Ever wondered what each state pays in gas taxes. Here it is ...
Yeah, California, my home state, is ranked at the top.
The worst part is that I live in one of the largest petroleum producing counties in the country, but we have one of the highest prices for gas in the nation. I'm currently paying between $4.09 and $4.16 a gallon for diesel. Ouch.
I say we do what the socialists in Alaska do, and implement a Permanent Dividend Fund for Kern County.
Last month I posted on the "Ten Myths About Our Budget Mess (And Why the GOP Isn't Serious About Solving It)". In a few words I wrote that rather than pursuing a balanced approach, and going after wasteful corporate subsidies, write-offs, deductions and other unnecessary corporate welfare giveaways, that the Republicans simply wants to cut programs they don't like. Their budget priorities have nothing to do with saving money as much as it does with forcing their failed ideology down America's collective throat.
A political force-feeding, as it were ...
I wrote that it doesn't matter that we can find at least $1 trillion in savings by going after unnecessary tax breaks, subsidies, and deductions, the GOP simply is not serious about fixing our budget mess. Period.
Well, guess what? With a $1.5 trillion budget deficit staring us in the face the GOP voted yesterday to keep and extend billions in tax breaks for America's biggest oil companies - even though they're making record profits, and don't need them.
Think about this the next time the GOP says they're serious about the deficit.
This suggests that President Obama is falling behind the curve on the clean-up. If you want to tell President Obama that he needs to get on BP, and demand that BP stop blocking clean-up workers from using life-saving respirators click here.
On Monday Governor Rick Perry (R-Texas) claimed that the oil rig explosion that caused a massive oil spill in the Gulf Coast area may not have been preventable because it could be "an act of God." Hmm ... I didn't know that a lax attitude, ignoring alternate valves, making decisions against placing acoustic regulators (which can remotely shut down well heads), etc. were God's department. Indeed, when did God start working for British Petroleum?
There is one thing that seems clear at this point: You can probably bet the house that the oil industry (a.k.a. "God" for Republicans) will reward Gov. Perry with campaign contributions for his astute - but as of yet unfounded - observation.
Here's Sarah Palin complaining about Barack Obama's economic policies because of how they "redistribute" the wealth ...
If anyone knows about communist tendencies and the redistribution of wealth it's Sarah Palin. Let's review ...
Alaska ranks #3 when it comes to what it's citizens pays out in federal taxes, and what it receives from the federal government. For every dollar Alaskans pay into the system, they take $1.84 out. Put another way, Alaska's hardened sense of "rugged individualism" is really built on a foundation of communal welfarism.
This probably explains why Alaskans have come to see oil within their borders as a form of community property. By making this claim, and turning it into policy, Sarah Palin and the federal government watch over a system that has written a $3,269 check to every eligible man, woman, and child in Alaska.
Interestingly, instead of calling it the "Redistributing the Wealth Because We're Communists Fund" - as Sarah Palin might suggest it is today - the state of Alaska calls it the "Permanent Fund Dividend."
And in case you're wondering that comes out to well over $23,000 for Sarah Palin's family of rugged individualists.
Finally, if we want to take the Conservative's assertion that welfare Mom's have children simply to pad their welfare checks, I have to think it won't be long before republicans start questioning the real motive for Sarah and Todd to have their last child, right? I mean, their oldest children appear ready to leave the nest, taking their welfare check nesteggs with them. I hope the Conservatives don't go this route, though, because the Palin's are already under the gun for using clothes that don't belong to them.
I wonder if the Palin's can see a trailer park from their backyard ... Just asking.
- Mark
UPDATE: I knew it was out there ... Here's Sarah Palin acknowledging her socialist state tendencies a few weeks before being nominated for the VP slot: "[W]e’re set up, unlike other states in the union, where it’s collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs."
Former Commerce Secretary Robert Reich has a short but excellent post on oil and energy in America. It's done in a Q&A format. Here's the Q&A lead ...
Question: Won't McCain's plan to increase offshore drilling lower gas prices soon?
Answer: No. The Energy Department's own Energy Information Administration admits offshore drilling will affect gas prices only many years from now, and even then would have a negligible effect on prices.
