What’s a 19-year old single male with a mohawk to do in Washington, D.C. on a Monday night? Why look for a baseball game of course. Failing that crashing a softball game between the World Wildlife Fund and the Alliance to Save Energy would have to do. Well, that’s if you’re Washington Nationals rookie outfielder Bryce Harper . It isn’t quite Willie Mays playing stickball in Harlem but it’s still pretty cool. Harper, of course, made his MLB debut with the Nats on Saturday night against the Los Angeles Dodgers at Chavez Ravine to heavy jeering. Despite not getting the red carpet treatment, in his first two big league games , Harper has gone 2 for 6 with an RBI double along with a spectacular catch and a perfect throw to home plate . Needless to say, there will be a much friendlier reception for Harper when he makes his debut at Nationals Park tonight against the Arizona Diamondbacks.
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Bryce Harper Takes Some Swings at Environmentalists
A combination of Ebenezer Scrooge and the mad bomber. This was Ronald Reagan’s joking description of how President Jimmy Carter’s campaign sought to portray Reagan as the fall campaign of 1980 finally got underway. And make book on it. Some version of this old liberal game will be run on Mitt Romney by Barack Obama, starting now. The only difference, perhaps, is that Richie Rich may serve as the substitute for Ebenezer Scrooge. Don’t believe me? Let’s begin with a video tour comparing the President Jimmy Carter of 1980 with the President Barack Obama of 2008 and today. It’s as if Obama were just pumping fresh stale air into Carter’s old lines about Ronald Reagan. Take note: the villains — big oil, tax breaks for the rich, heartless Republicans — are always the same. And as Americans have learned the hard way, the results that flow from the Carter and Obama policies have been the same as well. •
Watching President Obama stumble through his energy crisis, it seems only a question of whether he will end up channeling Jimmy Carter or President Cristina Fernandez de Kirchner of Argentina. The latter, in case you missed it, just announced that her government will be seizing a 51 percent interest in YPF, the Argentine subsidiary of Repsol, the Spanish conglomerate that is the 15th largest refiner in the world. In most places, that would be called theft, but in the banana republic of Argentina it’s just business as usual. In making her announcement , Fernandez de Kirchner stood directly beneath a wall-length portrait of Eva Peron haranguing the masses sometime back in the 1940s. It was an irony that nobody seemed to notice. Who knows, maybe there’s a Broadway musical in Cristina’s future. What prompted the move by the President, who succeeded her husband in 2007, was that YPF, originally founded by the Argentine government in the 1920s and privatized in 1993, wasn’t producing enough oil. Why wasn’t it producing enough oil? Because the government has imposed price controls. And like price controls everywhere, they have discouraged production while encouraging overconsumption. As a result, Argentina has ended up importing expensive foreign oil despite large discoveries of shale oil in recent years. This blast from the past can only remind us that one government intervention in the economy always leads to a bigger one and that, despite this sordid history, old leftist ideas never die. There will always be some demagogue telling us that the government can do a better job at running things than the people who know their business. Kirchner probably doesn’t know enough about oil to tell you the difference between a hydrocarbon and a carbohydrate but as a lawyer, she is sure that once she and her friends are running YSF, oil will gush forth like Moses striking the rock. So that brings us back to our own Man of the People, President Obama, who is really only in the kindergarten of such retrograde policies but giving it a try. On Tuesday he stood in the Rose Garden flanked by his two apostles of freedom and justice, Treasury Secretary Tim Geithner and Attorney General Eric Holder, and announced the solution to our energy problems will be hunting down and prosecuting evil “oil speculators” who are responsible for driving up the price of gas in the U.S. Who are these individuals? We don’t have any names but we can already be sure they are “millionaires and billionaires” and don’t pay any taxes. Why, aren’t these the same people who are messing up the entire economy?! Well, what we do know is that Mitt Romney is their friend. Before we go any further with this, perhaps we should ask, just what are “oil speculators” and why is it so important that they be hunted down? Here is the answer. Oil speculators are investors who think the price of oil is going to go even higher in the future. For whatever reason, they expect supplies to get tighter. Therefore they are willing to buy oil at a premium today in the anticipation that prices are going to go even higher tomorrow. It’s a gamble. You don’t automatically make money. Sometimes you lose a whole lot. What speculators do, however, if they guess right, is smooth out the availability of supplies between the present and the future. By paying a higher price now, they assure that prices will be lower in the future. In effect, they hold supplies off the market today so that they will be available next week or next year when things become even more scarce. Adam Smith described this as preventing a “dearth” from becoming a “famine”: When the government, in order to remedy the inconveniences of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of the season; or if they bring it thither, it enables the people, and thereby encourages them to consume it so fast as must necessarily produce a famine before the end of the season.