Natural Gas exhonerates Speculators! 1

Ok, I have conversed with many via twitter that think speculators are the devil.  While I agree, as a speculator, that they are a part of the problem, I disagree that they drive price.  Instead, speculators only carry the momentum that is already pushed upon it by outside factors.  I am excited to point out the latest example of speculators being neutral when it comes to price.  Natural Gas is a commodity that is played just like oil.  There are a hundred different ways to play this commodity, but the most important point is that it is at multi-year lows.  Has demand gone down? No, but supply has gone up.  Due to fracking (no comment on the legitimacy of this process here) they are finding it under every rock in the U.S.  I exaggerate this on purpose.  Because the notion that it is everywhere is speculation.  Speculators are getting out of the trade because of an assumed over-supply.  They are correct!  This lowers the price to unheard of levels.  It is almost a 1/3 the price is was in 2010.  Where are the Senators now?  Why aren’t they out congratulating us?..  Hypocrites!

The major difference between Natural Gas and Gas at the pumps is that there are more factors for gas at the pump.  When it comes to gas, we are far more subject to feuding countries that supply it, and profit lines of major refiners here in the U.S.  Remember that it is Oil that is speculated, not the price of gas at the pump.  Big oil companies are profiting huge on the difference between the price of oil per barrel and what they can get at the pump.  Here is what I mean: Last April price of light sweet crude was $125 per barrel and oil companies were still able to make a good profit at $3.25 per gallon.  Now that oil is only $103 per barrel, they are able to charge over $4.10 at the pumps.  This isn’t speculation, but profit.

The GOP Conspiracy 1

Before I begin, I must be very clear that I am not a conspiracy theorist kind of guy nor an anti-Republican!  Therefore, it is an internal struggle to put this out there, but after several months of introspection I feel it is time.  The Republican Party seems to have conspired to keep Buddy Roemer out of the race for president.  He would never come out and say it because it opens him up for an all out attack from the party.  He would then have an even smaller chance to win an election.

What are the facts?

Buddy Roemer has all the experience you would want for a commander-in-chief.  At Harvard, he earned a BS in Economics and later an MBA in Finance.  From 1981 to 1988 he served as a Congressman.  From 1988 to 1992 he served as Louisiana’s Governor.  While there he cut the unemployment rate in half, reformed their campaign finance laws, and balanced the state’s budget.  I don’t mention this to get readers to vote for him, but to show how qualified he is to have been a candidate.  The problem isn’t what he has done, it is what he hasn’t: He has never accepted Super PAC, or special interest money.  Matter of fact, this has been his platform to get elected.  The fact that he doesn’t accept this money makes him an enemy of the state, if you will.

Imagine running Buddy out there when his platform of campaign finance reform and getting SuperPAC’s out of politics could make your party look bad, as a whole.  Fox News network, a GOP slanted news network, hasn’t even hinted that Buddy Roemer exists.  He was left out of all debates.  Why you might ask?  At first they told him he wouldn’t be allowed in the debates until he officially signed on as a candidate.  That makes perfect sense until you realize that several others hadn’t that they allowed in debates.  So, Buddy officially announces his running.  Then they told him that he had to have at least 2% of the votes of a given state to qualify.  Again, you might think that this is a fair request.  We cannot have everybody and their brother in a debate, but you have to know that when they required this from Buddy, John Huntsman, Michelle Bachmann, and Rick Perry didn’t have 2% yet they were invited into these debates.  Despite the hypocrisy of the situation, Buddy attained the 2%.  Then they said he had to have 5% of the votes.  At this time only Perry and Bachmann didn’t have the 4% but they were allowed in the debates.  Matter of fact, Buddy was ahead of both of them in the polls.  You still saw no mention of his existence on Fox News and he wasn’t allowed into the debates.  Buddy Roemer was working hard to get the 4%, and then they dropped the bomb.  They told him that he had to have a minimum amount of money raised for his campaign to get in the debates that was far beyond what he had raised to that point.  This, they knew, went directly against his platform.  He will not accept more than $100 per campaign donation.

