The Democrats And Oil Speculators

It was just a matter to time before the Congressional Democrats would follow the President's lead on going after oil speculators.  Fresh with news that Federal investigators had just snared themselves a real case of  oil manipulation by an electronic trading firm, Optiver, Representative Chris Van Hollen and 42 other Democrat Congressmen wrote Attorney General Eric Holder a letter; urging him to use every means possible to "insure the proper functioning of our oil and gas markets."  Of course, that letter wasn't really necessary because, just last week, President Obama had announced, in a Rose Garden address, that he had committed the Justice Department to doing just that.  But, what the hell, Van Hollen and his buddies saw a political opportunity and they took it.

Now, to keep the politics going,  Van Hollen went on Neil Cavuto's Your World show to argue with Neil over how oil prices are being jacked up by speculation and manipulation of the markets.  Of course, Van Hollen immediately brought up the Optiver case as proof of this.  But, is Optiver any real proof of any  manipulation of the markets?  I don't think so.

First, the kind of charges that were brought against Optiver are extremely rare.  In terms of frequency, the feds charged that, in 2007, Optiver (one the world's largest oil and commodities trading companies) attempted to manipulate the market 19 times and were successful in at least 5 cases.  Wow, 19 times by a company that probably trades oil futures contracts thousands of times a year!  But here's another thing.  No guilt was ever proven and the court never found any real wrongdoing.  Optiver negotiated for and accepted a $15 million penalty; probably, to just get the feds off their backs and avoid any further attorney fees.  But, for a deceptive politician like Van Hollen (the former Chairman of the Democratic Congressional Campaign Committee), the penalty itself was enough proof that oil speculators are widely and illegally manipulating the oil and gas markets.

Obama's Latest Ruse: Oil Riggers/Spectulators

Throughout his presidency, Obama has blamed one straw man after another in an attempt to deflect blame for his own shortcomings. Now, in what can only be called the biggest ruse of his presidency, he is trying to make you and I think that the only reason oil prices are high is because of oil price rigging and speculation.  Even for Obama, this is a new low.

In his Rose Garden campaign photo-op of yesterday, he called on Congress to pass new legislation that would strengthen the government's ability to prosecute them. But, think about this.  If oil rigging and fraudulent oil speculation is such a rampant problem, why is it that the President's own Securities and Exchange Commission, or his Department of Justice, or his Federal Trade Commission haven't prosecuted a single case of it in the last three years.  Why is it that his year-old Oil Speculation Task Force hasn't exposed such illegal activity. The reason is simple. There isn't any.

So, Obama is calling for stricter regulation, increased oversight, and higher fines for something that his own people have "never" proven to exist. All he's really trying to do is prove to the dumbest of voters that he's doing something to lower oil costs when, in fact, he is more responsible for high oil and gasoline prices than anyone else due to his excessive spending and his blocking of new oil exploration on federally-controlled lands and offshore locations.  But, more than that, Obama expects to use this as another one of his anti-Republican campaign messages.  Clearly, if his call for new regulation is ignored by Congress, he will, again, say that it's because the Republicans are putting the rich speculators and big oil companies ahead of what is really good for this nation.

By the Way. oil prices went up yesterday with oil traders obviously laughing off Obama's grandstanding on increased regulation.

Will High Oil Prices Drive Hybrid and Electric Car Sales?

Logic would say that, during periods when oil and gasoline prices are high, people would seek more fuel efficient vehicles. Obama certainly believes this. In fact, he has predicted that there will be a million electric cars on the road by 2015. Unfortunately, the current facts don't necessarily support this theory.

There are about 600 million automobiles worldwide. Of that, 4.5 million (or about 3/4 of one percent) are hybrids with a sprinkling of electrics. This is despite high and going higher gasoline prices over the last decade. In the U.S. hybrid sales are still only about 3 percent of total auto sales. In Europe, where gasoline prices are double that of the U.S., hybrids only eke out 6% of total auto sales.

The problem is one of price. Hybrids and electrics are just too expensive for the average person. Even, the used ones. The cheapest hybrid is about $23,000 or the equivalent of about half the income of the average American. Sure, you spread that price over a 3 or 5 year loan but, still, it's a hefty chunk of change. Most people would rather buy a less expensive, but fairly fuel efficient, non-hybrid. In fact, when costs are compared over any period of time, hybrids always lose to highly fuel efficient conventional vehicles. Obviously, the people buying hybrids aren't very good at math.

So, you see, higher oil prices aren't necessarily going to drive hybrid sales or fulfill Obama's dream that there will be a million electric cars on the road by 2015. Let's not forget that oil hit a high of $140 a barrel in 2008 and hybrid sales stayed at roughly 3% of auto market. And, that $140/barrel was far higher than today's $100+ a barrel. Yet, people don't seem to be "stocking up" on hybrids. Conventional gas-powered vehicles are here to stay. And, they will maintain a dominant position for decades to come.

Lastly, I actually wrote this blog entry over 3 weeks ago; leaving it as a draft to be published later. But, just to today, this report on hybrids was released: Despite Gas Prices, Hybrid Sales Stall

The Insanity of Obama Releasing Oil From the Strategic Petroleum Reserve

Last Thursday morning, it was leaked that President Obama and UK's Prime Minister David Cameron have agreed to release oil from each country's strategic oil reserves. If true, this is just insane. Obama tried this just recently and it didn't work.

Last year, on June 23rd, President Obama announced that he was releasing 30 million barrels of oil from the Strategic Petroleum Reserve (SPR). At that time, Obama did this to counter the increases in oil prices that had resulted from all the turmoil of the Arab Spring. Oil prices did go down; somewhat. But, after only two weeks, the price of oil was back to where it had been before the "release" was announced.

