Only 8 Years Ago Alarmists Were Sure the U.S. Was Out of Gas

Many environmentalists and anti-business people in the U.S., most centered in the Democrat Socialist Party, were sure that the U.S. production of oil and gas was going to rapidly dwindle.  It was one of their many reasons for attacking U.S. oil companies as dinosaurs of the past.  It was time to make these dinosaurs extinct, at least with a government-controlled and accelerated culling and size-reduction plan.  Oil and gas when burned both produced the fatal gas carbon dioxide, which was claimed to be slowly or not so slowly killing the planet.  We were told that the only energy that made sense was the so-called renewable energy sources of windmills, photovoltaic devices, and all sorts of plants grown for fuel.  These people backed Obama for the presidency in 2008 and were rewarded as he allowed less and less production of oil and gas on the incredible acreage of federal lands and in the many off-shore areas controlled by the federal government.  Meanwhile, windmills and photovoltaic device arrays were offered subsidies and mandates with claims they would replace coal, oil, and gas in large part soon.

Because the renewable sources of energy proved, as I and many others said they would, to be expensive and unreliable, they have effectively proven to be non-renewable.  Investments in these energy sources have often failed and when they did not, it was only because of the subsidies and mandates that they managed a slow growth in energy output capability.  Let us compare the oil dinosaur in vigor:

The production information is from the U.S. Energy Information Administration.  The year at the bottom of the dip is 2008 when production was 1,829,985,000 barrels of oil, well down from the maximum production in 1970 of 3,517,450,000 barrels.  As the fracking revolution in oil production began, Obama was off-setting its initial gains by restricting oil production on federal lands.  In 2011, however, fracking oil production on private lands really took-off.  In 2015, oil production in U.S. fields was back to 3,436,515,000 barrels of oil.  Now, with the blessed end of the Obama Regime and the apparent desire of OPEC to give up its ruinous price war on oil, there is nothing to keep oil production in the U.S. from continuing to increase.  An end to the suppression of U.S. energy production heralded by the Trump administration and a Republican Congress as well, will be a great boon to the U.S. economy.

The story of shale oil production in the U.S. is shown below:

U.S. oil production already appeared certain to soon exceed that at its prior peak of 1970.  But at some point the Bakken and Eagle Ford and other known shale oil fields are likely to see lowered production.  Will other undiscovered oil fields take their place?  Yes!

In September, Apache Corp. announced that it Alpine High field in an area of the Permian Basin in West Texas holds 1.1 - 2.7 billion barrels of recoverable oil at current prices.  This area had been drilled many times by other companies with no finding of economically recoverable oil.

Then comes the blockbuster announcement by the U.S. Geological Survey (USGS) that the Wolfcamp Shale in the Midland Basin portion of the Permian Basin has 20 billion barrels of recoverable oil at current prices and 16 trillion cubic feet of natural gas.  Compare this to the largest oil producing field in North America, the Prudhoe Bay field of the north slope of Alaska with the 12 billion barrels of oil produced over 43 years.  The largest producing field in the Lower 48 is the East Texas oil field, which has produced 7 billion barrels of oil since the early 1930s.  The Wolfcamp Shale is now expected to produce nearly 3 times the oil of the Bakken - Three Forks capacity according to the USGS assessment in 2013.  The Wolfcamp Shale capacity is nearly 19 times that of the Eagle Ford field according to its 2012 assessment by the USGS.

Over time, the USGS estimates prove to be low due to increased knowledge about the oil field geology and to improvements in extraction technology.  How true this is, is clear from the fact that Midland, Texas is well within the Wolfcamp Shale area.  This huge discovery is entirely based on new technology, not on a failure of many an oil company to examine the area for its oil possibilities. Recall that George W. Bush spent his oil years in Midland, which had been an oil center prior to his arrival.

At current prices, the Wolfcamp Shale oil is worth about $900 billion.  Pioneer Natural Resources has drilling rights on 785,000 acres within the large field.  ConocoPhillips has Wolfcamp Shale holdings of 1.8 billion barrels.

