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Wednesday, February 29, 2012

The GOP Race -- What comes next?

After Mitt Romney's wins yesterday in Arizona and Michigan, one would expect that he should be coasting forward to the nomination. He is not yet there, however, and the GOP race remains quite fluid. In just the next week, eleven states will vote, and Romney may win as few as four while losing seven. Here is the rundown:

Washington -- the caucus is Saturday. The latest poll (from last week)had Santorum up by 11.

Alaska -- the caucus is Tuesday. There are no polls.

Georgia -- The primary is Tuesday. Gingrich is up by about 10% in the polls in his home state.

Idaho -- Another Tuesday caucus. Another state with no polling. There are large numbers of Mormons in Idaho, however, so Romney has to be favored.

Massachusetts -- Romney has to be favored in Tuesday's vote. After all, this is his third home state and the polls have him up by 45%.

North Dakota -- Tuesday's caucus seems ready made for Santorum, but there are no polls to confirm this.

Ohio -- The polls for Tuesday's primary all show Santorum in the lead, but all of them predate yesterday's sweep by Romney.

Oklahoma -- Santorum is way in front for Tuesday's primary. The race is between Romney and Gingrich for second place.

Tennessee -- Another Tuesday primary with no polling yet. Nevertheless, the likely winner is Santorum or Gingrich.

Vermont -- the last poll in Vermont was during the summer of 2011. The primary should go to Romney, however.

Virginia -- only Romney and Paul are on the ballot for Tuesday's primary. If Romney loses here, he should drop out of the race.

Wyoming -- The caucuses in Wyoming have no polling data which has been made public.

Looking at all these races, Romney is only clearly ahead in Massachusetts, Vermont, Virginia (by default) and probably Idaho. Gingrich leads in Georgia. Santorum is ahead in Ohio, Oklahoma and likely North Dakota. Tennessee goes to either Santorum or Gingrich. Washington, Alaska and Wyoming are anyone's guess.

If things play out with Santorum taking Washington and Alaska and Romney taking Wyoming, then less than half of the delegates awarded between now and super Tuesday will go to Romney. He ought to be doing better at this point in the race.

Focusing on the Essential -- Corporate Taxation

One issue which has actually received a reasonable amount of attention during the current presidential campaign is the tax structure applicable to corporations. Even so, much of the discussion has been at a simplistic level; a more comprehensive review is needed.

There are four keys to the current tax structure that need to be addressed:

1) The rate for taxation on corporate income is 35%. This is the second highest rate in the world.

2) A huge chunk of taxation on privately held corporations is paid through the personal income tax. Corporations that are either Subchapter S entities or LLC's pay no separate corporate income tax; their profits are included on the tax returns of their shareholders.

3) Income earned by American corporations outside of the USA is not taxed unless and until the income is brought back into the country. This has led to American corporations holding that income in foreign lands and reinvesting it there, thereby avoiding the 35% tax.

4) The corporate tax structure is riddled with special exemptions, deductions, credits and other provisions which make the tax code into a maze and which also results in better treatment for firms with the most successful lobbyists.

These key provisions place the USA at a competitive disadvantage compared to other industrial nations. There are a myriad of relevant points here, but consider these:

1) The funds held overseas by American corporations total well over a trillion dollars with some estimating the number to be close to two trillion dollars. All of these funds could be invested into the American economy, but the tax code provides a major disincentive for doing so. Few companies want to bring cash home for investment only to pay out 35% in taxes.

2) The confusion of the tax code requires American companies to spend enormous amounts just to comply with its requirements. These are wasted expenditures; nothing is produced as a result. Also, this same confusion discourages foreign investment in the USA since the tax treatment for the investments is sometimes open to debate.

3) Manufacturers located abroad are given a competitive advantage over American manufacturers since only the domestic firms have to comply with the tax code. Think of it this way: if a manufacturer in Korea makes a product identical to one made in the USA and for the same cost, both the Korean and the American company make the same profit. The American company, however, has to pay 35% of the profit to the US government while the Korean does not, so the tax code results in the Korean having a net profit which is 50% higher than that of the American firm.

4) Changes to the personal tax code often have major impact on the corporate world. The current debate about raising the tax rate for the so-called 1% is actually a debate to a great extent about raising taxes on privately held companies that pay taxes through their shareholders. The result is that arguments about class status and fair shares end up affecting the most productive segment of the economy in a major way.

5) Some companies manage through some means to avoid all taxes. The best example is General Electric. This industrial giant earned billions of dollars last year but paid no taxes. Particularly since the chairman of GE is one of Obama's cronies, this treatment gives rise to the clear perception that the code is unfair and rewards "friends" of Obama.

So how can these problems be addressed? The candidates have offered various solutions.

1) Funds Held Overseas -- All candidates have addressed what should be done with regard to the one to two trillion dollars now held by corporations overseas. There is a clear difference between the parties on this point. President Obama wants to impose a tax on these funds immediately; his latest proposal is for a 30% tax on the accumulated funds held outside of the country. It is not clear if he wants to also continue the 35% tax on repatriation. The tax, however, would give the government a big boost in revenue. There would be no effect on economic growth. Republican proposals all center on waiving all or most of the tax on the funds provided they were brought back to the USA. Some candidates have also placed requirements on how those funds need to be used. The idea here is that a greatly reduced tax (say 5% instead of 35%) would lure the bulk of the funds back to the USA. When these funds then get pumped into the American economy, they would provide a private sector boost larger than Obama's stimulus, and they would increase the growth rate of the economy by two to three percent.

2) The confusion of the code and the unfairness of special provisions could be eliminated by dropping all the special provisions and using a greatly reduced tax rate. Instead of some companies paying 35% and others like Obama's friends at GE paying nothing, everyone could pay 12% or even a lower rate. Billions would be saved with the reduced cost of compliance with the tax code. Distortions in the economy due to tax structures would be eliminated. Claims of unfairness could also be removed. Changes of this sort have been proposed by the Republicans, but not by Obama.

3) The effect of personal tax rate changes on the economy could also be reduced by ending the ability for companies to pay taxes through the personal returns of the shareholders. If the corporate tax rate were 12%, there would be no need for Subchapter S. Indeed, the code could be modified so that partnerships and LLC's above a certain size (like $5 million in revenues) could be required to pay tax as if they were corporations.

4) Earlier in the campaign, the 9-9-9 plan of Herman Cain introduced a consumption tax which had the effect, in part, of supporting American manufacturing. Taxes were levied on the sale of products whether domestic or imported, so the distortion of the corporate income tax was nearly eliminated. None of the current candidates has endorsed a consumption tax. Rick Santorum has called for elimination of all tax on manufacturing. While this would support the US economy, it would also continue different treatment for different groups. Romney has just promoted lower overall rated to reduce the advantage for foreign manufacturers. Obama has proposed a slight reduction in the corporate rate, but, when coupled with the new taxation on foreign operations, Obama is actually looking to increase total taxation on American businesses.

Tuesday, February 28, 2012

That Did Not Take Long -- Gasfrac signs long term contract with BlackBrush

There is some great news out tonight about Gasfrac Energy Systems; it signed a long term contract with BlackBrush Oil and Gas, L.P. for "the provision of GASFRAC's proprietary waterless LPG stimulation process in the Carrizo Springs area of the Eagle Ford formation. BlackBrush has over 900 drillable locations for Eagle Ford and other oil zones in this area." The rumors of impending contract announcements have come true. Most surprising is that the contract is in the Eagle Ford and not in Colorado as the rumors suggested.

With this contract, GasFrac has moved from experimental through "just starting up" past "untested" and well on into "accepted". If another contract (for Colorado) appears in the next few weeks, the trip into acceptance will be almost complete. Add in the MOU for work in Europe signed the other day with eCorp and the growth plan for GasFrac is quite obvious.

Earlier today, UBS downgraded GasFrac to sell. While I wrote this afternoon that I did not agree with the downgrade, I now have to say that the UBS analyst must get this years award for worst call on a stock. At least, he should get the award for worst timing of a bad call. Think of it this way: hundreds of thousands of shares traded after the UBS call. Those UBS clients who sold out just hours before one of the biggest successes ever by GasFrac may soon be former UBS clients.

