Friday, May 30, 2008


Take a look at this picture.

How do you conduct rational meetings with someone who does not recognize your right to exist? Al-Qaeda's terrifying vision of a devastated America in the wake of a nuclear attack paints a graphic picture (both figuratively and visually) of what the Radical Terrorists want to accomplish. Time is on their side. Time which pointless discussions would give them an advantage. Pointless discussions are those without preconditions.

This is what Terror Groups and Organizations dream. Let's hope it doesn't become our nightmare.

Other Related Items:

Thursday, May 29, 2008

Who's The Villain?

Oil Prices are through the Roof. Current prices in the Chicago Area are $4.199, and it's easy to blame Big Oil. But are they really the guys in the black hats? The answer has repeatedly been shown to be a resounding NO!

If you wish to blame someone, blame yourself. It is Congress who made this mess and we elected them. The good news is we can change our vote. Previous posts have made the case that Congress is to blame for the high gas prices. More evidence comes from "The Wall Street Journal" on-line edition in the form of this opinion article: Blame Congress for High Oil Prices.
...[I]f there is a villain in all of this, it is Congress itself. That venerable body has made it impossible for U.S. producers of crude oil to tap significant domestic reserves of oil and gas, and it has foreclosed economically viable alternative sources of energy in favor of unfeasible alternatives such as wind and solar. In addition, Congress has slapped substantial taxes on gasoline. Indeed, as oil industry executives reiterated in their appearance before the Senate Judiciary Committee on May 21, 15% of the cost of gasoline at the pump goes for taxes, while only 4% represents oil company profits. [Emphasis mine]
It is interesting that the Federal Government receives almost 4 times as much of the "Windfall Profits". This article clearly shows the effect of supply and demand. The author says that supply and demand account for 97% of the variation in the pretax price of gasoline.

In other words, "He who has the Gold, makes the Rules". In this case the "Gold" is the available Oil in the Ground. Because Congress forbids most Domestic Production, 80% of the Oil available to the Big Oil Companies comes from Foreign National Companies.
...[S]upply has been curtailed by the cartel-like behavior of foreign national oil companies, which control nearly 80% of world petroleum reserves. Faced with little competition in the production of crude oil, the members of this cartel benefit from keeping the commodity in the ground, confident that increasing demand will make it more valuable in the future. Despite its pious denunciations of the behavior of U.S. investor-owned oil companies (IOCs), Congress by its actions over the years has ensured the economic viability of the national oil company cartel. [Emphasis mine]
Congress is looking for a scape-goat. They are unwilling to accept, or even admit, that they are the problem. Congress continues to outlaw Domestic Oil and Gas Production while world wide demand (principally fueled by China's rapid growth) for Oil products is rapidly growing.

The impact of the Congressional Ban is enormous.
[Congress is] preventing the exploitation by IOCs of reserves available in nonpark federal lands in the West, Alaska and under the waters off our coasts. These areas hold an estimated 635 trillion cubic feet of recoverable natural gas – enough to meet the needs of the 60 million American homes fueled by natural gas for over a century. They also hold an estimated 112 billion barrels of recoverable oil – enough to produce gasoline for 60 million cars and fuel oil for 25 million homes for 60 years.
And there's more.
This doesn't even include substantial oil shale resources economically recoverable at oil prices substantially lower than those prevailing today. In an exchange between Sen. Orin Hatch (R., Utah) and John Hofmeister, president of Shell Oil Company during the May 21 Senate Judiciary Committee hearing, the point was made that anywhere from 800 million to two trillion barrels of oil are available from oil shale in Colorado, Utah and Wyoming.
There is a rather simple solution. Congress should immediately allow production and exploration to begin of Domestic Supplies. As in the 1970's, the announcement alone would cause the Foreign Oil Cartel's to increase production, before Our Domestic Production could fill the Pipeline. We further need to expand our Oil Refineries. Currently they are operating at near capacity (about 97% I believe).

It is time for us to make our pain at the pump felt in Congress, because they have the solution. Tell them to stop looking for someone to blame and accept responsibility and then ACT accordingly.

Wednesday, May 28, 2008

Tax Lessons From Real Life

Politicians (especially Democrats) believe that increasing Taxes will increase revenue. And the logic they apply appears on the surface to make a lot of sense. Democrats expect the size of the pie to stay the same (or grow larger). Therefore if the current Federal Corporate Tax Rate of 35% is increased to 45%, the Democrats reason, Tax Revenue will increase by 10%.