I am sure that President Trump will be very happy to claim credit for all the new jobs that will be produced by the production of the Wolfcamp Shale!  Assuming he does not act as Obama has to try to suppress oil production, I suppose we will have to give him a portion of the credit, though in a healthier context we would give all of the credit to the oil field innovators and production experts of our wonderful private sector.

Absurd Claims for Catatrosphic Man-Made Global Warming Never Stop

Absurd claims of catastrophic man-made global warming continue at a mad pace in preparation for the "climate change" conference to be held in Paris later this year.  At that conference, developed nations are supposed to place themselves under energy restrictions so severe that income inequality will be reduced around the world by virtue of decreasing the future standard of living in the developed countries.  In addition, the developed countries are supposed to deliver large sums of cash to underdeveloped and largely poorly governed and corrupt nations to "aid them in adapting to the harm of catastrophic man-made global warming."  The planned economic transformation is massive and will be catastrophic.  Obama claimed catastrophic man-made global warming is mankind's greatest problem, rampant beheadings by Islamists being the small stuff we ought not to sweat.

The U.S. government, the United Nations, and many other developed nations around the world have poured hundreds of billions of dollars into rigged "research" of the causes of catastrophic man-made global warming.  Government funding agencies and the universities dependent upon their research funding have been vicious in destroying or damaging the careers of such research scientists as have had the scientific principles to oppose the agenda mandating that funded research will not shed doubt on the politically essential agenda for catastrophic man-made global warming.  Yet, if any skeptic of this hypothesis receives a piddling amount of money from U.S. industry, from an oil company, or from a limited government think tank that in turn receives a piddling amount of money from an oil company, this is enough to completely discount all of the scientific arguments made by the scientist.

An example of this is a foolish article by a Jay Michaelson called Armageddon for Climate Change Deniers.  He plays the further old game of mocking those who believe the U.S. government has an agenda to acquire more power over the daily lives of Americans and their use of energy and all that implies for economic controls.  He makes the claim that 13,926 of 13,950 peer reviewed papers from 1991 to 9 Nov 2012 agreed with catastrophic man-made global warming.  The "study" [found on an infamously foolish blog] in question actually only counted very strong and explicit claims of falsity of that hypothesis and did not count those cases in which the authors allowed that some doubt was reasonable.  Given the tight controls on who is allowed research money to write journal articles capable of being published in the peer-reviewed journals, with additional journal editorial and peer reviewer (with funding) controls on the orthodoxy, the fact that few authors who want to publish will explicitly say that catastrophic man-made global warming is false, is not surprising.  Scientists who think it is false commonly wait until they have retired before they come out as doubters.  It is amazing how many have done so.

Given my explanations on this blog and by many other scientists elsewhere as to how bad the science theory of CO2-induced catastrophic man-made global warming is, the obvious failure of the highly touted climate models to predict the temperature rise, the heavy-handed alterations of the actually measured surface temperature data record, the recent 18-year constancy of the satellite lower atmosphere temperature record, and the many claims by politicians that bad science explaining the theory should not be allowed to get in the way of the political agenda, there should be many, many scientists who do doubt the hypothesis of man-made global warming.  There are.  Yes, few of them are actively funded by the government for the purposes of climate research.  But many of them are good physicists, chemists, meteorologists, geologists, or engineers.  Over the years because of the great attention the catastrophic man-made global warming hypothesis has been given as the greatest of all problems facing mankind, many scientists have looked into this hypothesis and evaluated it.  The skepticism is huge.  Very large fractions of the membership of many, many scientific organizations are skeptics.  We scientists are not all fools.  And no, very few of us are receiving any funding from oil companies to support our skepticism.

I am more than a skeptic.  I say the hypothesis is very wrong.  The physics of the hypothesis is horribly wrong.  The empirical evidence has proven the hypothesis wrong.  It is not just that the effect of CO2 on warming is not catastrophic.  It is not even significant.