As a result, Buddy Roemer has dropped out of the GOP race and decided to run as an Independent via the American’s Elect process.  Although I’m voting for Governor Roemer and love his platform of Campaign Finance Reform, this is not my point.  I hate the fact that politics has come to this.  Republicans snubbed one of their own because he was a threat to their pocket-book.  Democrats would have done the same thing if the situation was reversed.  It is a bi-partisan problem.  They will do anything they can to “keep the money in.”  This is why we, as a Republic, have to fight our own apathy and do something about it.  We have to support someone like Buddy.  Even if you don’t plan on voting for him, you should want a man like him in upcoming presidential debates.  His take on money in government shouldn’t be silenced or big corporations will continue to own our democracy.  We have to get the money out, and supporting people like Buddy is a way of going about it.

 

 

 

Apathy vs. misdirection: Winner kills the Republic 1

Misdirection is a form of deception in which the attention of an audience is focused on one thing in order to distract its attention from another.  Apathy is a lack of enthusiasm or energy, lack of interest in anything, or the absence of any wish to do anything.

You have political ADD, prove me wrong and read the entire article.

I was watching a GOP debate in Florida a few months back.  Newt Gingrich had been taking heat from Mitt Romney because of his payments from Freddie Mac for his “historian” expertise.  Mitt was calling him out as an unregistered lobbyist without using the words.  Being that they were in Florida made it extremely poignant because of their high foreclosure rate.  Many people in the audience and in the state are/were profoundly affected by the economic crisis and inclined to hate big banks such as Freddie Mac.  Newt, came prepared, so he thought.  He attacked back.  Gingrich said Romney had personal holdings in “a part of Goldman Sachs that was explicitly foreclosing on Floridians.” He did; it’s called a blind trust. A blind trust is  a trust managed by third-party: a legal arrangement in which a trustee manages funds for the benefit of somebody who has no knowledge of the specific management actions taken by the trustee.  Assuming Newt had done his homework, he already knew this.

Why do I even point this out? It is a game of misdirection.  Government officials of all types are pointing out flaws on the other side to distract us from the big picture.  Democrats are turning the Treyvon Martin shooting into a political debate.  It shouldn’t be a debate of Republican versus Democrat.  It should simply be about convicting a murderer.  Republicans are doing everything in their power to bring down “Obama Care.”  They have turned it into a life-style choice.  Instead of the benefits of this program, they are looking at the fact that traditional medicare generally covers some sort of birth control.  “Why should I have to pay for this person’s sex-life?”  It shouldn’t be a question about paying for a sex-life, but instead about the logistics of paying for a nationwide health plan.  Debate that to death instead of trying to distract us from real issues like the fact that millions are without.  They have a very good argument when it comes to funding it, why not stick to that?  It’s not sexy enough!  They have to have multiple bullets in their distraction roulette game in the hope that one of them will hit their mark.  Democrats have, in turn, turned the Republican raised issue about paying for someone elses birth control with tax money into a “war on women.”  It is a beautiful spin making Republicans look rather sexist.  No matter how you look at it, it is a spin game.  Everything is to distract us from issues they don’t want in the headlines.

The issue that neither Republicans or Democrats want to focus on is campaign finance reform.  What?  You might say that is a huge leap.  You’re right, but hear me out for a moment.  Nothing in government is left untouched by the almighty dollar.  It is campaign dollars that push, manipulate, stall, and even write legislation.  The amount of money it takes to win an election these days is crazy, and it is getting crazier!  To keep their jobs, and their standing within their respective political parties is pushing politicians to continually fundraise.  Literally, they spend 30-60% of their time trying to put money in the war chest.  If you think that campaign donors expect nothing for their money, you are sadly mistaken.  Just looking at earmarks, there are hundreds of examples where donors are getting earmarks.  Matter of fact, I find it hard to find where an earmark didn’t benefit a campaign donor, or someone who spent millions lobbying and the lobbyist contributed to an earmarks sponsor.

If you think it is just earmarks just look at Greg Walden, Republican Congressman, who just introduced the Federal Communications Commission Process Reform Act of 2012.  This act would significantly reduce the FCC’s ability to govern big media companies.  He receives hundreds of thousands of dollars from the very media companies that would benefit from this legislation.

Here is where the apathy comes in.  Your eyes have probably rolled back into your head and I’ve lost your attention.  I was talking to a buddy of mine about this stuff the other day and he said, “that’s just business as usual.”  It killed me! It is only business as usual because we allow it to happen.  We allow them to distract us with topics unrelated to their pay for play government.  We didn’t do this, but it is our job to collectively stand up and say no.  It isn’t ok to sell legislation to your biggest campaign donors.  We need to take our ADD medicine and stay on point.  We need campaign finance reform more importantly than any thing else.  Once real reform is done, we can focus on other important issues.  That way they are not tainted with corporate dollars.

