Oil -- Congress Finally Takes Charge Yet Must do Much Much More
This administration has wasted near eight years without giving the nation a coherent energy policy, a policy urgently needed that would:
- Dramatically reduce the consumption of fossil fuels
- Bring down the price of crude oil arresting the massive transfer of wealth to oil companies and oil producers.
For eight years Congress acceded to President Bush's threats to veto legislation that would have begun to show the oil industry and oil producers around the world that there was at least one body of our government whose patience with a dysfunctional, climate crippling and progressively rapacious oil market was at an end.
Finally, finally, on this issue Congress has begun to function as a legislative body more responsive to the welfare of its constituents than the need to curry favor to the vast influence and money power of the oil industry's lobby.
Other than the price of oil reaching new highs a few things happened over the past couple of weeks signaling this sea change. First Congress presented the president with a veto proof bill, which over his stubborn objections he signed into law, having read the writing on the wall and responding to the growing anger about energy prices in the country at large. It brought to an end
the administration's madcap and patently counterproductive purchases of crude oil irrespective
of the stratospheric prices that needed to be paid. On the one hand exacerbating those prices, and on the other, taking oil off the market. Thus one of the great oil patch boondoggles was brought to an end.
Then, going one step further Congress is preparing to challenge another of the president's threatened vetoes by presenting him with NOPEC legislation that would end once and for all the sovereign immunity extended to OPEC by our courts for actions in restraint of trade. Actions that would otherwise bring the full wrath of our Justice Department and our Federal Trade Commission into play were such collusionary constraints restraining trade and impacting prices on the American market organized by any other industry or commercial grouping. Such actions against offshore syndicates are not unusual and have been highly successful in forcing the end of collusion and price fixing.
The house has passed the measure overwhelmingly, the Senate is expected to follow suit. In the past the president's threat of a veto has aborted these efforts but this time it is expected to land on the president's desk. Given the mood of the country would he dare exercise his veto? We will soon see whether Mr. Bush is President of the United States or Saudi Arabia's stealth Regent.
With a motivated and focused Congress, zeroing in on this issue with enough votes to override the president's ever obstructionist veto much could happen to solve our energy and global warming nightmare swiftly, effectively, and permanently in that the steps that could be taken are all within our own purview, dependent on our own actions and not at the behest or mercies large and small of others. Courage, vision and a totally new perspective would be needed and perhaps just perhaps we are at the beginning of a new age. Congress could take the torch and:
- Begin to curtail our voracious appetitive for fossil fuels by legislating a national ceiling for oil/gasoline consumption programmed to diminish their usage significantly over a period of years. Our current consumption of crude oil is approximately 21 million barrels/day. The aim could be to reduce this amount by 5% per year over a period of ten years. The reduced consumption would attain to petroleum based gasoline and fuels only. Alternatives such as bio-fuels, hydrogen, electric power and on would be without restriction, open-ended and encouraged (please see "An Essential and Viable Energy Fix and the Renaissance of Detroit" 04.04.08). The allocated fossil fuel based gasoline/diesel would be distributed equitably through a national voucher system (please see "The Energy Solution That Dares Not Speak its Name" 07.17.07). For those skeptics questioning the viability of a fair voucher system may I direct them to their history books to read about the Home Front during World War II. A further reminder to the skeptics, that the technology available to us today to effectively organize and manage such a program was not even dreamed of way back then. And yet it was done with great success and imparted a sense of shared sacrifice and not unimportantly, great pride.
- We are the largest consumers of oil in the world. Our market is equally if not more important to producers as their product is to us. Under the influence of the oil lobby we have been giving world oil producers free access to our markets never invoking the enormous trading and strategic advantage our vast buying power imparts. We should henceforth require import permits for all crude oil entering our market, determined by country of origin. (Yes, I am aware oil is fungible but there are ways of tracing exchanges and switches that are meant to circumvent the spirit of such a program). These could be freely given, at least at the outset. However such a program would signal to producers within or without OPEC the possibility that these permits could be withdrawn and the American market for their oil might evaporate. Just to have this tool would be a sharply pointed arrow in the negotiating quiver of those in government who have currently been reduced to pleadings to the likes of Saudi Kings, witness the humiliating supplications of President Bush.