I have received piddling amounts of funding for my laboratory over the last 19 years from oil companies.  The amount of funding I have received from alternative or so-called green energy companies to solve problems of wind power generation, solar power, or biomass use has been significantly greater than the funding from oil companies.  Many of the oil companies are big and can do most of their own materials problem-solving or have long-established relationships with older laboratories. Oil companies are not clustered near Maryland, though my clients come from across the country.  I am happy to help oil companies and alternative energy companies alike with solving their materials problems.  I strongly prefer that they all operate in a rich and robust private sector with no government meddling, however.

So, advocates such as Michaelson will dismiss all I say because I have received a smidgeon of income from oil companies.  How convenient that they need not address the scientific analyses that I have published on this blog.  How convenient that they dismiss all I say because I am not funded by the government to perform climate research.  How convenient that they can dismiss me because I am not a climate scientist, but merely a physicist who studies materials properties using a range of radiations.

You alarmists are having a bit of trouble convincing Americans and many others around the world that man-made global warming is mankind's greatest problem.  I take comfort in the fact that I have convinced some people to be such skeptics.  I am doing my bit to promulgate what I believe to be the truth.  I am doing my part to uphold the scientific method of free inquiry, careful observation, the use of known scientific principles to understand phenomena, and the idea that an hypothesis has to stand up to empirical testing.  I will not destroy the credibility of science so that politicians can acquire more power and I will not have them buy me off with research grants.

Speculators are Good in a Free Market

When I was a sophomore at Brown University in 1966-1967, I sat in on the first semester economics course and then took a test to get credit for the course.  I then took the second semester as a regular course.  The course was taught by a Brown Ph.D. graduate student and in a lecture he made it clear that he did not like speculators and that he did not understand their essential role in a free market economy.  I explained it to him after class, making myself late for my next class.  To this day, few people understand the critical and good role that speculators perform.  They are presently being blamed by Obama, Bill O'Reilly, and many others for the increasing price of gasoline at the pump.

Obama claims that there is plenty of oil available and the price of gasoline should not be so high.  But, he says the mean, cold-hearted, selfish speculators are driving the cost of oil up and therefor the cost of gasoline is going up.  There are indeed times when speculators do drive the cost of oil up.  There are also times when they drive the cost down.  The total longer term average of their effect on the price of oil is probably a downward effect.  Let us consider why this is the case.

If you look at the market for a given product, you see the free market price of that product now fairly readily, if you have a free market.  What is harder to figure out is what the future price of that product will be.  Let us take the case of oil, since that is the present example of most interest.  Let us suppose even that Obama is right that there is enough oil now to meet the present demand for oil in the sense that the supply and the demand do not dictate a price increase.  Is it perhaps the case that speculators are driving the price up?  It may very well be the case.  Yes, even Obama can be partly right every now and then.  Even though he has no understanding of economics and business at all, he is sometimes partly right about something in some moment of time.  What he is most likely wrong about is his assessment that the rising price is entirely caused by speculators and that their contribution is bad.

The speculators are bidding up the price of oil because they think that we will before very long face a situation in which the supply of oil will not be enough to satisfy the future demand for it without the price going up more even than the speculators are bidding it up to now.  The speculator makes money only if he is right in his assessment of the future supply and the future demand.  If he is wrong, he will lose his shirt.

So, speculators have recently bid up the cost of oil by buying it.  Why might they do this?  First, the world economy has been in a severe recession with a slow recovery, so present demand is still suppressed.  Countries such as India, China, and Brazil have had rapidly growing economies in recent times, which may surge ahead as the world gets over the recession.  Many people in under-developed countries have been improving their standard of living and are using more energy.  World trade will grow and the transportation of goods will increase.  Meanwhile, OPEC has been limiting its production of oil.  The national oil companies that control the vast majority of the world's presently developed oil fields are very inefficient oil producers.  Will they be able and inclined to increase production by enough to keep prices near present levels as economies continue to recover from the recession?  There is also a loss of production of oil in Libya and some legitimate concern that the unrest in the Middle East may lead to other disruptions of oil production in other countries. 