 

Profit, not speculation, driving gas prices! Reply

One year ago Crude oil was $120 per barrel and never broke $3.25 at the pump. Currently, Crude Oil is resting at $102 per barrel and the average price at the pump is over $4.00.  Therefore, since April 2011, oil companies are saving $20 a barrel while gas prices have risen 23%. This equals a profit increase of 40%.  Real demand has been very steady, so we have to assume that prices are merely profit based.

Several Senators and Congressmen and women have come out to attack “rampid speculation.” Senator Bernie Sanders has gained popularity just for his stance against Wall Street on this issue.  Sanders is sponsoring the End Excessive Oil Speculation Now Act.  Now I don’t see any problem with this idea, but they are so far off the point here.  It is like Papa Bear getting mad at Mamma Bear because Goldilocks ate Baby Bear’s breakfast.

Speculation does have a piece of the blame here, but it is minute compared to the almighty profit of big oil companies.  Also, speculation drives the price down just as much as it drives the price up.  The major fault with speculation is that it swings the prices more dramatically than it would otherwise be.  For example, at the end of 2008 we thought the financial world was collapsing.  Because everything in speculation is anticipation, speculators figured that demand would diminish further than it actually had.  This assumption led to the price of oil to fall to $32 a barrel.  In actuality, it had dropped, but only minimally in the grand scheme of things.  Within a year, prices had gotten back to $80 a barrel.  At that price, everyone was pretty happy.  You see, $80 is the breaking point for big oil companies to make money.  They were returning to big profits and we were still under $3.00 per gallon at the pump… a far cry from being over the $4.00 we were seeing in the summer of 2008.

Exxon Mobile, a company I love, makes 17 billion dollars a year before taxes.  Knowing that they are losing money in Natural Gas, where do you think they are getting record profits?

 

Blatant attempt to buy legislation by AT&T other corps. Reply

This is definitely a gotcha piece in my opinion.  In 2011 AT&T sought to merge/acquire T-Mobile.  Cingular/AT&T is already the largest phone carrier.  The FCC denied the merger due to anti-compete laws.  The FCC did this to ensure that AT&T couldn’t create a monopoly in the cell phone arena.  Instead of taking this FCC ruling laying down, they are now trying to purchase legislation to limit the FCC’s rule over them.  They have enlisted Representative Greg Walden, Republican of Oregon, to do their dirty work.  I say enlisted but I really mean bought him off.  Yes I said it.  They directly donated $11k to his campaign.  This is three times their average donation to any elected official. T-Mobile kicked in another 10k as they are a beneficiary here. They wanted something special from this man.

He is returning the favor.  He has submitted to congress H.R. 3309: Federal Communications Commission Process Reform Act of 2012.  This bill, if passed, would significantly reduce the power of the FCC to block anti-competitive mergers from taking place.  I’m sorry but this sounds like a cellular version of Glass-Steagall Act.  I understand that the ramifications aren’t nearly as dangerous as the repealing of Glass-Steagall, but think about the long-term effects something like this could garner.  AT&T could buy up any competition that gets in their way.  This may be a small thing, but if the competition is gone, what’s to stop them from charging whatever they want?  There is a reason for these anti-compete laws.

Let’s forget about the ramifications of AT&T being able to purchase T-Mobile for a second and focus on the REAL problem here.  Are we really ok with a company that doesn’t agree with laws just donating to a congressman’s campaign so that they can change the laws in their favor?  Is this not blatant purchase of laws.  Hell, let’s take it a step further.  It is government for sale.

Meanwhile Lobbyist Paul Unger is to be mentioned.  He has donated 10k to Mr. Walden because he represents Comcast and NCTA.  Both are donors to Walden; Comcast donated as much as $30k this election cycle.  Time Warner Communications $15k.  Do you see where I’m going here?  Everyone that has skin in this game is donating big to Representative Unger.  One might say, “they are just of the belief that Greg Walden is of similar political thought.”  If that was the case, they would have been donating him in the last election cycle.  Only AT&T was a donor of his last cycle.

