Or simply put, the policy of the U.S. and the European Union is the banker’s idea of a solution.

Nothing could be further from the facts.

In the real world money is supposed to be a medium of exchange.  People are trained to believe and try to insist that the money alone is a form of wealth.  It is so because of credit, with credit systems earning interest income on money is possible.  Without the interest paying for the use of other people’s money, the hot motivator of the earning a profit without people working is missing.  Most of the developed world even guarantees that money in certain circumstances can never be lost with deposit guarantees. Without a credit system money would have to be invested to earn an income and that would make money a medium of exchange again.

When money itself is wealth it becomes a commodity, just like oil, corn or gold and even one’s house.  All those products, on to other agricultural items, other energy, metals and more including the money have less price stability.  It can get pretty confusing and complex for people to make life work when the goods and services in life have changing prices.  Add that money has a price in relation to the goods and other money such as with other countries’ money and its value relative to what it can buy is constantly moving too, then anxiety replaces confidence.

Governments, the press and media insist on overlooking important points.  The spark that set off the financial crises in the EU over how to bail out Greece came from riots over reducing government benefits, some layoffs and cutbacks.  With tax increases off the table, the Greek government chose to threaten a default on the interest paid to its debt holders – and the nation of Greece is getting way with it.

The Greeks have managed to export their profligacy to the whole of the EU.  The answer has been to overlook the honest need to reduce government spending and shift the problem to over the whole EU and countries whose financial firms hold both Greek and EU debt.  The result is the EU’s money has gone down from the mid $1.40s to below $1.30, about a 10% cut shared across the whole EU.  That cut the purchasing power of everyone in the EU by about 10%.  It’s a wonder that riots haven’t spread to all the other countries of the EU.

In the U.S. the first warning signs are taking place as well.  Both Wisconsin and Ohio have tried to face down excessive spending with austerity.  The answer has been, most notably in Wisconsin, the affected folks “occupied” the statehouse. But U.S. states don’t control the money value, so for now the impact is limited while the pressure builds.  If the folks in Wisconsin manage to recall the governor and return to overspending, the profligacy will find a way to spill over the boarders to other states, a sure thing when the Federal government gets involved.

All of us worldwide are using money whose value is determined by the exchange value with other currencies.  There is no place for governments and policy makers to hide the consequences of their actions for long periods of time. We’re all in the foreign exchange market whether we’re aware or not – and very very few people have the resources to hedge themselves a period of safety.

Those sparks of economic destruction are events that push policy to do unwise things.  Riots, occupying government buildings and the reactions they cause put emotions ahead of thinking through the reality for proper policy.

Perhaps everyone can adjust to the circumstances where the value of their work or the income from their investments and savings is subject to the sentiment of market’s views of the policies of governments.  It’s an unlikely idea.  Handling the constantly moving prices of the necessities of life is for most people a significant challenge.  With the volatility of the value of money also at risk for everyone it’s a wonder the economy is a healthy as it is.

To build confidence for consumption and investment, the value of the money has to be stabilized. With everyone trying to keep “whole” on the money they already have the priority ahead of building and improving their lives and the economy as a whole, the economy just stagnates.

Until policy makers realize the job is to keep the value of the money in circulation steady all the events around the world are sparking destruction of money value.  Oddly, many people think research and development funding are not government tasks.  That could be said to be true and when government tries to pick them its seems to always blow up in everyone’s face.

But to stir the economic pot and stimulate activity a steady stream of “new, better and cheaper” have to keep coming.

In the meantime, the government is printing, borrowing, eating reserves and savings, and devaluing assets including the currency. Someday one of those sparks will be one too many.

Your shocked, humbled and deeply embarrassed writer apologizes to the whole of Canada, in particular those who have risked and worked, invested and managed the development of their resources and willingness to work with us to benefit from them.

The President’s act is another and fundamentally flawed move to put his own political career ahead of the welfare of the nation’s citizens and our great neighbor to the north.  The calculation can only be to choose the campaign contributions and votes of the extreme environmentalists ahead of everyone else quickly in the plot to get the issue out of the news.

One wonders though, can the labor organizations who stand to lose billions of dollars in payroll and product sales forgive this?  There will be added costs to already record high gasoline, diesel and jet fuel for consumers, can they forget the betrayal?  Home foreclosures are in the millions – can any politician cuckold an economy any more directly?  By any responsible standard the President’s move was wholly political and in his own perceived self-interest.  It is an insolent act against hundreds of millions of people and betrayal of the responsibility of the office.

It might seem odd that the political calculation involved didn’t even use the 34 days remaining from the Congressional mandate to attempt to come up with a better solution.  Clearly, it’s a gamble, in that pushing the application off the table and into the wastebasket – the oil people can very well reapply, and should as well as go straight to court, as soon as possible – that the one major economic project that is “shovel ready” will be forgotten by November.

The announcement was simply an attempt to save the President from the ogres of the environmentalists.  When you read the press release its plain the decision is not final nor do the merits of the project involve doubts.  Instead its looks like cowardice, the project has been through the whole of the now three year process, made peace with the states through which it would pass and would have been approved by the Department of State if the President had simply kept hands off.