Even the rather free market oil companies are not able to increase oil production by much, because many countries are closed off to them and because the U.S. will not allow them to develop new oil fields offshore or on any of the vast federal lands.  Even on private land, they are often prevented from oil field development by lawsuits.  At the moment, there are also some oil refineries being threatened by production problems by the flooding of the Mississippi River.  In addition, speculators are predicting the future value of the dollar.  Will it continue to drop as the Federal Reserve continues to print money?  Perhaps the speculators think oil production will not therefor increase enough as demand increases to keep prices at present levels or at those that speculators are bidding the price up to currently.  Perhaps they are betting -- almost surely correctly -- that the value of the dollar will continue to shrink.

Let us suppose that the speculators are thinking this way and they have bid up the price of oil.  When that future time comes and many people are desperate for oil and its products such as gasoline and plastics, the present production oil of that future time would be bid up to very high prices by consumers.  It is then that the speculators let the oil they have been holding back onto the market.  The supply of oil is then increased and the price is driven down.  The speculator makes a profit if he was right about the future direction and rates of supply and demand changes and the value of the dollar.  If we deny him his profit, he has no reason to take the risk of acting on his judgment to try to smooth out price fluctuations.  The speculator takes advantage of price fluctuations to make a profit.  But, his act to make a profit, provides more supply when supply is low or demand is high, so his action reduces the price fluctuations that would otherwise occur.

In an act of idiocy, Congress made it illegal to speculate on the price of onions.  As a result, the price of onions fluctuates much more than most agricultural products.  Its price fluctuations were used as an illustration of what happens when speculators are removed from a market by a recent John Stossel program on Fox Business News.  He also discussed oil and onion prices in a column.  The horrible onion price fluctuation history goes back to 1958.  Because of the ban on onion speculation, onion prices recently went up by 36%, worse than the price increases on oil.

The present price of oil is not up just due to speculators in any case.  Much of the rise is due to the declining value of the dollar.  Obama and the big spending government thugs want badly to distract us from this effect.  They also want to distract us from the effects that past oil field development restrictions have had on oil prices, because they wish to continue those restrictions.  The loss of a large part of the Libyan oil production also causes world prices on oil to be bid up for its present effect on supply and demand.  Some states, desperate for more tax revenue, have also increased the gasoline tax.  The continued requirements for ethanol in gasoline and the increase of mixes to 15% ethanol causes the price of gasoline to go up as well.  All of these problems are caused by governments and our government wants our attention to be on speculators, not on it.  In similar past times, the government has investigated the role of speculators about 30 times and they never find anything substantial in the investigations.  These hearings are dog and pony show distractions just as Senator Hatch complained this last week.

I made the claim that the average effect of oil speculation is probably one of decreasing the cost.  Why would this be the case?  When the price of oil is low, many oil producers will cut back their higher cost production wells.  For instance, there are oil pumps all over the U.S. that pump oil only a few hours a day or less, as oil slowly seeps into the pump area from porous rock.  Delivering this small quantity of oil to market can be a bit expensive and the maintenance of the pumps which work such a small fraction of the time is high.  They simply get shut down when the price of oil goes way down.  Minimum oil production costs and then refining costs for gasoline will set something of a floor for how low oil and gasoline prices can go.  On the up side, however, there are many critical uses of oil and gasoline that make it possible for the price to go very high when demand becomes very great and the supply becomes too little.  Many a driver will still pay for gasoline to drive to work.  Many an American would pay $8 a gallon if he had to.  Many would pay $10/gallon.  Sudden decreases in supply or of demand could result in huge upward price spikes.