He is being PAID to fight the FCC.  This will probably not pass the Senate, but I am worried that we will forget the fact that this is Pay4Play.

Newt’s Super PAC “uncoordinated” Reply

There are several different kinds of PAC’s (political action committee).  You have your connected PAC, un-connected PAC, Super PAC, and Leadership PAC’s.  They all boil down to one thing: raising and then throwing money at a particular issue or political campaign.  For the purposes of this article, I will focus on the campaign type of PAC.  In theory they are an avenue for people of like mind to support their favorite runner in a campaign.  The thought behind this is that it is a form of free speech.  “By donating my money to this Super PAC that supports (insert potential candidate here) I am voicing my support for him or her.”  Leadership PAC’s are very similar but they allow for spending on “non campaign costs” and the party or elected official can start this up themselves.  They can spend said money on traveling, paying administration staff, and setting up the party for which they fundraise.  So, a presidential runner might have a leadership pack to pay for everything not directly related to campaigning and a Super PAC that pays for all advertising.  The major difference is that they are not supposed to coordinate with their Super PAC.

Lets examine the idea of “coordination.” The Webster’s dictionary defines “coordination” as 1. the act of coordinating, 2. the harmonious functioning of parts for effective results.  So to put it in political terms.  A politician is not allowed to speak with his Super PAC to achieve a common goal of ultimately winning an election.  Let’s take that a step further.  Would showing up to a Super PAC fundraiser be coordination?  As the law is defined, it is.  Also, have you ever heard the end of a political commercial where they say something along the lines of, “PAID FOR BY WINNING OUR FUTURE, WHICH IS RESPONSIBLE FOR THE CONTENTS OF THIS MESSAGE, NOT AUTHORIZED BY ANY CANDIDATE OR CANDIDATE’S COMMITTEE. WWW.WINNINGOURFUTURE.COM.” This is at the end of a commercial attacking Mitt Romney for his Bain Capitol involvement.  The committee is supporting Newt Gingrich by attacking Romney.  It is their “free speech.”  It is run by Becky Burkett and Ricky Tyler. Tyler is his former Press Secretary and Becky Burkett was his Chief Development officer for his 527 called American Solutions for Winning our Future. 527’s aren’t allowed to expressly campaign for one candidate or against another.  Weird how their names are virtually identical.  In the above picture you will see Newt with his staff.  Two feet behind him is Ricky Tyler, but they are NOT coordinating.  That would be absolutely wrong, not to say illegal.  I would never imply that Newt’s staff includes a manager of his Super PAC.  I could be held liable for slander so I will not imply that he would do such a thing.  I’m sure that Tyler just happened to walk into Newt’s staff office accidentally.  While there, he didn’t speak to Newt about where his campaign was going or what messages he was trying to get across.  They certainly didn’t discuss that they should put out more commercials attacking Mitt Romney about Bain Capitol.  Again, that would be illegal and unethical.

What am I getting at here?  Super PAC’s are simply an avenue to dump unlimited amounts of money on a campaign.  There is no way of proving coordination unless we tap their phones.  Is Newt any worse than the other candidates?  No, he is playing the game in front of him.  It’s time to change the game.  The only free speech is that coming from the candidates.  The only difference is that they can get untapped donations to voice their political agenda.  You might say, so what… It’s free speech.  Is it really?  Understand that campaign donors are being rewarded for their donations.  As these donations get bigger, so do the favors they expect in return.  Just look at what donations of $2500 to $5000 are getting donors: http://thelobbyisteffect.com/2012/02/28/earmarks-are-a-microcosm-of-how-government-works/   Casino owner Sheldon Adelson has donated untold millions towards Gingrich’s election bid.  Does anyone really think he wants nothing in return? It goes the same for all the Presidential candidates.  Our government is for sale and the price is only getting bigger.  Money is NOT speech.

