President Obama’s Fiscal Responsibility Summit bamboozled the stupefied national media into reporting on deceptive campaign-style hype as if it were a serious policy meeting.

Chutzpah (pronounced and sometimes spelled “hutzpah”) is a Yiddish term meaning shameless, brazen temerity, combined with contempt for the intelligence of others.  Perhaps the most famous description of Chutzpah came from humorist and author Leo Rostin:

Chutzpah is that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.

By hosting a “Fiscal Responsibility Summit” at the White House, President Obama has surpassed all rivals and earned the title of Chutzpah Grand Champion for all time.

Barack Obama:

• Promoted the $787 Billion “Stimulus” package, the largest spending Bill in American history.
• To a meeting of Democratic Congressmen said:  “Then you get the argument that this is not a stimulus bill, this is a spending bill.  What do you think a stimulus is? [laughter]  That’s the whole point. [more laughter] no, seriously.  THAT’S THE POINT!
• Added $1.3 Trillion, plus interest, to the government’s debt in just three weeks.
• Gleefully promises to spend Trillions more in borrowed money on a constellation of stale, discredited, social engineering schemes and causes.
  

Barack Obama then convened a “summit” to hector the rest of America about “fiscal responsibility!”  The Chutzpah is simply breathtaking! This is like the Hooters girls scolding the church choir for immodest robes, or the Jim Beam Company ordering employees to attend an AA meeting in the distillery tasting room!

Here are some excerpts from Pesident Obama’s speech at the Fiscal Responsibility Summit:

My administration came into office one month ago in the depths of an economic crisis unlike any that we’ve seen in generations.  And we recognized that we needed to act boldly, decisively and quickly — and that is precisely what we did.

They did indeed act quickly.  Under Obama’s leadership the Congress that still hasn’t produced the regular budget for the current fiscal year, which began October 1, slammed together $787 Billion in extra spending, mostly on liberal priorities that have been proposed for years but couldn’t survive the regular legislative process on their own merits.  This monstrous act of bold fiscal incompetence was completed so quickly there wasn’t even time to print the final version of bill before the vote.  The only copy was a previous version with handwritten corrections, cross-outs, and notes in the margins.  No Congressman or Senator who voted for the stimulus had read it.

This administration has inherited a $1.3 trillion deficit — the largest in our nation’s history — and our investments to rescue our economy will add to that deficit in the short term.

The President and his media spokespeople repeat this “inherited deficit” claim every day, hoping to persuade us that it is verified fact.   But Without the Big Bailout, that Obama fully supported during his campaign and has vowed to spend in its entirety, the inherited portion of the deficit would have been about $600 billion.

During Obama’s four years as a Senator he did absolutely nothing to reduce the deficit except call for cutting off support for the Iraq operation, just as the troops were engaged in the intense combat phase of the spectacularly successful surge strategy that has brought peace and stability to Iraq.  Abandoning Iraq might have reduced the deficit by about $75 Billion, while setting off a firstorm of horrific consequences.

He never advocated any specific cuts to the budgets of any federal department or agency.  Indeed, he campaigned on promises of Trillions in new spending!  Portraying himself as the victim of someone else’s negligence is fraudulent, to say the least.

We also have long-term challenges — health care, energy, education and others — that we can no longer afford to ignore.

Energy is a challenge only because Obama and his supporters plan to restrict or even ban cheap, abundant, domestic sources of energy and spend Billions of tax dollars on dubious, politically correct “alternative” energy and conservation schemes.

Education is a challenge because no matter how consistently they fail, the same federal programs, bureaucracies and teacher unions continue to enjoy ever increasing support from the federal budget. Obama is a staunch supporter of these special interests.

Health care is indeed a challenge after decades of bone-headed government programs, regulations, restrictions and mandates imposed on health care providers and health insurance carriers.  Obama’s solution is for government to assume even more power, and take ove health care responsibilites for tens of millions, or even hundreds of millions of people who are now covered by private insurance.

But I want to be very clear…we cannot, and will not, sustain deficits like these without end.

After just promising to spend hundreds of Billions more on health care, energy and education this assertion was utterly preposterous!

We are paying the price for these deficits right now.  In 2008 alone, we paid $250 billion in interest on our debt — one in every 10 taxpayer dollars.