Yes, these price increases will bring on increased production.  For enough money, OPEC will crank up their production somewhat.  Those hour a day pumps will surely be turned back on.  Political pressure on the U.S. government will force it to allow some new oil field development.  While some deep water offshore oil fields will take 10 years of development, there are shallow off-shore and land sources that can be developed much faster.  There are old depleted oil fields in which more expensive oil recovery measures can be justified and more oil can be squeezed from them.  Greater effort can be made in refineries to break down large oil molecules to squeeze out more gasoline.  Things can be done to bring down the high prices, but many of them take time to occur.  Over shorter periods, prices can spike upward badly.  These deleterious effects are mitigated by the much maligned speculators.  Speculators are our friends.  Governments, both the U.S. and the OPEC governments, are our enemy.

What Company Pays More Taxes than 50% of the People Combined?

The 27 October 2008 issue of Forbes has a quote of an Investor's Business Daily article which answers this astounding question. We hear Obama and his supporters constantly claiming that McCain is offering a tax break to the oil companies and we are supposed to assume that this is an evil act on McCain's part. Well, actually, he is not planning any special tax break for oil companies as seems to be implied by the Democrat claim. What he is planning to try to do is to reduce our corporate tax rate which is essentially tied with Japan's corporate tax rate as the highest in the world. He knows that our super high tax rate is causing American companies to expand more of their operations abroad at the expense of expanding operations in the U.S. Of course, it is also allowing companies based in Ireland and the many other low corporate tax countries to take business away from American companies.

Many Democrats have called for a windfall profits tax on American oil companies. According to the Investor's Business Daily article, economist Mark Perry has observed that ExxonMobil will pay more taxes to the Federal government this year than the combined total of taxes paid by 50% of all taxpayers. ExxonMobil paid $61.7 billion in taxes in the first half of the year, while having an aftertax income of $22.6 billion. The government makes much more from ExxonMobil's operations than ExxonMobil does!

Jimmy Carter went the windfall profits tax route on oil companies. There was a resulting 6% drop in domestic oil output and an increase in oil imports of 15%. If ExxonMobil were not being taxed so heavily, it would undoubtedly spend more on oil exploration, drilling, and oil field development. The result is already that less oil is coming to market and this means that oil prices are higher.

But Obama wants to milk even more money out of all of America's producers and it is especially easy to convince the simple-minded that oil companies are prime targets to be milked for all they are worth. Expect less oil and other goods and expect America's standing in a global economy to worsen when Obama puts his policies into effect. Expect American energy dependence to greatly increase despite all of Obama's foolish claims that his subsidies for alternative, sustainable energy sources will bring us to energy independence. Actually, I do not believe that he believes what he is saying. He is simply using the power of government subsidies, regulations, and mandates to gain control of the energy industries in order to advance his socialist agenda. This is as much a route to power as is giving tax rebates to people who do not pay taxes! It is all about power gained by promising some ill-gotten gains at the expense of some others chosen to be sacrificed.

Big Oil U

Merrill Goozner and Eryn Gable of the Center for Science in the Public Interest published a report entitled "Big Oil U" in January 2008. The June 2008 issue of Academic Sourcebook reproduced the executive summary, with the subtitle "Corporations large and small are attempting to influence academia. These attempts are not isolated, and they are increasing. This is a threat to academic freedom."

The summary claims that "As the scientific consensus surrounding climate change has solidified, the oil, gas, coal, and electricity industries have reluctantly recognized the inevitability of political action to reduce greenhouse gas emissions. Most energy companies are distancing themselves from campaigns to discredit global warming science." The summary then bemoans the fact that some energy companies are funding research programs at universities and attaching conditions that have the potential to compromise the integrity of the research. Nowhere does this summary discuss the possibility that government funding ever does anything of a similar nature.

The study complains that nine such university-energy business programs have some of the major limitations on academic freedom due to:

• Company representatives on governing boards
• Industry sponsors have intellectual property first rights
• Industry sponsors play a role in deciding which projects are funded
• Industry review of research prior to publication
• Industry may delay publication

There are almost always some industry executives on university governing boards. Universities want them there as potential donors, for their executive advice on running a large organization, and because they have some insight into what skills students need to prepare themselves for jobs in industry, which whether academics like it or not, is where most of the product of a university winds up. However, this article takes the consistent viewpoint that universities are to be run for the sake of the faculty and their research interests, not for the sake of providing an education to students. There is no mention in this summary of any aspect of concern for the university function of educating students. This is very consistent with the way universities are largely run, not to mention public schools. Universities have two concerns: one for the research and publications of the faculty and one for the indoctrination of students with socialist and radical environmentalist propaganda. Universities more and more are disinterested in providing students with skills and knowledge which will enable them to be productive in industry. They would much rather that students took government, non-profit, and academic jobs.