Gasfrac trading after UBS

I write often about GasFrac Energy Services (GFS in Canada and GSFVF on the Pink Sheets). Just two weeks ago, I mentioned that the upcoming earnings report has been scheduled for a Friday afternoon with the conference call coming the next Monday morning. This seemed either like an ominous portent of bad news or the mark of an inexperienced management team. The stock at the time was trading around $6.80 per share. The market, however, ignored the possible meaning of the timing issue and began buying shortly thereafter. In the last two weeks, GasFrac has risen to hit $9.06 less than an hour ago. That is an increase of 33% in two weeks. Volume has also been quite heavy during this rise. As of 1:00 pm, the combined volume in Canada and the USA is already three times the 90 day average volume. This makes the price rise much more impressive. There has been serious buying.

About 45 minutes ago, the wire service reported that UBS cut the stock to sell from neutral. That took the price down 5% but the stock is still up nicely today. So what can one make of all of this? Is UBS correct or is it missing something big?

The best answer depends on one's time horizon. If you are looking for another 33% rise in the next two weeks, I suggest that you look elsewhere. On the other hand, if you are looking for a good long term value, then it is time to get aboard and ride Gasfrac to much a much higher price over the next year or two. Here are the key facts you should know:

1) Just the other day, Quicksilver reported earnings and mentioned that it used Gasfrac in Colorado and achieve significantly better results than it would have had with regular hydrofracking.

2) There is continual chatter that Gasfrac is about to announce some long term contract(s) with companies in the USA. This would signify market acceptance of the process in the USA and would move Gasfrac down the road between a "developmental" type company to an "established" one.

3) As more and more months go by and GasFrac continues to operate, the participants in the oil/gas market are becoming more accepting of the LPG process. There is surely a long way to go, but we have not seen any poor results for wells that were completed by the company. As each day goes by, the likelihood that GasFrac will meet the high revenue projections for 2012 and 2013 becomes higher.

4) If GasFrac can announce at least one long term contract with an American company prior to earnings, the importance of the results from the fourth quarter will be diminished. The market always looks forward, and this is particularly true with new companies like GasFrac.

5) In the last two months, the press coverage for the company has dramatically increased. This may be in part the reason for the rise in the stock. Of course, one always has to wonder what is happening when a stock has a move like the one GasFrac has been having. Did some big news leak out; in other words, is news of a long term contract getting around before the public announcement?

6) Do not forget that according to the latest estimates, GasFrac is expected to increase revenues year over year by 141% in 2012 with eps jumping from $0.02 to $0.69. These are analysts' estimates, so they can change at any time, but each number includes figures from at least six firms.

So what does all this mean, particularly in the face of the UBS cut to sell? In my opinion, GasFrac remains an outstanding long term investment. Nothing has come forward which in any way calls into question the long term prospects of the stock. We may see some short term gyration, but Gasfrac remains a strong buy. It is not a place to put next month's rent money, but over time, it should make quite a profit.

DISCLOSURE: I remain long GasFrac. It is one of the largest holdings in my accounts.

Romney goes off the Deep End

The stress of possibly losing his home state primary is beginning to show on Mitt Romney. Yesterday, he lambasted Rick Santorum for a "dirty trick", a robocall to registered Democrats asking them for their vote in the primary. In Michigan, all registered voters are allowed to vote in the primary of either party, so Santorum's robocall was asking potential voters for their vote. Oh, the horror of it! Poor Mitt! Just imagine having to face an opponent who actually has the nerve to ask potential voters for their votes. Sure sounds like a dirty trick to me.

The truth is that there are millions of Democrats in Michigan who could find themselves in sync with Santorum; these are the more conservative and religious union members who can identify with Santorum's programs aimed at helping factory workers and others engaged in manufacturing. Not too many union Democrats have much affinity with Romney.

I guess Mitt thinks that on the day before the primary he can charge Santorum with a dirty trick in the hope that before anyone actually hears what the supposed trick is, the primary will be over. Sadly, Romney seems to forget that there are more than 40 other states to follow. It has been bad enough for Romney to run a wholly negative campaign. it is much worse for him to get caught using tactics like this one.

The last polls before today's vote showed a one percent margin between Santorum and Romney with one or the other ahead depending on which poll one consulted. No matter who gets more votes tonight, Santorum has already won. He has tied Romney in Romney's own home state. Romney won here four years ago by a big margin over an opponent who had already wrapped up the nomination. Now, when Romney is in the middle of an actual fight, his birth state is going for someone else. It is a big blow to Romney's campaign.

American Foreign Policy -- Successes and Failures

Over three years ago, president Obama took office after a campaign in which he criticized essentially every aspect of American foreign policy during the Bush administration. It seems appropriate to see how well Obama has done since taking office. Let's look at the record:

Items that were a success for Obama:
1) Osama bin Laden is dead! Of course, the information used to find bin Laden was developed as a result of the enhanced interrogation used at Guantanamo, so if Obama had gotten his way, bin Laden would still be out there.
2) American troop are out of Iraq. In fairness, this victory is the result of the Bush policy on the surge which Obama strongly opposed. Indeed, by removing all troops from Iraq, Obama has left the US unable to assist the Iraqis in any meaningful way now that there is an upsurge in bombings within Iraq.
3) A number of high level al Qaeda leaders have been killed using drones based in Afghanistan.

Failures for Obama include these items:
1) The strength of American long-term alliances has been reduced. The special relationship with the British is no longer so special. There have been many rocky moments with our ally Israel. The American alliances with Turkey and Egypt are either dead or dying. Even the relationship with Canada took a hit with regard to the Keystone Pipeline.
2) The war in Afghanistan was changed by Obama from a small scale involvement into a large scale assault. Casualties have skyrocketed. Our relationship with the Afghan people has not improved, however. Indeed, judging from the current rioting about burning the Koran, American relations with Afghanistan are at their lowest point in years.
3) The price of oil has more than doubled.
4) The Iranians are close to having nuclear weapons and no actions taken by Obama have made any difference.
5) American relations with Latin America are at a low ebb. A number of countries actively oppose the USA.
6) American debt to foreign entities has skyrocketed.
7) Obama has not accomplished any of his goals regarding global warming. While I think this is a good thing, it does show that Obama is inept.
8) During the arab spring, Obama has quickly supported the overthrow of American allies but remained curiously detached when the uprisings were against American enemies.
9) The ability of the United States to project its power around the globe is less than when Obama took office and it is scheduled to be greatly reduced.
10) No progress has been made in dealings with North Korea.

The list of failures could go on, while I cannot think of another success. The truth is that when it comes to foreign policy, Obama has been a truly crappy president.

Monday, February 27, 2012

Gas Prices and the Economy -- 5 -- the Truth abouth Obama

In a recent speech in Florida, president Obama said that he favored drilling for oil and gas and pointed out that American production of oil has risen since he took office. As previously discussed here, Obama actually did not foster higher production; instead, he did all he could to discourage oil and gas drilling. Now the latest statistics are out, and they clearly show Obama was lying. Oil production on federal land and off shore was 726 million barrels in 2010, the year when Obama really started trying to discourage drilling. In 2011, oil production on federal lands and waters fell 14% to 626 million barrels. This was the lowest oil production since Obama became president. The numbers were the same for natural gas. Natural gas production from federal lands and waters fell 11% last year from 5615 million MCF to 4609 million MCF. All of the increase in oil and natural gas production took place on private and state owned land, in other words, places that Obama could not control. So despite his claim to be promoting energy production, Obama has actually curtailed oil and gas output in a very large way.

By the way, in case you are wondering if these numbers are the product of some oil industry flak, they come from the United States Department of the Interior as reported in the New York Times. That means that any possible way to slant the results in favor of helping Obama has already been done, and the numbers still indict and convict Obama as a blatant liar.

