan and Iran. Who has the experience, backbone, and judgment to deal with those problems?

Oil Executives Finally Faced Down Democrats

Usually, American oil company executives when called before Congressional committees for the ritual browbeating by Democrats whenever oil and gasoline prices shoot up, take the beating that is dished out fairly meekly. Perhaps with gasoline prices as high as they are now, they were afraid the Democrats would not stop at a tongue-lashing and would actually take draconian action against the oil companies. Usually, the Democrats take their cheaply earned points with the public and do nothing more about it, because they know that any action they take will be a disaster. That's right, they are self-aware demagogues! They usually know better than to put their pet popular theories to the test. They know they will fail. After all, they are bright enough to get elected. They are bright enough to fool most of the people most of the time.

On 21 May 2008, Chairman Pat Leahy of the Senate Judiciary Committee called a number of oil company executives before the committee for a grilling. This time, these oil company executives did the grilling with their testimony.

John Lowe, Executive Vice President of Conoco Philips Company said: "We can only compete directly for 7 percent of the world's available reserves while about 75 percent is completely controlled by national oil companies and is not accessible."

Stephen Simon, Senior Vice President of Exxon Mobil Corporation: "Exxon Mobil is the largest U. S. oil and gas company, but we account for only 2 percent of global energy production, only 3 percent of global oil production, only 6 percent of global refining capacity, and only 1 percent of global petroleum reserves. With respect to petroleum reserves, we rank 14th."

"Of the 2 million barrels per day Exxon Mobil refined in 2007 here in the United States, 90 percent were purchased from others."

Now, the Democrats want Americans to believe that these small-time companies in the world oil and gas market are manipulating the world-wide cost of oil, which in 2007 accounted for 58% of the cost of gasoline sold in the United States. They are accused of price gouging by the Democrats. But, as they pointed out, only 4% of the price of gasoline goes to oil company profits, while government taxes average 15%. If a 4% profit is gouging than government is beating them in the gouging arena by a factor of 3.75!

John Hofmeister, President of Shell Oil Company, told the committee that for 30 years companies have been prohibited from exploring and developing oil and gas resources in the United States. The Department of the Interior says 62% of all on-shore federal lands are off limits to oil and gas developments and restrictions apply to 92% of all federal lands. Outer continental shelf moratoriums apply to the Atlantic Ocean, the Pacific Ocean, and the eastern Gulf of Mexico. There are also congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska and bans on even doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific, and eastern Gulf of Mexico.

Do you suppose the bans on analysis of the reserves that may be present in these restricted locations in the U. S. are motivated by fear that Americans would be angry at Congress for the high price of gasoline if they knew how much oil Congress was making unavailable?

Hofmeister continues: The Argonne National Laboratory reported in 2004 that 40 specific federal policy areas halt, limit, delay, or restrict natural gas projects. He offered to make a copy available for the report on the day's proceedings. "As a result, U. S. production has declined so much that nearly 60% of daily consumption comes from foreign sources."

Senator Orrin Hatch, Republican, pointed out that large proven reserves of oil exist in Utah, Colorado, and Wyoming. He noted that experts say there are between 800 billion and 2 trillion barrels of oil that can be recovered there for much less than $100 per barrel. He noted that just last week, the Democrats stopped an effort to recover shale oil in Colorado.

Clearly, the Democrats really want oil to become very expensive, so that oil and gasoline consumption will drop. Partly this is for the nonsensical idea that we need to reduce carbon dioxide to prevent global warming. This is a case where Democrats have enough understanding of supply and demand to know that if they cut off the oil supply, the price of gasoline will rise. Partly, it is just that the Democrat elite think there is something romantic about a primitive lifestyle, even though few of them are prepared to live that primitive lifestyle themselves. But, they think it would be better if the rest of us did.

How is it that Americans have managed to send so many strange people to Congress to rule us all with their wrongheaded ideas?

Kudlow: Striking out on energy

Lawrence Kudlow has written an interesting commentary on the energy crisis and his evaluation of the energy policies of Congress, the President, and Senator McCain. He notes that the Chairman of Exxon Mobil correctly calls for producing more domestic oil and gas by opening up exploration and development of oil and gas fields in U.S. coastal waters and on the outer continental shelf. He also agrees that President Bush is right in drilling for oil in Alaska.

The cost of gasoline has risen due to increased demand throughout the world and the failure to increase the supply of oil. Americans are apparently blaming the Republicans, despite the fact that it is overwhelmingly the Democrats who have consistently opposed the development of new sources of energy. Oh yes, they do favor government incentives and research into possible future new sources of energy, but once any energy source becomes viable, they tend to turn against it. In any case, none of the present Democrat-favored sources of energy is both commercially viable and able to produce significant energy. Apparently, the chimera of future new energy sources held out by the Democrats is enough to fool most Americans into placing the present blame upon the Republicans. Go figure.

Kudlow weighs into the problems and wrongheadedness of John McCain's proposal for a cap and trade energy program. McCain will have inspectors traipsing into every company in America and examining their use of energy. There will be massive new rules and regulations for 5 million businesses. The Congressional Budget Office guesses that this will cost at least $1 trillion. That is the cost to the government. The cost to business will be much greater than that. Way to revive the economy, John McCain! Yes, shoot us all in the foot in the name of an unfounded idea that there is significant global warming, that this is bad, that this is caused by man, and that any government program is capable of meaningfully addressing the supposed problem.

So, business will be forced to use less energy, at least certain types of energy. I suppose I will be allowed to use a hand-cranked generator to provide power for my x-ray photoelectron spectrometer! The Democrats will be talking about the new jobs they have created. I will have to hire 3 shifts of hand-crankers, who probably will insist on union breaks, so long data acquisition runs will soon be a thing of the past. It will be interesting to see what the likely voltage fluctuations will do to the quality of spectra. Well, maybe I am being pessimistic. Maybe the government will send a brilliant inspector to my laboratory who will offer a great solution to our newly mandated need to stop using so much electricity. Realistically Charles, when was the last time you encountered a brilliant government inspector?

Congress will be able to use this cap and trade program to generate huge amounts of new money for them to spend. The fact that it will come out of the pockets of every American and drive up the cost of hiring people and producing goods and services, is of no concern to them. It should be of concern to us however.

You can read Kudlow's commentary here.

Walter Williams on Congressional Problem Creation

Prof. Walter E. Williams has written a short commentary on a number of problems caused by Congress and the Presidents. These problems then become the justification for Congress taking still more control of industries and the economy, which will cause still more problems. These will newer problems will be used to justify still more Congressional controls and, happily for Congress, lead to still more problems, which will .......

He discusses the effects of The Community Reinvestment Act of 1977, monetary expansion by the Federal Reserve Bank, Congressional limitations on oil and gas exploration, refineries, and nuclear power, and the ethanol fuel mandates and food prices.