Representative Maxine Waters (D-CA) suggested that unless oil execs promised to lower gas prices in exchange for drilling wherever they want - she would make it the duty of “this liberal” (her) for “basically taking over and the government running all of your companies.” She said “socializing” - she meant “nationalizing.” Neither are good. Please click here to watch the video. Unlike the other Congress members laughing in the background of that video, I don’t find it funny. Unlike many Americans who increasingly want a socialist country, I find Representative Waters and her concepts on solving the energy crisis to be extremely dangerous.
Venezuela nationalized its oil industry over the last few years - they have more oil reserves than we do. Click here for summary of global reserves and look where the US sits. Many countries with the most reserves have nationalized oil industries. Some of those countries are actually drilling wherever they want. And some countries are actually finding some new oil every once in a while. With all that, you might think that oil would be free. And yet, somehow it escapes Rep. Waters and anyone like her to understand that nationalizing oil has not lowered global oil prices. Doing so in the US with our relatively low level of oil reserves is ridiculous - we are a “drop in the bucket” or if you prefer, a “bucket in the barrel” when it comes to affecting world oil supplies.
But let’s just play along with her concept for a while. Let’s say she and her socialist friends in government would take over. Wouldn’t that be fun?
First of all, let’s look at the financial consequences. Let’s say that the taxpayers would pay market prices for the top oil companies and pay off their debts - for XOM, CVX, and COP - that would be about $900 billion to $1 trillion to nationalize. If this means that oil prices and those pesky “excessive windfall profits” would decline, then the US taxpayer would be overpaying for assets and cash flows at their peak for an industry that the socialists want to put entirely out of business. HMMM?
What a waste of money not to mention what would happen to the loss of our entire ability to have confidence in ever investing in any US business. And let’s remember that the US oil industry is just a part of the global energy industry. That means we’d have to renege on commitments to foreign companies who have drilling rights in US territory or compensate them for taking those as well.
Please remember that much of the “obscene windfall profits” of the 5 oil companies interrogated by Congress came from outside the US. So does much of the exploration and production of those companies. If their businesses were nationalized, the new US national oil company would be restricted to current US production and revenues and we’d have to get rid of the non-US operations just as we would have to kick out the non-US companies operating here. As a result, we would almost certainly end up in a serious shortage situation. That should do a number on foreign investment in the US. And what about all the other companies.
I know Congress only wants to blame the biggest 3 US oil companies. But how about the drillers and other oil service companies or the independent refiners or the pipelines? What would we do to nationalize the retail network which also includes a bunch of small businesses that operate the local gas station? Financially, we are now in the trillions for this nationalizing program. And if you say, we shouldn’t pay fair market prices then our entire financial system is screwed more than it already is.
In the end, the US dollar - it would be worth less than worthless. Oh and never mind the inflation that would result. Yep inflation - sadly making gas is not free and even if you price it at nationalized prices - we will have shortages and inflation in other products. Just check examples like Venezuela. I know socialist dream worlds suggest that there are no negative consequences for nationalizing industries, but you might want to read this article.
A few more ridiculous points about this ridiculous idea - if the socialist US government would run the oil industry, where would they allow themselves to drill? Do they know precisely where the oil lies? If so, would they just tell us now? If there is no way to drill in an environmentally responsible manner in ANWR or the continental shelf or Florida or wherever else, then what would the socialists do to increase supply? Do Rep. Waters and the other socialists know how to explore, drill, transport, refine, and distribute oil in a sterile manner? If so, could they save the planet and just tell us now? Finally, by what mechanism do they plan to do all the work of the industry without having to raise taxes to pay for it, with or without 10% profit margins they call “obscene” and “excessive”?
Maybe you can watch Rep. Waters and feel comforted that she cares about the effects of high gas prices on her voters and Americans in general. I do not doubt that her feelings are genuine and well intentioned. They just happen to be wrong and dangerous. Like many socialist ideals - these good intentions are ignorant of all the complexities and interdependent relationships that would result.
This article has 65 comments:
2. Amaranth
3. BP
4. Investment Banks/Hedge Funds???
5. ...next year???
6. Peak Oil Sooners???
What do you do to control the inevitable recurring manipulation in the energy market?
If not nationalized - broken up, heavily regulated, and more heavily taxed to help fund and develop alternatives.
