Setting the Record Straight

September 11, 2008

Palin’s Pipeline To, Not Here

Drill, Baby Drill; Then Export It

     As has become clear, the McCain/Palin campaign has decided to exceed the level of distortions and exaggerations that characterize many a political campaign and perpetrate outright lies its American Idolators are more than pleased to spread. We consider duplicity even worse.
     A natural gas pipeline, which would span Alaska and become the nation’s largest-ever infrastructure project, is being promoted as helping to reduce America’s dependence on foreign oil. At the same time the United States is about to export natural gas from Alaska, reducing U.S. supplies and driving up prices just as winter arrives.
     Sarah Palin speaks endlessly about how she stood up to big oil interests as Alaska’s governor. First, she stood up to them by negotiating more money for the state in a deal to build what she calls “a nearly $40 billion natural gas pipeline to help lead America to energy independence.”
     She goes on, according to a
New York Times article, “That pipeline…will lead America one step farther away from dependence on dangerous foreign powers that do not have our interests at heart.”
     At the same time, the Interior Department reveals a string of sex, lies and audio tapes involved in Alaska oil and gas deals with the oil industry and the federal employees handling the deals.
     The Times piece cited above is about the proposed 1,700-mile pipeline being only that, a proposal that has so many hoops to go through it might never be built.
     The Palin quotes are part of the political practice of distortion and exaggerations the John McCain campaign has decided to take to a higher level. The duplicity is the claim the pipeline would “help lead America to energy independence.”
     The gas pipeline is just one of the elements in the Republican “drill baby, drill” campaign to open up more public land to the oil industry that is not yet active on many other permits it already has to drill on public lands.
     The drilling campaign is being sold as a way to deal with the current energy crisis that is affecting not only the United States, but also the economy of the entire world.
     The Bush administration is pushing for more drilling, Repub- licans in Congress are pushing for more drilling, but the Democratic majority in the House balked, and rightfully so. The move would have absolutely no impact on today’s oil supply and wouldn’t for at least a score of years. It is nothing more than a ploy to open more land to drilling, in case the oil industry wants to take advantage of it some time in the future.
     Now comes the revelation by Ron Wyden, D-Ore., a senator much more “maverick” than McCain could hope to be, that the Energy Department recently approved plans for ConocoPhillips and Marathon Oil to ship abroad 2.8 billion cubic meters of natural gas already being pumped out of Alaska. The amount is the equivalent of the average annual use of 1.4 million American families, Wyden says. He could be exaggerating when he says that, but he notes that Americans already are projected to pay an average of 22 percent more for natural gas this winter than the paid last year.
     The duplicity certainly is real.
     At a time we have our own domestic-energy shortage, the lame-duck Republican administration in one last gasp cleared a deal for the oil industry to export precious natural gas to Japan and other nations in the Pacific Rim.
     Do we need to drill for more oil or don’t we? Are we going to reduce our dependence on foreign energy or not? Do we have the interests of U.S. citizens at heart or do we not? Do John McCain and Sarah Palin tell us the truth, or do they not? But most importantly, are they the candidates more likely to change this practice or are they not?



August 12, 2008

What’s Putin Up To?

Cold War II?

         Back in July, almost as a throw-away line in an Outside the Box item on Afghanistan, we noted the United States is the world’s sole super power, “until Vladimir Putin gets Russia back up to the old Soviet strength….”
         Later in the item, we noted we defeated the U.S.S.R. not with warfare, but with money, with the U.S.  ability to spend more money than the Soviets in the Cold War arms buildup. Finally, Mikhail Gorbachev, thankfully with a modicum of training as an agriculture economist before he became the Soviet Union’s last president, could see the end game, quit the Cold War and folded the Soviet Union in 1991.
         Since then, the Soviet Union has contracted back into its pre-Stalin boundaries, largely areas that never spoke Russian before the expansion of the Russian Empire in the 1800s. That contraction allowed restoration of the sovereign nation of Georgia, which sits astride the stretch of land between the Black and Caspian Seas, just above the oil-rich Middle East. It also established its own democratic government.
         Today a pipeline vital to Russia is stretching from the Caspian Sea into Georgia, past its capital of T’bilisi and across Turkey to the Mediterranean Sea. That is a valuable outlet for Russian oil, which, along with natural gas, is the base of the new nation’s economy. Russia has become the world’s second largest exporter of oil and the largest exporter of natural gas.