Economic Gurus or Lemmings

Every day I hear predictions about which way the economy is heading. The internet and the airwaves are filled with "experts" who tell us in great detail what just happened. Most of them also tell us what is coming next. Indeed, I used to find it funny that every morning at 9:30 no one knew what would happen in the market that day, but at 4:00 we would hear reports telling us not only what the market did, but also why. If these "experts" really knew why, they would be investing themselves rather than making their living by reporting. Many economic predictions seem as flawed as those about the daily performance of the market. It often seems that most of the so called experts can only predict that things will continue as they have been going. These folks seem more like lemmings following each other than actual experts.

This morning I hear a report which illustrates this phenomenon. According to the business reporter from CBS News, many "experts" (his word) now think that higher gasoline prices will not hurt the economy like they have in the past since we have already seen $4 gas before (right before the crash) and since the economy is growing rather than contracting as it was last time gas was so high. This is nonsense. Each dollar increase in the cost of oil takes about $5 billion out of the pockets of American consumers and more than half of that total leaves the economy completely. That means that the rise from $80 per barrel of oil to $110 took far more from consumers than the much touted payroll tax holiday gave them. It seems safe to say that if the payroll tax holiday was supposed to push the economy forward (according to these same experts), the rise in oil prices will hold the economy back. Further, as gasoline prices hit new highs, folks get sticker shock. They not only lose the portion of their income which now must be devoted to fuel costs, but they start to fear for the future of the economy and hold back on other purchases. This has happened over and over in our economic history. In other words, these "experts" are just wrong.

The Gray Lady sinks

I used to read the New York Times every day, but that stopped about ten years ago. Then yesterday, I found myself unexpectedly on the Acela train from Philadelphia to Stamford, a two hour ride. I bought a Sunday Times to fill up the time on the ride. Years ago, reading the Sunday Times took about two and a half hours and was extremely enjoyable. Yesterday it literally took 22 minutes and was a bore. There were sections, like Business, that had no news or even interesting opinions. There were other sections, like Style, that had nothing that remotely interested me. While I admit that I am not a youngster, I am still younger than the average age of the Times' readership; one would think that this alone would mean that the paper would be of interest to me. Even the "news" sections were sparse. There were none of the in depth pieces on stories that get little coverage elsewhere, the type of articles that used to be the very best of the Times. Instead, there was the obligatory articles slamming the GOP and the others extolling Obama, but even these seemed more like propaganda than news. In short, the Sunday Times sucked. It is no wonder that circulation is down by so much. The Gray Lady is sinking still.

Sunday, February 26, 2012

Do you pay attention?

With the swirling stories about social issues and past votes, it seems a good time to see how well you all have been paying attention to reality. This quiz should measure your awareness.

1) Which GOP candidate for president favors banning the use of birth control pills or other contraceptive measures?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

2) Which GOP candidate has announced a plan to have the federal government ban abortion during the first 100 days of his term in office.

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

3) Which GOP candidate has announced a plan to have the federal government ban gay marriage during the first 100 days of his term in office?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

4) Which GOP candidate has announced that he opposes domstic partnerships for gays?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

5) Which GOP candidate has announced that he wants the federal government to follow Christian teachings even if it might discomfit those who are not Christian?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

6) Which GOP candidate has announced that he wants to end both the food stamp program and Medicaid for everyone since these programs promote increased numbers of people who rely on the federal government for necessities?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

7) Which GOP candidate favors having the FBI infiltrate all mosques and other Moslem institutions in the USA in order to keep tabs on what he calls "potential terrorists"?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

8) Which GOP candidate says that he favors reducing immigration from Hispanic countries in order to keep the character of American society from changing?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

9) Which GOP candidate says that America can no longer take the time to consider the environmental impact of its actions since the economy is in such need of help?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

10) Which of the GOP candidates has a plan to reduce taxes on the wealthy so as to shift the tax burden back on the middle class?

a) Ron Paul
b) Mitt Romney
c) Rick Santorum
d) Newt Gingrich

ANSWERS: If you identified any candidate in any of the questions, you were wrong. The only correct answer is that none of these candidates has ever said or done anything like what is stated in the questions. The only place you would have picked up the idea to the contrary would be from the media and the extreme lefties who populate the Democrat party. In other words, the only place you could have come to those ideas is from lies put forth about the GOP candidates.

Tell the truth now: did you think that any of these were questions that could be answered with a name?

Saturday, February 25, 2012

More Americans killed in Afghanistan

Two more American millitary personnel were killed in Afghanistan in the aftermath of the accidental buring of some Korans. An Afghan policeman shot two American officers in a secure location. These people are just nuts. First of all, the locals are rioting because the accidental burning of the Korans "defiled" those books. Actually, the Korans were first used to pass messages from one inmate to another at a local prison. The prisoners were defiling the Koran, but the locals do not care. When the books were subsequently burned by accident, the locals go crazy.

The truth is that Americans are fighting and dying to protect Afghans from other Afghans. Would they prefer if the USA just left? The Taliban could come back and kill many of those who are now living under the Kharzai regime and not fighting. The policeman who shot the American officers would certainly be marked for death by the Taliban, but he is shooting people who protect him?

The truth is that Obama blew it when he loaded up Afghanistan with almost an extra hundred thousand American troops. Before Obama, we were fighting a bit in Afghanistan but our troops had a low profile. After Obama decided that we needed to fight this "just" war, we sent in tens of thousands of more troops, suffered vastly increased casualties and achieved nothing much at all. We easily could have used the drone attacks and special forces to strike at al Qaeda and the Taliban. We did not need to pacify or nation build. It seems strange that even when Obama uses American force, he still blows it.

Drudge is Campaigning Again

In recent weeks, Matt Drudge at the has done everything he can to promote Mitt Romney in the GOP campaign. There has been no endorsement, rather a non-stop stream of first anti-Gingrich and now anti-Santorum articles. I keep looking for positive articles about Romney, but so far Drudge has not found many. Drudge is not shy about linking to the weird or the unfair; it is one of the things that makes his site so interesting. Nevertheless, by reprinting headlines as the link, his site and its tens of millions of visitors probably has more impact than most of the articles in question. Today brings a good example. That AP released a "news" story under the headline "Santorum Benefits from Mistaken Religious Identity". The article points out that Santorum is a Catholic who appeals to evangelicals. So far, no mistaken religious identity. Anyone who listens to Santorum for five minutes would know quickly he is a Catholic. Only once one gets halfway through the lengthy story, is there any hint of why the headline reads the way it does. It seems that some obscure newsletter ran an article entitled "Catholic politicians you thought were evangelical". That is the only place in the entire piece where any mention is made of someone mistaking Santorum's religion. So here is Drudge promoting the idea that there is a mistake with his religion on the basis of an AP article that actually does not say that.

Friday, February 24, 2012

The Media Tries to Change the Subject

One of the most slanted news sources on the web which claims to be unbiased is Yahoo News. Sure, there are some sites like the Huffington Post which have no pretense of being fair, but someone reading Yahoo News for the first time would not know that the site is totally slanted. Each time I happen upon Yahoo, I am always amazed by the true extent of the liberal bias. Today was another good example.

Congressman Alan West of Florida yesterday criticized the speech by president Obama about energy. West pointed out that it cost over 70 bucks to fill up his tank and that Obama's plan to bring down prices was neither a plan nor something that would work. Yahoo News coverage of what West said was essentially non-existent. Instead, Yahoo wrote a piece about how West drives a Hummer H-3. That's right, instead of talking about the price of gas and what West said, Yahoo wants us to focus on the gas mileage of West's car.

I wonder if the folks at Yahoo News actually think that they are fooling anyone. Their coverage makes about as much sense as a story about a murder where instead of covering the crime they write about how the brother of the victim did not keep his yard clean. Are they kidding?

Afghanistan, Syria and Iraq

Headlines from the Middle east never seem to get any better. Rioting in Afghanistan took the lives of 12 people today who were protesting the inadvertent buring of some copies of the Koran at an American airbase. Hundreds were killed in a major onslaught by the Assad regime in Syria. A series of bombs were set off in Iraq (mostly in Baghdad) with over 50 people dead; the government blames al Qaeda for the blasts. The reality is that the Afghan riots are an attempt by the Taliban to take advantage of an unforced error by US forces. No one was trying to insult the fundamentalist forces in the country, but they did a great job of it without trying. No matter what happened to the books, it does not justify killing American soldiers or other protesters. We need to find out if these protests are being staged or if they are spontaneous. After all, spontaneous protest would make clear that the current policiy in Afghanistan has failed to win even minimal trust from the locals.