The next president needs to fund and build a huge new energy infrastructure - solar, wind, and hydrogen. The oil trade deficit bleeds $450,000,000+/year now. Why not spend at least $1 trillion on this new energy infrastructure over the next 10 years?
Of course, and I don't mean to get off on a tangent here, but who should we blame for awakening the untamed beast of populism? I think the Idiot Son and the war in Iraq is probably a good place to start, but maybe also Slick shares some blame, especially his move to eliminate welfare.
The consequences of a real "worker's revolution" in America would be dramatic and severe (the probability is small, I grant) so I just want to ask all the traders out there, don't you think a decent, or even minimal, social safety net a great hedge against this kind of political risk?
Why sell that downside put? Is the extra premium from saving money on the safety net worth the (small) chance that hoards of angry, hungry, desperate people will march in the streets? That people who have just lost their homes and jobs, who have lost their retirement savings because of the deflating of the tech or housing bubble, who have nowhere to go and no one to turn to, aren't you worried they might vote for dramatic change? Or worse?
"The oil trade deficit bleeds $450,000,000+/year now."
I also think the government should add a national gas tax of $1/gallon. This would take off a dollar from the speculators...and put it into the governments hands to fund energy alternatives.
"First of all, let’s look at the financial consequences. Let’s say that the taxpayers would pay market prices for the top oil companies and pay off their debts"
No problem. Most oil drilling is on Federal lands, I think. Just take back those assets.
And the oil co. coffers would go a long way towards easing our federal deficit.
I think nationalization makes WAY more sense than letting private companies have so much sway over common resources.
If Maxine Waters scares you, you are a dolt. She represents the fringe point of view of the Democratic party, and holds little power to push her views onto the country. She does provide handy scary sound-bites for Republicans to exploit, though! At least she's good for something!
And to the know-nothing who stated that XOM pays no royalty on oil pumped from the gulf, you sir are completely wrong. They pay large royalties on most of the oil pumped from the gulf as do other operators. Only some of the newest leases in the deepest of waters have roylaty provisions that reduce the royalty to overcome the technological advances needed to produce the oil. Without those royalty holidays, there would be no exploration in the deepest waters.
Maxine Waters and a few other politicians are poster children for contraception! Friends don't let friends procreate!
Well it not the ECONOMY, "Its ENERGY, Stupid!" and Americans have finally realized their gasoline highs are costing them an arm and a leg, not to mention their jobs, savings, and livlihoods..
The formula is simple: ENERGY=ECONOMY! No Energy...No Economy...No Employment...No Earnings...
As stupid as "W" appears, he understands this and he and his BIG OIL buddies are making hay with a cut, slash, and run exit strategy, that will in all probability lead to a massive, dare I say it... DEPRESSION!!!
Hey, Moron. The government already gets vastly more of oil revenues thorugh taxes than the companies get in profits. Federal, State, and local governments get over 30% of revenues and the oils companies get anywhere from 8 to 12% profits.
The problem is SPENDING! Every senator and representative wants to buy votes by promising some new social spending program with their name on it. And they do stupid things like paying ILLEGAL immigrants welfare and health benefits, though they all pay little or no income taxes, because they claim 7 dependents and have no withholding. And we build bridges to nowhere, and bike paths and unused rail lines, and any number of wasteful spending projects to impress voters and buy their votes.
Get the government out of the buisness of deciding by fiat who wins and loses and you'll have lower prices and more product. Get them out of the business of spending vast sums of money they have to steal by gunpoint from productive Americans and there will be no deficit to cover by more appropriations from you and me (who ulitmately pay the taxes that corporations transfer to the government).
USPS is self-supporting.
"The problem is SPENDING! "
One man's "spending" is another man's "investment". I don't think private industry is any more efficient, on average, than government.
But htey will stop being so productive when they're in government jobs with no accountability for productivity as most government jobs are. And when the governement caves in to the unions who want everything but want to give nothing in return hike wages far beyond what the market would bear, prices will go up, productivity will go down, prices will go up, or government spending will go up to cover it.
Plus when the oil boogeyman is slain, then the government, er envious, ignorant, liberal activists will set their sights on some other boogeyman industry to vilify, appropriate, and start the cycle over again. It's been done many times in history and always fails.