         Putin was a two-term president of Russia, and before he had to step down from that job as required by the Russian Constitution, he arranged to hand-pick his successor to serve as his presidential puppet and in return name him the next prime minister earlier this year. There is little doubt he will use that office to remain Russia’s leader.
         So what is Putin up to in Georgia? The attraction of controlling the former Soviet portion of the pipeline seems obvious. That would take Russian troops next into Azerbaijan, across which the pipeline begins its journey from the Caspian.
         Does he see Russia’s energy-based economy growing to the level the country without the burden of its Communist-era satellites, could once again compete with the United States in Cold War II? The United States is not looking any too strong itself, right now.
         So weak is the United States thanks to the Iraq-invasion lunacy and its own oil-price economic woes, it is likely to have almost no diplomatic influence on the outcome of what already has been termed a war between Russia and Georgia.


August 5, 2008

Off the Dime on Energy

An Energy Plan–But Just a Start

      The real presidential campaign has begun, reluctantly. This is not to suggest idiotic campaign claims are no longer going be perpetrated by both sides, but the fact we now have a discussion about a key policy issue—energy—is encouraging.
     Having said that, both candidates are pandering, one to the oil industry, the other to a fearful public.
     Republican John McCain keeps insisting on the ludicrous proposition of opening more public land to oil drilling now. House Republicans staged a protest in front of nobody but a handful of reporters and TV cameras to dramatize a demand that Congress end its just-begun vacation and return to pass the proposal to lift the drilling moratorium. We have already spoken of the ridiculous- ness of that suggestion: One Last Scam for the Sleazy GDB Era.
     Now we have Barack Obama’s more thorough energy policy, designed mostly by one of President Clinton’s energy secretaries, Frederico Pena. (These surrogates are well-schooled to speak of policy as “Senator X believes,” or “Senator X says” when it is actually the adviser who is forming the policy).
     The Obama plan offers only one positive response to dealing with the current crisis of oil prices—drawing from the Strategic Petroleum Reserve, a reserve held by the federal government for emergencies. McCain and others claim it is only for military uses, but those statements are not accurate. The origin was a fear of emergency military needs during the OPEC embargo of 1973, but Congress intended it as an emergency supply without restric- tions, as illustrated by subsequent drawdowns for domestic purposes.
     Another suggestion of the Obama energy policy is worth implementing, as was done after the embargo—a windfall profits tax. It is obscene the U.S. oil companies realized such record profits April-July this year as the American (and world’s) economy went into the tank.
     The oil industry argues the problem is the supply and cost of foreign oil, that they are not to blame. Check out how closely involved U.S. oil com-panies are with foreign oil production, where they obtain most of their oil and how much they bother to oppose the decisions and policies of oil-producing nations. Go ahead and tax windfall profits.
     Otherwise, the Obama energy policy is more of the same, a repeat of suggestions made after the 1970s crisis, implemented in part, but mostly junked in the 1980s, leading to the current repeat of history. His policy says nothing about the auto fuel-efficiency standards that have so many loopholes they allowed the proliferation of gas-guzzling SUVs and pickup trucks, which many buyers are now trying to unload. There is a new push for nuclear energy, but history again should be heeded—the same problems that led to its rejection still remain, problems with safety and spent-fuel and water disposal.
     When biotechnology emerged as the new popular science, it became apparent we did not have to rely on fossil fuels any more and could burn cleaner fuel in our cars and factories. Congress had a great idea, but as usual, in a fit of excessive exuberance, it overreacted and passed incentives for producing ethanol as a fuel alternative (that’s why 10 percent of your gas today is ethanol).
     But we now know that proposal was overreaching and the incentives should have stressed alternatives other than those that affect the food supply, such as corn, contributing to the stagflation the nation finds itself in.
     What is needed, from Obama as well as McCain, is a deeper-thinking and longer-term energy plan.
     We need to begin thinking outside the box on energy. What- ever solution is proposed should exclude the oil industry, a firewall if you will, between the industry that has acted to impede oil efficiency as far back as the attempt by Preston Tucker to market a more fuel-efficient car (most of Tucker’s innovations were adopted many years later) and other efforts to supplant the internal-combustion engine. Do not look to that industry for a solution, so bar it from any attempts to achieve one.