The killing in Syria is the subject of a meeting today in North Africa among the "friends of Syria", an international group trying to end the fighting and help the protesters. Assad looks like he is trying to finish off all the protesters before anything else happens. Congratulations to the international community for moving at such a glacial pace. Maybe they can wait for another 5000 dead before doing anything.

The Iraq bombings are perhaps the most troubling. If Iraq slides back into chaos, then all of the efforts by American troops for the last eight years could easily go to waste. Indeed, Iraq could become a vassal state to Iran, a development that would alter the strategic balance in the Middle east in ways very detrimental to American interests. If the USA still had troops in Iraq, we could help determine exactly what happened. Of course, since Obama pulled them all out, we are left in the dark. More congratulations to the Obamacrats.

The Price of Oil and the Future

In a strange twist, it may well be that the speech about gasoline prices given this week by president Obama may be the beginning of the end of his presidency. Obama has opted for the course on energy that is most likely to lead to his defeat. This may not seem obvious, but here are the reasons why:

1) The American economy can be very responsive to fuel prices. As gasoline prices move up and down there is some change in the amoung of funds that consumers have for spending on other items and this can speed or slow the rate of economic growth. The effect is not a major one, however, until gasoline prices hit unusual highs. At a certain point, ordinary consumers see the extremely high cost of filling up their cars and they take notice. Not only do consumers try to conserve gasoline due to the higher prices, but they also cut back on other purchases. Vacations and other trips are the first things to fall, but all sorts of other items get caught up in the mix as well. Everything from TV's to shoes feels the effect of this new and increased concern of consumers. Every time that gasoline prices have soared, the economy has tanked. Remember, just before the great recession in 2008, oil prices hit their all time record high.

2) In his speech, Obama made clear that he does not buy into the idea of increasing drilling as a means to lowering prices. Indeed, his focus was on putting the blame for high prices elsewhere; it is Iranian disturbances or something else that has led to high oil prices, he tells us. Obama even mocked the GOP for its supposed three part plan to lower oil prices, "1)drill, 2)drill, and 3)drill." Obama also promoted green energy once again, this time fuel from algae.

3) None of the ideas that Obama mentioned in his speech will have any effect on the world price of oil. The response of the oil markets to the Obama speech was a yawn; prices continued to wiggle upwards a bit. so the trend continues, and it foretells of much higher prices to come. Every year, there is an upward trend in gasoline prices during the months of March to May with the peak around Memorial Day. This is a byproduct of a)the decline in supplies as refineries switch over to their summer mix and b)the normal increase in driving that takes place when the weather gets better in the spring. On top of this, the Iranian situation is likely to get worse; indeed, the mullahs may decide to close the Strait of Hormuz which would easily double the world price for oil overnight. No large new supplies are coming on line either. All of this points towards an increase in speculation as well, so the most likely course is that oil prices will keep going up.

3) If gasoline prices continue to soar through the end of May, the American economy will head south. All the recent good news which shows that the economy may actually be turning the corner towards some reasonable growth rate will be replaced by slowing growth or even a recession. Unemployment will stop falling and start rising again. Since these are all lagging indicators, a high gasoline price in May will mean higher unemployment in July, August and maybe September. If the gasoline prices stay high into June and July, the bad economic news will continue through election day.

4) Despite all the garbage that gets tossed out with regard to the upcoming election, the one undeniable fact is that Obama will not get re-elected if the economy is clearly going in the wrong direction. After four years in office, Obama has to at least have movement in the right direction or he is history. Few voters will care whether or not the cause of high oil prices was due to Obama or not, so the Obama campaign slogan ("It wasn't me") will not carry the day.

There are, of course, things that Obama can do to change the trajectory of world oil prices. Obama could release more oil from the strategic petroleum reserve to drive down prices. That is a temporary move, however, and it would be unlikely to provide enough of a solution without a release of enormous amount of oil, something that would be perceived as a purely political move. Obama could also open up all sorts of new areas to drilling and hope that the prospect of more oil would drive down prices. but these moves have to come quickly. If Obama waits until May when gasoline prices are peaking, the damage to the economy will already be baked in the cake.

I just do not see Obama changing course in time. A week after mocking the idea of "drill, drill, drill", even Obama will not just adopt it as his plan. Indeed, with Robert Gibbs out there telling the lie that the USA has only 2% of the world's oil, the Obama campaign is going all out the other way. It may be their biggest mistake of the campaign.

Thursday, February 23, 2012

Gas Prices and the Economy -- 4 -- the Obama Response

At a speech in Florida today, president Obama answered those who jave attacked his environmental and energy policies as being responsible for the current high gasoline prices. Obama's response breaks down into two parts:

First, Obama did his usual, he blamed something or someone other than himself for the problem. This time Obama did not blame George Bush or Republicans since no one could believe that one. Instead, Obama blamed high fuel prices on tensions with Iran, rising demand from China and India, and speculation by Wall Street. Is he kidding? Really? It is true that there are tensions with Iran. It is also true, however, that there have been tensions with Iran since 1979 when the Iranians occupied the US embassy and took American diplomats hostage. Indeed, Obama seems to want to ignore that production from Iraq is at recent highs and that production from Libya is coming back after the recent fighting there. Since Iran is still selling all its oil on the world market, there is really no reduction in supply and no reason for prices to rise. Rising demand from China is also nothing new. China and India use much more oil than they did ten years ago, but nothing has happened in the last six months to increase Chinese or Indian demand. The current rise in prices has nothing to do with the Chinese or Indians. Well how about those pesky Wall Street speculators? That too turns out to be a phony. The flow of funds into hedge funds that invest in oil or other energy sources is actually negative for the last three months. That's right, there is an outflow of funds which means more selling than buying. Now this does not mean that there are no speculators in oil; there are always speculators in oil. What it does mean, however, is that there is no major push by Wall Street which could drive up the price of oil.

The truth is that the price of oil is being driven by a reduction in supply, a reduction which the USA could remedy simply if Obama would stop putting roadblocks in the path of domestic oil production. The fault is not with others; it lies squarely on Obama's shoulders.

Obama's second answer to high gasoline prices is another of his green energy programs. This time, however, he is not thinking small; he is thinking tiny. Obama wants to invest $14 million in a program to get fuel from algae. This nonsense (undoubtedly run by some big Obama contributor) will never produce a substitute for gasoline. But that is not all. Obama also wants to raise taxes on the oil companies. We all know that if one taxes something, one gets less of it. So, Obama's plan is to cut oil production through taxation. Less production means higher prices. But Obama still wants America to believe that none of this is his fault.

Obama has got to go!

Romney Gets Caught in a Lie

At last night's debate, Mitt Romney told America that both Newt gingrich and Rick Santorum were wrong when they said that he had acted as governor of Massachusetts to force Catholic institutions to provide abortion pills despite their religious and moral objections. Gingrich responded that the reports he had seen all said that Romney in fact had taken such action, but Newt backed off from pushing the point further. Gingrich took Romney at his word. Well now the truth is coming out, and it does not look good for Romney.

This morning, Quin Hillyer of The American Spectator calls out former Romney for his false statements. It all pertains to a so-called emergency contraception law enacted in Massachusetts in 2005. Here is an excerpt from that column:

Dec. 7, 2005: a week before the law was to take effect, the Boston Globe ran an article headlined, "Private hospitals exempt on pill law". The article said the state Department of Public Health had determined that the emergency contraception law "does not nullify a statute passed years ago that says privately run hospitals cannot be forced to provide abortions or contraception."

Public Health Commissioner Paul Cote Jr. told the Globe: "We felt very clearly that the two laws don't cancel each other out and basically work in harmony with each other."....

December 8, 2005: The Globe itself ruefully bowed to this legal analysis. It ran an editorial headlined: "A Plan B Mistake." "The legislators failed, however," the Globe said, "to include wording in the bill explicitly repealing a clause in an older statute that gives hospitals the right, for reasons of conscience, not to offer birth control services."