The question before the citizens and the media, if they can be the fifth estate again and not in the thrall of the President, is reconciling the astonishing news yesterday from the President’s own Council on Jobs and Competitiveness when presenting its 72-page report prescribing how the U.S. can recover by recommending moving forward on projects like the XL Pipeline.

Now before anyone gets anti democrat, Ms Clinton runs the Department of State and the Department long ago stated the Keystone XL pipeline is the preferred option.  Some might recall that the Environmental Protection Agency was objecting again, but that was brushed off by the administration, leaving the decision up to the President.

And Ms. Clinton has her head down today.

The flip side is the OPEC folks have to be thrilled.  It offers Iran another actual example of the character of the U.S. President.  Ratcheting up the venom looks like a sure thing now and the threat measure for our military will have to be adjusted upward – we have just been exposed to more risk.

Meanwhile . . . the oil will get moved to someone eventually.  Much will come this way with pipeline upgrades, tighter management and – more risk.  Much more will go to Asia, the long way to a market and we’ll be getting more from much further away from much less reliable sources.

What do the environmentalists think? There will be oil recovered, moved by pipeline and now very likely by rail, trucks and by seagoing tankers.  That’s somehow better?

Oddly for many observers, “Big Oil” who weren’t all that into the fray, have been handed a major loss.  They were topped by the radical environmentalists at the Whitehouse.  Now even if you lean toward a safe and wonderful planet like your humble writer, environmentalists aren’t much on keeping up the mortgage payment, feeding and clothing the kids or saving for old age.  Their reality has a strong case of tunnel vision.  We do need them for the squeaks, but lets not let them wreak our lives or the country.

If energy security, building up an economy, making sure products like petroleum are handled the safest way and showing the world responsible conduct are sensible expectations of a president, we’ve been badly let down.

The hardest part is the 20,000 who’ve been waiting for months for the call back to work that went home last night to tell families it “ain’t gonna happen”.

Sometimes shame can be gut wrenching.  I’m Sorry.  But the support for the project has just been reinforced.

The atom bomb matter has the largest destructive and life risking potential and has driven other nations to respond.  So far that has only gone as far as economic sanctions, an idea of limited effect.  But the suspicion is the effect is having an impact, and if Iran is bright enough to use the sanctions as a tool to justify an oil price increasing effect – thus you have a threat to close the Strait of Hormuz – for whatever the real reason.

Iranian Vice President Mohammad Reza Rahimi has warned that Iran will not allow a “drop of oil” to pass through the Strait of Hormuz if the West widens sanctions against his country.  Iranian Navy Admiral Habibollah Sayyari said it would be “really easy” for his forces to block the waterway through which a sixth of the world’s oil flows.

At issue is 40% of the world’s tanker-borne oil passes through the Straits.  Iran, some of Iraq’s and Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates all ship crude oil out the Strait.

Meanwhile, the U.S. maintains a naval presence in the Gulf, primarily to ensure the oil routes remain open.  You can bet the battle plans have been thoroughly thought through and practiced out on the U.S. side.  The U.S. Fifth Fleet said on Wednesday it would not allow any disruption of traffic in the Strait of Hormuz, a day after Iran threatened to stop ships moving through the strategic oil route.

Iran bombastic talk has some merit, having mine-laying and missile capability to wreak some damage to ships and seaman’s lives, but the real candidate for disaster would be the environment, as a lot of oil would spill into waters at war.  Iran could go down in history as causing the single largest environmental disaster even seen.  If the oil spilled was substantial and stays mostly in the gulf, the mess could turn a seawater gulf into dead zone.  The Persian Gulf doesn’t seem to be as deep or robust or is as large as the Gulf of Mexico.

The Strait of Hormuz is 21 miles (34 km) wide at its narrowest point.  That’s a pretty good-sized area when considering battle plan damage; it will take a lot of sunken ships to block a 21-mile hole.  But at the same time, 21 miles is a really small battle area when dealing with missiles.

It will hardly matter, if the Iranians choose to take on the U.S. Fifth Fleet.  The fight won’t last long, after the first shot by the Iranians the U.S. Navy will be deciding the course of battle, if the U.S. President can see to supporting them properly.  It could, if the world community gets its act together be the tipping point to set the Iranian people free of the religious zealots and make the whole world a safer place.

People tend to forget the destructive power of an organized, trained and well equipped military force.  The past two decades has seen U.S. power become more accurate and effective at disabling counter forces.  The U.S has gotten very good at making sure the other guys die for their country – futilely.

And it will be futile.  Because also on Wednesday Saudi Arabia said it will offset any loss of oil from a threatened Iranian blockade of the crucial tanker route through the Strait. Add to that the news that Iraq is up to shipping 3 million barrels a day and Libya is back to shipping 1 million more barrels each day. Not only can starting a fight be extremely dangerous to the Iranian regime’s existence, the benefits are already taken off the table.

The Saudi oil ministry official didn’t specify other routes that could be used to transport oil.  There aren’t a lot of options.

The question is how long will it take for the U.S. fleet to clear the sea of combatants.

The idea to start a fight also would have other serious consequences.  The Iranians could lose political support from China and Russia.  Then there is the money; oil provides half of Iran’s revenue and last year that amounted to about $73 billion.