July 2, 2008

U.S. Automakers’ Enemy: Themselves

Filed under: news,policy,politics — straightrecord @ 9:03 am
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Help the U.S. Auto Industry: Vote Against It

          Ask anyone close to the American auto industry who has been its biggest friend in Congress and you will hear a unanimous: Rep. John Dingell, Michigan Democrat.
          Ask us who in Congress has caused the most harm to the U.S. auto industry and we will say: Rep. John Dingell, Michigan Democrat. Why? Because he gave them what they asked for.
         Yes, the auto industry’s biggest enemy is straight out of the late Walt Kelly’s Pogo: “we have met the enemy and he is us.”     
          The U.S. auto industry is reeling and the stock market is expressing shock over the latest sales reports from Detroit. Together, General Motors, Ford and Chrysler suffered an 18.3 decline in sales in June, just the latest month of troubles this year, but also representing the steepest decline since 1993.
          Once again, history has been ignored, as George Santayana warned: “Those who don’t remember the past are condemned to repeat it.” And repeat it we have, in spades.
          Go back to the 1970s and listen to auto industry representatives appearing before the House Commerce Committee, now headed by Dingell, an otherwise liberal Democrat, later to become a millionaire by marrying a woman who is now a General Motors executive. For several years now, he also has been the longest-serving member of Congress.
          In 1972, before the supply of gasoline in the United States became a problem, U.S. automakers fought against auto-safety legislation that centered on bumpers that would reduce the amount of damage at certain speeds. The automakers wailed Americans were in love with their chrome, but crash-inefficient bumpers and would not accept the rubber-based bumpers that would allow the mph low-speed-impact to increase from 2.5 to 5.
          Dingell, already fourth-ranking member on the “powerful” Commerce Committee, and the automakers lost that battle and one result was the infamous (for other reasons) Ford Pinto switched from a bumper that sustained $500 damage in 1972 to one that sustained only $29 damage two years later. Heavy chrome bumpers disappeared and gas mileage increased as an unintended result, but not until after German cars made their first sales inroads with their rubber-based bumpers.
          Even before the Oct. 17, 1973 Organization of Oil Exporting Countries embargo on oil to countries that supported Israel during the Yom Kippur War, the United States was undergoing a crisis in its oil supply, fueled by an ever-expanding level of consumption. Prices were rising as demand outpaced the pace of supply, leading to those now-fabled blocks-long lines of cars waiting to fuel up at service stations, those places that used to pump the gas for you, wipe your windshield and check your oil.
          The government attempted price controls and allocation systems without success and practically gave up when OPEC began its embargo.
          All this time, there were proposals in Congress to increase the mileage cars could get on a gallon of gas. U.S. automakers appeared before Dingell and the Commerce Committee to plead against legislative efforts that led eventually to what became the Corporate Average Fuel Economy (CAFÉ) standards governing car mileage.
          It began as an ambitious effort to require better gas mileage to reduce U.S. gas consumption, already the major reason behind the demand for imported oil. The automakers appeared before the panel to argue against various provisions, such as requiring them to reduce other vehicle weight not already reduced by those soon-to-be defunct chrome bumpers.
          In environment hearings, they also argued against catalytic converters, claiming that requiring them would add nearly 10 percent to the cost of a car and Americans would not stand for that. Congress required them nonetheless and the added cost not only turned out to be minimal, there was almost no buyer resistance.
          U.S. auto industry executives and lobbyists argued against just about every requirement that would later save their industry, and Dingell served was an obedient key ally. These efforts included establishing a national speed limit. The auto industry, of course, fought against it. The commerce committees heard testimony that the optimum efficient speed of a car was 50 miles an hour (Congress ended up setting a 55 mph limit to satisfy pleas of the trucking industry) and ended up establishing the 55 mph limit that has been largely diluted and 75 mph has become widespread once again.
          But it was the auto industry’s fight against the CAFÉ standards and Dingell’s help on their behalf that doomed U.S. automakers.
          Even as foreign automakers were making cars much more fuel-efficient than American-made cars, the U.S. auto industry fought the standards that would require them to average a certain amount of miles per gallon across their entire fleet. The standards would still allow gas-guzzlers, but they would have to be offset by vehicles that achieved an equal fuel efficiency on the other side of the center line.
          “We can’t do it, it would ruin us, we’d have to lay off workers,” U.S. automakers wailed as representatives of the United Auto Workers weeped at their sides. Thus the CAFÉ standards were set so high and with so many vehicle-type exceptions, they became mostly meaningless and Americans guzzled away.
          Within a few years, automakers and their employees were banning foreign cars from their parking lots and foreign cars, particularly those made in Japan, were being vandalized but auto workers in the Detroit area. Why? Japanese cars became popular during the 1970s, a decade capped by another oil crisis in 1979, because they routinely provided a better mpg than American-made cars.
          Today Japanese-owned automakers sell more cars than the American giants (now numbering only two as Chrysler ownership bounces from country to country).
          Despite this history, what did the U.S. automakers do in the 1980s and 1990s? They not only supplied, they encouraged with billions of dollars of advertising, the new fad of gas-guzzling bigger vehicles supposedly demanded by Americans with memories even shorter than those of the auto executives.
          Sure, foreign automakers also began producing gas-guzzlers to compete with the growing fad, but they always maintained massive production lines to continue to produce their old fuel-efficient autos. More importantly, they led the innovations for more fuel-efficient cars, such as hybrids and autos using alternative fuel sources. Detroit, as always, lagged way, way behind.
          Now, the bloom is off the gas-guzzler rose and Detroit is stuck with gas-guzzling trucks and SUVs while foreign competitors find themselves unable to keep up with the American demand for economical substitutes.
          The U.S. auto industry was hoist by its own petard. Ten years from now, if it still exists, will the industry have learned its lesson this time? For clues, watch the next appearances by auto executives before concerned congressional committees.



