TheRealBull

Obama Wants to 'Robin Hood' Exxon

There are a few simple things to understand before you agree to higher taxes.

1. This inflation we are experiencing is a FED created phenomena. Expansion of the money supply ultimately creates inflation. Rapid expansion of the money supply ultimately creates hyper-inflation.

2. More money in the system puts pressure on a finite amount of goods. Take for example the housing bubble. Lowering interest rates to the floor and allowing anyone and everyone regardless of credit history to borrow money rapidly expands the money supply (yes, we in America have a negative savings rate, so all that borrowed money was created via the loan or as I like to say out of thin air). Now everyone wants to buy a house which puts pressure on the system. This so called bull market (aka inflation) drives price astronomically. We bundle this housing debt and try to pawn it off on the world as triple A rated securities. The housing market collapses and the world dumps these securities as a false hope of repayment, inflation is introduced back into our financial system and commodities rise.

3. So called "Big Oil's" profit margin has always remained the same 8.5%. Big Oil doesn't control the price of oil on the world's market. Big Oil is rather small when you compare it to the state run oil companies of Russia and the Middle East. Big Oil's reserves has a very small influence on the world price for oil.

Big oil makes big profits because 8.5% of $140 a barrel is a lot more than 8.5% of $10 a barrel. Big Oil's expenses to drill for new supply go up astronomically along with the price of oil. Big Oil is taxed heavily with wind falls profit tax. Big Oil doesn't have enough capital to make the necessary investments for future drilling and exploration. Big Oil eventually figures out its not worth being in business when you're taxed heavily while inflation (that expanding money supply) makes production cost prohibitive. The whole system, including those who taxed Big Oil suffers. This scenario has been proven over and over again.

4. Heavy taxation creates apathy, destroys prosperity, and makes everyone poor. Vote it in and see how quickly it kills prosperity.

The rich is powerful enough to protect their money. It's a matter if the rich wants to invest in a country that is founded on heavy taxation. Ultimately it will be the middle class and the poor the carries the burden of high taxation.

Oil Manipulations Exposed

One last thing to think about. Sure we have moderate sized oil fields that we can still tap and bring online perhaps 10-15 years from now (what? Peak Oil is now?). This is especially true around the US. But, oil consumption is a world wide phenomena and sold on a world wide market! Each and everyday there are thousands of new energy consumers coming online from China, India, and especially the Middle East who have American dollars in their pockets burning a hole to live the good life...like we do in America! All this insatiable demand for oil will continue to outstrip supply by radical proportions. We have not found any significant sized oil fields in several decades meanwhile we are sucking dry the oil bank. And as much as you want to believe we have an endless gooey center in the Earth that produces oil continuously, well I have a bridge to sell to you.

Folks come back to Earth. You've been doped up on oil for way too long. If you really want to understand what is happening, I highly recommend you research the following term "EXPONENTIAL FUNCTION."

Meanwhile I think Chris Skrebowski, editor Petroleum Review sums it up our current situation quite well.

“The first peak that we’ve achieved. … [is] in light, low-sulphur crude. The next peak will be when the producer countries’ exports start falling because their [internal consumption] growth rates are much higher than those in the West….Finally we will get the peak where we simply cannot produce any more of any grade, any quality, anywhere. And that will give the final kick-up [in prices]…probably around 2011.”

Oil Manipulations Exposed

You can whine all you want. You can even prohibit futures speculation. I can guarantee you this, the oil age is ending as we know it. Oil will continue to rise in price no matter what we do to try and mitigate it. And this is just the beginning. Expect all your energy sources to sky rocket in price. As we start to realize that oil is not getting cheaper, we will start putting heavy transportation demands on natural coal and natural gas. Well guess what? Our energy grids run primarily off coal and natural gas! I recommend you watch this short CNN story about what your government is going to do soon to your energy bill.

money.cnn.com/video/#/...

All other alternatives are going to take several decades to ramp up to any significance meanwhile Peak Oil is now. You best come to terms with Peak Oil, or you will become road kill on the slope down.

Is Oil Bubbling Over?

Peak Oil is here! Peak Oil is here!

And that is about all you really need to know when trying to comprehend the price of oil and where it is going.