The fallacy of this argument is that the pie does not stay the same size. In fact it becomes smaller because that extra 10% was what Corporate Michigan used to expand and grow. It provides the Corporate Dollars to invest in new technology, grow and thereby create new jobs. Tax Increases inhibit growth, investment in technology and cause job loss.

We elect a lot of Lawyers, but few Economists. If our elected officials came from the business schools with MBA's rather than JD's, we might see a better understanding of this Inverse Tax effect. We can hope, and we can now point to an example, the State of Michigan.

Granholm's Tax Warning, from the on-line edition of "The Wall Street Journal" highlights the effect of an Increase Taxes Attitude. The state is lead by a Democrat (Jennifer Granholm) and Democrat Lead Legislature which combined to Increase Taxes on Michigan Activities.
Officials in Lansing reported this month that the state faces a revenue shortfall between $350 million and $550 million next budget year. This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan's biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state's tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be "invested" in social spending and new businesses and lead to a Michigan renaissance.
Michigan is in an Ecomomic Hole and should realize that the first rule of Holes. When in a hole, stop digging! This Hole is underlined by what happened after the Tax Increase was put into effect.
Six months later one-third of the expected revenues have vanished as the state's economy continues to struggle. Income tax collections are falling behind estimates, as are property tax receipts and those from the state's transaction tax on home sales.
Currently Michigan's Unemployment Rate is 6.9%. This compares to Illinois' rate of 5.4% and Ohio's 5.6% according to this article. Further reading of this article will reveal the depth of Michigan's Economic Hole.
The tax hikes have done nothing but accelerate the departures of families and businesses. Michigan ranks fourth of the 50 states in declining home values, and these days about two families leave for every family that moves in. Making matters worse is that property taxes are continuing to rise by the rate of overall inflation, while home values fall. Michigan natives grumble that the only reason more people aren't blazing a path out of the state is they can't sell their homes. Research by former Comerica economist David Littmann finds that about the only industry still growing in Michigan is government. Ms. Granholm's $44.8 billion budget this year further fattened agency payrolls.
From this example we can learn that there is a balance between the Tax Rate and Prosperity. Obviously the Governments (Local, State and Federal) need to raise money through some form of Taxation, but if the Tax Burden becomes too great, the Pie and therefore Tax Revenue decline. In real terms we all become poorer when business and individuals are not allowed sufficient income above expenses to grow, invest and provide good paying jobs.

President Bush is not an Attorney. He holds an MBA. Maybe this is the reason his tax cuts have lead to our Economic Growth and Expansion (despite Michigan's Record) during the last 8 years. Not everything went well, but if the Democrats are allowed to execute their Stated plan of Increasing Taxes, Michigan's Situation awaits the entire Country.

The Bush Tax Cuts expire after 2010. The Democrats have pledged not to continue them and to add additional taxes to boot. The Pie is in DANGER.

Sunday, May 25, 2008


Thank You to all our Service Men/Women, past and present and especially to their Families.

Friday, May 16, 2008

Gas Prices Higher Maybe $5 HIGHER!!

The Senate is considering legislation which could yield a increase in current gas prices by $1.50 to $5.00 per gallon. (Senators Warn Bill Could Spike Gas $1.50 to $5 a Gallon) Now that I've got your interest, how will Congress accomplish this increase?
Worried about gas prices hitting $4 a gallon and beyond? Imagine if they were $6, $7 or even $8 a gallon. Those levels are a certain possibility should Congress pass cap-and-trade legislation, which could face a vote in early June.
The Democrats in Congress have repeatedly failed to allow passage of legislation which would permit drilling in Alaska, Gulf of Mexico and other areas of the US. These areas are Domestic and would allow two things to happen which are important to all of us.
  • First, Domestic Production of these Proven Reserves would increase the supply of Oil.
  • Second, Domestic Production would allow less dependency on Foreign Oil.
However, this problem is also a result of another problem. Besides not being allowed to drill and produce Domestic Oil, we have not increased US Refinery Capacity since 1976.

Senator James Inhofe (R-OK), the ranking Republican on the Senate Environment and Public Works Committee, had this to say.
“The Democrats are the reason we have high prices at the pumps, and we’re not going to be able to alleviate that until we start producing again in America,” Inhofe added. “And I knew this was happening way back, well 10 years ago, when President Clinton vetoed the bill that would have allowed us to drill in ANWR. I said on the Senate floor that day 10 years ago that in 10 years we would regret this. It’s now 10 years later.”
Here is a copy of Senator Inhofe's "White Paper" on the New Inhofe White Paper, Web Page, Details Harmful Impacts of Lieberman-Warner Bill.