With Congressman Kevin McCarthy being applauded by Bakersfield Californian columnist Marylee Shrider for running back and forth between Bakersfield and Washington to participate in the republican's energy publicity stunt, Reich's comments make it clear that our local congressman is just wasting his time. It also tells us that Shrider doesn't understand the difference between "democracy" and publicity stunt politics.
Read Reich's post. It's the best short review of our energy situation I've read in a while.
I don't always agree with some of the information and observations I get from the financial news or newsletters I receive regularly, but this one from The Daily Reckoning offers some very sobering observations. Here's a snippet ...
“Terrorism will be reduced...weapons of mass murder will be limited, people will be safer around the world, human rights and democracy will be unleashed in the Middle East, and the fragile outlook for world prosperity will be improved... The uncertainty tax on world growth will be lowered too, as will the energy tax from temporarily spiking oil prices.”
This was Larry Kudlow writing in March, 2003.
The spike in oil prices he described took place on March 12th, 2003, pushing the price of a barrel of crude all the way up to $37.83 and the price of a gallon of gasoline to $1.72. Yesterday, oil closed at $137 and gas sells for $4.06.
But Kudlow was hardly alone in his hallucinations. Laurence Lindsey, then George Bush’s senior economic advisor, looked into his own crystal ball and saw nothing he didn’t like.
“Under every plausible scenario, the negative effect will be quite small relative to the economic benefits... The key issue is oil, and a regime change in Iraq would facilitate an increase in world oil,” thereby driving down oil prices.
Paul Wolfowitz, then Deputy Secretary of Defense, went on to reassure the nation that Iraqi oil revenues would pay all the costs of reconstructing the country.
Today, we are talking about one of the most boneheaded miscalculations of all time. Almost with a single maladroit stroke, a relatively small group of world-improvers undermined the progress of 9 generations. Five years later, Americans are on the losing end of the “biggest transfer of wealth in history,” as T. Boone Pickens described the oil market of 2008. George W. Bush has the highest disapproval ratings of any U.S. president in history. America’s most profitable industry – finance – has collapsed...its currency has lost a third of its value...and European, Chinese and Indian economists are wagging their fingers saying, “I told you so.”
But here at The Daily Reckoning we always look on the bright side. And the sunny side of this story is that the United States needed to be humbled. After the Soviet Union fell to its knees in 1990, America had a monopoly on worldwide military force. Nature abhors a monopoly; she needed to take the U.S. down a peg. Who better to do the job than this group of neo-cons? They knew no history; nor did they understand economics. They were the perfect people to lead the nation to disgrace and bankruptcy.
Mr. Kudlow continued his miscalculation by referring to a survey, in which 69% of respondents said they would gladly pay $300 for the war.
So far this year alone, the price of crude has risen 40%. It’s now $100 higher than when the neo-cons took America into the Iraq War. Each American uses 25 barrels of oil per year. This is equivalent to a tax of $2,500 in additional energy expense per person...or $10,000 for a family of four, annually. In addition, the war itself is estimated to cost between $1 trillion and $2 trillion. Divide that by the number of U.S. families and you get a figure of $10,000 or more.
Ooops ...
And on and on it goes. Long story short, even the financial analysts have had it with the Bush administration. And why not? As the articles points out:
When Larry Kudlow, Laurence Lindsey and Paul Wolfowitz were explaining how nice it would be to rough up the Middle East, the average suburban American household spent $1,422 on gasoline. Now, according to the Bureau of Labor Statistics, the sum has risen to $3,196.
Read the entire article if you can (it may have a subscription wall). It explains, without trying, why John "I'm-Bush's-Third-Term" McCain should not president.
I'm sure this bit of news should settle all the concerns about the U.S. going into Iraq to create a vibrant market economy, governed by competition and transparent democratic processes ...
According to the NY Times, four Western oil companies, "Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields ..." Left out of the no-bid contracts were offers by more than 40 companies from countries like Russia, China, and India.
This decision should also help assuage concerns that we went into Iraq to help Western oil firms gain access to Iraqi oil, right?
I wonder who's going to pay to maintain the political stability necessary so these guys can make a profit? Hmmmm ...