In the first 20 days of his Presidency Obama  added over $1.2 Trillion to the federal debt.  That increase, plus the deficits already baked into the budget will increase this interest cost by 50%, to about $375 Billion, in just two years.  And that’s before the borrowing Obama just promised, to pay for government health care, even more subsidies to failing education programs, and a new alternative energy program.

…today I’m pledging to cut the deficit we inherited in half by the end of my first term in office.

OK, he claims to have “inherited” a deficit of $1.3 Trillion.  Half of that would be $650 Billion.  The chart below shows the deficits during the Bush years, that the Obama campaign characterized as irresponsibly huge.

Obama is claiming credit in advance for “reducing the deficit” to 43% more than the largest Bush deficit.  Obama’s amazing speech continued…

To start reducing these deficits, I’ve committed to going through our budget line by line to root out waste and inefficiency…And already we’ve seen how much money we can save, just in the last 30 days.

Take one example — the Department of Agriculture has moved some of its training programs online, saving an estimated $1.3 million a year.  They’re modernizing their financial management system, saving an estimated $17.5 million.

This would be a real knee-slapper if it weren’t so arrogantly contemptuous of us, the audience he was speaking to.  The Dept. of Ag. will save $19 Million on training and bookkeeping.  But every year the same department hurls nine hundred times that amount at farming companies to subsidize their businesses!

The reason Obama talked about saving relative nickels and dimes on training instead saving serious money on farm subsidies is to avoid a fierce backlash from an entrenched special interest constituency who would lose it’s annual handout.  It’s the special interest spending that grows government, not the lack of on-line training.

Obama went on to claim that:

…we are making important progress towards fiscal responsibility this year in this budget.

With this preposterous claim Obama surpassed every politician in history in The Great Chutzpah Competition!

The Bottom Line

Even as he TALKS about “fiscal responsibility” President Obama is racing to spend this government into an unprecedented financial crisis.  It will take decades for America to recover from the damage being done right now, in Washington.

The executives submitted to scores of stupid questions, and endured many hours of ignorant opinions from Senators and Congressmen, most of whom have no real business experience, and certainly no comprehension of the massively complex and intensively competitive automobile industry.

What was conspicuously absent from these star chamber hearings was any of the facts leading to the obvious conclusion that much of the cause of Detroit’s financial crisis was green politics in Washington, with blame falling squarely on Congress.

A favorite criticism from the political-media elite is that General Motors has stupidly continued to make cars “nobody wants to buy.”  But, since the early 90s GM has made some of the most wanted vehicles available in America:  Large pickups and large SUVs.

GM didn’t invest Billions on world class engineering and design of these vehicles out of stupidity.  They did it to meet consumer demand – demand that was so great that Nissan began offering similar vehicles.  Toyota, a company that basks in the glow of political-media-green admiration, invested Billions in engineering and a new plant in Texas, to introduce a new product, just one year ago, that competes directly with GM in the large, V8 powered, pickup market.

Through October of this year, even with gasoline prices spiking to record highs and a financial crisis that has disqualified half or more potential buyers from auto loans, General Motors has still sold over 1.2 million of these popular vehicles including:

• 67,000 of America’s largest SUV, the Chevrolet Suburban and it’s nearly identical cousins, the GMC Yukon XL and the Cadillac Escalade EXT.

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• 141,775 of GM’s slightly smaller but still large SUVs, the Chevrolet Tahoe and GMC Yukon and Cadillac Escalade.
  

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• 1,009,069 full sized pickups, including the Chevrolet Silverado and Avalanche, and the GMC Sierra.

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A lot of politicians are chauffeured around daily in the huge Suburbans and Escalades.     But, political-media establishment opinion leaders have always been opposed to large vehicles for us common people.

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When politicians say “nobody wants to buy” an SUV or large pickup, listen between the lines for the real meaning: the environmental lobby that rules Washington these days doesn’t want these vehicles offered for sale, because too may customers like them and buy them.

For three decades the government has attacked Americans who want or need large vehicles through a regulation called Corporate Average Fuel Economy, or CAFE.  CAFE imposes an arbitrary fuel consumption standard, based entirely on political rather than engineering considerations.  Currently, the standard is 27.5 miles per gallon average for all cars sold by a given company.

If too many of us customers defy the elites and  buy larger pickups and SUVs instead of tiny sedans, the auto company’s CAFE average falls below the standard and it must pay a penalty.  And who does the penalty cash go to?  Not to customers to help pay for gasoline.  It goes to the government, of course.