On a logical basis, this latest intention by Obama certainly plays into Albert Einstein's definition of insanity: "Doing the same thing over and over again and expecting different results." But, in the world of politics, acting insanely and getting headlines is all that matters; even if the benefit is extremely short-lived. While the White House spokesperson claims this rumor to be completely false, I'm betting just the opposite. And, later this year, closer to the Fall elections, Obama will release a significant amount of reserves in order to drive oil prices down; proving that he "does care" about high oil prices. However, what he really cares about is his reelection.

Obama Administration Thinks High Oil Prices Will Make Amerrica Green

Yesterday, in a Congressional hearing on the current rise in oil and gasoline prices, Secretary of Energy, Steven Chu, basically said that he and Obama are OK with high oil prices because it will help "wean U.S. off oil." This despite the fact that lower income working families and people on fixed incomes are getting clobbered by high fuel prices; probably forcing some of those working families to cut back on food and other essentials so they can still get to work.

But, the logic on the part of Chu is flawed. And, you only need to look to Europe to see why. In Europe, the prices at the pump are basically double that of the U.S. at any given time. Yet, that hasn't forced people into buying greener hybrids or electric cars. In fact, despite having had high oil prices for years, 94% of the autos being sold in Europe, today, are still strictly gasoline-powered. On top of that, Europeans hang onto their old gas-guzzlers 40% longer than do Americans. For an average of 13 years. Thus, electing to ignore the higher mileage economies that any newer vehicle would afford them.

What people choose to drive is generally decided by what they need the vehicle for. Beyond that, economics generally forms their final buying decision. Most people understand that gasoline prices at the pump would have to go a lot higher to make it worthwhile for them to buy an expensive green vehicle. But, Chu and his boss can't seem to understand this; proving, again, that economics is not their strong suit. That was obvious from Chu's idiotic decision to blow a half billion dollars in taxpayer money on a failing green energy company: Solyndra.

The reality is that, world-wide, there are 600 million vehicles. Less than three-quarters of one percent of them are hybrids or electrics. In this country, hybrids and electrics only account for 3% of vehicles sales. And, with the average age of vehicles going up each year, it's going to be a long, long time before anyone will be "weaned" off of oil.

Obama: "We're Not Going To Drill Ourselves Out Of This Problem

Last Thursday, in President Obama's address on energy, he repeated a familiar refrain of almost all Democrats when it comes to high gasoline prices and calls for increased drilling: "We're Not Going To Drill Ourselves Out Of This Problem". In that same speech, he tried to take credit for the fact that our dependency of foreign oil has been reduce through -- yes, that's right -- increased drilling.

Back in 2006, the then-Senator Obama from Illinois, wrote this in his book The Audacity of Hope: "We cannot drill our way out of our addiction to oil." Yet, since then, U.S. oil supplies have never been greater. All thanks to new and deeper oil finds and major advances in drilling techniques. Not, because of our government. Because of persistent exploration by the oil companies. Now, we actually may have enough reserves to last us through the beginning of the next century. If Obama would allow those companies to drill.

Over 40 years ago, during the OPEC Oil Embargo, the Democrat-controlled Congress under President Carter, trotted out a bunch of hand-picked, environmentally friendly experts who said we would run out of oil in 40 years. But, now, more than 40 years later, with more than a tripling of the world's automobiles, we still seem to have enough oil in the world.

This "we can't drill our way out" is a tactic that is used, over-and-over again, by the Democrats to delay bringing any new sources of oil into the marketplace. It is driven by their all too cozy association with the environmental movement. Sadly, every time they win using that slogan, it's the working poor and the middle class who suffer as a result of higher gasoline prices. A problem that the Democrats never seem to understand.

Obama Is Not Blameless On High Oil Prices

When Obama took office, West Texas oil was being traded at just above $36 per barrel. By the fall of 2010 -- before the Arab Spring and the Middle East turmoil that we are now seeing -- West Texas crude was selling just above $86 a barrel. This was despite slow, world-wide economies (except for China) and high world-wide unemployment.

The fact is that supplies were up and demand was down and the world should have seen a lowering of oil prices by the Fall of 2010. Not a doubling. But, you see, around the world, oil is only traded in U.S. dollars. And, if the dollar is weakened, then it takes more dollars to buy a barrel of oil. All that spending in 2009 and 2010 by Obama and the Democrats severely devalued the dollar as our national debt piled up. As a consequence, oil prices naturally rose. Not driven by demand, not driven by supply, but instead, driven by the spending policies of Obama and his fellow Democrats in Congress.

On top of that, in April 2010, we had the BP oil spill . In response, Obama pulled all the deep-water drilling permits in the Gulf of Mexico. Traders viewed this as a short and a potential long-term reduction in supply and they started trading oil prices even higher. Further, in December 2010, Obama re-imposed a 7 year ban on any drilling off the Atlantic or Pacific coasts; as well as in the wilderness areas of Alaska. Once again, traders saw this as a future reduction in supplies.

For Obama to blame high oil prices on events that are out of his control is just ridiculous. He's done everything possible to restrict oil production and drive prices up; and, in doing so, make expensive green technologies seem more reasonably priced. Eventually, the world-wide economic doldrums will end. Unemployment will lessen and economies will start to come alive. When that happens, years of pent-up oil demand will literally happen over night. If there isn't enough new supply to meet that demand, dealing with today's high oil prices will look like child's play. That's why Obama's policies are so dangerous for America's future..