In most of the cases discussed in which industry played a role in deciding which projects were funded, the role was less than that usually played by a government agency. Only at Georgia Tech did the industry partners make the decision by themselves.

The industry review of the research may play a very good role, since the scientists and engineers of the major oil companies know a great deal about energy. If they abuse their role, then the university can simply turn to government to fund the programs instead. The complaint that publication may be delayed can be handled the same way. There are cases when government funded research is also reviewed before publication and when publication may be delayed as well.

Apparently, the fact that the university generally has intellectual property first rights is less of a threat to academic freedom than a company having such a right. This entire article assumes that universities and industry are and ought to be at loggerheads. It totally fails to recognize that our wealthy society can only afford to pour money into these universities in amounts that consistently grow at rates even higher than the economy as a whole because of the incredible productivity of industry. It states that with more industry involvement "there is less space to perform research that is critical of industry or that challenges the conventional wisdom." Wow! Industry research funding for universities is swamped by government research funding for universities. Does this uncritical susceptibility of university researchers mean that they are much discouraged from criticizing government because of that funding. If so, and many of us recognize that this is very much so, then universities have a far more serious conflict of interest on their hands than that of accepting money from industry. Surely it is also the function of university elites to warn the great masses of dumb Americans of government excesses, mistakes, failed policies, impossible goals, frauds, inefficiencies and other problems which we know them to systematically ignore. Is it not the case that much of this tendency to ignore the limitations of governments is due to university dependence upon government funding? Of course it is!

As for discouraging a university from challenging conventional wisdom, I thought that they were in the business of creating the conventional wisdom and implanting it in their students with religious zeal. Long ago, they gave up on the ideal of teaching students to think critically for themselves and to close observe reality. Now they teach the tenets of tired and false socialism and anthropogenic global warming. Socialism has had nothing but obvious collosal failures and global warming never lived up to its billing even when there was a bit of warming and now there has been none for 10 years! No, the universities are one of the primary sources of myths in America today.

There is further admission that the commitment to truth is weak among university faculty members in this summary. Sheldon Krimsky of Tufts University observes that "It's when they ask, 'Can you write the research in a certain way?' that it takes away the autonomy of the researchers, and many researchers are perfectly willing to trade that away so that they can get funding." He is talking about the role of corporations in biomedical research, but if they are so susceptible to dishonesty in that mode of funding, surely they are equally or more dishonest when dealing with government agency funding sources.

The summary says there is an inherent conflict between the interests of universities and the interests of corporations. The summary states "University research is supposed to work toward the common good. Corporate research is primarily aimed at maximizing profits." Wow, what a self-serving assessment. If corporation research is aimed at maximizing profits it does so by producing better product, or cheaper product, or whole new kinds of products that people buy freely in their pursuit of their own happiness. This we know in a capitalist society with free markets to be phenomenally effective in serving the common good. Universities supposedly exist primarily to educate students, which, if it is done well, serves each student well and then has great benefit for the common good. More and more, in order to have good faculty who will put up with educating students, many of whom are not so interested in being educated as in partying, universities hold them by making research a priority, which also has been contrived to give the university itself great prestige, even if the students are poorly educated. So, if we are to put the role of universities in a pejorative way, we can summarize their purpose as get government funding, publish or perish, never offend the government, and always ally oneself with government to expand its role and power. This comes much closer to a truthful assessment of their purpose than it should.