There is nothing "Progressive" about socialist thought. It's been tried and failed many times over.
Once government takes the step toward socializing one part of the economy, they will think they can do the rest to the remainder of the economy and you get a Soviet Union, East Germany, Venezuela, name any number of totalitarian dictatorships in which freedom evaporates and government dictatorship tramples the "people" that the liberals say they're trying to "help".
If you believe government knows best, then move to Cuba and enjoy the fruits of government bounty.
You said "...the ability of Halliburton and others to move their Corporate offices off shore and pay no taxes..."
Guess what doodle head? Halliburton did move their offices to Dubai but they did not move their CORPORATION to Dubai. It is still in the U.S. and STILL PAYS CORPORATE TAXES. Why don't you do a small amount of research before spouting your marxist crap???
Now, if the US decides to nationalize, I can assure you that the assets that are leased by XOM, COP, etc in other countries will not be a part of the deal. Would be interesting to see the US Gov't try and expropriate foreign assets. But hey, when you marxists dream, you dream big. I guess thats why so many folks are buying into Obama's "Change" BS. When the majority of the voting public pay no taxes and can elect people who will confiscate the earnings and profits of the minority, we are clearly on our way down the tube.
And finally, as someone who works in the oil industry for the Big Bad Evil Oil, I can tell you that government takeover will lead to mass-retirements. Or would your comrades freeze the freedom of individuals to not work as well? What's next? Gullages in northern Montana?
Well, that's about the most idiotic comments I've seen on here yet. LOL.
Government spending is anything but investment. There is no accountability for earning a return on the investment. There is no expectation of earnings, because it's simply a give-away for the quid pro quo of votes. There is no efficiency in operations to earn a profit, there is little value in what government invests in, because people value little of what government provides, beyond basic services.
And when governments own businesses with a profit motive, their earnings have to be the same as a private business in order to raise capital. And when you raise capital, there has to be a return on capital to attract investment. And when a business says they're not in it for profit, they attract no investment and cannot run the company. Anyone who thinks socialism is more effective than capitalism is either smoking too much pot, or they want us to return to the 1500's style of living.
Government exists to keep order in society, not mold society to what it's short-sighted, dogmatic leaders want. Or it should exist only for that reason. When you let pliticians of all stripes try to social engineer, you get unintended consequences largly worse than the disease they sought to cure.
And when government fails, do they cease what they were doing, or do they keep trying harder to do what failed in the first time by spending more money and ruining more lives? It's the latter. Then you end up in socialism that has to get thrown off in violent revolution.
Keep the politicians out of our lives. Keep government in the business of protecting basic freedoms and the millions of individual humans will live better lives and make better personal and business decisions than Ivy League bureaucrats will.
But, I repeat, no nationalizing or socializing!
Nationalization would just result in the most profitable part of big oil becoming a separate, forgeign company. So barnburner's comment:
"they could just as well receive the taxes as well as the profits. "
is far from the truth. In realtity, the govenment would not get the profits from the (newly) foreign company's assets, but they'd lose the taxes on those profits as well.
And as for the experienced personnel needed to run the oil industry? Well, lets just say alot of those jobs aren't exactly glamorous - people do them because the money is good. Last I checked, government workers weren't exactly at the top of the pay scale. So now, you've compounded the already existing problem of a large part of the workforce nearing retirement age by taking away a major incentive (pay) for new workers to enter or stay the field.
Nationalization is such a ridiculous idea, I can't believe I spent even this much time talking about it.
The government possibly needs to build solar and wind farms, and hydrogen producing plants, then auction them off to the energy companies.
I love it!
Seriously, I'm not sure that's what I want government doing. Putting up the capital to build alternative energy? Why not let the market do that? What you are still talking about is subsidizing alt energy, either through extending capital or selling at a loss.
Heck, we've got a group of private investors and private landowners trying to build a wind farm in South Texas WITHOUT any gov't subsidies. Guess what? The Greenie Weenies are fighting them!!
Yeah, I guess we should villianize Big Oil...after all they are the ONLY GROUP in this discussion actually putting gasoline in your tank and doing something about the problem!!
Can't wait to see that Chinese oil rig being built off the Florida coast (first of six I am told), flying the Chinese flag half way into our "protected zone".