- There is a growing consensus throughout the land that we must begin to access those deposits of oil and oil shale that could dramatically reduce or dependence on foreign sources of energy. Concurrently there is a massive distrust of the oil industry to access these potentially massive resources in an environmentally responsible manner and in a way that the nation rather than the oil company's would benefit. Rep. Edward Markey pointed out in recent House hearings that the oil companies currently have drilling rights to 30 million acres both on shore and offshore that they are not using. Given their performance, given their massive earnings on the backs of everyday Americans, given their lack of meaningful innovative initiatives to curtail our fossil fuel dependency, now perhaps more than ever is the time for Congress to consider the creation of National Oil Trust to develop both economically and in an environmentally friendly manner the nations hydrocarbon resources, not exclusively for the benefit of a handful of wealthy and powerful oil companies but for the nation as a whole. This could be achieved much in the spirit of, and in the example of Norway's National Oil Trust through which that nation's oil and gas riches accrue to all its citizens (please see "The Oil Industry is Driving Away With Our Future- The Norway Solution" 04.24.06). Clearly, an American National Oil Trust venturing to develop the Alaskan ANWAR Refuge would have a totally different resonance in the halls of government and among our citizenry than its development being left to an oil industry that has lost its credibility or an Exxon Mobil adding another billion to its bottom line.
- Speculation in oil and oil product markets has distorted the realities of market logic. On May 22nd the price of oil on the trading exchanges topped an all time high of $135 per barrel. On that day Iran had fifteen fully loaded tankers waiting in harbor with no place to go "waiting for greater demand to lift spot prices as well" (translation-couldn't find a buyer). Russian crude was selling at a $5.00 a barrel discount a to its equivalent North Sea crude on the spot market, if and when there were any takers. And yet long dated futures contracts were selling at significant premiums (at contango) largely in reaction to Saudi Arabia's announcement that they would not expand their production capabilities in the future beyond the long since promised 12.5 million barrels currently planned by 2009. Nor would they commit to any significant increase in current production as needed to signal to a market that prices need to come down, this in spite of the entreaties of President Bush and numerous other countries and agencies. Clearly when paper barrels are bid to the sky and wet barrels go begging there is a manifest irrationality lurking in the oil trading pits. It is bad enough to have the oil executive royalty spouting the nonsense "the price of their product is determined by supply and demand" before an assembled Congressional hearing, but it becomes particularly grating hearing it from our government officials or perhaps better described as oil patch lackeys the likes of Energy Secretary Sam Bodman, Acting Chairman of the CFTC Walter Lukken, and now Secretary of the Treasury Hank Paulson who one would have hoped would have known enough to know better. As Chris Kelly on a HuffingtonPost blog ( "Oil Execs to Congress: I Drink your Milkshake" 05.23.08) wisely put it "supply and demand' is what you say when you want the other person to know you think they're an idiot". Congress needs to roll up its sleeves to assure those agencies responsible for trading oversight have the budgets and the highly motivated and qualified personnel needed to deal with the issue of oil futures trading and other commodities, closely looking at the exchanges in New York, Chicago, Philadelphia, electronically and beyond to London, Singapore, Dubai and wherever, determining how it all ties together and where mischief is possible (please see "Sovereign Wealth Funds and the Price of Oil" 11.1.07) , fully understanding that those working the commodity pits are like brothers in foxholes. See, hear, speak no evil could well be emblazoned on their banner. The exchanges are all intertwined, trading on one impacts the price on the other. Ways have to be found to make them all transparent and accountable or serious consideration has to be given to changing the system altogether. Please remember, not that many years ago there was only a wet barrel market.
- And please, please get rid of that 54 cent import duty on Brazilian sugar based ethanol.
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A passage from article, Recoil in the latest edition of the Economist:
Stuck for answers, politicians have been looking for scapegoats. Top of the list are the speculators profiting from other people's hardship. Some $260 billion is invested in commodity funds, 20 times the level of 2003. Surely all that hot money has supercharged the demand for oil? But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of “paper barrels”, but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.
True/false?
Comments?
Last I saw, the inventories are either completely adequate, or even high!
