Showing posts with label gas prices. Show all posts
Showing posts with label gas prices. Show all posts

Tuesday, September 11, 2012

9/11 - A Day to Remember



9/11 is upon us again.  This is usually the time when I tell you about where I was when theworld stopped turning on that September day in 2001.  I explain that as a Marine, stationed in North Carolina on that day, I was instantly imbued with a sense of duty that I had never felt to that time and I tried to explain something that really, only those who remember Pearl Harbor could appreciate.  Today, I’m not going to go through all of that.  9/11 serves as a reminder to all of us that our world is a dangerous place but it should also serve as a reminder of what America is and who we are as individuals.  There were no divisions on that wretched day as twisted metal and crumbling concrete rained down upon NYC, D.C. and as heroic passengers gave their own lives in the last full measure of devotion to their fellow man and their nation in Shanksville, PA.  The terrible cost gave way to a glorious outpouring of love and service.  There were no divisions on that day.  Race, color, creed, even nationality were discarded as a means of disunity and all of us pitched in together to rescue those stranded, to provide life giving blood to those who needed and to support the first responders who rushed headlong into the fray.  It’s time to stop focusing on the tragedies, remember them, and honor those who suffered, but focus on who we were in a time of chaos and confusion.  We were Americans! 
Again, we are being tested although this time there is no foreign terror organization to blame and no enemy to combat.  Our nation faces serious financial troubles and as we close in on yet another election, we are left to ask, where do we go from here?  Who are we now?  Today, as Delaware’s Primary elections are taking place in the Republican and Democrat parties and in the wake of two of the most watched political conventions in history, instead of focusing on where we’ve been, I’m going to tackle the question, are we better off than we were four years ago.  I won’t look at things so much nationally, although we will cover some things nationally but I’ll focus mostly right here, in Delaware.

Are you better off than you were 4 years ago?  That question was circulated around the Democratic National Convention and Delaware’s elected officials were chomping at the bit to answer it.  To a man, they all said, “Yes”.  (Chris Coons) (Joe Biden) (Jack Markell) (Tom Carper) But I’m not so sure that they are right.  Let’s look at a few economic factors and decide if we are better off today than four years ago.

Gas prices
Nationwide, when President Obama took office, after the worst collapse since the great depression, the average price per gallon of regular gas was $1.86 but today, a gallon of gas nationally will average about $3.86.  Here in Delaware, when President Obama took office, we were paying $1.75 and today, the average is $3.79 per gallon of regular gas (although I just paid $3.95 at a Shell outside of Wilmington).  So clearly, by any standard, the price of gas has risen by $2 in 4 years. 
How Do We Fix It?
There’s no sense in simply tearing someone down.  We need a plan to fix the problems we face or we’re just complaining and there’s no sense in that.  So how do we tackle high gas prices?  We embrace safe and responsible fracking operations, open up drilling and stop burning our food supply as fuel (ethanol).  Despite claims by unscrupulous and biased documentary filmmakers, the fact is that even the Obama EPA has had to admit that when done properly, fracking poses almost no danger to ground water, reservoirs or other water sources.  American natural gas and shale oil energy potentials are estimated to provide more than 200 years of clean, affordable energy and could cut our imports from the Middle east by as much as $200 billion per year.  Furthermore, while the administration rightly points out that there is more drilling in the private sector taking place today, what they fail to mention is that there is less private land on which to drill as the federal government has sucked up much of our resource rich ground and refuses to allow safe and responsible U.S. oil producers to use it.  They do however, allow Brazil and China, nations who do not possess the ecological sense of duty that Americans do, to drill on our lands.  Finally, ethanol is consistently touted as the green fuel of the future and it’s been so deeply embraced that it’s hard to find a station that doesn’t have E85 blended ethanol as the standard.  Unfortunately, while it may be greener on a one to one basis, the reality is that ethanol reduces fuel economy and therefore it takes more ethanol burning to go the same distance as it would with gasoline without ethanol.  At best, ethanol is a wash in terms of pollution and at worst, it unnecessarily drives up the prices of both fuel and food (ethanol is commonly made from corn, soybeans, sugar cane and switch grass).

Jobs
In 2009, when President Obama and Governor Markell took office, the national unemployment rate was 7.8% and Delaware’s unemployment rate was 6.9%.  Today, after 4 years of their economic policies, the national jobless rate stands at 8.3% while Delaware is at 6.8%.  These are the U-3 numbers which is the rosiest picture.  This doesn’t include ‘discouraged workers…persons who are not in the labor force, want and are available for work, and had looked for a job sometime in the prior 12 months. They are not counted as unemployed because they had not searched for work in the prior 4 weeks, for the specific reason that they believed no jobs were available for them.”  Nor does it include people who have had to take part time jobs who would otherwise be working full time jobs.  Those numbers are found in the U-6 database and they are staggering.  The U-6 number today is 15.3% (12.1% in 2009) and in Delaware it’s 13.3% (10.7% in 2009).  Nearly 30 million Americans and nearly 60,000 Delawareans are unemployed or underemployed.  You’re not being told the truth by our government.  4 years ago, Delaware maintained one of its two auto plants, the promise of thousands of green energy jobs and hope for those who were being laid off.  Today we’re crippled by the failures of Fisker, Blue Water Wind and the corruption of the Bloom Energy deal that saps money from Delmarva customers to pay for unproven and unrealized potential.