How much is the penalty?  Currently, the penalty is $5.50 per car for each tenth of a mile per gallon under the 27.5 MPG standard.  So, if  Joe the Plumber buys a Chevy pickup for his business with an EPA rating of 17.5 MPG, GM must pay the government $550.

GM can pay cash or, theoretically, it could offset the penalty on the pickup by selling small cars that exceed the 27.5 MPG standard.  But this is can’t happen in the real world.

To understand the problem, consider this tiny car called the Yaris,  made by Toyota, the company most favored by the “green” blowhards.  It’s rated at 31 MPG.  So, in order to avoid penalties for selling 17.5 MPG pickups, GM would have to develop a car like the Yaris and sell three of them for each pickup.  But there are not nearly enough customers who actually want to drive a Yaris-sized car to make this equation work.

Besides, the limited market for miniature cars is already saturated with models from foreign companies, many assembled in American plants, that have a huge competitive advantage in that they do not have burden of the United Auto Workers Union.

On top of the CAFE penalty are decades of relentless political pressure from Congress, adverse publicity from the know-nothing media, and continuous attack by “green” activist groups.

GM does offer several, newly engineered, world-class quality cars that are roughly the same size, and achieve the same mileage ratings as the Camry, the most popular car sold by politically favored Toyota, with ratings from 24 to 26 MPG.  But GM gets no political or media praise for these cars because it continues serve American customers who wish to drive Pickups and SUVs.

If the Senators and Congressmen really wanted to help they could start by killing the politically motivated CAFE law that punishes families and businesses who need large vehicles, and punishes the companies that provide those vehicles.

But that won’t happen because their first allegiance is to the “green” lobby, not to the auto companies, not even to the union workers they claim to care so much about.

But we couldn’t let this one go by.

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The alarming development is that even though there are roughly a thousand limousines available for hire in the DNC Convention city of Denver, theres a shortage for convention week. Distressed delegates have to compete with each other, as they urgently pursue available limos to reserve.

Colorado State Government has agreed to help out during the emergency by temporarily waiving the usual licensing requirements for limos from other states.

These are Al Gore’s acolytes in the Temple of The Global Warming Cult, who constantly hector us with dire predictions of imminent climate calamity caused by our SUVs, RVs, boats and lawnmowers. These are the folks who have, for decades, politically blocked new drilling for oil in America because – they always said – we should convert to “alternative” sources, that aren’t yet viable or available.

America uses too much oil and looks too opulent and the world isn’t going to put up with us much longer, Senator Obama warned, ominously, last month.

Apparently a lot of the delegates believe their tedious chanting on behalf of “saving the planet” entitles them to a conspicuous arrival presentation in chauffeured, gas-guzzling magnificence.

The august delegates are not about to suffer the indignity of being seen by their peers crammed into the kind of elfin coupe they demand the rest of us drive.

I’m running for president because of…because I got two daughters just like you. America is…is no longer what it could be, what it once was. And I say to myself, I don’t want that future for my children. I want…I want America to be better, to be stronger, to be more unified, to be more prosperous, to be kinder, to be more tolerant.

The consensus on talk radio, where the emphasis was on the phrase “America is no longer what it could be, what it once was,” was that Obama demonstrated contempt for America, and was inappropriately negative in a responding to a child.

But more troubling is yet another demonstration of Obama’s major campaign tactic: he uses deliberately imprecise, but seemingly righteous language, knowing that each listener will, based on the listener’s life experiences and political leanings, draw his/her own conclusions as to what the Senator means.  He knows there will be nearly as many different conclusions as listeners.

Some might think “stronger America?” means, or at least includes, militarily stronger. But in this video Senator Obama openly and forcefully promised military reductions that will leave America significantly weaker, and more vulnerable to the will of other nations. It’s important to note that this is not a “gotcha” video of an unintended stumble or slip of the tongue. In this video, which was placed on YouTube by the Obama Campaign, he reads a prepared statement from a teleprompter.

Liberty Works analyzed the video statement and detailed his promised military downgrades here and here.

Obama’s vague language strategy doesn’t include clarification to make sure every listener who approves of military strength understands that when he promises “a stronger America” he means militarily weaker.

