July 01, 2008

Eye of Newt (and John Sharp, too)

This was forwarded to me Monday night...

Although my Winning the Future message has always been directed at all Americans, whether they consider themselves Republicans, Democrats, or independents, today I am directing my message specifically to Democrats. And my message is this:

The American people have spoken. Are your leaders listening?
Over 1.1 Million Americans Call on Congress to "Drill Here, Drill Now"

We really had no idea, just 35 days ago when we first posted the "Drill Here, Drill Now, Pay Less" petition here, that we would provide the spark that has ignited a fire among frustrated, struggling Americans.

So, Newt, what you're saying is that .03% of the American public is as dumb as you are when it comes to energy supply and energy security (two very separate issues)? I'll buy that. Hell, it appears you've even managed to suck that assweevil John Sharp into your stupidity...

Secondly, cut the capital gains tax from 15 percent to 7.5 percent for investments in new domestic energy. History has shown that capital gains cuts produce more revenue for government, not less. These two actions would unleash the economic power of America towards solving our energy crisis by allowing Americans to do what they do best ... produce. This country has never conserved its way to greatness, but many times we have produced our way to greatness.

A couple of things here, John. First, cuts in cap gains ALWAYS normalize. See, it's called 'tax planning' and people do it all the time. Fund managers, for example, will sell badly performing equities leading up to the end of the year, only to repurchase them in January. Why? Because they get to book a loss on the stock, which are then used to offset gains on other sales. Then they get to rebuy at, if they're lucky, a slightly lower price than they got on the sale, covering their frictional costs. THE SAME THING APPLIES TO CAPITAL GAINS. If I'm sitting on a massive capital gain, and legislation changes the rate at a known date in the future to a lower rate than current, I'm going to put off selling that investment until the rate goes down. Then, I'm going to sell. That's why it looks like tax cuts pay for themselves. As long as you don't think too much about it, which John has evidently not done. Next he'll be telling us that deficits don't matter.

Now, on to conservation... we actually did that. In the 1980's. Consumption went down dramatically as people started driving more energy efficient cars. That coupled with increased production led to oil at $10/bbl. However, the overwhelming factor was the drop in demand. That's in process right now.

Look, I'm going to let y'all in on a little secret. Newt's playing politics and quite stupidly as just about everyone knows that it's a lie that there is enough oil on the continental shelf and in ANWR to satiate our demand for oil.

The world’s energy needs are so great that it’s going to take an immediate production increase roughly equal to the output of Saudi Arabia, for there to be significant supply side downward pressure on oil prices. When thinking about U.S. based energy projects, the question offered is: “on aggregate are these projects capable of rivaling the present day output of the Saudis?” If the answer is no then we have to question those who claim that a particular energy project is going to make gas/oil cheaper. It’s probably better to view the projects as a possible way to reduce some of our energy dependence, as opposed to being a solution to the larger energy problem.

The Saudi's produce 12 million bbl/d. ANWR can't fill that. OCS can't fill that. Shale can't fill that. Neither can oil sands. Combined they STILL aren't close and the oil sands, well, they have their own unique problem of natural gas AND there's a possible political consideration. Remember, we've been through this already. One last point for the 'Drill Everywhere' crowd... the capacity TO DRILL is too low to do anything for five years. Which puts most of the OCS output MORE than a decade away.

So what about Sharp's brill idea about tax incentives for solar, wind, etc? Those are all great, but they can't run a car. Unless we have battery technology far in advance of what we have available now. It's coming, but it's a decade away barring some miracle. Plus, most of these renewables already get some pretty nice tax breaks. Tax breaks aren't the issue. Sharp's an idiot for thinking it is when gas fired power prices are approaching those of more advanced PV solar. Sharp's the perfect kind of old school Democrat, too stupid to know what the hell he's talking about and willing to give away the farm when it's completely unnecessary. I'd love to play no limit with you sometime, John. It'll be fun selling your house after I win it.

Some of you budding candidates out there may be thinking about joining with John on this. Don't. Just keep your mouths shut or we'll excoriate you in the same manner. Let the Republicans be the ones who open their mouths and let the stupid spill out.

Here's where all this is heading... within 5 years gasoline is going to be less than $1.50/ gal. It'll probably happen sooner, but I'll run it out 5 years because right now politics is overriding good decision making. I will throw John a bone by letting him know that the market WILL make the decision. See, I know something that John apparently doesn't : Humans don't like restrictions on their growth. When there is a restriction, we find a way around it. You could say we're large like that. We'll do it this time as well, because speculators have rather firmly planted the seeds for their own destruction.

At $140 a barrel, there’s as much incentive as anyone needs to find new sources of oil (such as the tar sands, and even oil shale), and more importantly, substitutes. At $10 a barrel, no one’s going to take the time and trouble to find a way to make an electric car viable. At over $100 a barrel, it’s a Nobel prize winner.

That's what'll create the solution. And no, it won't be shale oil. It'll probably be something like this. Or maybe something better. I know it'll happen because Malthus was wrong and his followers today are still wrong.

One thing's for sure... it won't be drilling, no matter how much Newt and John may wish for it. If it was, you'd already see some new supply starting to hit. It's not there. Speculation has driven prices and as a result, we're now destroying demand as people change their lifestyles. However, it's only part of the problem since the increased price has not sparked additional supply. Which means we're producing at marginal max capacity.

Of course,with Gwahar producing a 28% water cut, THAT data point should be obvious to anyone with a brain. And no, I don't include those 'Drill Everywhere' people in that group. They're hellbent on politics over substance. For them I have nothing but scorn.

It would be nice, John, if rather than parrot R bullshit, you'd start focusing on some real issues. Better yet, just keep your mouth shut. We'll call you when we need you.

Posted by mcblogger at July 1, 2008 09:21 AM

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