Liberals joined in attacking Romney's defense of Catholic hospitals. But that defense did not last long.

The same day the Globe ran its editorial, Romney held a press conference. Now he said his legal counsel had advised him the new emergency contraception law did trump the 1975 conscience law.

"On that basis, I have instructed the Department of Public Health to follow the conclusion of my own legal counsel and to adopt that sounder view," Romney said. "In my personal view, it's the right thing for hospitals to provide information and access to emergency contraception to anyone who is a victim of rape."....

Lifesite News reported at the time, "Romney Does Flip-Flop and Forces Catholic Hospitals to Distribute Morning-After-Pill":

In a shocking turn-around, Massachusetts's governor Mitt Romney announced yesterday that Roman Catholic and other private hospitals in the state will be forced to offer emergency contraception to sexual assault victims under new state legislation, regardless of the hospitals' moral position on the issue.

A constitutional law expert advising BCI says that the LEGISLATIVE INTENT was clearly to allow the 1975 statute to prevail. The formulation of the regulations is supposed to follow the legislative intent. Romney actually violated the law and his oath of office by NOT going with the legislative intent, and overruling the legislative intent (as well as the Constitution).

But it was not merely a legal interpretation by the legal counsel to Romney. Romney said he personally thought it was the "right thing" for hospitals to provide access to emergency contraception for any rape victims.

Please do not get confused by all this. The issue is not whether a rape victim is able to get the morning after pill if she so desires. That is a given, established as a right nearly fourty years ago by the Roe v Wade decision. The issue here is whether or not Mitt Romney forced Catholic hospitals to provide abortion pills despite their moral and religious objections to so doing. Mitt said last night that he never did that. The facts say otherwise. Indeed, it seems that we may need a new slogan in the campaign: "Mitt lied and his candidacy died!"

Gas Prices and the Economy --3

Over the last week, I have written about how the actions of president Obama with regard to oil exploration have helped to drive the price of gasoline up at the pump. This morning brings us two further confirmations of that fact.

1) Anandarko Petroleum announced that it hit a major oil find in the Gulf. Estimates are that 200 million barrels of oil were found in the Heidelberg prospect where the company is drilling. That is an area which would have been drilled nearly two years ago, but for the interferences by Obama with off shore drilling. That means that but for Obama's moratorium on drilling and his subsequent efforts to hamper drilling, just this one prospect would have been producing about $2 billion worth of oil this year. By itself, this would not change American gas prices, but now remember that Obama prevented off shore drilling for well over 700 rig months. If only a third of these found oil, the American oil supply right now could be increased by many hundreds of thousands of barrels every day, enough to lower the price of domestic oil.

2) Robert Gibbs was out with the official Obama campaign position on high oil prices. He tells us that there is nothing that can be done. (Obama will repeat this in a speech later today.) Then comes the clincher why drilling is not the answer: the USA has only 2% of world oil reserves; we cannot drill enough to find the oil we need here at home.

This is a pernicious lie! Gibbs is talking about "proven" reserves only. That means that all of those areas that Obama has removed from drilling are not counted. Further, none of this included unconventional oil, i.e., oil that comes from shale formations. According to the Department of Interior's own figures, there are 21 billion barrels of proven reserves in the USA. That same agency, however, estimates that there are about 134 billion barrels of undiscovered oil in the United States excluding shale oil. We also know that right now shale oil makes up about one-quarter of all the oil produced in the USA. The deposits of oil within shale are huge. Most geologists believe that the Government estimate I just mentioned is low. They point out that in the last fifty years, the USA produced more oil than was contained in the estimate of the total recoverable oil in place when that period began. But, if we stick with the government figures and add about another 40% for the shale oil, we come to 200 billion barrels of oil in the USA. That is enough to meet all of the needs of the USA without any imports for 40 years. If, indeed, there are new discoveries made or further advances in extraction techniques, we have enough oil to last a century.

As I said, Gibbs statement for the Obama campaign is just a lie.

Wednesday, February 22, 2012

Tonight's GOP Debate in Arizona

Tonight we saw the first GOP presidential debate in nearly a month, and what was the big surprise? Without a doubt, there really were no surprises. On the whole, the best debater of the evening was Newt Gingrich who was thoughtful and intelligent with consistently good answers. It began with Newt explaining the ways to bring down the national debt better than his opponents. It continued throughout to a great answer on how to deal with education. The problem for Gingrich, of course, is that he is damaged goods. He has twice risen to the top of the polls only to become self important and emotionally unstable. It is clearly too late for Gingrich to recover once again; too many folks have seen him in action.

Mitt Romney had a good night. He was more animated and more forceful than usual. He got in some good shots at Rick Santorum and also, for the most part, seemed presidential. Of course, there were two moments when he looked rather foolish. The worst of these is when he blamed Santorum's endorsement of Arlen Specter for re-election for the passage of Obamacare. Santorum endorsed Specter in a primary in 2004, some six years before Specter voted for Obamacare. Even forgetting the time lag in question, it is hard to imagine that Santorum's endorsement in a primary carried the day for Specter. Romney was trying to avoid being pinned down as the spiritual father of much of Obamacare, but using a six year old endorsement in a primary to turn the tables is just silly. Romney also looked foolish when he told John King that he did not have to answer the question that King asked but could give the answer he [Romney] wanted.

Rick Santorum also had a good night. He was at his best discussing Iran and Syria; Santorum showed a depth of knowledge about the Middle east that was impressive. Santorum also gets good marks for being honest. He did not try to wriggle away from his past votes and positions through distortions the way Romney does with Romneycare and Obamacare. He showed that he was both a principled and a pragmatic politician. Indeed, the criticism from Ron Paul about Santorum voting for things like title 10 showed why Paul has accomplished next to nothing in all his years in Congress and why Santorum got quite a large number of his proposals passed. Santorum understood that often he had to vote for bills based upon the entire package; he could not oppose each bill that had something in the body that he did not like. If you get 80% of what you want, that is pretty good. Paul, on the other hand, opposes anyone who ever votes for anything that has any provision in it that he did not like.

Ron Paul, indeed, showed why he is totally unqualified to be president. Imagine, Paul bragged at the debate that he had never voted for an appropriations bill aside from one funding veterans' benefits. For Paul, politics is an exercise in theoretical purity rather than accomplishment of the possible. This is a problem for Paul wholly apart from his frequent inability to speak coherently, although that problem too surfaced tonight as usual. Paul's explanation of how to cut the deficit was particularly rambling and confused.

Overall, I do not think there was a clear winner tonight. Romney reinforced his troops, but Santorum did the same too. If Gingrich has any troops left, they too must have been pleased. I do think that Santorum missed an opportunity to pounce on Romney when he made the ridiculous comment about the Specter endorsement, but that is not very important in the scheme of things. Each of these three did well.

One last note: I have to comment on John King of CNN. What is it with this guy? At his first debate, he asked questions like "Coke or Pepsi?" to the candidates. Tonight he progressed to the silliness of asking each candidate to describe himself in one word without explanation. These guys are running for president, not head of the comedy improv troop. And while we are talking about the CNN folks, why did there have to be a three minute introduction that looked like a promo for Survivor or some other reality TV show? Can't CNN even run a debate with dignity? I guess that by now I should know that the answer to that question is NO, but I still hope nevertheless.

Giving "Crazy" a bad name

I just happened upon a website that was reporting in detail why president Obama does not qualify to be president since he is not a "natural born citizen" as required by the Constitution. These people give crazy a bad name. With so many things to be concerned about, they should be focusing on something that is important and realistic. Instead, they are spending time and effort on a completely ridiculous subject.

The simple truth is that Obama clearly meets the Constitutional test for president; he is a natural born citizen. Over a hundred years ago, it was determined that a natural born citizen is one who, at birth, was a citizen of the USA. That means anyone who was born within the USA; anyone whose parents were both US citizens when born; or anyone one of whose parents was a US citizen who had lived in the USA for more than five years of the previous ten. It would not matter if Obama had been born in Kenya as many of these fools contend; his mother was a US citizen and she had certainly lived in the USA for five of the previous ten years.