Is it all a tempest of words? Maybe.  Just keep in mind the total behaviors of those who do the speaking.  That’s enough to cause concern.

The first is the sheer insanity of Moody’s Investor Service, the bond rating company‘s analyst Steven Hess, making the completely insane suggestion there need not be a debt limit for the U.S. government.  If anything could be a more irresponsible idea your humble writer has no imaginative concept for self-destruction more powerful than that.

Imagine where some of the people you know could get to if credit cards had no credit line.  From the performance to date of the United States government with the essentially symbolic debt ceiling in place so far, with a bond debt close to about the same as the whole nation’s gross domestic product, the government’s sense of responsibility is already in dire straits.  The U.S. debt isn’t being used to buy an asset such as a house or car – it’s being used to pay the everyday bills of about 40% of the whole U.S. government budget in the current year.

What would we say to a friend or family member, a business manager, or think of another country getting into such a spot?  Cut back on the spending seems a survival tactic – a means of financial self-preservation.

What’s happening is the Federal Reserve Bank is “printing money” by using a computer to make an entry on its balance sheet of a loan to the U.S government, then moving that phantom entry over to the U.S. General fund – and presto!  The checks don’t bounce.

Everyone in the U.S. wonders why the price oil is so high – it’s because the exchange rate of the U.S. dollar is so low and oil is priced internationally in dollars.  People who live in nations with highly valued currency don’t see oil prices as so high – a little bit of their money buys lots of dollars – so oil seems cheap.  It’s Americans that are getting gouged, and it’s not a gouging by the oil companies, it’s a gouging by the value of the dollar being driven ever lower by the Federal Reserve allowing the government to spend about $1.4 trillion phantom borrowed dollars in a $14 trillion dollar economy.  Ten percent new money into the U.S. economy looks like dollar value destruction racing over a cliff.

Just consider the price of gasoline or compare your usual grocery product prices over the past three years or Walmart’s Chinese product prices over the same period.

Where the action to be seen is in the markets that operate worldwide. The currency exchange market adapts nearly instantly – more dollars will simply push the dollar value down and no amount of pontification, political posturing, spilled ink or server hard drive files will overcome that reality of more phantom dollars flooding the economy.

Remember, more of anything makes each one cost less and that applies to dollars like everything else.

President Franklin Roosevelt famously said, “. . . the only thing we have to fear is fear itself.”  Your humble writer will offer there is a choice: the fear of the cost to fix the problem of government debt and spending or the fear of the economy continuing its malaise in more recession or depression, inflation becoming a fact in public consciousness, and an ever steeper fall of the devaluation of the U.S. dollar.

The eminent Geoffrey Styles has written on his Energy Outlook Blog about the ‘Energy Implications of a Federal Default’.   The post explores some suggestions on where the ax may fall if the choice is to fix the problem.  Its going to be hard, but it won’t be so long and drawn out.  Mr. Styles’ post deserves a read.

Yet there will be other consequences – a great deal of grant money will dry up, too.  Many of the great ideas in research and development are going to be slow tracked or shelved until things settle down into more confident and predictable forecasting.  Getting back will come sooner if the problems are in fix mode – they would be delayed even longer if recession and inflation come to rule indefinitely.

There are thousands of articles, editorials, posts and other views published to examine the debt limit matter. Your humble writer is still looking for the “Franklin Analysis” of the “pros and cons” for both passing a higher limit and not passing one.  If you find one – that has demonstrable basic facts – please add a comment.

Didn’t we taxpayers buy a strategic petroleum reserve?  Somehow the meaning of strategic has lost its value.  Even worse, done once, the clamber for more will come fast furious and shrill.  You’ve been sold out, our oil, gasoline, diesel and jet fuel safety net itself isn’t even safe.  The second thought is it’s insulting to start, alarming with some thought.  As noted, once the strategic reserve is cracked, sealing it back up again may be impossible.

The third thought questions motives.  Why on earth would a president and his administration betray a national investment in economic safety and self-protection?  Some people love to remark on how intelligent the guy is, but there isn’t much intelligent action to see, at hand or it seems, to come.  A national betrayal, even as there will come the claim the authority was there, is plain to see.  Oil flirted with over $100 per barrel for months, but it won’t hold, its been slipping and a price crash is possible setting off another dive cutting supplies followed by another price run up. We’re all better off when those price moves are gradual.

The suspicion is the tapping of our oil safety net is from a political motive.  Now some will say not so – but good luck with that, we’ll just let it be a suspicion for now.  With the news about misery indexes and hard real misery out there, plus the widespread and deepening loss of family net worth from the citizenries’ home inventory, the expected pending layoffs across government, etc., this administration is showing its bereft of leadership.

Leadership doesn’t require intelligence; common sense and some smarts will do real well.  In the coming days there may be the question, how far back does one have to look to find such incredible incompetence in a president?  The term so far only has two events some can find as positive, ObamaCare and Financial Reform, both headed into slow motion disasters if the forecast reports that trickle out are right.