Wednesday, May 14, 2008

We Could, But We're Not Producing Oil. WHY?

Cal Thomas has published a column which explains a lot. In Defense of 'Big Oil' is a good example of why we pay more than we should. The cause is our Congress (particularly Democrats) and the Environmentalists.
Senate Democrats last week sought to ingratiate themselves with voters, while doing nothing to produce more energy, with a familiar attack on "big oil." They want to repeal $17 billion in tax breaks for the oil companies over 10 years and on top of that impose a windfall profit tax on companies that don't invest in new energy sources. This is political expediency at its worst.
Oil Companies are spending LARGE sums of money on alternative energy research.
Peter Robertson, vice chairman of Chevron, told me it's a myth that oil companies are not investing in new energy sources. He says last year alone, Chevron spent $20 billion exploring new sources of energy. [Emphasis mine]
A windfall tax will result in less being spent on energy alternatives. Yet one of the biggest problems is the lack of Congress to allow Oil Companies to search, produce and market KNOWN DOMESTIC Oil Reserves
Robertson said there would be plenty of oil available to the United States if the oil companies were allowed to get it: "Eighty-five percent of offshore oil is off-limits." Responding to objections to offshore drilling by environmentalists and their allies in Congress, Robertson noted that some of the strongest pro-environment nations in Europe - he mentions Denmark, Norway, the United Kingdom - lease offshore locations for oil exploration. The technology has become so good, he said, that during Hurricanes Katrina and Rita, "one thousand offshore wells were destroyed (in the Gulf of Mexico), but not one leaked." Australia, he said, has allowed offshore drilling for 40 years without any environmental damage. [Emphasis mine]
Note that 1,000 offshore wells were destroyed, but not one leaked. If this isn't enough, the Environmentalists (with the help of Congress) have prevented construction of new refineries. In fact no new Refinery Capacity has been constructed in the US since 1976. That's 32 years, and demand is going up!

How much Domestic Oil is Available?
According to government estimates, there is enough oil in areas accessible to America - 112 billion barrels - to power more than 60 million cars for 60 years. The Outer Continental Shelf alone contains an estimated 86 billion barrels of oil and 420 trillion cubic feet of natural gas. [Emphasis mine]
But we can't touch it, because the Environmentalists, with the aid of CONGRESS, have made such a fuss about so little.
... the Alaskan pipeline was built despite protests from environmentalists who claimed it would destroy the caribou. It didn't, but the environmentalists are back with the same discredited arguments. Because most of the oil remains "off-limits," we are becoming more dependent on foreign oil.
More things to think about when you fill your tank as I did last night at $3.839 and when you vote. That price is for Regular folks and some stations here are as high as $4.079 this morning.

If Congress was really serious about the Gas Price, wouldn't (and Shouldn't) they do more to allow Domestic production and Domestic Refining?

I need to point out the obvious. WE ELECT OUR CONGRESS.

Monday, May 12, 2008

Taxpayer Dollars Well Spent on Energy?

How does the Government spend our tax Dollars for energy production, research and development. The Wall Street Journal On-Line edition gives us an idea in this article - Wind ($23.37) v. Gas (25 Cents).
Congress seems ready to spend billions on a new "Manhattan Project" for green energy, or at least the political class really, really likes talking about one. But maybe we should look at what our energy subsidy dollars are buying now.
Most of us can agree that a reasonable look at any project needs to be free of emotion. Green is a Politically Emotional Term. So it is fair to go beyond the emotion and look at reality.

First let's start with the total Tax Dollars expendated by our Government concerning energy.
Some clarity comes from the U.S. Energy Information Administration (EIA), an independent federal agency that tried to quantify government spending on energy production in 2007. The agency reports that the total taxpayer bill was $16.6 billion in direct subsidies, tax breaks, loan guarantees and the like. That's double in real dollars from eight years earlier, as you'd expect given all the money Congress is throwing at "renewables." Even more subsidies are set to pass this year.
Now what are we getting for our $16.6 Billion spent? So that we are really comparing apples to apples the Wall Street Journal article points out that the taxpayer cost per unit of energy is one way of standardizing expenses. And here are the results.
For electricity generation, the EIA concludes that solar energy is subsidized to the tune of $24.34 per megawatt hour, wind $23.37 and "clean coal" $29.81. By contrast, normal coal receives 44 cents, natural gas a mere quarter, hydroelectric about 67 cents and nuclear power $1.59.
Since the research into alternative (green) energy has been going on for several years, it is clear that without a technological break-through solar, wind and clean coal don't deserve the bulk of the research money.