The sad fact is that so many of these nuts take something which is clear and try to distort it into a cause. The left does this all the time. Unfortunately, conservatives have their own lunatic fringe with which to contend.

Obama's latest phony tax plan

President Obama is at it again. This time he is proposing an overhaul of the corporate tax structures in the USA. As is his usual practice, Obama has not put forth a proposal; instead, we have gotten another speech. It is true that the speech was followed with talking points memoranda, but the actual proposals were nowhere to be found. We hear that Obama wants to "close loopholes". Which ones? Obama has not told us. We hear that Obama wants to reduce the tax burden on manufacturing. Exactly how will that be done? Obama has not told us. We hear that Obama wants to grab some of the cash that corporations have in accounts located outside the USA and that overseas profits are going to be subject to a minimum tax as well. Here we got a few more details, but not enough to understand the actual proposal. Indeed, based on the little we have been told, it sounds like the new tax proposals will drive American multinationals to re-incorporate outside the USA and move their headquarters overseas as well. This used to happen quite a bit; for example, Tyco was nominally headquartered in the off shore in order to avoid tax problems. How can Obama think that it will help the country to give big business the incentive to leave the USA?

The real truth is that what we are hearing today is a campaign strategy. Obama wants to be able to claim that he is reforming the tax code. Well where has he been for four years? Why did he do nothing during the two years when he and the Obamacrats had total control of Congress? And why is it that we never get the details of these supposed programs? The simple answer is that Obama's plan is a phony, a ploy. He really has got to go!

Five Simple Questions -- No Answers

A few minutes ago, a self-proclaimed "environmental activist" approached me and asked me to sign a petition calling for Connecticut to replace all nuclear power plants with wind powered facilities. I asked this fellow five questions:

1) What happens if it is a calm day and the windmills are not turning?

2) What happens to the windmills during one of the periodic storms that hit Connecticut with 60 MPH winds about once per year?

3) Can anything be done so that the windmills will not kill birds flying in the area?

4) Where would the windmills be put? In other words, what areas of Connecticut have agreed that windmill farms would be nice additional to the landscape?

5) How much higher would the cost of electricity get once the switch to wind power was made?

The environmental activist told me that these were "good questions". I did not bother to thank him for his approval of my questions, but instead I said, "so what are the good answers?"

At that point, I learned that there really are no answers to these questions. The environmentalists want to switch to wind power without knowing where the wind facilities will be built, how power output can be kept constant in a calm day, how the facilities can survive high winds, how we can avoid killing thousands of birds, and, most important, what the whole plan would mean for the economy.

It gives a whole new meaning to the word "idiocy".

Viewing the American Economy -- who is Desperate?

Writing in New York Magazine yesterday, Jonathan Chait says that Republicans are "desperately trashing" the Obama recovery. That's right, according to Chait we are in the midst of a big economic recovery and the Republicans are trying to obscure that fact. What complete garbage!

Chait first takes Republicans to task for pointing out the failure of the Stimulus to do what Obama promised. As most Americans recall, we were told in 2009 that if the Stimulus were passed, unemployment would peak at 8% and would be down to 6% by now. Well, the Stimulus got passed and unemployment blew through the promised maximum of 8% where it has remained ever since then. Chait complains that Republicans call this 8% figure a promise even though some economists said at the time that there were other possible outcomes. But the 8% figure comes from Obama's message to Congress containing the reasons why to pass the Stimulus; Obama and not some unnamed economist told the country that the maximum unemployment would be 8%. Except in the world of the loony left, that is a promise that most Americans would understand.

Chait also claims that things were worse than the Obama economists understood, and Obama cannot be held responsible for that. Huh? We all knew that things were really bad in 2009; you did not need to be a professor of economics to recognize that reality. If the geniuses who prepared the stimulus did not know that things were that bad, then they really were not geniuses; they were more like fools. As president, Obama had the responsibility to find out how certain it was that his proposed remedy would work. A president cannot simply just try things because they sound nice; a fair amount of investigation must first be done before deciding to spend a trillion dollars of taxpayers' money. think of it this way: When George Bush pushed for the invasion of Iraq to prevent that country from using its weapons of mass destruction, he was attacked endlessly by the Democrats for those missing weapons. Remember "Bush lied and people died"? Bush relied on the intelligence estimates of all of the American agencies as well as the analysis obtained from British, French, and Israeli sources. It seemed to the whole world that Iraq had WMD's. Obama, on the other hand, relied on the views of his economists to push a stimulus which he promised would keep unemployment under 8%. Unlike in the Iraq war, Obama's advisers told him that the results could be very different than what Obama was promising; even Chait acknowledges this. Further, anyone looking at the economy in early 2009 could see that things were really bad. The USA was losing 700,000 jobs in a month. So Bush relied on unanimous advice that seemed correct while Obama relied on split advice which seemed wrong. Chait, however, has condemned Bush for what he did, but Obama deserves a pass according to Chait. It is total hogwash.

Chait also attacks Republicans who say that this is the worst recovery since the Great Depression. It may be true that except for now, since the 1930's there has never been a recession where we could arrive at a point two and a half years after the end of the recession with total employment lower than before the recession began. Chait says that does not matter since this was not a recession, it was a financial crisis. Chait then compares our current problems with other financial crises, all of which occured in other countries. That's right, chait ignores the one financial crisis that took place in the USA during this time. In the late 1980's, the Savings and Loan industry nearly went under. Savings bank after savings bank failed, and many forced sales of shaky institutions took place. The federal government had to act in 1989 to spend hundreds of billions of dollars to defend the S&L's. In Chait's view, this should have led to a major decline in employment and a recession. But it did not. There was a mild recession that went into 1990, and within a year of the end of the recession employment had already exceeded the pre-recession numbers. What this means is that even if you look only at financial crises, the recovery from the Obama recession is still, by far, the worst since the Great Depression.

The Debate Tonight

After a break of nearly a month, we are going to see yet another GOP presidential debate tonight. Sadly, it will have John King of CNN as a moderator. I assume that means that we will start with questions about Satan, move on to marital infidelity, then cover individual tax returns with emphasis on low overall tax rates and total contributions to charity and then finally turn to the birth control issue (not the religious freedom issue, but actual birth control).

My hope is that the candidates to not fall into the gotcha traps that King will surely set for them. It would be nice to hear a thorough discussion of economic issues for once. I doubt that CNN will let that happen, however.

Tuesday, February 21, 2012

Where are the Protests?

Over the last few years, we have seen countless protests against what is described as Israel's "occupation" of Palestinian territory. The defensive wall that the Israelis built to prevent terrorists from either infiltrating or shooting into Israel proper has been the subject of sit ins against "apartheid" on many college campuses. When Israel fires back at missile sites from which terrorists are launching rockets against Israeli civilians, Israel is criticized for "non-proportional responses" or occasionally for "genocide" even though the only ones hurt are the terrorists themselves. Leftist groups and college campuses have been hot beds of this supposed outrage over Israel and events in the Middle East.

My question is this: where are these protesters now when the Syrian government is slaughtering its people day after day. In the last three months, more people by far have been killed by the Syrian government than the total number who have died over the last 35 years in the West Bank and Gaza. Innocent civilians are being killed indiscriminately by the Assad regime for the sole reason of being in the wrong place at the wrong time. Mourners at funerals are routinely gunned down. But there are no protests about this her in the USA. No one from CAIR is speaking out against this senseless slaughter by a Muslim regime against other Muslims. No one at Harvard is lobbying for that university to disinvest from Syria or companies that do business there. No one at Berkeley is sitting in to show solidarity with the innocent civilians of Homs. Where the hell are they? Why is there no protest?

The answer is really rather simple. All over the world, the countries governed by leftists are supporting the Assad regime in its one-sided battle with the Syrian people. Venezuela is actually shipping fuel to Syria in order to undermine the sanctions meant to slow the attacks by Assad and friends. Cuba has spoken out in strong support for Assad. China used its veto at the UN in order to prevent any resolution from passing the Security Council which might lead to a cessation of hostilities. If the mega-lefties are supporting Assad the mass murderer, then the stooges of the left on college campuses and elsewhere around America have to do so as well. Assad is not indiscriminately killing civilians; soon the left will tell us how he is culling undesireables from Syria's population.