Now there is a very funny twist in this summary. It proceeds to note that carbon-dependent industries have only funded modest programs with modest goals in universities. One is tempted to ask how such modest funding is supposed to pose such a great threat to the universities. Indeed, university research in total dwarfs the entire R&D budget of the oil and gas industries. Given the widespread animosity of the universities to industry in general and to the oil industry in particular, it is clear that it is the oil industry that is most in danger, not the universities. Indeed, it is precisely because government funding of so many university researchers has bribed most of them into participating in the global warming alarmist scandal that the oil companies have been trying to fight their image as evil-doers by funding these university energy programs, which the summary notes is done to protect themselves.

The summary also bemoans how little the oil companies are investing into research of alternative energy compared to what they spend on exploration and the exploitation of new oil reserves. There is a reason for this. The alternative fuels do not offer sufficient return for these large companies to make a profit and to continue in business. Furthermore, finding new oil and developing it is becoming rapidly more expensive, even as the non-national oil companies, such as those funding the university programs complained about, are at or almost at their peak in production. They are almost certainly all on a downward production path. Alternative energy cannot solve the problem. Spending too much R&D on alternative energy will only make matters worse for the oil companies, since any possible return on investment is much too far into the future.

The universities want to take the toy from the little boy next door and then refuse to share it. This makes them look rather childish. Meanwhile, these university purists claim the oil companies are the wolf to their Little Red Riding Hood's grandma, even as the naked grandma climbs merrily into bed with the government wolf.

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?

Congress Backpeddling on Ethanol

It seems clear now that both the Democrats and the Republicans in Congress are largely coming to the conclusion that they made a big mistake in backing ethanol mandates, subsidies, and exclusionary tariffs. Some aspects of the magnitude of their mistake have only relatively recently become clear such as the fact that there is probably no net energy achieved with the use of farmed plants to create ethanol, with the possible exception of sugar cane grown in some very favorable areas. Another example of recent knowledge is that ethanol use does not likely reduce net pollution when all factors are accounted for. On the other hand, the idea that one-quarter of all corn could be used to create ethanol and that this would not greatly increase the cost of corn, those end products dependent upon corn such as beef, pork, chicken, corn oil, and corn syrup, and of soybeans and wheat as corn was planted in their stead, was ludicrous. This year, 35% of the corn crop may be going to ethanol production.

President Bush is still saying that the ethanol mandates are not barely responsible for the food cost increases. He is disappointingly slow on coming around on this. It is true that corn and other food prices are going up both because of the reduction of supply due to the ethanol mandates and due to a major increase in world-wide demand for better and more food.

Congress has pleasantly surprised me by starting to change course so soon. House Minority Leader Steny Hoyer, Democrat, is not as nimble-minded as he should be, but he is now advocating that the upcoming farm bill, delayed from last year, should reduce the ethanol subsidy. They would also increase the subsidy for cellulosic ethanol. He has said, "Obviously, sometimes there are unforseen or unintended consequences of actions." Imagine a committed socialist allowing that he is not omnipotent! Even that he may have been wrong-headed!

Republicans in Congress actually want now to remove mandates requiring the blending of ethanol with gasoline. Representative Jeff Flake, Arizona Republican, introduced a bill to end all federal ethanol supports, including the requirement to blend it with gas, the tax credits for ethanol refiners, and the tariffs to prevent the importation of sugar cane produced ethanol, primarily from Brazil. He recognizes that our economy does not need big increases in food prices on top of those for energy, such as oil. Senator Kay Bailey Hutchison, Texas Republican, wants to freeze the ethanol mandate for gasoline at this year's level. On Rush Limmbaugh's program, she noted that cattle and pig producers were being hurt badly. Apparently there are a few of them in Texas! Rick Perry, Texas governor, has asked the EPA to allow Texas to use only half as much ethanol in gasoline blends as is required.

Meanwhile, some farmers are asking Congress to put windfall taxes on oil producing companies, claiming that these companies are responsible for driving up their costs. The National Corn Growers Association made the foolish claim that the use of biofuels with gasoline was saving Americans $69 billion a year. Others such as Hillary Clinton are also demagogically calling for windfall profit taxes on the oil companies.