Notice I did not say cut off all funding. I'm only suggesting we insist on a more Fiscally responsible way to allocate our Tax Dollars. Research needs to continue, but reality needs to govern how the Research Tax Dollars are spent so that we get the most bang for our Tax Buck.

Where then should we put the bulk of our tax dollars?
... nuclear power provides 20% of U.S. base electricity production, yet it is subsidized about 15 times less than wind. We prefer an energy policy that lets markets determine which energy source dominates. But if you believe in subsidies, then nuclear power gets a lot more power for the buck than other "alternatives."
The figures up to this point have been for Electrical Energy Production. However the study also calculated the tax dollars spent on federal subsidies for non-electrical energy production. For fuel the figures are:
... ethanol and biofuels receive $5.72 per British thermal unit of energy produced. That compares to $2.82 for solar and $1.35 for refined coal, but only three cents per BTU for natural gas and other petroleum liquids.
Even with the high cost of oil, natural gas and petroleum liquids are ONLY 3 CENTS PER BTU. Remember these figures next time any of the politicians talk about expendatures for Green Energy Production. Our Tax Dollars are truly best spent on Oil and Gas.

Sunday, May 11, 2008

Obama Notes

Somehow this statement found within this document FactSheetPoverty.pdf (current as of 5/10/08) on Senator Barack Obama's Web Site ...
Barack Obama believes that workers should have the freedom to choose whether to join a union without harassment or intimidation from their employers [Emphasis mine]
... is in direct conflict with his support of the Employee Free Choice Act Legislation currently stalled in Congress.

Currently the National Labor Relations Board (NLRB) requires a secret ballot majority vote of the employees to establish Union Representation at the Employers Work Location. The Employee Free Choice Act eliminates the Secret Ballot Vote. It is a very public Card Check vote where each employees vote is visible to all.

Obama claims the Employer is currently able to practice intimidation and unfairly restrict Union votes, primarily because the Union Organizers are not allowed to disrupt Company operations in order to Organize the employees. Somehow this equates with a secret ballot being un-democratic.

What the Employee Free Choice Act allows is much more intimidating because of the elimination of one of the corner-stone fundamentals of a Democracy - the Secret Ballot Vote. This Act Destroys this fundamental right of the employees.

If the present plan is weighted in favor of the Employer, substitution of a plan which is weighted exclusively for the Unions is worse. Better we fix the current problem (if there is one) than create an even worse problem.

Saturday, May 10, 2008

Al Sharpton's Tax Troubles

In December of last year, we didn't take much note of this item, "Subpoenas for Al Sharpton's aides", By GREG B. SMITH and LARRY McSHANE
The FBI and IRS are investigating whether Sharpton improperly misstated the amount of money he raised during his 2004 White House run to illegally obtain federal matching funds, a source familiar with the probe said.
Note that the IRS participated in the investigation. The Federal Agents issued subpoenas to 10 of the reverend Sharpton's present and former aides.
As many as 10 people were subpoenaed, [Carl] Redding* said. The court papers also sought a wide range of financial records, from invoices of expenses paid by cash to cash receipts to bad debt records from the years 2001 to 2007. [*Carl Redding was head of Sharpton's Staff for eight years]
The subpoenas summoned reverend Sharpton's associates to testify before a Grand Jury on December 26th, and
The subpoenas additionally called for them to provide the IRS with all financial records from the campaign and a half-dozen Sharpton-related businesses. [Emphasis mine]
Now let's fast-froward 6 months to this article, "Al Sharpton Under Fire", from CBS News.
Government records obtained by The Associated Press indicate that Sharpton and his business entities owe nearly $1.5 million in overdue taxes and associated penalties.
Since the records were obtained by the AP as a result of a Freedom of Information Act request, it is possible that the December 2007 subpoenas had nothing to do with this IRS claimed deficiency. It is also possible that the Grand Jury testimony and documents turned over to the IRS could have bolstered the Government's claim, or the Tax Levies could have been assesed as a result of the December 2007 investigation. In either case reverend Sharpton has TAX troubles with the IRS and New York City.
Sharpton's own debts include $365,558 owed in New York City income tax and $931,397 in unpaid federal income tax, according to a lien filed by the Internal Revenue Service last spring. His for-profit company, Rev. Al Communications, owes the state another $175,962 in delinquent taxes.
From the article we learn that reverend
... Sharpton has started paying it off but contends that faulty record-keeping by the National Action Network led the government to overestimate his tax liability [Emphasis mine].
The phrasing of the last quote is interesting. The quote implies that reverend Sharpton agrees he is delinquent - it is only the amount of his tax liability that's in question.