… No trade deserves more the full protection of the law, and no trade requires it so much, because no trade is so much exposed to popular odium. Unfortunately, there are always politicians around, like President Obama, who are willing to encourage that odium for political purposes. The biggest oil speculator of all is the federal government. At present the government has bought 727 million barrels of oil and stockpiled them in caves in Louisiana so that they may become available in case we face a dearth of oil tomorrow. This is, of course, the Strategic Petroleum Reserve, which holds enough oil to replace all our imports for 80 days. These purchases made over the years have subtly driven up the price of today’s oil, yet we are still very glad to have it because it could play a crucial rule in our future. The SPR has been drawn on four times: in 1991 during Operation Desert Storm (21 million barrels), in 1996-1997 in order to pay off part of the federal debt (28 mb), in the aftermath of Hurricane Katrina when production in the Gulf of Mexico was disrupted (11 mb), and during 2011 because of tensions in the Middle East (30 mb). The current run-up in price could qualify as another such emergency. The reason private investors are driving up futures prices is that they are anticipating a shooting war in the Persian Gulf. As Secretary of Defense Leon Panetta testified this week, we have been “within an inch of war almost every day.” Quite frankly, the Obama administration could well justify making some small releases from the SPR, since these tensions are having an impact on prices. But at this point it would probably be wiser to hang on to those supplies in case something more serious happens. If the President would explain all this to the public, people might be a little more tolerant about bearing the hardship. Unfortunately, his own anti-energy policies and past quotes about raising gasoline prices have overshadowed all this. So instead, he has to make a big show of tracking down “speculators.” Right now I would say it’s time to start an office pool on how long it will be before the President or some congressional Democrat starts talking about price controls. Then we follow right in Jimmy Carter’s footsteps and have a repeat of the “oil shortages” of the 1970s. That’s the problem with government intervention in the marketplace. One you intervene, things only get worse, which creates a new clamor for even more intervention. Just ask Cristina Fernandez de Kirchner about that one. ••••••• Three weeks ago, I wrote a column saying you could count me out on defending George Zimmerman in the Trevor Martin case. At that point the country seemed on the brink of racial warfare. Al Sharpton was on television every night, African-American youths were rioting in southern cities, the New Black Panthers had put a price on Zimmerman’s head. Then a week later there were racial killings in Tulsa and it appeared the country might be pushed over the edge. Now suddenly everything is quiet. You hardly see a story on the news. What happened? Well, there was an arrest. The Florida prosecutor finally got around to deciding that the circumstances demanded a second-degree murder charge. In Tulsa, the alleged killers were arrested very quickly and will probably be facing the death penalty. Mind you, none of this says that any of these people are guilty. It just means that somebody in authority is acting and that everyone will have their day in court. It’s a good lesson in the purpose of the justice system. It is there to keep the peace. If police and prosecutors and judges don’t deal with a situation like the Zimmerman-Trayvon Martin shooting, then someone else will. Instead of being tried in a court of law, it will be tried on television every night or in the streets. Judges and prosecutors and law school professors have somehow gotten lost in the conviction that their only responsibility is to make sure that no one is ever wrongly accused or convicted of anything. They talk endlessly about how the justice system pits “the lone individual against the awesome powers of the state.” But if the state has awesome powers, it also has awesome responsibilities. It has to keep the peace in a nation of 300 million individuals, many of whom dislike each other and are not hesitant to act things out. The calm that has descended upon both the Trayvon Martin and Tulsa, Oklahoma cases are a good example of just how important those responsibilities can be.