94% chance that Barack Obama will win election. Reply

94% of the time, the winner of presidential, congressional, or senate elections are won by the runner who has raised the most money for their respective election bids.  This is not a piece that discusses the merit of Obama being a two-term president.  This article is to discuss the absurdity of this fact.  Do we as a nation accept this?  Is it ok that the fate of our nation’s elected officials depends on their ability to raise campaign funding?  Also, are we ok with the fact that the money being raised has become so utterly ridiculous?  Barack is pushing $140million dollars in funds raised by his campaign as of the last reporting date.  Mitt Romney looks like he is on his way to securing the GOP nomination and is coming in second in fund-raising.  Weird how that works.  The leading candidate for the GOP has raised the most within that competition?   He is pushing $64million and starting to feel comfortable with his lead.  Now, it is obvious that as GOP candidates start dropping out of the running much of the money that has yet to be raised will funnel to that candidate or candidates still remaining.  They will push higher up the ladder, but if you look at combined totals for the entire GOP race, they still don’t come close to Obama’s totals.

As a nation we are becoming more and more frustrated with the fact that corporations are controlling legislation.  Companies are now considered people.  Super PAC’s allow for unlimited fund donations.  If there is only a 6% chance that your favorite candidate has if he is not the leading fundraiser, what would compel you to vote?  Consider a guy like Buddy Roemer for a second.  Those of you who do not know who he is, you are in the majority.  He has taken the road less traveled.  He only accepts donations of $100… no more.  He will not accept Super PAC’s in his name.  He is a former Governor of Louisiana and Congressman.  His qualifications are impressive yet he got absolutely no love from the GOP.  He was running as a Republican but couldn’t get in a single debate.  I’ll let you decide if it was a “conspiracy,” or not but you should know that he was beating both Michelle Bachmann and Rick Perry while they were still in the running and they were allowed in the debates.  Are we really saying that a guy who stands against Big Money contributions isn’t even allowed in the game?

It just further alienates the voting public.  The vast majority of America does not contribute to campaigns and they, sure as hell, are not going to donate the amount of money that makes a real difference in a $140 million campaign.   If you are a supporter of Obama, this should infuriate you just as much as the guy who supports a GOP candidate.  Why?  Obama ran in 2008 campaign on the platform that he would end Lobbyist influence in government.  To date, he is the leading beneficiary of Lobbyist bundling.  This means a lobbyist comes to him with a pile of donation checks in “bundles.” You may believe in his ability to change for what you want, but you cannot agree with the idea that this is good for our country.  In no way is it helpful that lobbyists gain more control of our politicians by encouraging this type of campaign funding.

Bottom line: If you are not voting for Obama, you have less than 6% chance of being happy.  Worse yet, if several of the GOP candidates hold on to the very end, you have less of a chance that the money will be funneled into your favorite’s campaign, ie. less chance of catching Obama in funds raised.  I am NOT anti Obama, Newt, Mitt, Rick, or Paul, but I am very against the idea of vast amounts of money deciding the election.  There is no other way to look at it, our country is very much for sale.  Good luck Republic.

What if OWS had a single goal? Reply

Protests used to mean something.  We would protest Vietnam, equal rights, and equal liberties. I think that OWS peeps are onto something.  Just as our forefathering protestors before us, we have real issues at the heart of this movement.  Because these issues are not as overt as a sign outside a restroom door saying, “whites only” it doesn’t mean they aren’t extremely important.  The difference is that our government no longer has our best interests at heart.  They are far more concerned about justifying the huge donation they got from Corporation X.  They are in debt to their campaign donors.  It is dividing our country.

When Occupy Wall Street first began, I immediately thought of them as misguided.  Why? Because they are protesting the rich in general.  What good is that?  I’m not mad at my neighbor because he has more money than I do!  Just the same, I’m not mad at the stock broker on Wall Street if he is successful enough to drive a Lamborghini.  Who we should be mad at is our elected officials for allowing our country to be bought off.  Heck, they didn’t just allow it, they encouraged it.  They paved the way for eliminating the Glass-Steagall Act, increased the potency of Super PAC’s, forced lenders to lend to unworthy candidates, etc. etc.   In the never ending quest for campaign funding, they have sold our Republic’s soul.

I understand the frustrations of Occupiers, I just wish they focused their attention on the “fix.”  If OWS decided they wanted real change, they can force it.  If every occupy movement started communicating with each other, they could come up with common goals.  They all agree that money has corrupted our system, so why not take up campaign finance reform.  If they were to put together a piece of legislation and bring it to a Congressman/Senator that agrees with them, they could use their vast voting leverage to push it through congress.  They could call on media to help spread a single message and reach every single state.  The power of Twitter and Facebook is at their finger tips to help get this message across.