May 22, 2008

Fuel Crisis Redux

A Solution to Our Fuel Crisis

Saudi to Bush:

 No Crude Shortage, It’s U.S. Refinery Shortage

          The economic mess in the United States, a mess reverberating throughout the world, should bring a renewed focus on the basic element of the mess–fuel prices on the verge of having quadrupled since 2000.
          The federal government may not yet have the figures to declare a recession or to measure a huge rise in inflation, but the public from the middle-class on down know both already are here. The housing crisis was only fuel to a fire made inevitable by a steady and unconscionable increase in fuel prices.
          This may be the time to give the federal government a new tool. It would be a tool to be used not necessarily to make more oil available, but to allow the government to prevent manipulation and gouging of the supply and price. 
          It used to be the oil industry made convoluted, confusing excuses for price increases, throwing around various figures and arcane reasons few people could ever unravel. Notice you do not hear any of that today. They say almost nothing, and when they do say anything, they simply shift the blame to speculators in the stock market. And, as they did before Congress recently and anytime they are put on the spot, the use the occasion to be freed for more domestic oil exploration.
          This is the second time around for a modern-day U.S. oil crisis. Between the other one and now, the federal government failed its citizens. We are suggesting a correction of that failure and a new way of thinking this time around. It may not work, it may not be feasible, but it is worth a look. Just the fact it is an option on the table could have an impact on the current mess.
          The U.S. government should build its own oil refinery, preferably away from the current Gulf Coast area where most domestic oil work is concentrated.
          This mess is not new.
          Back in the early 1970s we had the previous fuel crisis. Before the Organization of Oil Exporting Countries decided to impose a year-long embargo on exports of oil to the United States, causing a shortage of gasoline and a concomittant jump in prices, a gallon of gas had cost not much more than a quarter in the United States for decades, a period when the word “inflation” was never uttered.
          The crisis began when OPEC, largely for political reasons, embargoed U.S.-bound oil. Cars were lined up at service stations (they actually provided service up to that time), often for several blocks, to get access to fuel pumps that could run out of gas at any moment. The cars were gas guzzlers by today’s standards, about equal in mileage to most of today’s trucks and SUVs.
          Supply and demand being what it is, the price of gas quadrupled to well over $1 a gallon (an increase that would equal more than $15 a gallon at current prices), and inflation followed close in its wake, leading to interest rates that had been steady for decades at 2 percent or 3 percent, to jump to 20% and more later in the 70s.
          Over the ensuing years, the government responded with laws to encourage alternative energy explorations, coupled with all sorts of subsidies for the oil industry itself to encourage domestic drilling, including greater freedom to explore for oil in formerly off-limit areas. The government also made inflation a major area of concern and enacted stronger fuel-efficiency laws. The inflation rate fell back to more sensible levels, although never to its pre-OPEC level except in odd instances.
          After the change of administrations (Carter to Reagan), the incentives to the oil industry remained, the incentives to explore alternative fuels were dropped. The number of refineries on line had crept up to more than 300 until 1980, when the administration changed. Suddenly, the number of refineries on line began a long plunge to our 149 today.