Democrats: The poor people suffer the most when the monopolies price-fix and manipulate prices. To keep the poor from starving, crime rates from soaring, and widespread suffering - monopolies must be heavily regulated by the government, even if it's bad for corporate profits.
But the stock market is down and not to many companys are in a position to hand out rasises and gas prices keep going up.
And who,s getting this money. The oil companys say the saudi,s are getting it and the saudi,s are saying the oil companys are getting it. I understand there are production costs and the deeper you drill the more expesive it is, but how does anyone justify a barrel for $200. I worked on a oil rig and we would drill a extra 1000 ft but that would not make it twice as expensive. Someting is wrong here..
"Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter. So long as men live together on earth and need means to deal with one another--their only substitute, if they abandon money, is the muzzle of a gun.
...Ayn Rand (Atlas Shrugged)
that wouldn't have been so bad either, but they screwed that war up. we have air superiority and dominion over the skys everywhere. why do we put our soldiers at risk? why do we get involved in ground wars? it is financially impossible to project power across the globe. vietnam taught us that.
simply bomb hussein and drop leaflets that the bombs will stop for 24 hours until we hear that hussein is gone or opened his country to nuclear inspection or whatever you want. once you have convinced one country that you mean business, you will have no trouble from iran or north korea.
or, republicans could have gotten together with china and russia, which both finally headed into capitalism and agreed on a policy that would support all three, instead of allowing our country to be out capitalized by them. china and russia were broke and backward. thanks to our tax dollars being misspent and our energy dollars given to them, they are now able to buy us.
much as you hate the democrats, at least they would waste our money on us. ok, not the working part of us, but at least the poor part of us. then those people could continue to go to the 99 cent store or walmart and i could buy stock and be rich, but noooooo....
They collectively produce around what...10 million barrels or so, which is 11.7%.......they are damn efficient...and they have to work with some pretty nasty countries in some nasty environments. They deserve the money.
Why is everyone trying to take something that isn't theirs? and why is it now a problem?
The market wants to use more oil than is supplied....this is physical and geological limits that we could possibly be running into.....and at some point we will hit these limits...regardless of how efficient or advanced we are at pulling the oil out of the ground.
We need other forms of energy at some point.....and I cannot say where this energy should come from...or who provides the capital.....but the government is probably the least efficient at doing whatever.
The government only has what it takes from others.
On the thoroughly ridonkulous notion of "One man's "spending" is another man's "investment"... You socialists (and that's simply a factual observation, not a personal attack) out there are missing one very big point: In a purely capitalist society (not to be confused with what we have in the US), buyers and sellers interact with FREEDOM, and they each decide to trade with each other only when each makes the other better off. In that way, the collective benefit steadily rises, and capital moves FREELY to those purposes where it achieves the most good.
Under socialism, buyers and sellers are FORCED to transact with each other under terms that are dictated by POLITICS. So unlike free-market capitalism, socialism is a system that REQUIRES people to squabble with each other to determine how to split up whatever loot they can steal from others. The whole issue of who-decides-what is completely political, invites corruption, breeds mistrust and is ultimately entirely immoral, in that 51% of the population can vote to completely stomp on the other 49%.
Will some socialist please answer this question? Why is it that if I break into your house and steal your stuff, only because I want to give it all away, I will be thrown into JAIL, but if I convince my government to effectively do the same thing, via taxes, regulations and the like, I'm a compassionate "progressive" and am now suitable for ANOINTMENT by the media?
PLEASE answer that question.
timesunion.com/AspStor...
This will be difficult for the marxists in this thread to follow but when the supply demand situation gets out of whack as it is now and generates higher profits (high by historical standards in the oil industry and about average for all of US mfg), it will attract more exploration and production. That activity results in more supply and lower prices. If you wanted to keep prices high, you could do any of the following things: Limit drilling in ANWR, limit drilling off of 85% of the US coast, limit or impede drilling on BLM lands, restrict the building of refineries or nuclear power plants, nationalize oil companies, restrict the oil futures market, impose windfall taxes, impose cap and trade, focus your rhetoric and subsidies on ethanol, windpower and solar which will never be able to replace hydrocarbons.
The geniuses in our Congress, of which Maxine Waters only happens to be among the stupidest, have imposed or are proposing all of the above.