Here it is the reason for the Futures Markets can be USED TO RUN OIL PRICES SKY HIGH.
READ AND GET MAD, GET MAD AS HELL.
http://www
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A lot of good ideas. Thank you.
I fear that America is so deeply imbued with the corporate tradition, that we will never be able to break free, thus condemning us to more of what we have seen in recent history.
No one wants to admit it, but our inability to govern ourselves wisely will likely hasten our downfall, from a position of world leadership, to a position where the world pities us.
It would seem we are overlooking the installation of smaller wind turbines that could/should be attached to new housing. The wind has picked up tremendously and even small inexpensive units could offer power for some household needs.
If we ONLY install huge million $ windmills on ranges, we aren't utilizing the millions of homes that could be generating power 'in our own backyards'.
If all the power poles each had a wind turbine attached, they could be adding power to the grid all along.
Another idea would be to put on photo-voltaic roofing on ALL new construction. Yes, this will add new-construction costs , but we could trim some square feet from these montrous houses to compensate. All the sun-belt states have unused energy shining down almost daily. We need to aggressively apply answers NOW!
The idea of the "National Oil Trust" is a good one. It may be the only realistic way managing oil resources into the future based on any criteria other than maximum profit for the smallest number of people, which is the present "system".
It will also be a necessary control to support strategies to combat global warming. If the carbon fuels peddlers are NOT tightly regulated by agencies representing the citizenry, then the privatized corporatists will continue to deny the impending ecological calamity and pump, pump, pump, sell, sell, sell, and burn, burn, burn their way to huge personal profits at the expense of all other life on Earth. They'll be the richest apes on the planet for the few weeks preceding the total collapse of the biosphere.
Essentially what’s going on here is oil traders of U.S. crude now can make electronic trades in offshore markets. US “computer terminals will be governed by US regulation, because the computer terminal is located in the United States,” Sen. Carl Levin (D-Mich) has noted.
He said refiners have told him that the price of oil, excluding the impact of speculation, would be in the $65 to $70 range.
I would think a little bit higher [just a guess], but hey, anything below $80/bbl or so is a huge improvemen
Next, Senate Democrats want to shut the so-called “Enron loophole” which lets traders purchase oil contracts electronically outside of the US. Bringing the trades onto the CFTC would stop oil traders from trying to get around the new margin limits by fleeing to electronic markets offshore.
The “Enron loophole” has been around since 2000, when the Commodity Futures Modernization Act was passed. It lets oil traders buy and sell oil futures contracts electronically in markets outside of the CFTC’s jurisdiction, such as the commodities exchange in London.
May 30, 2008 7:46AM
Farm Bill’s Bid to Stop Oil Speculation
By Elizabeth MacDonald
The Commodity Futures Trading Commission says it launched a nationwide investigation last December into possible manipulation of the oil-markets.
The probe comes during an election year that has the country on high alert over record oil prices, now boomeranging over $130, a price that has doubled in the last year.
The farm bill would close a loophole oil traders have driven a Mack Truck through. It would hike margin requirements on oil trades and end the so-called Enron loophole that lets traders buy oil electronically outside of the United States.
Though market watchers say high oil prices are really a supply and demand issue, the bill aims to stop speculators thought to be artificially inflating the price of oil in order to cash in, which Sen. Carl Levin (D-Mich.) estimates adds as much as $35 to the price of a barrel of oil.
Senate Democrats want to increase the amount of money traders would have to put down when buying oil futures. Specifically, they want to jack up the margin requirement for energy futures trades, now ranging between a teensy 5% and 7% of the cost of a new position, versus 50% for stocks.
I don't trust Congress to put out a workable energy plan. I have absolutely no doubt the earmark kings will pad any plan with kickbacks and favors for the largest bidders. Our current Ethanol policy is a prime example of our government's efficiency and planning.
Instead of just the current Ethanol fiasco you want to put Congress in charge of the entire oil supply?
Russia is giving their oil companies $40 BILLION in tax cuts to go find more oil.
USA is calling them into congress to whine. Liberals are talking about taking their tax breaks away and installing a windfall profits tax.
Since when did the USA become the country that hurt its people with government restrictions and Russia used free market solutions? Scary.