          Not so curiously, the price of gas never fell, almost defying the laws of supply and demand. In fact, prices continued on a steady rise, notwithstanding the waverings of politics, supply and demand and other factors. All the increases were accompanied by those aforementioned convoluted excuses.
          Part of the government response during the oil crisis included creating, in 1975, the U.S. Strategic Petroleum Reserves for the sake of future security, comprised of a storage of oil now totalling about 727 million barrels of crude and all located in four salt domes below ground, in a single part of the United States, on the coast from Texas into Louisiana. Even when released, to be offered to the oil industry on the commercial market at a set price, it still must be refined by the oil industry.
          This area includes or is close to the greatest concentration of U.S. oil refineries where basic crude oil has to be processed to make it usable, refineries jammed into a highly vulnerable area of the country. There are now 149 refineries in the United States, more than a third of them in hurricane-vulnerable Texas and Louisiana, producing fewer than 18 millions of barrels of usable oil a day. That is the same level of oil refining that existed before the last one new one was completed in 1976, at a time when we had more than 300 refineries.
          Although shutting down those refineries has not changed production levels, overall refinery production level has not been increased in nearly three decades as our usage, and even needs, have skyrocketed. Of course, with half the number of refineries, more than a third in two hurricane states, we are twice as exposed to weather and transport disruptions.
          The U.S. petroleum industry is one of the top profit-making industries in the United States. Individual companies claim they are just passing along their added costs, but never mention they also are including the U.S. norm of about a 100 percent markup. Before the 1970s crisis, the normal business markup was about 40 percent.
          If the U.S. government had its own refinery, it could refine its own strategic reserves, already-refined, with a built-in capability of diverting some of that refined oil immediately to the public market in competition with the private oil industry whenever such a move would serve the public iinterest.
          Such a move bypassing much of the oil industry with which it would then be in partial competition, also would give the government greater power to support alternative fuels and play that power off against the price of oil to make the industry somewhat honest. The government already has the ability to do some of that by releasing supplies from its oil reserve. A refinery would greatly increase that impact, by being able to tweak the price to a level that would discourage increased use, but low enough to help balance inflation and other economic concerns.
          The crude oil it refines could come from two sources, foreign and domestic. With a world crying for foreign oil–check out China and Japan –the U.S. government as a buyer would give it added political leverage, something it badly needs after its recent foreign policy gaffes.
           Domestically, it could force the oil companies to donate crude in lieu of greater taxes, including windfall profits taxes, something that already should have been restored. The cost of all this could be paid for, in part, by ending the subsidies to big oil, in a huge part by ending the massive cost of the fool’s errand in Iraq.
          There would be an ancillary benefit. Remember the oil industry ruse of switching refineries over twice a year between heating oil and gasoline? A government-run refinery could step in and ease the impact of that semi-annual chicanery.
          Or, the federal government could simply nationalize the oil industry and operate it in the public’s interest on grounds no industry should be allowed to hold the nation in a stranglehold.
          Either solution is fraught with all sorts of problems, chief among them lack of a political will. But the federal government is filled with geniuses–yes, among those much-maligned civil servants–who could work on the issue (and probably already have) if asked.







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