How Do We Fix It?
Even the rosiest of pictures shows that the Obama/Markell jobs plans are simply falling flat.  At the very best, they are maintaining unemployment at ridiculously high levels.  Unfortunately for Delaware, while tackling our energy problems will create millions of good paying, private sector jobs in the energy rich states nationwide, it won’t help us much here in Delaware where we have little square footage and not much energy potential.  Delaware needs to rebuild itself and rebrand itself.  Gone are many of the banks and large enterprises who previously helped Delaware be the corporate capital of the world, gone are the auto plants who employed our blue collar workforce and going are companies like Astra Zeneca and DuPont who have for so long sustained us in tough times and in good times.  There has to be a two pronged approach to job creation in order to make sure that it sticks.  First, Delaware needs a shot in the arm to stimulate the markets.  We can accomplish this through slashing investment and capital gains taxes, reducing our corporate taxes and cutting regulations that choke businesses.  Opting Delaware out of the Obamacare legislation, reducing the power of the PSC and repealing RGGI and the RPS will immediately create opportunities for manufacturing and enterprise businesses to return to Delaware.  Next, Delaware needs to be able to sustain jobs over the long term through serious regulatory reform, tax breaks for companies who hire Delaware residents, incentives for rehabilitation of targeted growth areas including the reuse of existing structures and targeted incentives for companies who invest in Delaware’s infrastructure.  This approach will create long term growth in our state and help to revitalize and rebuild struggling communities while ensuring a fair and open playing field for all businesses.

General Economy
The fact is that the loss of jobs, the skyrocketing price of energy and the lack of confidence in our leaders to fix these problems has led a national economy that is growing in drips and drabs at best and at worst is only giving the false appearance of life.  Despite massive spending on stimulus, bailouts for big banks, a practical takeover of the American auto industry and the passage of the Obamacare bill that was supposed to entice businesses into hiring, our nations growth is barely stagnant at less than 2% growth.  The future is not much brighter with tax hikes looming and businesses still unsure of what employee costs will be.  Here in Delaware, Governor Markell has placed a heavy burden on corporations that had long sustained us while making crony deals with political friends and party backers in Fisker and Bloom.  In short, our leaders in Dover have put politics over people and cronyism over job creation.  Like the nation, our growth rate is below 2% and more and more Delaware residents are turning to social welfare services to try and make ends meet.

How Do We Fix It?
The first step in the process of getting out of a hole is to stop digging the hole.  Delaware’s partisan political class, a group of people largely made up of a single party, must be reigned in and held to account for their action and inaction.  We must replace the single party rule in Dover with new faces and fresh ideas.  Throwing money at our problems hasn’t solved them yet and it’s not for a lack of trying.  Our nation is a nation built around the idea of individualism and service to our communities and we must tap the potential of our unbridled talent by unleashing the power of our people.  First, common sense tells us that in a time of fiscal turmoil, raising taxes is a bad idea.  When people are already struggling, pressing more burdens on them is both unfair and harmful to any chance of a recovery.  Instead, we should lower individual income taxes to put more money in the hands of consumers to stimulate the local economies.  While we’re on the subject of tax cuts for Delaware’s working families, we must recognize that without the means to create jobs, tax cuts to the middle class are a temporary benefit at best.  We must also cut our investment taxes and make it easier for those who have the means to invest in Delaware companies to do so.  Much ado has been made about the “rich” paying their “fair share” and I’d be remiss if I didn’t point out that nationally (even with the “Bush tax cuts” in place), the top 10%, who make over $112,000 per year, pay more than 70% of the entire income tax burden and the top 50%, those making more than $32,000 annual account for almost 98% of our national income tax burden. In Delaware, those with an income of $200,000 or more, the folks that we’ve been told “aren’t paying their fair share” account for just 2.6% of all the tax returns in Delaware.  They also account for 29% of Delaware’s portion of the Federal Income Tax and 33% of Delaware’s State Income Tax revenue.  That means that the other 97.4% of Delaware residents combine to cover 67% of the Delaware State Income Tax.  Any rational view of these numbers would lead one to ask, “What is ‘fair’?”  We can turn our future around but it really requires us to do all of the above.  Address our energy needs by supporting low cost, domestic energy sources that can power us into the next century, creating jobs that are sustainable in the private sector and decreasing the financial burden on our citizens to allow them the opportunity to grow and thrive and lead us out of the recession.   