The fourth thought focuses on the consequences.  A1. Little oil price impact over a short time.  A2. A precedent to encourage repeating the release. A3. The strategic reserve will shrink. B1. Many will applaud the move. B2, Many will be appalled. B3. It will take a while for the mass to realize the betrayal. C1. Serious pressure will mount to repeat the release across a vast spectrum of special interests.  C2. The price of oil will move even more unpredictably because the market that finds the price will have a new player, the U.S. administration. C3. The administration will play fast and loose in a market that will eat them in the end – when the citizen’s safety net runs dry.

The reality check is about a “moon view”, a kind of objectivity from way out there.  For several presidential terms the taxpayers have been led to understand we’re buying a reserve of petroleum to protect us from interrupted supplies.  It was never about price until lately, it started and has been about not having enough.  Surely there are people who remember gas lines?

But it’s done.  There is no hurricane, no war of a major proportions choking off the world’s oil supply.  No natural or man-made event to stress the market such that the gas stations are empty.

22 times or so and the reserve is dry.  How long until the special interests figure out to up the demand from 30 million barrels?

The moon view offers one other point.  It’s one thing to influence votes using money contributed by donors sold on promoting a person and the ideas.  It’s very much something else to influence votes using the public’s property for burnishing an image.

Watching the current U.S. administration with now two and a half years of real world activity makes clear that personal transportation falls far behind the environmental perspective.  What makes news out of the government are efforts to cut CO2, not reduce the costs of energy or increase supplies, or make for a better freedom experience.  The facts are actually the opposite.

Most people aren’t watching, and the media is wholly in the dark.  The Obama administration is deep into canceling the personal freedom of personal transport.  What President Obama calls his “livability” program is really a war on cars and “sprawl”.

According to Secretary of Transportation Ray LaHood, ‘livability’ means “being able to take your kids to school, go to work, see a doctor, drop by the grocery or post office, go out to dinner and a movie, and play with your kids at the park, all without having to get into your car.”  It hasn’t occurred to LaHood that the closest isn’t necessarily the best, cheapest, safest or tolerable – if you can get there on foot, for these bureaucrats its good enough.

In promoting the agenda, LaHood wants every metropolitan area in America to include anti-automobile concepts in its long-range transportation plans. Now, under federal law, metro areas are required to write such plans every five years. The administration wants the next round of such plans to incorporate anti-auto policies such as expensive transit projects and land-use rules aimed at discouraging driving and encouraging other methods of travel.

The anti personal transport battle is older than realized.  Twenty years ago Oregon first passed a state land-use commission ruling requiring major cities to reduce per capita driving by 30 percent (later reduced to 20 percent) within 30 years. The Washington state legislature topped that by passing a law requiring a 50-percent reduction in per capita driving by 2050. The California legislature has also passed a law requiring all cities to reduce per capita driving. The enemy is further along than almost everyone realizes.

The CO2 and pollution basis is disappearing fast. Today’s new cars emit about 1% of the pollution of cars from the 1970s when air pollution was a visible problem.  Driving is up about 3 fold and pollution is down two thirds and declining.  CO2 is for the informed a non-issue, but CO2 remains media ammunition for the war on personal transportation freedom.

Very few moderate-income suburbs could exist without personal transportation.  Suburbia would be the region of the rich – like it was before the automobile – a costly luxurious lifestyle.  Those homes, on plat of land for a yard and garden, four outside walls not joined to others, trees and open spaces for children are products of low cost energy and fuel feeding the automobile. Its low-density population, everyone has territory, not a lot, but personal and owned.  It’s called “Sprawl”.

The choice the anti personal transport crowd offers is high-density population.  The front door opens on a hallway, no yard, garden, buffer space, or trees.  The children will roam those halls – open spaces will be some distance away seeing the children from the window -an impossibility.  Being secure will be much harder, and a mistake or accident anywhere in the structure endangers everyone.  They used to call high density living in urban areas ‘tenements’.

Other states are following the west coast lead – Hawaii, Florida, Massachusetts, plus municipal governments in Denver, Minneapolis-St. Paul, and several other urban areas.

The crowd leading the anti personal transport battle is seeking power and rents from everyone else.  If people are limited in travel the choices are what’s up close, competition suffers, choices disappear.  Spending is guided to the product and price by proximity.  Shopping as a pleasure or pastime will cease.

One presumes there is some self-gratification for the effort behind anti personal transport, suburbia, and travel liberty of Americans.  Controlling the territory and choices of others seems to have some deep psychological drive in some people.  History has many examples, all of which seem to end at great human cost after astonishing human misery.

It’s a sure bet that the administration’s inaction and misaction in the mortgage and housing market disaster is driven by anti personal transport coupled to pushing the population to urban rent based low choice locations.  There could have been a revisiting of the U.S. Constitution’s Bankruptcy Provision by Congress for a new chapter to address the problem.  Your humble writer isn’t keen to see others get help paying for their homes, but the cost in lost wealth to everyone else from the market harm stall the entire economy.  The lost asset base of American homes, lost jobs and business is a larger disaster than the cost of foreclosures.  It didn’t have to happen.  Bankruptcy has been in the Constitution from the start, it’s the envy of the world.  Bankruptcy s a fresh start for individuals, but it can be a “reset button for the economy” when an entire market hits the wall.  The Congress simply failed dismally in its responsibility.