From the article it would also appear that the December 2007 Grand Jury and IRS investigation is still in progress.
In December, Sharpton revealed that as many as 10 of his associates had received grand jury subpoenas. A person familiar with the investigation told the AP that the FBI and IRS are probing whether Sharpton or his organization committed tax crimes or violations related to his 2004 presidential campaign, during which he was forced to return public matching funds for breaking fundraising rules.
This is not the first time the reverend Sharpton has been investigated. But none of his past investigations have resulted in serious penalties.
In 1990, he was acquitted of tax fraud and charges that he stole from one of his charities. He followed that up with what was essentially another victory in a tax case by pleading guilty to a misdemeanor charge of failing to file a state return
.We shall await further developments.

Monday, May 5, 2008

Another Hillaryism - How Will She Do That?

Politicians have become experts at saying things which sound great, but mean nothing. I have found Hillary one of the best at Political Double Speak. I refer to this post Clinton: OPEC 'can no longer be a cartel' which was posted by Ben Smith.
"We’re going to go right at OPEC," she said. "They can no longer be a cartel, a monopoly that get to gether once every couple of months" at a hotel in "some plush place in the world" to set prices, she told a crowd a volunteer fire house in Merillville, [Indiana].
How will she do that remains the big question.

Hillary would make Yogi Berry proud. (For those of you who don't remember Yogi was an "All Star" and is a "Hall of Fame" baseball catcher for the New York Yankees. He is currently featured in some Aflec Insurance Commercials getting a Hair Cut. His comments such as "And they give you cash which is just as good as money" are typical Yogi-isms.)

Note: Ben Smith's Blog is found at

What's Obama's Cost to Us Tax Payers?

Senator Barack Obama has a limited record on the National Level. But one thing is Clear, Senator Obama is the Most Liberal member of the Senate according to his voting record.

Senator Obama's comments are middle of the road, non-partisan, BUT his VOTES ARE further left and more partisan than Hillary, Ted Kennedy, Joe Biden, Harry Reid and all other members of the Senate.[Source: "Obama: Most Liberal Senator In 2007" as published by the On-Line National Journal Thursday, Jan. 31, 2008]

As you know, it is the Left who believes in Bigger Government and more Government handouts. Senator Obama is the most Liberal of the Left in terms of his voting record. As you also know, both Hillary and Barack have promised to raise taxes which will cost us more.

In practical terms, Senator Obama talks about reaching across the aisle and compromise with Conservatives, but he votes along the Democrat's Party Line more than anyone else in the Senate. The Left, including Senator Obama, costs us in increased taxes, AND in increased costs. Senator Obam's Extreme Left or Liberal Standing yields increased costs for such things as Health Insurance.

The on-line edition of The Wall Street Journal, contains an article by SCOTT GOTTLIEB, which highlights Senator Obama's record of increasing cost of Health Insurance for the Tax Payer ("Obama's Health Care Record"). This is a double whammy. Health Insurance cost goes up, Taxes go Up to pay for those who can't pay and Senator Obama simultaneously talks about lowering the cost to the individual.
... during Mr. Obama's tenure in the state Senate, 18 different laws came up for a vote and passed that imposed new mandates on private health insurance. Mr. Obama voted for all of them.
Mandates on private Health Insurance drive the cost of Health Insurance Higher, because these Mandates require Insurance Companies to cover specific items.
A 2008 study by an insurance-industry supported research organization, the Council for Affordable Health Insurance (CAHI), estimates that mandates increase the cost of basic health coverage by 20% to 50%, depending on the state. Average policies in high-mandate New Jersey cost about $4,000 according to a 2004 insurance survey, much more than the $1,200 charged in low-mandate Wyoming.
Not all mandates are bad, or that expensive, but some like the so called "Slacker Mandate" which extends coverage for unmarried dependents up to the age of 30 are popular in many states.