Everyone in America knows that George W. Bush was a failure as a businessman in the oil industry. Well, in spite of touting his oil credentials as a potential plus with OPEC members when he ran for the White House, it turns out that he's an abject failure at Oil Diplomacy too.
Here's a quick overview of President Bush's most recent efforts at "jawbone" diplomacy, which he claimed he would bring to the White House.
For the second time in two months, President Bush's efforts to "jawbone" his Saudi friends over the cost of oil fell on deaf ears. On Friday, oil surged to a record $127 after Bush's meeting with King Abdullah failed to secure a production increase beyond the meager 300,000 barrels the Saudis previously committed to on May 10th. In all, it was just the latest dismal failure for the jawbone of the Texas oilman who campaigned on his powers of persuasion when it came to OPEC ...
... For its part, OPEC brushed off Bush's feeble entreaties and rejected calls for an emergency meeting ahead of the cartel's next scheduled gathering in September. On Saturday, the Qatari oil minister put it simply, "The oil market is balanced...There is no threat to or crisis in supply."
There's no secret to what's happening here. OPEC members do not respect, nor trust, the capabilities of George W. Bush. And they're particularly not happy with the Bush administration's dollar policy (there is none). As Fadel Gheit, an oil analyst at Oppenheimer & Company in New York, put it: "It's really not surprising that they have ignored [Bush]" when you consider the collapsing value of the dollar.
Indeed, while Saudi King Abdullah has "shut down grandstanding talk from Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad" (which focused on moving OPEC away from the "worthless piece of paper" this past February) OPEC Secretary-General Abdullah al-Badri is still suggesting that the oil cartel might switch to euro-based pricing.
My guess is that this will become a real issue some time during the next administration. When this happens it will be yet another tattered feather in President Bush's lifelong headban of failure.
I finally sent the first manuscript for my book, The Roots of Markets & Wealth, to the publisher. I'm expecting at least 6 weeks (if not longer) before I get the first request for revisions. The photo here is Bush the Elder with Prince "Bandar Bush" - the tutor, diplomat extraordinaire, and Saudi family friend that President Bush thanked for for keeping the price of oil low before the 2004 elections. Below is an excerpt from my book on the U.S.-Saudi relationship ...
Saudi Prince Bandar al Sultan, aka "Bandar Bush" and President George H.W. Bush
... In Sleeping With the Devil: How Washington Sold Our Soul for Saudi Crude, former CIA operative Robert Baer tells the story of returning from Langley, Virginia. Coming from the direction of the Potomoc River was a convoy led by a Chevy Suburban with flashing lights. He suspected it was the President because “he’s the only official in Washington who gets that kind of protection.” When the convoy turned into an estate, he recognized the enormous iron gates.
The next day he learned the convoy was escorting Prince Bandar, the Saudi Ambassador to the United States – who “alone of all ambassadors got official State Department protection.” And why not? Granted the title of “Bandar Bush,” for his long and cozy relationship with the Bush family, Prince Bandar is dean of the Washington diplomatic corps – its brightest star, with a constellation of resources and political contacts that give him both access and power. But perhaps his greatest trump card is how he uses money and oil to move U.S.-Saudi relations.
After the oil price hikes of 1973 the U.S. convinced the Saudis to use their “petrodollars” to help underwrite U.S. budget deficits. Later, a combination of geo-politics and personal greed helped turn a simple funder-borrower relationship into a hydro-headed monster that thrives on national security imbalances and narrow self-interest.
Indeed, Baer writes things have gotten so cozy between Riyadh and former high level Washington officials that granting Prince Bandar the same protection afforded the President is only a small part of a larger story. For those fortunate enough to brush shoulders with Prince Bandar and his circle of friends, Saudi Arabia has become “Washington’s 401(k) Plan.”
Former cabinet secretaries, taking advantage of the Saudi Cash Cow, now work with the “good” bin Ladens, while the U.S. government works to keep Saudi regime safe, and its oil flowing. The financial cooperation the U.S. received from the Saudis after Saddam Hussein invaded Kuwait border is illustrative. Success in the first Gulf War, in Washington’s eyes, guaranteed that a grateful and friendly “House of Sa’ud would remain the world’s banker of oil.”
