What’s All This Then!

Back on March 9th of this year, gas had just crested the $100 mark during its amazing, budget-killing rise. In my post of that day, I mention how it might reach $150 a gallon and then crash to $30 during this year. Today’s price after peaking at $147 in July is … drum roll please … $37!!! And the year isn’t over!

Somebody get me a Quiji board and tell Ms. Cleo to move over. You are subscribed to this blog, right???? Who’s know what amazing things I might get right!

UPDATE: At 6:30 this morning (Dec.19th), NYMEX WTIC crude oil was at $33. WOW!

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On Friday, I listened as Michele Norris of NPR interviewed you, Mr. Obama. As you spoke of your noble plan to tax more money from those greedy oil companies, I couldn’t help but to be moved by your eloquent words. Actually, my car moved me. I was just enthralled by your ideas as I traveled along the road. I drive over a 100 miles a day to and from work. Naturally, I would love cheaper gas (and not just the kind you get from fast food). So, go get ‘em, Mr. Obama … I think … well, that was my mistake — to think about your ideas.

Your interview left the impression that oil companies aren’t taxed at all. Yet, I know that our thrifty governments already take almost 50% of the oil companies’ earnings. So record profits mean record revenues for you and your congressional cohorts, don’t they? Yet, the way you talked made me wonder if you guys have already squandered this year’s oil tax windfall. I realize that you made the list as one of the top pork spenders in Congress. But this isn’t one of those types of lists to be proud of or to remain on.

Let’s look at this little audacity of hope, shall we? According to the Tax Foundation, Exxon earned over $20 billion in the first quarter of this year. Out of that, government took over $9 billion. Then there is all the additional sales taxes, excise taxes, severance taxes, and property taxes that Exxon had to collect from motorists on behalf of our lawgivers — which worked out to $20 billion more in tax revenue. All-in-all, for $1 in after-tax oil profit, you politicians took almost $3. WOW!! And yet, Mr. Obama, you want to take more? Who’s being greedy? Kind of like the pot calling the kettle black. Or in this case, the candidate calling the oil … well, you know.

Have you forgotten that those evil oil companies take some of what’s left of their profits and pay investors — in other words, my lowly 401(k). Given Congresses’ wonderful management of the Social Security system, I’m going to need every penny of that 401(k) when (and if) I retire.

So, Sir, I’m not sure of your noble desires to relieve those ill gotten record profits from Exxon and the like. And when you put those billions of dollars into more bureaucratic programs, I’m not sure that the pennies that somehow trickle down will really benefit us poor folk of America.

Hmmmm, here’s a thought: do you think you and Mr. McCain can first put a stop to the wasteful spending that you boys and girls are doing in Congress before trying taxing the rest of us into poverty?

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I probably shouldn’t be telling you this but we may be seeing gas prices around one dollar a gallon. This might even happen within the year. But before these tidings of great news can come to pass, we might have to endure paying almost five dollars a gallon at the pumps first.

How can I say this? Well, it certainly wasn’t an oil slick birdie who told me about this. I got tired of minimalist news reports saying, “Oil prices increased today” and then going on about how petting baby seals was bad for the enviroment. What happened to journalistic standards of filling in details, such as, “how much did prices go up” and, that all important, “why did they go up”? So I did my own investigation.

At first I thought it was those greedy people in China and India gobbling up all the oil while our poor, starving cars stranded themselves on the sides of roads. But it turns out that there is more than enough oil to meet the world’s demand. If this were a simple matter of supply and demand, we would be looking at about $80 a barrel; and could only blame India and China for the rise from the good ol’ days of $30 a barrel.

No, there is another culprit in these ongoing price increases: speculative investors of pension funds, sovereign wealth accounts, and banks across the world. OIl futures, it turns out, are a very safe investment, or so it seems. Well, much safer than, say, investing in a paper towel business and revolving door company. With those, you could be wiped out before you could turn around. In any case, their oil investments weren’t much of an influence back in 2000 when it was about $9 billion. 8 to 9 billion dollars is what we spend on oil each day now, globally. However, now those same investments are at $250 billion — several weeks worth of oil spending — and growing! And why not? If you have $3,000, you can go to the New York Mercantile Exchange (NYMEX) and control almost $70,000 worth of oil.

So it’s all that ol’ speculative “make money quickly” bubble that is pumping up the prices. According to some economists, this bubble could take prices as high as $150 a barrel. That’s the bad news for us. The good news is that, while we might not be able to predicted how high and how soon, we do know how other speculative bubbles behave. Remember the speculation in housing, metals, and stock markets? They all tended to burst. And the quicker they went up, the harder they crashed. Some economists are brave enough to say that, within the year, we could see an oil splat of $30 a barrel. We’ll see … A lot can happen before all this leaves us in an oily residue. For now oil companies will keep making record profits and our government will continue taking half of that for itself. As for you and I, we”ll just sit tight and see whether we end up walking more as we go shopping for dog food because the pension firm lost our retirement money.