That's because the government massively subsidizes gasoline. As a result, they drive Suburbans and Escalades. This is an untenable populist move by Chavez. Venezuela would be much better served exporting the oil and capturing the real price and using the revenues however the dictator then decides.
Your comment demonstrates typical liberal intellectual rigor.
Next time you hear somone crying about big oil profits remember there is a difference between PROFIT MARGIN and PROFITS. If you think a "tax" is the answer to solving this problem, you should go back to finance 101, the tax will be paid by the consumers.
We just drive the cars to work Mr.President, we don't formulate policy.
On the other hand it is the same people drinking the global warming Kool Aid who banned drilling the massive offshore and Alaska Anwar reserves, which at least would give us a ten to fifteen year breathing room, not for hydrogen cars ( it takes equal energy to split water into hydrogen as to then get the hydrogen energy release to return it to water).
No, the eco Prius driving crowd (they can afford to buy the new cars, most people can't) opposes drilling here, and also opposes the massive need for nuclear power,which is the only real solution for electricity to power those electric cars which most commuters should be driving today. Burning natural gas and coal to make electricity for the "clean" electric car is just exporting emissions to a remote plant.
And speaking of natural gas, it is also extremely clean burning, but again, "fossil fuels bad, fertilizing crops for ethanol,creating phosphate runoffs to kill sea life in the Gulf, good"
The problem with liberals is that they are on perpetual searches for the free lunch, whether by nationalization (no,Maxine would not pay for the oil industry, she would have "our troops" take it over by force some bright sunny morning, probably make the workers produce under penalty of being sent to reeducation camps) or by banning domestic exploration to punish us all for driving fossil fuel vehicles.
They believe that we need to be punished with high fuel prices, that this will force us to alternatives. Problem is that their suggestions of wind and sun power are long term solutions which will not stand on their own without nuclear power and yes, still some use of fossil fuels.
But no worries, after all Obama is coming along with "change you can believe in"
I find your logic amusing - I thought you were a socialist with that Microsoft comment - Using the same thought pattern... Why should the person who works the hardest to earn $ have to subsidize income for somone who earns less money? (key word = Earned) You could say the same for health care....
To get control back of our national resources, we might open new fields: Nat gas, oil shale, coal gasification, and require all US leases of federal land have pricing of raw product sold in the U.S. at a price determined by the department of Energy.
We then import the rest at world prices or buy contracts for futures or purchase leases from other countries and the average is the price we pay. The goal is to increase U.S. production until we are energy sufficient.
Under some kind of system like this, which is not as tied to world production or world usage, we would have more control of our future.
By the way I am a free market capitalist all the way. However I think some new ideas are needed with reference to being under the thumb of "world trade" with no restrictions to "world" pricing.
China seems to purchase mines and companies to supply their future material and commodity needs. We need to wake up and take better care of our own economic interests.
Another idea is to negotiate with China and India to set Oil import caps for those countries, under a new nafta chapter. Otherwise we can cutback usage here, and they use even more, and world prices
continue to rise. Supply will most likely not rise for some time, because it is not in the economic interests of the producers to increase production or exploration, when they can get price increases for not doing so.
And.. or we should place a tax per barrel on oil, with the goal of creating a floor under gas and oil prices, to stimulate private investment in alternative energy. Proceeds would go into research , tax credits to offset environmental energy cost requirements, and credits to low income and some moderate income rebates to cover some of the burden of higher fuel and food costs.
We also need a "national equation" that factors in things like unemployment level, oil cost, food costs, interest rates, tax rates, environmental regulation costs, etc. so we could all see what happens so each part of the equation when we change another part.
This would help lessen some of the political one issue discussions, as the impact of any policy change would show the relevant change in the other factors. An example would be if you substantially raise the environmental cost through tougher air standards, given all else equal what happens to the other factors. We could then discuss in a rational intelligent manner the expected results of making changes happen. Change is going to happen... but Do we feel lucky? Should we just change because we feel things can get no worse? Things can get a lot better.. or things can get a lot worse. Lets be careful what we change.
Of course welcoming all comments.
I think you are on to something with your question: Why is it that the left always fall in love with leftist leaning totalitarian states? We have seen it with the USSR, Cuba and most recently Venezuela. It seems to me that they have no problem claiming the property of someone else for themselves as long as it is perceived as "just" under their narrow conception of justice. Never forget the fawning over the USSR. Never.