It seems to me that unless a dependent is handicapped and not capable of self-care by 18, they should not be covered by forced Mandates. Exceptions for full-time Students to age 24 is reasonable, but by requiring coverage to age 30 only drives the cost for those with Private Insurance Higher.
These increased costs aren't shared equally among all who have health insurance. People who are covered through self-insured employers (usually large corporations) are shielded from state mandates because of the federal Employee Retirement Income Security Act (ERISA), which prevents states from enacting controls on plans that cross state lines.
Who pays for these Mandates then? The people who generally can least afford it. The payers are the ones who do not have an employer sponsored plan. They are the ones who pay for their own Health Insurance.
The burden of paying for state mandates is usually borne by individuals who buy their own insurance, small employers and others not covered by ERISA. In total, about half of the people who have insurance bear the brunt of the cost of state mandates. And, as it turns out, individuals who do not work for large corporations are much more likely to be uninsured. AHIP calculates that between 20%-25% of uninsured Americans can't afford coverage because of the increased cost of providing mandated care.
The ironic twist is it doesn't have to be so expensive it the law allowed Health Insurance Companies to offer Basic, Bare-Bones Plans. In other words why can't the Individual shop for the Health Insurance he wants, with the options he desires? We do it with most items we buy, why not Health Insurance?

The truth is that we should be able to shop for Health Insurance the same way we shop for a new car. We should be able to select the options and extras we want, not what the State Legislators, Like Barack Obama, say have to have. Why do we have Mandates?
For the simple reason that each mandate has a powerful constituency – be it chiropractors, dentists or other groups – who benefit when their services are included on the list of mandated care. These groups pressure lawmakers to expand the list of mandates and, over time, the list grows to be very long and expensive. Often the care that is being mandated is for minor medical problems because small, routine ailments are suffered by more people and therefore have broader political constituencies.
This is known as Political Pandering. On the one hand, the Political Campaign Contributions which enable a Politician to be re-elected come from special interest groups. The Tax Payer gets stuck with the bill, but hears the emotional empathy from the Politician. Political Pandering to both groups.

The article also offers a solution.
One way to make insurance more affordable is to extend the benefits of the ERISA exemption to people who buy insurance on their own, putting them on a level playing field with those who get coverage through large employers by freeing them from expensive state insurance laws.
Or this solution.
Better still, Congress could pass legislation that has long languished in the House allowing people to purchase health plans across state lines. People could choose which state regulations to buy into, creating a market for the insurance mandates. This would give states more incentives to fix local problems that have helped make health insurance expensive in the first place. It's a fair bet that there would be an exodus of policyholders from higher-cost, higher-mandate states like New Jersey and even Illinois (which has more expensive mandates than about half of the other states).
Why not do both? Here is a chance for Senator Obama to break free of the "say one thing, but vote another way" mold.
Mr. Obama says people need more options to purchase insurance outside the workplace. He also says he can draw on his experience as a state legislator to lead a reform of the kinds of special interests that pursue these mandated benefits. Right now Mr. Obama's health-care proposal, like Hillary Clinton's plan, does the opposite by adding federal regulations on top of state laws.
Up to now, Barack Obama has shown that he speaks and acts very differently. Senator Obama is quoted as saying the following:
"My plan emphasizes lowering costs," Mr. Obama says. If that is really what he wants to do, he can start by freeing consumers from forced subsidization of the pricey state mandates
.Time will tell if he really means what he says, but I'm not holding my breath, because his track record shows he will not vote the way he is quoted.

Saturday, May 3, 2008

Oil Company Profits

A couple of days ago, I posted some Thoughts About Oil Company Profits. Today the On-Line Version of "The Wall Street Journal" published this article - "Windfall Profits for Dummies".
This is one strange debate the candidates are having on energy policy. With gas prices close to $4 a gallon, Hillary Clinton and John McCain say they'll bring relief with a moratorium on the 18.4-cent federal gas tax. Barack Obama opposes that but prefers a 1970s-style windfall profits tax (as does Mrs. Clinton).
Again we have a case of the Democrats pandering for votes. This despite the fact that we have tried to place a Windfall Profits Tax on Oil Companies, and it failed to:
  • reduce prices
  • increase Domestic production
  • reduce our dependence on Foreign Oil
Alas, those who fail to learn from History, are doomed to repeat it.
Mr. Obama is right to oppose the gas-tax gimmick, but his idea is even worse. Neither proposal addresses the problem of energy supply, especially the lack of domestic oil and gas thanks to decades of Congressional restrictions on U.S. production. Mr. Obama supports most of those "no drilling" rules, but that hasn't stopped him from denouncing high gas prices on the campaign trail. He is running TV ads in North Carolina that show him walking through a gas station and declaring that he'll slap a tax on the $40 billion in "excess profits" of Exxon Mobil.
Actually there are no "excess profits" being made by the Oil Companies. The raw numbers only look like like an excess because the Oil Companies are so big. By the way the Government already takes 35% of the Oil Companies Profits. That's the Income Tax Rate the Big Oil Companies pay on Profits.
Exxon's profits are soaring with the recent oil price spike, but the energy industry's earnings aren't as outsized as the politicians seem to think. Thomson Financial calculates that profits from the oil and natural gas industry over the past year were 8.3% of investment, while the all-industry average is 7.8%. And this was a boom year for oil. An analysis by the Cato Institute's Jerry Taylor finds that between 1970 and 2003 (which includes peak and valley years for earnings) the oil and gas business was "less profitable than the rest of the U.S. economy." These are hardly robber barons.
Let's put these figures into perspective. The 5 Largest Oil Companies (Chevron, Exxon Mobil Corp., ConocoPhillips, BP PLC and Royal Dutch Shell PLC) earned $36.9 Billion in 1st quarter profits. Gross Sales were over $400 Billion, and they paid over $140 Billion in Income Taxes.