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Obama’s Snipe Hunt
RedState Morning Briefing
Conservatives need to do a better job of explaining how they would lower gas prices. More drilling is a great piece of the pie, but there needs to be more. Governor Sarah Palin and Eric Bolling, Fox News host of of The Five, have put together a comprehensive plan to lower gas prices and they mapped out the details in the video below. The FOX gas price solution show was titled “Paying at the Pump.” Gov. Palin and Bolling rolled out some excellent ideas to combat skyrocketing gas prices. When President Obama was sworn into office, gas was priced at $1.85 cents a gallon. Clearly, the President’s energy policy has been an abject failure with gas prices hovering close to $4.00 a gallon. This show contains a comprehensive conservative means to lower gas prices. Conservatives need to make a strong case to the American people that the solution to high prices at the pump is a conservative solution. Get the government out of the business of hiking gas prices through wrong headed government policies. As usual, government has caused many of the problems leading to a massive hike in gas prices and President Obama has exacerbated the problem. It is important to note that high gas prices causes price inflation in consumer goods. Having gas prices so high is a drag on the economy in the transportation of goods and in the production of many products. The impact of gas prices doubling since President Obama was sworn into office is currently harming the economic future of the United States. High gas prices hammer the middle class and low income Americans harder than the well to do. High gas prices are a problem that needs to be addressed in the very near future or our economy shall stagnate. The first point Palin and Bolling made in the show was that gas prices cause inflation on many other products used by Americans. Anybody who has made a recent trip to the grocery store has felt the pinch of increasing prices. One of the reasons why these prices are hiking is because of high fuel prices, yet another important, and lesser known factor, is the impact of environmental regulations forcing truckers to use vehicles at increased cost. The experts on the show argued that environmentalist extremists and anti-energy policies are one of the factors hiking grocery prices. We can all thank the Environmental Protection Agency (EPA) for some of the gas price inflation. Kenneth Green of the American Enterprise Institute wrote a blog post titled EPA-Induced refinery closures linked to high gas prices . Green cited an article in Investor’s Business Daily that put responsibility on the EPA for higher gas prices. The untold story behind soaring pump prices is that major U.S. refineries are going out of business and creating at least regional shortages thanks in no small part to costly EPA rules. Over just the past six months, three refineries supplying about half the gasoline, diesel and jet fuel to the East Coast have closed, including two owned by Sunoco Inc. They say they simply cannot make money anymore. Philadelphia-based Sunoco’s refinery business in the Northeast has lost almost $1 billion over the past three years as U.S. demand for gas fell and the cost of foreign crude soared. But over the same period, it had to shell out “significant expenditures for environmental projects and compliance activities” to satisfy onerous EPA mandates, according to the company’s latest 10-K report. In fact, it’s spent more than $1.3 billion just to comply with stricter EPA rules, which carry stiff fines or penalties for violations. Sunoco fretted that these regulatory costs would grow exponentially under the Obama administration, which has hit some of its refineries with fines. The federal government has passed on a $1.3 billion tax on the American consumer in the form of EPA regulations. Regulations are a hidden tax on the American people and they limit choices. The fact that three refineries have closed is evidence that this burdensome regulatory structure is increasing gas prices. One simple solution would be to suspend these regulations to see if gas prices come down and more refineries come on line. Strip the EPA of any authority to implement the rules that are causing higher gas prices. Of the many laughable and wrong headed ideas of the Obama Administration is the President Obama’s suggestion of getting regular tune ups and inflating tires. This will have no impact on gas prices and is not a realistic means to solve our energy problems. Obama has also embraced the miracle fuel of converting Algae to gas. Yet another unproven miracle fuel idea that is not at a stage where Algae is being considered a realistic solution to our nations’ energy problems. These Obama ideas can go in the silly category and should be treated as non-serious solutions. One serious proposal that will increase gas prices is to impose higher taxes on the Oil and Gas industry. The President’s idea to raise taxes on the Oil and Gas industry was rejected by the United States Senate , because it would raise prices at the pump. The President’s idea is to single out the manufacturing tax credit extended to the Oil and Gas industry. A tax credit that applies to all manufacturers. The President acts as if the federal government is subsidizing Oil and Gas, yet fails to point out that every manufacturer is