Perhaps more importantly, by keeping the Saudis in business, the global status quo was maintained, which meant (and perhaps more importantly) the sources that help fund the American Kingdom would continue. Interestingly, there appear to be historical parallels to this relationship.
In many ways the U.S. - Saudi relationship follows a pattern similar to the protection racket that existed between prosperous merchants in medieval Europe and their royal protectors. And just like their aristocratic predecessors, when they’re not busy tending to their economic interests, or bestowing politically powerful “titles” on their friends, American elites have become consumed with war.
But there is another, more ominous parallel. Much like the medieval period when Europe’s monarchs tried to keep rogue states and marauding nobles at bay, America’s aristocrats have been slow to recognize that the American Kingdom increasingly depends on the Good Will of others and no longer controls its own fate – a point the well protected “Bandar Bush” seems to understand quite well ...
Here's Robert Reich on President Bush's weak (and pretty lame) comments regarding the price of gas during yesterday morning's press conference.
The President criticized Democrats in Congress today for barring oil drilling on the Alaskan tundra. If he thinks that will bring down oil prices, he's even farther out of his mind than I feared. Even if such drilling were environmentally safe (and it's not -- remember BP?) it would amount to a miniscule addition to global oil supples.
Reich's also on to the Snake Oil that Hilary and the increasingly out of touch McCain are pitching.
So what else can we do? McCain and HRC are proposing a tax holiday on gas - so this summer you wouldn't pay the 18 cents a gallon that would otherwise go to Uncle Sam. Talk about dumb ideas. This will only encourage Americans to drive more, thereby increasing demand and causing gas prices to rise even higher ... It's a cheap political gimmick that does nothing to stem the rising price of oil.
Reich's solution? It's pretty simple, and very doable.
You want to hold oil prices down? In the short term, strengthen the dollar. Part of the reason oil prices are soaring is because the dollar is tanking [which we discussed on Saturday]. The Treasury and financial ministries of other rich countries should buy back dollars to stop speculators who are bidding the greenback down.
Over the longer term, though, China and India's insatiable demand for oil will continue to drive oil prices up, and turmoil in the Middle East will keep them up. So there's really only one way for us to go: Alternative sources of energy - wind, solar, biomass, water, and if we can make it safe enough, nuclear.
By way of Crooks & Liars, Democratic Rep. Peter Fazio really takes it to the Republicans and the White House. Here Fazio's pointing out how the Bush administration and Republicans are assisting the Saudis in keeping gas prices high in America through collusion (via the Organization of Petroleum Exporting Countries, OPEC).
Here's one of the pieces of legislation that Fazio is referring to in his speech on the House floor: H.R. 2264. In a few words, H.R. 2264 would amend the Sherman Anti-Trust Act and make it illegal to have market collusion in the oil industry.
It was 1986, conservation efforts were paying off, competition in the oil industry was returning, and gas prices were plummeting. In The Prize: The Epic Quest for Oil, Money & Power, author Daniel Yergin details the efforts of then Vice President George Bush to assure the Saudis – and U.S. domestic oil producers – that the U.S. should support artificially high prices in energy. On a trip to the Middle East VP Bush made it clear to the Saudis that, as Yergin put it, "market forces had gone too far" and had the potential to cripple America’s energy industry.
Well, I’m sure Papa Bush would be quite content with the following.
At its March 2000 meeting, OPEC set up a price band mechanism, triggered by the OPEC basket price, to respond to changes in world oil market conditions. According to the price band mechanism, OPEC basket prices above $28 per barrel for 20 consecutive trading days or below $22 per barrel for 10 consecutive trading days would result in production adjustments …
And, just like that, competition is mugged by collusion. Think about this the next time you hear some Talking Head drone on about “market” forces in the oil industry.
But I really liked this comment: “At its January 30, 2005 meeting, OPEC decided that market changes had rendered the band unrealistic, and decided to temporarily suspend the price band mechanism” … Translated this says “OPEC’s already making so much stinking money they no longer have to manipulate production levels.”
As I've been doing from time to time, what's posted below is a piece from the book I've been working on, The Roots of Markets and Wealth ... And, yes, it's almost done. To the left is a photo of John D. Rockefeller.