In truth, this is a silence which can only be described as defeaning. These phonies who use the media to play up stories that fit their political aims do not care about anything other than advancing their own path to power.

Finally, a Clear Admission Why the Radical Environmentalists Oppose Fracking

In the latest New York Review of Books, there is an article by Bill McKibben entitled "Why Not Frack?" which for the first time clearly sets forth the objections of the radical environmentalists to hydraulic fracking. It is extremely revealing even though it only confirms exactly what most observers previously concluded. According to McKibben, there are three reasons to fight against hydrofracking. The first and least important is that fracking may let hydrocarbons leach into surface wells and acquifers. McKibben, of course, offers no proof that this is happening anywhere except in one locality where the cause was traced back to something other than fracking. McKibben only says that it may be happening. It seems that after years of screaming about this, the radical environmentalists and their allies in academia still have not been able to find the proof for which they have searched.

The second reason McKibben cites for opposition to hydrofracking is that the disposal of "contaminated" water brought up with the natural gas recovered will pollute streams, rivers and lakes and do great harm. Interestingly, McKibben ignores the processes like fracking with a gel made from propane rather than using water, a process which completely solves all of the supposed ills about which McKibben complains. Indeed, McKibben offers no example where a river, stream or lake was materially polluted. He also ignores the increased regulation on the disposal of waste water from fracking which has been adopted in state after state. In short, after citing two reasons to oppose fracking, McKibben has come up with hyperbole but no facts to support his view.

That takes us to the third reason for opposing fracking which McKibben says is by far the most important. What is that reason? Fracking will make abundant supplies of natural gas available at a very low price. This will mean that Americans will have a low cost alternative to imported oil and even domestic coal. Energy costs will tumble. As a result, projects that produce high cost solar and wind energy will not be able to compete. If the "green energy" of solar and wind cannot compete we will be forced to live in a future where fossil fuels still comprise the main source of energy in the United States and around the world.

If you were expecting more in the way of a key reason to oppose fracking, it just is not there. Fracking must be opposed because it works too well. All of the schemes of the radical environmentalists to force energy costs higher are undermined by the existence of fracking. If you remember back to the 2008 campaign where then candidate Obama told us that under his plan, energy costs "would necessarily skyrocket", then you understand that the goal of radical environmentalism has always been to drive fossil fuel energy prices as high as possible. With gasoline prices as high as they are now, Obama is not upset with the high prices, but only with the fact that prices rose so rapidly. We have a group who have adopted a religion of global warming. Scientific evidence for man made global warming has been undermined and mostly destroyed in the last two years. Indeed, research at CERN has demonstrated that the most likely determinant of the global climate is the level of solar radiation interacting with the Earth's magnetic field. Even so, this scientific heresy is ignored by the true believers in the global warming cult. Hydrofracking is a threat because it provides the chance for progress for millions, indeed billions of people for a future based upon abundant and low-cost fossil fuel energy.

Next time someone starts to tell you about the horros of fracking, please remember this. The real goal of the opposition to fracking is to force everyone to live in a world where progress is a dirty word, where abundance is a nasty nightmare, where the good life for the average person is just too expensive. These are people who put their "religious" beliefs above the welfare of humanity. They may not wish literally to sacrifice humans to their new deity, but they certainly want to sacrifice comfort and well being to that cause.

Monday, February 20, 2012

The New Canadian Pipeline to the Pacific -- There goes the Oil to China

There is an article in today's LA Times discussing the upcoming hearings in Canada about construction of a pipeline to take oil from the tar sands in Alberta to the Pacific for export to China. This is the same oil that was originally supposed to go to Texas via the Keystone XL Pipeline that Obama blocked.

There is nothing all that remarkable about the article. In typical fashion, the LA Times tells us about all the environmentalists who are opposing the pipeline and about all the economic interests who want it built. In the liberal world view, any project that leads to jobs and economic growth is always about greedy industrialists harming the earth. There is, however, a priceless quote from the head of a small environmental group called ForestEthics (headquartered, of course, in San Francisco). Todd Paglia, the head of that group is quoted as saying the following: "Canada is not what it used to be. It's hard to believe, but it's tilting toward becoming more of an authoritarian petro state, positioning itself as a resource colony for China." Did you get that? Canada is now no longer a democracy, but an authoritarian state. Canada is trying to become a colony for China is some sort of reverse injection of colonialism. Canada is not doing what the crazy enviro-left wants, so it is evil, fascist, and part of colonialism. It is a veritable tri-fecta of leftist evils.

The reality is that Canada wants to have a secure future just as any other country does. The Canadian governement, unlike the Obamacrats, recognizes that increased commerce will help raise the standard of living for the entire country. There will be jobs, not just government programs to support the ever increasing numbers of poor.

I do have to report one more thing about Mr. Paglia. On the ForestEthics web site, he is proudly touted as having been named "to the annual 'Hot 20 Under 40' list published by 7x7 Magazine, San Francisco’s glamour and culture publication." Glamour and Culture??? Really?? I thought it was an effort regarding the environment, not one seeking fame and glamour. I guess I was wrong.

Gas Prices and the Economy -2

Earlier today, I wrote about the Obama policies that have reduced American domestic oil production and caused gas prices to move higher by over 100% during Obama's time in office. I received some email asking for proof that offshore production is actually lower; apparently some folks are being taken in by the Obama claim to have raised production.

Here are the figures: In April of 2010, there were 55 rotary rigs working off shore according to Baker Hughes. By July of the same year, the number of rigs was below 10. Now, a year and a half later, there are only 40 even with the price of oil higher than it was at that time. If the number of rigs in use had stayed at 55 over the last year and three quarters, there would have been 1155 rig months worked until now in off shore waters. After the Obama attack on off shore drilling, the total number of rig-months used off shore during that time was about 470. In other words, the Obama policy shifts reduced the amount of drilling off shore by 60% for nearly two years. While no one could know for sure what the production would be from each well that was not drilled, it is easy to approximate that current American oil production has been substantially reduced due to the Obama attack on off shore drilling.

Let's Cast the First Stone

Why does the media cover the PR stunts of minor celebrities? Last week, the son of conspiracy theorist and movie directory Oliver Stone converted to Islam. His name is now Sean Ali Stone. Over the weekend,we got an article in the New York Post in which Stone is claiming now to be a victim. That really did not take long. Five days ago in Iran Stone made his conversion. In the intervening days he travelled back to the USA and met the reporter for dinner at trendy Bario 47 in Manhattan. Suddenly, Stone is a victim of a major Hollywood backlash due to his conversion. Give me a break!

First, if Stone has suddenly become an observant Muslim, he would not be eating at Bario 47 which does not meet the relevant dietary requirements. It seems most likely that Stone announced his conversion for shock value and to get publicity for his new movie (whose name I will not mention since I have no desire to help Stone's game plan.) In other words, Stone's actions are like Madonna's involvement with Kabbala, the Jewish mysticism which she claims to follow.

Second, if Stone is actually experiencing a backlash, why doesn't he go public with details. No, Stone just tells us that he is a victim but never identifies the perpetrators or what they have done. Indeed, these would have had to be some pretty amazing people to get to Stone while he was flying back from Iran and to take some action which would harm him when they had no dealings with him. It sounds much more like the plot to one of his father's movies than anything that actually happened.

Third, let's assume for a moment that Stone is accurately telling the truth (which seems unlikely to me). Who cares? People in Hollywood have every right to get annoyed with Stone if they choose to. Stone does not say that he lost a job or had anything other than words directed at him. Why does the media think that anyone actually cares about this stuff.

Okay, so I realize that after complaining about the story, I am extending it by writing about it. Too bad. It has to be said. I am giving notice, however, that this is the last story on Stone and his purported conversion.