allowed a 9% deduction from revenues as part of our corporate tax code. Already, the federal government has singled out the Oil and Gas industry for a manufacturing tax credit. An increased tax on the Oil and Gas industry will be passed on to the consumer in the form of higher gas prices.; therefore the President’s removal of what he calls a tax subsidy would effectively increase gas cost at the pump for all Americans. Another problem identified by Gov. Palin’s segment on the Fox broadcast is that there are large swaths of the United States off limits to drilling. Production is up on private and state properties, yet on federally controlled lands, production is not where it needs to be. Gov. Palin made the point that in Alaska is loaded with resources that are untapped. Palin said on the show the following: In the 50s oil was discovered and the Navy set aside a petroleum reserve, the NPRA, was set aside for the development of oil and gas. That was in the 1950s, yet that unit, that land, still has never been touched. And then in the 1960s more oil was discovered and ANWR was created. It is a huge unit, 20 million acres, was set aside for wilderness for refuge and in mid-1980 it was expanded for oil and gas development in the coastal plain, the tipy top of ANWR. So we have these huge swaths of land, 20 million acres in one unit and 19 million acres in another unit, reservoirs that have proven to hold oil and gas that have not been tapped yet. If President Obama was serious about domestic oil production he would urge Congress to open up drilling in ANWR today. Yet again the environmental extremists have won the day. They have thwarted the Keystone pipeline and drilling in ANWR, as well as off the coast of Florida, the East Coast, the West Coast and many on land areas that could help reduce America’s dependence on oil. According to Rayola Dougher of the American Petroleum Institute, 87% of the acreage offshore is off limits to drilling and development. The President’s solution seems to be merely a political one. Obama has targeted individuals who trade in futures as if they are the individuals responsible for a massive spike in gas prices. This is consistent with his Class Warfare campaign, because he can blame Wall Street for high gas prices. Yet again, President Obama is trying to shift blame away from his own anti-energy policies as a means to blame somebody else for the problems he has failed to solve. President Obama needs a straw man to draw fire from his incompetent energy policy. The President has seen fit to demonize “speculators” as if they are evil people driving up the price of gas at the pump. The fact of the matter is that speculators are trading on the knowledge that the President’s energy policy is not going to produce more domestic sources of energy. As good traders they are operating on the smart bet that as President Obama thwarts more domestic oil production, gas prices will go higher. The President said earlier this week, “we can’t afford a situation where some speculators can reap millions while millions of American families get the short end of the stick.” According to the AP , the President’s proposal to bring down gas prices contains three elements, federal supervision of oil markets, increase penalties for market manipulation and empower regulators to increase the amount of money energy graders are required to put behind their transactions. According to AP the following elements are included in the President’s plan: Increase six-fold the surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation. Increase spending on technology to provide better oversight and surveillance of energy markets. Increase civil and criminal penalties against firms that engage in market manipulation from $1 million to $10 million. Give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position. The administration officials said such authority could help limit disruptions in energy markets. Eric Bolling stated on his show that one element of the Obama proposal may make some sense – raising the energy trading margins. Bolling is a guy who has some experience on the issue of futures trading. He was on the Board of Directors (2000-2005) of the New York Mercantile Exchange (Now Chicago Mercantile Exchange) and an oil trader (1990-2007). Bolling argued that merely using existing authorities to force Wall Street banks and other institutions trading in derrivatives to put some skin in the game would insure against reckless trading. Maybe one of the problems we have today is the idea that the big Wall Street traders are considered “Too Big To Fail,” therefore they act as if they have an implicit insurance policy from the federal government to bail them out if the oil futures market collapses. One solution to the problem would be for the bailout supporting Obama Administration to pledge not to bail out big Wall Street banks and trading firms if they go belly up as a result of bad energy futures trades. That seems like a good free market solution to the problem. Although the Dodd-Frank legislation already says that financial institutions will no longer be bailed out, and will be allowed to fail, this is not necessarily true. The standard interpretation of this language on Wall Street is that no one needs to worry about failing any more, because a Federal bailout is assured. It’ll just be called by some different name. As usual, President