Now suppose we apply the same percentages to a family making $40,000 per year. The Government takes $14,000, other expenses are $22,310 and we have $3,690 "EXCESS PROFITS. How would you feel about a tax on your "excess profits" of $3,690? Does taxing your "excess profits" make you want to earn more?

I mentioned we tried an excess profits tax on energy previously. Here is what resulted.
You may also be wondering how a higher tax on energy will lower gas prices. Normally, when you tax something, you get less of it, but Mr. Obama seems to think he can repeal the laws of economics. We tried this windfall profits scheme in 1980. It backfired. The Congressional Research Service found in a 1990 analysis that the tax reduced domestic oil production by 3% to 6% and increased oil imports from OPEC by 8% to 16%. Mr. Obama nonetheless pledges to lessen our dependence on foreign oil, which he says "costs America $800 million a day." Someone should tell him that oil imports would soar if his tax plan becomes law. The biggest beneficiaries would be OPEC oil ministers.
Right now Gas Prices hurt, but an excess profits tax would hurt a heck of a lot more in the long run.
This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don't want more production to increase supply. They want oil "independence" but they've declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?
As these figures show, we all need to think beyond the emotional political speak coming out of the current Democratic Presidential Candidates.

Global Warming Update

Remember, It's all settled. But Al how do you explain this fact? "May blizzard shuts down parts of S. Dakota"
RAPID CITY, S.D., May 2 (UPI) -- The mayor of Rapid City, S.D., Friday pleaded with residents to stay home as a May blizzard closed down streets and highways in parts of the state.
Add this to the list of Al Gore's "Famous Last Words", "Global Warming is Settled".
"Please, stay off the roads until the weather clears. The wind is still gusting to 50 mph with heavy snow," said Mayor Alan Hanks. "There are very few businesses that are going to open, so take a day off and enjoy it."
Some places got as much as 4 FEET of SNOW.

Al Gore, you will remember, won the Nobel Peace Prize and an Awards for his Movie "An Inconvenient Truth" This is a classic example of why Politicians should not try to mess with "Mother Nature".

What Ifs

Dick Morris points out a fatal flaw in the Democratic Iraq strategy. (See "O’Reilly-Clinton Interview Shows Dem Flaw") The question of "What Ifs" is what will enable the Republican Party to retain the White House for at Least another 4 years.
Bill O'Reilly asked Hillary Clinton the key question about the war in Iraq: What happens if we pull out and the Iranians move in? She talked around the issue, but never gave a convincing answer to O'Reilly's question. She said she would replace force with diplomacy. But, as Frederick the Great said, “Diplomacy without force is like music without instruments.” If our troops are long gone from Iraq, the Iranians will snub our diplomacy and laugh at our entireties. They will add Iraq to their other trophies in the region: Syria, Lebanon and Gaza.
The Democrats have long maintained that the fighting in Iraq cannot be solved Militarily. For anyone who takes the time to think about Military actions in time of Battle or War, realizes no conflict is EVER WON by Military means alone. And the Point Dick Morris is making is the same one I have stated many times before - Diplomatic negations end the conflict, BUT the Military Wins the Battles which make the enemy want to negotiate piece. One cannot exist successfully without the other.
What do the Democrats propose? Obama and Hillary both want to pull out as soon as technically feasible. OK. But what happens if Iran moves into the vacuum and takes over Iraq? And what if Al Qaeda takes advantage of the American absence and sets up a permanent base and sanctuary in Iraq, beyond our reach — a situation akin to the Taliban in Afghanistan where they could develop the capacity to hit us on 9-11 in their privileged, protected home territory? And what if hundreds of thousands of Iraqis who used to work with us start to be killed as happened when we pulled out of Vietnam? And what if the Iraqi oil falls into Iranian hands, sending the price even higher? And what if … The list goes on.
As the flaw in the Democratic Strategy becomes more obvious after the Nominations are finalized, John McCain's policy win in Iraq becomes the only viable course of action.
The truth is that the Democrats are cashing in on a mindless impatience with Iraq and an unwillingness to think through the consequences of pulling out. They are capitalizing on an emotional “no” in reaction to the war. But when the alternatives are carefully explained and examined, as they will be in a presidential debate, they are not going to embrace the answers Obama or Hillary will have to the “what ifs.” They will see the Democratic position as extremist and unworkable and will come to see the Democratic candidate who is pushing them as unprepared and unrealistic. If the candidate is Obama, their concerns will resonate with their perception that he is inexperienced and doesn't know his way around foreign policy. This will raise more and more doubts about his ability to lead us in a time of crisis.
The same can be said for candidate Hillary. The course of action does not involve making a bad situation worse by withdrawing the Military before the Diplomatic process is complete. The Democrats have played only to the emotion of the people. They are not talking about the reality of the world situation.