If the US has to nationalize an entire industry, limiting our freedoms to do so, what the hell have we accomplished as a country? Are we now to proudly proclaim: Give me liberty or give me cheap gas prices? And yet, there is a segment of our population (who apparently believe they have something to offer to a community that thrives off of the ability of men to trade freely with one another) that would gladly sacrifice liberty for what they perceive, THEY perceive, this is not ever, ever to be determined democratically, as some greater social good.
I expect this nonsense on the political blogs, but on a trading website?! How can you hold the organizations from which you derive your living in such disregard. I have never heard anyone say that they "made a killing last month off that non-profit" or "I made a killing off of the government." Rather, it is always: "I made a killing because this company that anyone can invest in came up with a product that the American people really liked and as a consequence of combining raw materials into a sum that was valued more than its parts was able to turn a profit." Or something like that.
Enough with the Marxist nonsense. Get a job and stop trying to trade from your dorm room. This stuff doesn't fly in the real world. Just ask the gentlemen from Eastern Europe.
On Jun 11 10:22 PM barnburner wrote:
> TreeSkier your question equates taxation and social safety nets with
> stealing so we have nothing to talk about because I think that is
> a ridiculous comment. Actually I am not a Socialist, I would consider
> myself a Capitalist Anarchist.
The simple explanation is that the Libs want control. They're high on the power that comes from making people dependent on them. They want to treat people like so many houseplants, like a benevolent gardener or something. But when people do not WANT to be dependent on them, they get mad and attempt to seize that relationship by force. They don't believe in the capability of the individual. They fear the unequal outcomes that come about from people making the most of their natural talents. They want equal outcomes, regardless of opportunity or initiative. Unfortunately, the equal outcomes asymptote to dictatorship and poverty. And unfortunately too many people (as witnessed on this board) are seduced by the siren song of a politician offering to make their lives better. We've gotten the system we've voted for - it's really sad.
I will now go back to my job, from which I will pay 50% of my income in taxes, only to watch them be utterly and thoroughly wasted, and worse, to cause the very problems the Libs want my money to solve.
On Jun 12 12:38 AM Jimmy84 wrote:
> TreeSkier,
>
> I think you are on to something with your question: Why is it that
> the left always fall in love with leftist leaning totalitarian states?
> We have seen it with the USSR, Cuba and most recently Venezuela.
> It seems to me that they have no problem claiming the property of
> someone else for themselves as long as it is perceived as "just"
> under their narrow conception of justice. Never forget the fawning
> over the USSR. Never.
>
> If the US has to nationalize an entire industry, limiting our freedoms
> to do so, what the hell have we accomplished as a country? Are we
> now to proudly proclaim: Give me liberty or give me cheap gas prices?
> And yet, there is a segment of our population (who apparently believe
> they have something to offer to a community that thrives off of the
> ability of men to trade freely with one another) that would gladly
> sacrifice liberty for what they perceive, THEY perceive, this is
> not ever, ever to be determined democratically, as some greater social
> good.
>
> I expect this nonsense on the political blogs, but on a trading website?!
> How can you hold the organizations from which you derive your living
> in such disregard. I have never heard anyone say that they "made
> a killing last month off that non-profit" or "I made a killing off
> of the government." Rather, it is always: "I made a killing because
> this company that anyone can invest in came up with a product that
> the American people really liked and as a consequence of combining
> raw materials into a sum that was valued more than its parts was
> able to turn a profit." Or something like that.
>
> Enough with the Marxist nonsense. Get a job and stop trying to trade
> from your dorm room. This stuff doesn't fly in the real world. Just
> ask the gentlemen from Eastern Europe.
Why do black people vote for these imbeciles? Are they all stupid?
Why doesn't the media laugh these ignoramuses out of office/
Remember the old presidential debates, when Ted Koppel asked Al Sharpton about the Federal Reserve, and Al Sharpton went on blathering about the IMF as if he actually thought that the IMF had something to do with monetary policy.
What a buffoon. What a stupid loudmouth.
Why does the press give these clowns a pass time after time?
If Bush had made either of those blunders, we would be hearing about it every day from the second he uttered the gaffe until the second coming.