The OPEC cartel, third world development, national instead of independent oil companies, hysteria in environmentalism, and the anti personal transportation crowd are factors herding the world into paying rents and royalties set without competition.  Some of the work they do is increasing standards of living,  just greed, some conniving; some conspiracy, and some may lead to war.

There are people out there with power and influence who seek to take away your freedom to travel how, when and where you choose.  Their efforts cover a vast range that accumulates fellow travelers with a wide spectrum of motivations.

But when one thinks of where such ideas will take us, the realization sets in – this is a fight for life as one chooses – against a life as others would have it foisted upon us.

But not this time.  It’s real clear from just over two years ago consumers can destruct demand, contracting oil exporters economies in return from a price run up.  The push pull on prices isn’t over and won’t ever be over.  Price run-ups and price collapses are will always be peaked up and peaked down.

For the exporters the price down peaks are a serious matter.  Many are governments holding power without consent of the population or hold power tenuously by threat of force.  As we’re seeing in Libya today both government and the population can threaten and use force.  Starting in Tunisia, on to Egypt and now in Libya it’s becoming clear that even when oil prices seem to prop governments up quite well, satisfaction isn’t based in oil prices.

No matter who is in charge, when the dust of the fight is over, the winner is going to need the revenue from the oil.  If the tyrant wins money will be needed, if the population wins, money will be needed even more.  From the consumers point of view a population win is most likely better as the need for money will explode driving a production explosion which may well play a part in over all oil market production.  Democracies are not well known for husbanding resources until the democracy matures, and there don’t seem to any mature democracies in OPEC.

Meanwhile consumers have three economic weapons in the oil market.  Conservation is first, the quickest; simply choosing not to use energy, skipping doing something that uses energy has a large impact when most everyone is doing the same thing.  Second, efficiency gains gathered when disposing of a fuel hog and replacing it with something that does the same work for a fraction of the fuel, uses a different fuel or energy source takes longer but has a security effect for the consumer and helps the entire consumer side of the market over the long term.

The third thing, which from a hard economic look includes a hard humanitarian segment, is to aid the oil producing nations’ populations to make the change.  It not as if when popular control is gained that all the oil production will stay stopped – rather after the slow down or shutdown during transition, the oil will flow again, probably to flow even more.

There is one other move that free countries and non-OPEC countries can do. OPEC is still at less than half of world oil production; the rest can increase production in their portion of the market.  The tools are at hand, and the reserves are already well known.  The last decade has seen more North American onshore oil and gas production coming from past-producing deposits and newly developed technology applied to shale reservoirs.  There is now and could be lots more oil production market share gained.

If the governments can overpower the political specialized interests with compensating consumer interests, a flood of oil can come to market over a just a few years.  That might be quite hard to accomplish when the ideology of many western leaders seeks the same social ends as many tyrants do.  Larger, more encompassing governments whether popular by choice or operated by despots, walk the same roads.   Even though they don’t see themselves as brothers, they are a community with similar interests.  Trying to do many things for a population eventually comes to the same levers of power whether elected or arriving from the power of force. The view of rebellions from Wisconsin to Tripoli is a curious sight, indeed.

The past few years has shown, if the value of the dollar can stay solid, that oil below $50 can’t endure for long and that oil much above $100 won’t endure either.  That range is instructive, a price low point can double and that’s where most of the time, the price will be.  Outside that range – producers or consumers are going to respond.  At more than $75 a tremendous motive exists for alternatives to oil.

Where the problem is difficult is in the amount of time the price spends at the opposing peaks.  That prediction is the most interesting and the most difficult to get right.  Its also always the most expensive to affect.

Say you trade your main oil using energy using personal transporter three times in a decade.  If you decide to improve fuel economy 25% each time you trade, in 10 years you’ll be at 42% of the fuel used ten years before, a 58% reduction.  For Americans that would almost stop oil imports at current market conditions.

If the U.S. government got out of the way and U.S. oil production continued to increase as it has reversed the past two years by about 2.5%, in ten years oil production would be up nearly 30%, close to 10 million barrels a day.

No fear here, but there’s lots of concern about governments and what they do and don’t do.

Yet opportunity abounds for an economic recovery.  At the basics, raw materials and energy the U.S. is sitting on vast wealth.  Rare earth elements can be mined here, precious metals, too.  The U.S. remains the biggest food resource on the planet always there for disasters everywhere else.  One bright spot is in agriculture, pointing out the farmer’s political sophistication, but don’t overlook the food processors and the grocers groups.  There might be something to learn there. (Export!)

A week ago saw your writer in D.C. as a travel, food and lodging paid guest of the American Petroleum Institute to hear the API president deliver a speech (PDF Download). In a panorama room looking out on the U.S. capital and mall atop the Newseum about 200 to 300 press personnel and less than 10 bloggers watched and listened.  The speech certainly puts the pressure on, if it gets covered and enrolled into the thoughts of the media and the citizenry.  Lets roll some knowledge in, OK?

It seems that the economy is going to have to wrench itself up while the government drags along the ball and chain of debt.  Many expect with good reason that soon some state governments may fail.  It might be a good thing for all the government bodies in the U.S. to get a terrifying wake up call.