Obama has takes the wrong tact. He refuses to drill more on federal lands, his addiction to green energy is well known and he is not expected to renounce bailouts as a legitimate policy of the federal government. Remember how much money Wall Street funnelled to his campaign after the 2008 Wall Street bailout. One should not expect him, in an election year, to stick a finger in the eye of one of the sectors of the economy expected to give him $1 billion to fund his re-election campaign. Obama is engaging in more class warfare by demonizing “Speculators” as a class of people robbing the American people. Bolling pointed out on the show out that a simple change to the margin requirements may solve the problem. That solution may preclude the over-broad response by the Obama Administration to the gas price problem. Bolling pointed out on the show that the whole world uses 83 million barrels a day. The markets move over 4 billion barrels a day in the form of derrivatives on the market. Bolling further pointed out that these futures are not being traded by the Saudi Arabians nor other middle eastern members of OPEC. Also, not Shell or Gulf or any other oil company making these future trades. The traders are the bailed out (i.e. failed) Wall Street entities that have already done lasting harm to the idea of free market capitalism with the bailouts. Bolling pointed out that these Wall Street firms don’t have to have any skin in the game if they buy and sell an oil future in the same day. He further pointed out that if they hold a future overnight, they only have to prove they have posted approximately a 5% against the margin of the position. Conservatives need to understand that this is not in the form of a new regulation. The regulations authorizing this new margin requirement already exists in the law. It is not a new additional regulation nor is it a fee. It is merely a margin account to show the companies still own the collateral used to make these trades. Now some will point to the fact that exchanges already have the ability to increase margin requirements for trading positions. They absolutely do this in volatile conditions, when they fear that traders may be taking on too much leverage, increasing their risk of failure. Additionally, futures markets have strict daily trading limits and positions are marked to market every night. This means people who bet wrong can generally get forced out of the market before they can bankrupt their counter-parties. Some will argue that if the Obama Administration comes to Congress to demand that legislation enabling regulators to impose position limits or margin requirements is pointless. The exchanges already have a self-preservation interest in enforcing these at times of stress. It is important to note that the Palin-Bolling plan did not call for more legislation, yet the Obama Administration is trying to get Congress to pass legislation to force regulators to make this decision. The President’s plan does not define “manipulation” and gives regulators the power to make subjective decisions. How will market participants prepare for regulators curtailing otherwise-legal activities. Having Congress implement all the aspects of the Obama proposal may make the markets all the more unstable. Now creating a margin requirement that is too high will stifle the market and move these trades to other markets. That would hurt the financial sector of the American economy and also do lasting harm to free market capitalism. Bolling’s idea has merit and a reasonable margin requirement may be one element of a comprehensive plan to get gas prices under control. The fact that the Obama Administration already has the authority that this Administration is not serious about gas prices. They punt all the difficult decisions to Congress, yet they refuse to do anything to “Drill Baby Drill” domestically. This Administration is firmly in support of demonizing “Speculators” and “Big Oil” by increasing taxes and comparing “Speculators” to the guys that cause the Enron scandal. Another idea that needs an airing that didn’t make the Palin-Bolling show was devolving highway programs back to the states. Right now the federal government collects $18.3 cents on every gallon of gas pumped in the United States. The feds collect the taxes then dole these revenues back to the states to pay for highway programs, bike paths and miscellaneous earmarks. The best solution would be to devolve the programs back to the states where they belong and eliminate the federal gas tax. States already collect hefty gas taxes and they could increase the state based gas taxes to cover the shortfall. Without the federal government bureaucrats wasting these tax dollars there would be measurable savings at the pump. At a minimum, conservatives need to roll out a comprehensive plan and force Congress to consider these plans over and over again. Gas prices are a big issue and if conservatives in Congress are not forcing vote after vote on good ideas, then they will lose the messaging war to the Class Warrior in Chief who is seeking to use scare tactics and class warfare to secure another term in the White House. There is a conservative solution. Governor Sarah Palin and Fox’s Eric Bolling have rolled out a conservative plan that deserves a national debate.
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The Palin-Bolling Proposal To Lower Gas Prices