Wednesday, April 27, 2011

Oil Prices and what is causing them to rise

I was included on an email thread by a friend about the reason oil prices are going up.  I know my good Friend Rick Jensen (1-4PM on 1150WDEL www.wdel.com) has a bug up his butt about "speculators" and that he's had numerous "money people" from Peter Schiff to Stephen Schork on his show in an effort to prove his theory right and they have all pretty much said the same thing: Speculators ARE driving up the price...but that's their job.  They are not the CAUSE and regulating them more won't do anything to reduce the price, in fact it might increase it.  Anyway, back to the original thread, the email contained a piece by Brian Wesbury (click here to read the piece) in which he calls the theory of speculators to task.

Brian makes excellent points and points that I have been making for a long time.  Stop looking at the difficult answers...the easy ones are where the "beef" is.  Here is my response to the email thread:

Amen! I’ve been talking about this for a LONG time now. There are three main causes of the spike in oil prices: The Fed, lack of domestic drilling and the Middle East

The Fed – I think all of us on this thread understand that more money printed, drives down the value of the money in circulation just like more widgets drives down the price of all widgets (unless you add in union labor…but that’s another story ;]) which is nothing more than SIMPLE Econ 101 (most of our problems would be solved if we just went BACK to Econ 101) and the law of Supply and Demand. In the currency markets (again as you know) this is called inflation. The more you print, the less it’s worth. The reason is because our dollar isn’t BACKED by anything…really since the Fed was created, the dollar, that is to say the federal paper note, has been unpegged from hard assets like Gold. It’s no different than a personal loan, if you have collateral, for instance, you ask the bank for a loan for $100,000 to make a large purchase… if you give them the deed to your home in case you don’t pay it back, you are far more likely to get the loan than if you showed up with nothing. Why? You’re less likely to walk away from your home than you are from a promise alone. Our currency was once issued based on the amount of gold we had. The denomination of the currency was changed based on the finite resources of gold. Since paper notes relied on the issuing bank (remember, we had no central bank for large chunks of our history…currency was issued by local banks and based on their gold supply) maintaining gold reserves, bank runs and travellers redeemed their notes in physical gold (more often coins and bullion than gold nuggets). Now, our dollars are backed by what? The word of Congress. The word of politicians who lie to their wives, who lie to their GODS and who lie to US. Heck, the word of politicians who don’t even UNDERSTAND these basic truths. If there’s nothing behind the paper, what stops them from printing as much as they want? Nothing, and that is EXACTLY what they are doing now. They’ve gotten to the point where we now have more printed dollars in circulation than we create in revenue each year. That means we are actually backing up our money supply not with gold, or with revenue, but with IOU’s from the government. This is what they call “monetizing the debt”. This causes commodities that are PEGGED to the dollar, like oil, gas, food, etc. to rise in price as it takes more of the dollars to buy the commodity but what will happen is that intrinsically valuable items (gold, silver, etc.) will eventually replace the dollar as the peg for commodities and the market will reset. Speculators will shift to the gold market.

Lack of Domestic Drilling – Simply put, if we CREATED more supply at home, where WE had a stable source, and for that matter if our energy policy relied on proven sources of energy instead of Wind/Solar/Battery tech that doesn’t even yet exist, speculators would have no gloom to doom about. Or at least less. American energy RESOURCES are actually keeping speculators from driving the price up FURTHER because we do HAVE the coal, oil and natural gas that we can use for power if we need it (and we need it bad!) in an emergency and in the longer term with an administration with a better energy policy. Next time you drive by an oil derrick, coal mine or gas well, thank a gas company for keeping America running (even if the engine DOES need some work).

Middle East – If you don’t think the instability in the Middle East is contributing to speculator concerns, I’ve got some Oceanfront property in Arizona for you to check out ;) and it’s goin cheap! The Middle East is on fire, not just one or two countries either, I mean the ENTIRE thing. Iran, Iraq, Syria, Jordan, Yemen, Bahrain, Saudi Arabia, Egypt, Libya, Somalia (pirates) are all on fire and taking anti-American/anti-Europe/anti-Israel positions. It’s counter intuitive to think that people buying a product for the long term, wouldn’t look at what’s going on over there and say “Gee, oil might be hard to come by later, I think it’s going to be something I should take a chance on.” Any smart business person would plan for the future. So what goes on in the Middle East makes a difference, of course it doesn’t help that our American economy is also on fire and our credit limit is being downgraded.

It’s absolutely THIS simple. If we had a decent energy policy, drilled for our own oil, fixed our economy, got out of debt, cut spending and stopped printing money, the price would shrink.