We’re going to have to maximize the work of the segments of the economy starting with the basics, obviously.  From the view here that would be oil and gas.  The administration seems to think that old style blood letting of the business is some smart move robbing the cash flow out from capital investment, construction and long term employment.  Sometimes one has to wonder if the tax mavens are really fifth columnists trying to destroy the American way of life.

Garard’s speech was a kind of situation report and encouragement to consider the situation with an eye to the long term. In a nutshell, lets not tax a basic industry into the hospital and let human energy run a little freer.  There’s a lot at stake on these points.

The oil and gas industry is paying some $95 million dollars a day into the U.S. treasury, well, the money is in the price you pay and winds up in the government coffers.  History shows the oil and gas business has channeled from consumers a Trillion Dollars in oil business income taxes since 1980 plus $187 billion in rents and royalties from U.S public lands production.  That’s just the direct money.

The API membership provides 2.1 million jobs on the payroll.  They know they’re indirectly employing another 7.1 million jobs with suppliers, servicers, and subcontractors.  Granted the business demands a high level of either education or training or both, so the jobs pay better than double the national average.  A few of these jobs are at a little risk if the tax attack takes place.  The tax attack truth is the customers would wind up paying anyway – if anyone is any clearer that taxes pass through to the consumer, who would it be?  Follow the money back and it comes from us.

On the other hand, the API isn’t asking for any new tax breaks anywhere in the speech or in the research study they bought from a research group.

The second and more important point is all that opportunity for more oil and gas production and the jobs that come with it.

The oil and natural gas industry claims it could generate another $1.7 trillion in government revenue if it were to explore for and produce those oil and natural gas resources in the areas that government currently has set off-limits.  Wouldn’t that actually be not importing from OPEC and the Axis of Oil Countries and keeping the money here?  Jobs, investment, taxes and by the way more oil production for the world market likely lowering prices?

Doesn’t it make sense for the U.S. to encourage policies that simply allow the industry to do what it does best – produce energy from all sources for Americans and at the same time build up some high paying job creation?

The situation today is government taking actions that discourages our domestic energy production.

The Wood Mackenzie study the API bought for public use (a scribd page- icon on the right) compares the impacts of two fundamental scenarios. The first would raise revenues for the government from fees and payments associated with increased access and industry working in those areas now off-limits.  The second would raise government revenue through a quick and dirty additional $5 billion in direct taxes on the industry.

The results show that not all tax revenue is created equal. When you compare the total government revenue impact from the two scenarios, the increased business activity in the now off-limits areas scenario generates an estimated $149 billion in additional government revenue.  That’s money taken right out of the nation’s imported oil bill. However, under an increased taxation scenario, those net revenues are estimated to decrease by $128 billion with a higher imported oil bill.

You have to give Big Oil its due for being patriotic to the citizens, the families, friends and neighbors.  Mr. Garard isn’t asking for a tax break, an incentive deal, or some special treatment, only to be allowed to work.

After the BP oil spill in the Gulf last spring a lot of problems for the environment floated up and spread around.  Damages aplenty, lessons learned, BP had a brush with corporate death – it’s a good thing it’s a huge company, and lot less huge now.  But the U.S has to grow up and get a grip on its emotions, being angry and pouring money out for imported oil might be the first response, but before long it will be a very costly choice that dwarfs the problem of the spilled oil. And makes the oil exporters who don’t like us even richer.

The Wood Mackenzie study suggests the total additional direct, indirect and induced jobs could exceed 400,000; that would about cover a month’s worth of job losses back at the start of the recession.  That would prompt some more jobs, better incomes across the country and take some of the pressure off the state and local governments.  The oil and gas business saturates the whole economy.

It would sure be a better deal than those Trillion Dollar stimulus programs that can’t seem to get anything done but maybe keep the economy treading water and are funded with borrowed money.

Niemeier is working from the theory that long-term investors are good predictors of whether and when new energy technologies will become commonplace. That’s to say stock market expectations are a guide to the future.

The case can be made from applying two key elements of the theory, market capitalizations (based on stock share prices) and dividends of publicly owned oil companies and alternative-energy companies. Other analysts have previously used similar equations to predict events in finance, politics and sports.

Nataliya Malyshkina, a UC Davis Postdoctoral Researcher and co-author said, “Sophisticated investors tend to put considerable effort into collecting, processing and understanding information relevant to the future cash flows paid by securities. As a result, market forecasts of future events, representing consensus predictions of a large number of investors, tend to be relatively accurate.”

Niemeier said the new study’s findings are a warning that current renewable-fuel targets are not ambitious enough to prevent harm to society, economic development and natural ecosystems.

This writer can buy this is a general sense.

Niemeier explains, “Our results suggest it will take a long time before renewable replacement fuels can be self-sustaining, at least from a market perspective.”   Just how the ladies are getting to 90 years isn’t explained.  A “long time” isn’t real precise, but 90 years?