... Whatever the roots of his “scathing disdain for the ‘waste’ of unbridled competition” John D. Rockefeller’s pursuit of monopoly power in the late 1800s helped bring organization and, perhaps more importantly, steady profits to the oil industry. However, by the early 1930s oil profits were again threatened by too many competitors. Indeed, by August 1931 producers in Oklahoma and Texas were so plentiful and productive that the price of crude dropped to thirteen cents a barrel and, by the spring of 1933, saw some ‘hot oil’ runners get little more than two cents a barrel. And this occurred after Texas Governor Ross Sterling had, in effect, “declared war” on East Texas by sending the National Guard and Texas Rangers to cut off rogue producers, and then “rammed” a bill through the legislature which allowed market prorationing.
To stabilize prices, the oil industry turned to the federal government. After initially going after black market producers Interior Secretary Harold Ickes sought to reduce production by sending production quotas to the governors of each oil state. And why not? Acording to Ickes, after the Depression many business leaders were shell-shocked and “crawling to Washington on their hands and knees…to beg the Government to run their businesses for them.”
Unfortunately for Ickes, and FDR, the Supreme Court declared much of the National Industrial Recovery Act – which gave the federal government its authority in oil – unconstitutional. Still, with memories of ten cents a barrel still fresh, the states decided to follow federal government determined quotas on a voluntary basis.
To insure cooperation, the Interstate Oil Compact was passed in 1935 and provided a “forum for states to exchange information and plans, to standardize legislation, and to coordinate prorationing and conservation in production.” To check the flow of foreign oil, which might undermine the “informal” quota system, Congress imposed tariffs on foreign crude, fuel oil, and gasoline. This cut U.S. oil imports in half, stabilized sales, and put the U.S. oil industry firmly under a government escorted quota and tariff system.
As was the case during Rockefeller’s time, the post-Depression oil industry was able to establish regular profits at “market prices” only after competition had been brought under control. Perhaps more importantly, the organizational mold that would inspire the creation of the Organization of Petroleum Exporting Countries (OPEC) had been cast ...
Our national debt is $9.2 trillion. A little over $8.2 trillion of that has been accumulated over the past 28 years. Ronald Reagan began the deficit-spending binge. George W. Bush, interestingly enough (given his background), turned it into an addiction. Now, we’re faced with an economy that appears to be staggering in Bush’s final year, but the Federal Reserve refuses to issue “Last Call” – choosing, instead, to hand out more free drinks to those who irresponsibly bellied up to the Subprime Bar that sold instant highs in concoctions insiders called “toxic waste.”
So, as George Bush prepares to leave office – in the process, sticking us with the tab for his rotgut-filled, deficit spending binge – I’ve been reading a couple of books that help shed light on why things may get worse before they get better.
Want to know about the “toxic waste” produced by the market? Read The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash, by Charles R. Morris. It's perhaps the most accessible reading on what's been happening in markets that I've read.
If you want to understand why we won’t be escaping the political and military entanglements of the Middle East any time soon, read the appropriately titled Sleeping With the Devil: How Washington Sold Our Soul for Saudi Crude, by former CIA operative, Robert Baer.
Both of these books are highly readable, and non-technical (although the book by Charles R. Morris has to get into some jargon). At the end of the day, what we find is that the Saudis aren’t our worst nightmare … it’s the people in Washington who can’t seem to say no to Wall Street, and are captured by self-serving political and financial interests that keep us tangled up with a very corrupt and morally bankrupt Saudi regime.
You would think that being home to 15 of 19 of the 9/11 hijackers AND Osama bin Laden, PLUS being the center of petroleum policies that have led to the tripling of gas prices in the U.S., might push our President to stand up for America. Think again.
Proving that American consumers are not his constituency, and that democracy in the region is really just a smoke and mirrors side show, President Bush wrapped up his failed Middle East "good will" tour with a strong embrace of medieval-like Saudi oligarchs. In spite of being led by a corrupt and democratic-challenged family, President Bush felt no need to push a democracy agenda with these tyrants of the Middle East, even signing off on a $20 billion arms deal for the country.
Well, at least we still have our military bases in Saudi Arabia ... just in case ... uh, wait ... Oh, never mind.