Gas Prices and the Economy

According to the latest figures, the price of gasoline is higher today than it has ever been at this time of the year. That is big news, but it is not good news. Normally, the price per gallon in February is one of the lowest of the year. Driving is reduced in the winter, and by the end of winter there is frequently a buildup of gasoline supplies due to the lower winter demand. In March, most refineries have to shut down for a short time to recalibrate production to their summer mixtures at the same time that miles driven pick up. This leads to a rise in gasoline prices that peak around Memorial Day in late May. If this trend holds as usual and without any sort of other factor kicking in, the current expectation is that the price per gallon will peak around $4.30 to $4.50 at that point. such a price would be, by far, the highest ever.

The effects of high gasoline prices are clearly damaging for the economy. First of all, there is the obvious problem that folks are forced to spend more on fuel and this sucks cash out of the consumer economy. A rise in the gas price to $4.50 would take much more out of the economy each week than will be put back in by the recent payroll tax cut. Some folks on the margin will have to give up other items in order to get by. A second impact, however, is the psychological effect on the nation. The cost of filling up at the pump is one that folks see all the time. As it rises dramatically to new highs, many folks worry about how much worse it will get and they start to cut back elsewhere just to keep a margin of safety. In other words, it is not only those who literally cannot afford higher prices who cut back elsewhere; many others are influenced to cut expenditures. The totality of these cutbacks in spending ripple through the economy and slow or stop economic growth.

So why is the price of gasoline so high? It would be easy to say that there are worries about the situation with Iran, and that would be true. It would, however, be only a small part of the story. The real story, however, is that gasoline prices have soared during the last three years. When Obama took office, the price per gallon was less than half of its current amount. That price was depressed at the time because of a huge fall off in driving during the recession. Obama, however, took action after action that drove the price ever higher by cutting the supply of gasoline. For example, Obama put a moratorium on off shore drilling in place after the BP spill in the Gulf of Mexico. The stoppage covered all drilling in the most prolific off shore area of American waters. This moratorium was followed by a new permitting procedure which has drastically cut the numbers of wells being approved for drilling and dramatically increased the cost to drill such wells. Not surprisingly, the amount of oil produced in the Gulf has been much less than it would have been under previous practices. The latest estimates are that oil production in the USA has been cut by about three quarters of a million barrels of oil per day just due to these actions of Obama regarding off shore drilling. To put this into perspective, one needs to understand that this is about 4% of America's daily oil usage. Adding this oil back into the supply stream would have meant much lower prices for gasoline.

But this was not all that Obama did. The Obama Energy Department has stopped drilling on all sorts of on shore areas as well. It has threatened drillers who use hydraulic fracturing for completion of wells, thereby again reducing the number of wells drilled. Obama stopped the Keystone XL Pipeline which would have delivered another 800,000 barrels of oil each day to the refineries in Texas. (Admittedly, the Keystone would not have yet kicked in, but the others would have been working in full force.) Because of the shale oil and gas production boom, total American production has not declined, but it could easily have been about 25% higher but for Obama and the Obamacrats.

The impact of the current high price of gas should be felt in the coming months as the price level reaches emotionally high levels. Expect fewer folks to go on vacations. Expect declines in non-essential purchases. Expect a modification to the mix of autos sold and, possibly, a decline in auto sales as well if things get bad enough. Expect higher prices for food and other staples which have to be brought to market by vehicles using more costly fuel. Ultimately, expect a decline in the rate of growth of the economy. Even though it seems unlikely at the moment, a big enough price rise will mean a renewed recession.

There is another problem that Obama has layered on top of the American people. There are new regulations from the EPA which are imposing dramatic costs on electric power plants that operate on coal. As a result, there have been more than a dozen plants which have been scheduled for shutdown later this year by the utilities, and the full impact of the new regulations has not yet been felt. These shutdowns will inevitably lead to higher costs for energy in the USA. Higher electrical energy coupled with higher costs for oil based fuel will be a one-two punch that the economy will not be able to withstand.

During the Great Depression, Franklin Roosevelt adopted the song "Happy Days are Here Again" as the theme song for the Democrats. Obama seems to want to rewrite that into "Recession Days are Here Again" just by his energy policies alone.

Sunday, February 19, 2012

More of the phony narrative from the press -- This time from Politico

Today Politico is out with an article under the headline: "Voting rights Act Under Siege!" If you read the first two paragraphs of the piece by reporter Josh Gerstein, you are told that conservatives Republicans are leading an "intensifying assault" on the Voting Rights Act. There is a problem with the article, however. It is false. There is no attack on the Voting Rights Act; no one is suggesting that the USA return to the types of practices outlawed by the act like poll taxes or literacy tests for voting. No one is suggesting that gerrymandering districts to prevent minority representation be allowed. Gerstein's basic premise is a blatant lie.

I was intrigued to see what proof Gerstein and Politico would offer to show the siege to which the act is being subjected. I waded through Gerstein's lengthy screed and found only two things. First, at a debate in South Carolina, Rick Perry said this: “I’m saying that the state of Texas is under assault by the federal government. I’m saying also that South Carolina is at war with this federal government and with this administration. If you look at what this Justice Department has done, not only have they taken [South Carolina] to task on voter ID, they’ve also taken them to task on their immigration law. When I’m the president of the United States, the states are going to have substantially more right to take care of their business. And not be forced by the EPA, or by the Justice Department for that matter, to do things that are against the will of the people.”

According to Gerstein and Politico, Perry's statement supporting the right of states to govern themselves with less interference from Washington is an aassault on the Voting Rights Act. To say the least, this is stretching Perry's words way beyond the breaking point.

The second item that Politico offers to prove its assertion is a statement by an "expert" that office holders are now more willing to oppose the law. This guy is some expert! Even Politico has to admit at the end of the article that not a single Congressman or Senator has stepped forward to oppose any portion of the Voting Rights Act. Not one!!!

Now it is true that there are pending lawsuits in federal court in which various localities challenge whether or not they must still be subject to section 5 of the Voting Rights Act. That section gave the Department of Justice the right to veto new districts, polling locations or voting times in certain states which, in 1965, we designated by Congress as those which had not had sufficient open access to their polls. In the principal case which comes from Alabama, the local government contends that things have changed. With everyone having free access to the polls, there is no rational basis any longer for the restrictions placed upon that government. This is hardly an assault on the Voting Rights Act. Indeed, it is an argument that the Act has done its intended purpose and remedied the problem it addressed.

So if there is no basis for saying that the Voting Rights Act is under siege by Republicans, why does Politico put this forward? Now we get back to the basic liberal media narrative. Republicans are racists; that is why they want to repeal the Voting Rights Act. Who cares if the truth is otherwise? Remember too, that Republicans represent only the rich and do not care about anyone else. Who cares that it is the Democrats who get more money from Wall Street. Who cares that it is the Democrats who use their time in office to pay off their wealthy supporters with goodies from the treasury. Just look at Solyndra or the other "green" energy programs that went to Obama's biggest fundraisers. The truth is that "green" energy refers more to the cash that went to Obama supporters and less to the clean nature of the failed energy projects.

Washington Post Announces Impending Taxmageddon

In a front page article by Lori Montgomery, the Washington Post is announcing the impending "taxmageddon", the January 1, 2013, scheduled return to the pre-Bush tax rates and credits together with the imposition of the first of the major Obamacare increases and the end of the payroll tax holiday. All together these tax increases will take over half a trillion dollars out of the economy in 2013 if nothing is done. Indeed, although Montgomery does not mention it, the Alternative Minimum Tax will also revert to its original form and the so-called Doc Fix will expire at that time as well, events which will also suck funds from the economy. According to the WaPo, this confluence of events will give the Democrats and Obama great power to achieve their goals ina a lame duck session next December. The pressure will all be on the GOP according to WaPo in order to avoid being blamed for a tax increase.

It never fails to amaze me how myopic the supposedly insightful liberal media really is. Taxmageddon has been on the schedule for two years and yet they are just discovering it. In truth, there is no way that this mess will ever wait until after the election. It will be one of the biggest issues in the fall without a doubt. Does the WaPo really think that Obama's plan to have 250 billion dollars sucked out of the economy (to use their term) will not be mentioned? Obama, after all, wants about half of these tax increases to proceed. My prediction is that the GOP candidate will favor a wholesale change to the tax structure and simultaneously blast Obama for favoring a huge tax increase.