Some license must have been granted for the press release.  The abstract of the ladies paper is more scientific saying, “This research establishes a probabilistic theoretical approach based on market expectations reflected in prices of publicly traded securities to estimate the time horizon until the appearance of new technologies related to replacement of nonrenewable resources, for example, crude oil and oil products. To assess time T when technological innovations are likely to appear, we apply advanced pricing equations, based on a stochastic discount factor to those traded securities whose future cash flows critically depend on appearance of such innovations. In a simple approximation of the proposed approach applied to replacement of crude oil and oil products, we obtain T ≈ (P0oil/C0)·ln (Δ·P0oil/P0alt), where P0oil and P0alt are the current aggregate market capitalizations of oil and alternative-energy companies, C0 is the annual aggregate dividends that oil companies pay to their shareholders at the present, and Δ is the fraction of the oil (oil products) replaced at time T. This formula gives T ≈ 131 years for replacement of gasoline and diesel. The proposed market-expectations approach may allow policymakers to effectively develop policies and plan for long-term changes.”

Everyone with some modeling experience or math or statistics will realize that the inputs for the formula are rapidly moving assumptions.  The curious thing is the formula, updated every day, week or month might be very useful for establishing a trend or more adroitly as measure of the effectiveness of national polices.

Which today suggests – at 90 years – that policy is a dismal failure.

But policy isn’t a dismal failure, rather the foundational work is proceeding both with amazing progress and aggravating frustration – it depends on where you look.

Resources for the stock researchers rely on hard data of performance already done.  The alternative fuels are still building foundations and simply are not threatening entrenched fuel producers in a serious way.  The mindset of the stockholder isn’t ready to move, and justifiably so.

But a certainty exists that’s not in the view just yet – alternative fuels are coming and cheaper and will cross the market price line someday.  At that moment much of the high cost petroleum production will be threatened – if demand is high enough that the marginal last barrels are rare enough to command a good price.  If the marginal barrel is cheap – its all the harder for alternative fuels to get market share.

But if anything has been learned over the passed four years it’s that demand and supply are elastic, more than the analysts thought.  And that doesn’t seem to be in the formulae.

As a practical matter the UC Davis ladies have given us a valuable service.  A tool exists to project the effectiveness of national policy. One hopes they are very busy with Congressional inquiries.

Niemeier said in the news story’s closing, “We need stronger policy impetus to push the development of these alternative replacement technologies along.”

She’s right, whether 90 years, 45 or 5; policy is too weak and too slow.

Its something far more dangerous that low intensity wars would be.  Yet media and leadership are out of touch.  Integrity be damned, so to speak.

Not everyone is lost.  Some, only a few, get the message and act to preserve the integrity of science.  It’s hard to resist all that money and notoriety.  Al Gore is famed on falsehoods, sort of that Gary Hart idea “you can get real famous in just two weeks,” comment taken to a whole new level.  That fame mixed with fear has flooded the scam with money.  That leaves those with integrity out in the wilderness shouting at the emptiness.

But for those with an age past needing the career funded or the integrity to stand up to the snake oil sales pitch a little can be done.  When its somebody very highly regarded, with an impeccable reputation and is slapping down a U.S. national association – its news – and an act worth our attention and respect.

But not by major media news in the U.S. so it’s up to a viral spread.

Harold Lewis, Emeritus Professor of Physics at the University of California, Santa Barbara has resigned from the American Physical Society. Here is short version of the Lewis career pedigree: Emeritus Professor of Physics, University of California, Santa Barbara and former Chairman; Former member Defense Science Board, chairman of Technology panel; Chairman DSB study on Nuclear Winter; Former member Advisory Committee on Reactor Safeguards; Former member, President’s Nuclear Safety Oversight Committee; Chairman APS study on Nuclear Reactor Safety Chairman Risk Assessment Review Group; Co-founder and former Chairman of JASON; Former member USAF Scientific Advisory Board; Served in US Navy in WW II.

Hal Lewis, Professor Emeritus UCSB

This is news.  The Lewis resignation is significant, the reason are damning.  Lewis’ act may be a historical moment and calls into doubt the integrity and credibility of the management of the American Physical Society. It’s past time for these things to get underway.

Anthony Watts of WattsUpWithThat suggests the letter is, “worthy of repeating . . . in (its) entirety on every blog that discusses science.”  This writer agrees – far too much human capital is being wasted as well as billions of dollars and risks to the future from a fraud.  This IS serious stuff.

Here is his letter of resignation to Curtis G. Callan Jr, Princeton University, President of the American Physical Society. It’s a damning document of great courage and some sacrifice.

From: Hal Lewis, University of California, Santa Barbara

To: Curtis G. Callan, Jr., Princeton University, President of the American Physical Society

6 October 2010

Dear Curt:

When I first joined the American Physical Society sixty-seven years ago it was much smaller, much gentler, and as yet uncorrupted by the money flood (a threat against which Dwight Eisenhower warned a half-century ago). Indeed, the choice of physics as a profession was then a guarantor of a life of poverty and abstinence—it was World War II that changed all that. The prospect of worldly gain drove few physicists. As recently as thirty-five years ago, when I chaired the first APS study of a contentious social/scientific issue, The Reactor Safety Study, though there were zealots aplenty on the outside there was no hint of inordinate pressure on us as physicists. We were therefore able to produce what I believe was and is an honest appraisal of the situation at that time. We were further enabled by the presence of an oversight committee consisting of Pief Panofsky, Vicki Weisskopf, and Hans Bethe, all towering physicists beyond reproach. I was proud of what we did in a charged atmosphere. In the end the oversight committee, in its report to the APS President, noted the complete independence in which we did the job, and predicted that the report would be attacked from both sides. What greater tribute could there be?