My message to you Occupiers: Stop talking about what is wrong, focus on a goal, coordinate your voting leverage, and try to get legislation into effect that “fixes” the issues.

The Republican Democrat Chasm spawned from Greed. Reply

A couple of years ago it was reported that Brett Favre’s presence in the Vikings locker room had created a Chasm.  There were teammates loyal to the quarterbacks who had already been there a few years, and doubted whether Brett could still lead a team.  In the end, he won over the locker room and got them to the NFC championship.  I always thought it was a strange way to use the turn chasm, but it couldn’t have been a more profound way of looking at the situation.  Two sides were divided by a belief and loyalties.

Today we are facing a grave situation.   Our political structure has become divided by political beliefs and loyalties, but there is no Brett Favre that can unite the team.  One would think that a president could pull together opposing sides and bridge that gap, but it is being reinforced.  Worse yet, the two chasms are actually being paid to be different. At least in Brett Favre’s situation, their team was paid to come together.  In our government, you have the Republicans being politically backed by large corporations that want limited government and a weak tax structure.  On the Democrat side, you have Unions and other interests that donate to enlarge government regulations and directly conflict with donors that back Republican issues.  This may seem obvious, but it is creating such a stalemate that nothing can get done.  The frustration is boiling over to a disgusting display of word twisting.  Both sides are culpable and both sides are ruining our country.

Because our media is no longer attempting to be unbiased, they are feeding the flames.  Instead of reporting facts, they are using only the facts that favors their side.  For example, Obama bashing is now become a sport on Fox News, a Republican slanted news channel.  In an attempt to create a mental link for the audience, you will often hear Obama referred to by his entire name: Barack Hussein Obama.  This is trashy news commentary trying to connect him to the decease dictator of Iraq.  It is the same on MSNBC News.  They often paint with a broad brush stroke trying to paint the entire Republican base with ignorant and racist strokes.  For example, instead of focusing on the fact that religious affiliated churches don’t want to sell birth control because it directly conflicts with their faith, they say that all Republicans want to get rid of birth-control.  It is a obsurdity, and unfair to force a Catholic Hospital to sell something that is against their faith.  What you will get is Catholic Hospitals closing up shop rather than knowingly commit a sin.  Who would that benefit?  Republicans, as a whole, have no problem with people going elsewhere for birth control.  You see where I’m going with this.

Both sides are intentionally creating a chasm.  They are trying to draw clearer and clearer lines in the sand intended to draw support from opposition and create more of a need for donations.  Obviously, companies that carry birth control are going to feel the need to support a democrat in elections if they are being convinced that Santorum will shut down or even affect their margins.  The same is happening on the other side.  A company like Haliburton or Lockheed Martin is reading that Democrats want to tax them into oblivion and reduce government spending on defense contracts.  The truth might be far from the truth, but they are hedging their bets by backing Republican candidates.  For the purposes of this article, I won’t even go into the tax loopholes, earmarks, and subsidies that they are trying to garner from both sides by donating.  Government officials are becoming very successful.  Donations to campaigns are at all time highs.  For example, the Presidential campaign is already 460% above its mark at this point in the last election.  Super PAC’s are pouring money into campaigns.  If you simply look at current GOP candidates, it is not uncommon to see an average of $460 spent per vote in close districts.

The result of this hemorrhage of money is that campaigns and media are devoid of all decency and unbiased truths.  Making comments like, “Romney wants to send little old ladies back to Mexico,” or “Obama shouldn’t apologize to Muslims for burning the Koran” are playing on stereotypes, fears, and racist beliefs.  Our country is being taught racism.  Political figureheads are playing on the fact that fear is creating a racist divide between Muslim and Christian beliefs.  Millions of Muslims are peaceful, but if we say it enough we can get a voter in South Carolina to believe that Obama is bowing to a murderous culture.

Our country still is the greatest country in the world.  Our freedoms that have been paid for in blood are something to be treasured, but greed in our government is driving rhetoric that will destroy our country and our freedoms.  American culture is becoming two different cultures and the before mentioned rhetoric is deepening and widening the great chasm.  Now more than ever, we have to get the money agenda out of Washington and clean up our Media or there will be no Republic to repair.