The question of how or why we became involved in Iraq is irrelevant in today's world. This is a question for the Historians to answer. For us the question which we need to consider is What do we do now? and What happens after that. To pull out before the Diplomatic win is achieved will be a much bigger disaster than anything you think has happened up to now.

Friday, May 2, 2008

Thoughts about Oil Company Profits

The five largest Oil companies showed an increase in profits from the 1st quarter last year. Chevron, Exxon Mobil Corp., ConocoPhillips, BP PLC and Royal Dutch Shell PLC earned $36.9 billion in the first quarter. This represents a 25% increase in profits from last year. The figure $36.9 BILLION sounds like a lot of money. It is! And it represents a profit margin of about 9%.

So does $410,000,000,000.00 ($410 BILLION), but that's what it takes in Gross Sales for the Big Oil Companies to show a profit of $36.9 BILLION. The Big Oil Companies are called Big Oil because, well because they ARE BIG.

But wait a minute. Let's put this into perspective. If the Oil Companies were not so big, would we be as outraged by the BILLIONS of Dollars of profit? I think not. For example if you or I owned a company which had gross sales of $100,000.00, the same profit margin would mean we would take home only $9,000.00. Nine Thousand dollars on sales of One Hundred Thousand Dollars.

That represents the same profit margin, but it doesn't bother us as much does it? Why? Because we have a somewhat different perspective, when the numbers are smaller. There is a saying which all of us should remember. Figures don't Lie, but Liers do figure.

The moral of this story is - don't just look at the bottom line. Dig a little deeper, And Don't let the Politicians who use emotion instead of logic to fix a problem. The fix is not to tax the Big Oil Companies more. The fix is to drill in the Alaskan Wildlife Refuge and the Gulf of Mexico. The fix is to increase the capacity by expanding the oil refineries. The fix it to use Nuclear Power, Wind Power and Solar Power. The fix is to find a way to use something other than corn and other food crops for ethanol production.

John Sidney McCain III - The Man

In today's On-Line edition of "The Wall Street Journal" is a very interesting look into the life and character of John McCain, POW. The article ("Messages From John") is authored by fellow POW in Hanoi, ERNEST C. BRACE.

Mr. Brace gives the reader a great look into the character of John McCain in the worst of circumstances.
It was May 24, 1973. Almost five years previously I had met John under harsher circumstances. We had been confined as POWs in solitary confinement in adjacent cells at a camp the prisoners of war had named "The Plantation" in Hanoi, North Vietnam. We talked to each other through a wall for over a year, of family, our capture, girlfriends, troubles we'd been through, and on Sunday we told each other a movie.
Through Mr. Brace's eyes and words, we can see a John McCain in acting and re-acting in times of REAL STRESS. It is apparent from the events, as seen through one who also experienced the same sacrifices, that John McCain is made of the stuff which America Needs.
John was now in solitary confinement because he refused to co-operate with the North Vietnamese efforts to exploit his father's position. His father, Admiral John Sidney McCain II, was Commander in Chief of Naval Forces Europe when John was captured. Since John's capture in 1967 his father had become Commander in Chief of Naval Forces Pacific, (CINCPAC), a much more significant posting considering John's captivity. John was considered a valuable prisoner by the Hanoi Government and they occasionally tried to use him to their propaganda advantage. John refused to cooperate.
This is an article which should be read by anyone wanting to know "the stuff" of which John McCain is made.

John wanted to follow in the foot-steps of his father and grandfather by becoming an Admiral in the United States Navy. John didn't make Admiral, but he has an excellent chance of becoming Commander In Chief.