How different it is now. The giants no longer walk the earth, and the money flood has become the raison d’être of much physics research, the vital sustenance of much more, and it provides the support for untold numbers of professional jobs. For reasons that will soon become clear my former pride at being an APS Fellow all these years has been turned into shame, and I am forced, with no pleasure at all, to offer you my resignation from the Society.

It is of course, the global warming scam, with the (literally) trillions of dollars driving it, that has corrupted so many scientists, and has carried APS before it like a rogue wave. It is the greatest and most successful pseudoscientific fraud I have seen in my long life as a physicist. Anyone who has the faintest doubt that this is so should force himself to read the ClimateGate documents, which lay it bare. (Montford’s book organizes the facts very well.) I don’t believe that any real physicist, nay scientist, can read that stuff without revulsion. I would almost make that revulsion a definition of the word scientist.

So what has the APS, as an organization, done in the face of this challenge? It has accepted the corruption as the norm, and gone along with it. For example:

1. About a year ago a few of us sent an e-mail on the subject to a fraction of the membership. APS ignored the issues, but the then President immediately launched a hostile investigation of where we got the e-mail addresses. In its better days, APS used to encourage discussion of important issues, and indeed the Constitution cites that as its principal purpose. No more. Everything that has been done in the last year has been designed to silence debate

2. The appallingly tendentious APS statement on Climate Change was apparently written in a hurry by a few people over lunch, and is certainly not representative of the talents of APS members as I have long known them. So a few of us petitioned the Council to reconsider it. One of the outstanding marks of (in) distinction in the Statement was the poison word incontrovertible, which describes few items in physics, certainly not this one. In response APS appointed a secret committee that never met, never troubled to speak to any skeptics, yet endorsed the Statement in its entirety. (They did admit that the tone was a bit strong, but amazingly kept the poison word incontrovertible to describe the evidence, a position supported by no one.) In the end, the Council kept the original statement, word for word, but approved a far longer “explanatory” screed, admitting that there were uncertainties, but brushing them aside to give blanket approval to the original. The original Statement, which still stands as the APS position, also contains what I consider pompous and asinine advice to all world governments, as if the APS were master of the universe. It is not, and I am embarrassed that our leaders seem to think it is. This is not fun and games, these are serious matters involving vast fractions of our national substance, and the reputation of the Society as a scientific society is at stake.

3. In the interim the ClimateGate scandal broke into the news, and the machinations of the principal alarmists were revealed to the world. It was a fraud on a scale I have never seen, and I lack the words to describe its enormity. Effect on the APS position: none. None at all. This is not science; other forces are at work.

4. So a few of us tried to bring science into the act (that is, after all, the alleged and historic purpose of APS), and collected the necessary 200+ signatures to bring to the Council a proposal for a Topical Group on Climate Science, thinking that open discussion of the scientific issues, in the best tradition of physics, would be beneficial to all, and also a contribution to the nation. I might note that it was not easy to collect the signatures, since you denied us the use of the APS membership list. We conformed in every way with the requirements of the APS Constitution, and described in great detail what we had in mind—simply to bring the subject into the open.

5. To our amazement, Constitution be damned, you declined to accept our petition, but instead used your own control of the mailing list to run a poll on the members’ interest in a TG on Climate and the Environment. You did ask the members if they would sign a petition to form a TG on your yet-to-be-defined subject, but provided no petition, and got lots of affirmative responses. (If you had asked about sex you would have gotten more expressions of interest.) There was of course no such petition or proposal, and you have now dropped the Environment part, so the whole matter is moot. (Any lawyer will tell you that you cannot collect signatures on a vague petition, and then fill in whatever you like.) The entire purpose of this exercise was to avoid your constitutional responsibility to take our petition to the Council.

6. As of now you have formed still another secret and stacked committee to organize your own TG, simply ignoring our lawful petition.

APS management has gamed the problem from the beginning, to suppress serious conversation about the merits of the climate change claims. Do you wonder that I have lost confidence in the organization?

I do feel the need to add one note, and this is conjecture, since it is always risky to discuss other people’s motives. This scheming at APS HQ is so bizarre that there cannot be a simple explanation for it. Some have held that the physicists of today are not as smart as they used to be, but I don’t think that is an issue. I think it is the money, exactly what Eisenhower warned about a half-century ago. There are indeed trillions of dollars involved, to say nothing of the fame and glory (and frequent trips to exotic islands) that go with being a member of the club. Your own Physics Department (of which you are chairman) would lose millions a year if the global warming bubble burst. When Penn State absolved Mike Mann of wrongdoing, and the University of East Anglia did the same for Phil Jones, they cannot have been unaware of the financial penalty for doing otherwise. As the old saying goes, you don’t have to be a weatherman to know which way the wind is blowing. Since I am no philosopher, I’m not going to explore at just which point enlightened self-interest crosses the line into corruption, but a careful reading of the ClimateGate releases makes it clear that this is not an academic question.

I want no part of it, so please accept my resignation. APS no longer represents me, but I hope we are still friends.

Hal

One day ‘Global Warming’ will in be history’s trash can.  The question is how much will be lost in the hysteria in the meantime.