We definitely wouldn't want to waste those billions in tax cuts on the American people right now by establishing a national oil trust. I don't know if the oil companies could ever recover
Fine let's go with your liberal idea, take their profits and tax them more . . .
Who do you think they'll pass that cost too?
"Since when did the USA become the country that hurt its people with government restrictions and Russia used free market solutions?"
Tax cuts, provided to an industry that is already the most heavily-subsidized industry on Earth, do not qualify as a "free market solution."
THANK YOU!!!
You make it sound like this is something new, every President since JFK has sold people the same BS and included a statement about "getting off foreign oil" in their state of the union.
Nothing gets done no matter if it is D or R in the seats, it's too much work.
Ethanol will not solve our problems. Congress will not solve our problems. And last and definitely least, your writing will not solve our problems.
I'm afraid I disagree
Only Democrats think that Government will solve their problems (healthcare, energy, etc.)
Reality: Government is big and slow, businesses react much quicker to what people want and need but Liberals hate capitalism.
Dear 1/4 wit, or 'UnbiasView' as you proceed to express a very biased view, as a 'Liberal' I can clearly state I do not 'hate capitalism'. Uncontrolled capitalism as espoused by the Milton Friedman fans and similar I am indeed not fond of. And having worked for some extremely large corporations, including one with a worldwide staff of over 500,000 I can assure you large corporations are little better at responding quickly than are governments, and far more inclined to ensure that those at the top receive very disproportionate rewards, which generally governments, unless there is graft or corruption involved, do not engage in with such eagerness. So please spare me the morality play that there is some greater virtue beating in the heart of the capitalists that is missing from the hearts of those who prefer a reasonable mix of government and private enterprise. Each has a proper part to play.
No UnbiasView, we only hate "I've gotten mine with government help, to hell with you, go f**k yourself" (i.e.Dick Cheney-like) capitalism. How do you think your dear Fuehrer Bush and Darth Vader Cheney got to where they are today? The answer: CORPORATE WELFARE!
And businesses without proper regulation are SO GOOD at giving us what we need in the long term, right??????
One damn thing is for sure there sparky, your party hasn't done ANYTHING for ANYBODY other than the top 1%.
And just in case you happen to find someone who will let you borrow a brain, liberals don't hate capitalism; liberals hate UNREGULATED captialism. Moronic Friedmanite free-traders love the boom/bust model until it busts, and then they expect Uncle Sam to bail their sorry asses out of hock.
If, like in the past, we had been practicing a keyenesian form of regulated captialism and economic stimulation, the 1% wouldn't have so much money, and a helluva lot of people would 1) still own their houses, or 2) wouldn't have had the opportunity to borrow above their means in the first place.
So way to go their sparky, your guys do such an excellent job, no wonder the stupidest people in this country want them to stay in power. Have fun spending your $600 dollars that will accomplish absolutely NOTHING.
Unbias view:
Well, I've worked for and with large corporations and with government -- and the bottom line is, Big gub does some things a lot better and faster than big bus, and vice-versa.
What Big Gub does better is anything that deals with public goods (Social security has a 2-3 % overhead, equivalent private sector endeavors range from 14-30% or more. FACT.
What private industry does best is make a profit. As in what the oil companies are doing now, Ace.
If all you knee-jerk conservative morons stopped mindlessly repeating Republican talking points, and villifying government, we could actually solve this problem.
How much would we save if AMERICANS worked smarter and worked 4 days a week?
would that save 20%
would our roads last longer?
would jobs be created for part time fill ins to cover the 5th day?
would Americans like 3 day week ends?
more family time?
Another idea in that vein, is flexible work hours or staggered start and end times, especially for large corporations that dump thousands of cars onto the roads every day at 5. Less traffic, less time spent sitting in your car, adds up to less gas used and a more pleasant commute.
I am recently of the opinion that if corporations, and even governments, have employees who could perform their duties remotely at least once per week and yet are not permitted to do so, then the employer involved should be required to pay an extra tax in order to make up for the added burden to society of really pointless excess commuting. That just might get the attention of the accountants, who have most of the real power in corporations anyway.
Let e guess, you are really lazy?
Hee hee
Too little too late, I fear.
Again we have taken our typical us(USA)
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