Understanding Oil and Gas Prices Reply

Because understanding the price in oil is a bit of a specialty of mine, I thought I might share (in the simplest of terms) why the prices are what they are.  There has been so many wild accusations and finger-pointing that I feel it is time for some rational explanations.  To quote just a few people and media comments: “Speculators are strangling America.” “Obama has no energy plan.” “A vote for Newt, is a vote for $2.50 gas.” “Drill baby Drill.” “We have to make ourselves energy independent from the middle east.”  While all of these comments have grains of truth in them, they are really founded in misconceptions about the oil markets, where we get our oil, and how much policy can even affect prices.”

Let’s start with speculation.  Speculation does drive up the price of oil, but remember it also drives down the price of oil!  Speculation is just that, speculating on demand.  This really just makes for greater swings in oil, not a simple driver to higher levels.  Here’s what I mean: Summer of 2008 we had oil hovering just under $150 a barrel.  Prices at the pump were in the $4.25-$4.50 range. People trading futures, options, and companies that represented oil were looking at problems in the middle east and possible limited supply.  That December the price of a barrel bottomed at around $32 a barrel and at the pump around $2.65 a gallon.  This right there is a very telling point.  People were not decreasing demand of oil by 4.5x.  In fact, actual supply/demand ratio didn’t fall by much, yet the price per barrel tanked.  This was a result of insane speculation.  It was a much larger swing than was warranted due to fears that our entire economy was swirling around the toilet.  This important fact is also an explanation of price gouging.  Realize the price at the pump has moved significantly less, percentage wise even though it is much cheaper for them to purchase the oil.  This is a very important realization.  The price of refinement hasn’t changed.  Only profit margins increased.  Oil per barrel is only 21.33% of what it was, yet they are able to charge 58.88% of what they used to. I assure you they were making a killing even though the price of oil was at $150, now we’ve just increased their profit margins.  The only ones losing are the people who actually take the oil out of the ground.

Let’s use the Saudi Arabians as an example.  When prices were at $150 a barrel, they were rolling in money, but they didn’t set that price.  Matter of fact, they were actually increasing supply as much as they could to take advantage of the prices.  If you speak to anyone in the know about oil, you will find out that they need prices to be $80 or more to turn a profit, so $70 above is great for them.  There are a multitude of reasons why it is dangerous to become dependent upon some of the middle east countries for their oil, but it is important to note that none of them have ever even hinted at the fact that they would decrease supply.  We are their life-line.  When I say we I am including China and all major oil consuming countries.  We get more than 20% of our oil from Canada, we are increasing our Brazil Oil connections, and have always been a large oil supplier ourselves.  So, in summation, we don’t rely too heavily on middle eastern countries for oil.  They are just a player and do everything they can to keep us happy.  They know they are not a necessity in this game, much like Coke tries to appease their vendors.  They are the biggest and the baddest, but it comes down to keeping your customers happy.

The idea that Obama has no energy plan is hilarious to me almost as much as Newt Gingrich saying he will give us $2.50 per gallon gas.  Both are ridiculous.  Obama does have a plan, and you cannot simplify it too much by saying he just wants to use “green energy.” What he has is plenty of supply, but two strong forces working against him.  Exxon Mobile is one of the largest players in the game.  They are going to sap every bit of profit out of a gallon of gas that they can.  I don’t blame them because they are beholden to their stock holders and, after all, it is a profit driven business.  Are we to assume that they should take losses so that you can drive to the grocery store on the cheap?  No, that is ludicrous.  There is the chance that companies would go out of business.  The fewer refineries, the higher prices.  You get the drift.  Not to mention, that there is no way Obama has the pull to completely rid the stock market of speculation.  Republicans are “free-market” and pro-capitalism.  Is there a chance in hell that they allow him to pass legislation limiting the amount of speculation on Oil as a whole?  For both of these reasons, Newt doesn’t have a chance of bringing gas down to $2.50 a gallon on his own.  Why?  If he proclaims “Drill baby Drill” it will only be a temporary fix.  Speculation will drive prices down because people will assume that Supply will go up… This is not the case!  They will only drill what is economically feasible.  Exxon is NOT going to drill themselves out of a profit!  As supply maintains virtually what it does already, the prices will eventually reach a norm and be subject to speculation about the next middle east squabble.

Bottom line.  Speculators, big oil companies, and politics all play their role, but the only way to get prices low and keep them low is to find an alternative forms of energy (which I know is a sin to say out loud), or the government has to get into oil production itself because it is a for profit game.