Some listeners, hearing Obama speak of “a more prosperous America” might envision greater economic opportunity, lower taxes, lower oil prices, and an energized, profitable private sector. But a glance at Obama’s web site reveals a long list of new government programs that will restrict private sector innovation and require massive tax increases and/or massive borrowing that would crowd start-up businesses out of the credit markets.

Clearly, Senator Obama has no interest in removing government imposed restrictions, endless bureaucratic process, and junk litigation, that choke free market invention, innovation and prosperity.

Many who heard the words “America is no longer what it could be, what it once was,” would agree; In some ways America was better a few decades ago. But what is it about America that Obama thinks is less desirable than in the past?

Does he lament the destruction of millions of live human fetuses? Not a chance.

Does he regret the rise of the Anti-American Left, that blames us and our country for most of the world’s chaos, violence and misery? No.

His Pastor of twenty years and some of his long-time political associates are, and always have been among the most angry and vitriolic critics of American culture and of the values most Americans hold. In his campaign speech in Germany last month he proclaimed himself “a citizen of the world,” the favorite term of the Anti-Patriotism Left.

What about the coarsening of the culture? It’s hard to tell where Obama stands. Until recently he spoke favorably of his friend Ludacris, the rap artist whose vile lyrics assault the spirit and contribute to the general trend of cultural decay.

Obama’s public attitude only changed when ludacris released a new recording that apparently was intended to “help” the campaign by describing adversaries with profane lyrics, but instead caused embarrassment.

What about the decline in the quality of American Education? Is Obama in favor of policy changes, such as choice and competition, that have a chance of bringing about real improvement? No!

Obama has demonstrated in several speeches that his loyalties are with one of the Democrat Party’s dominant constituencies, the teacher unions and the education bureaucracy. His “fix” will be to further empower, and hurl even more money and resources at the same education establishment that has presided over decades of decline and degradation.

Senator Obama wants America to be “better.” So do we all. But we don’t all agree on what a better America would look like.

Obama deliberately discloses as little as possible about his vision. He hides the details behind masterfully ambiguous, yet high-sounding rhetoric.

Senator Obama’s vision of a better America is a place that celebrates government authority, not liberty.

Today, in a Michigan speech, Obama spoke at length on energy but apparently forgot about how important tire pressure was last week. But some helpful folks from the McCain campaign reminded the audience by passing out customized tire pressure gages.

Today, we’ll comment on two excerpts from Senator Obama energy speech. First Excerpt:

…in the short term, as we transition to renewable energy, we can and should increase our production of oil and natural gas. But we should start by telling the oil companes to drill on the 68 million acres they currently have access to but haven’t touched. And, if they don’t use it they should lose it -we shoudld require them to give up their leases to somebody who will do something.

Here at Liberty Works we’ve done considerable research into this latest ruse by the Democrats to resist making off shore oil fields available for drilling – the claim that big bad oil companies already have access to “68 million acres” but instead of drilling they whine that they need more.

The existing lease process already includes a ten year time limit. If the company doesn’t produce oil in ten years it loses the lease. The idea Obama and his friends in Congress are trying to sell, that oil companies would spend Billions to lease sections of ocean floor for ten years and then make no effort to recover their investment by producing oil is preposterous.

Some of those acres have been drilled and depleted once. The government leased them a second time to drillers with new technologies to see if they could pump out more oil. Some of the leased acres have been explored and found not to contain any oil.

But the biggest barrier to actual drilling comes up right after an oil company leases a section of the ocean floor, paying Billions of dollars. The company must then navigate years of bureaucratic permitting processes and sometimes years of litigation, before they can legally begin exploration and drilling.

Why is that, you ask? If a company is granted a lease to explore and drill for oil, then shouldn’t permission to explore and drill be automatic? Of course! Only in the alternative reality of the Bureaucratic/Administrative State would it not be. If the all-knowing Federal Government clears a section of ocean floor for drilling, shouldn’t Congress ban lawsuits that are brought for no other reason than to delay drilling and make it more costly?

Congress can quickly pass legislation that forbids lawsuits when the government has sold leases, and requires the Department of Interior to include in the lease permission to explore and drill. Further, Congress can require the leasing/permission process to take no more than a couple of months.

Second excerpt:

We should invest in the technologies that can help us recover more from existing oil fields.

The private sector already has invested, and continues to invest, in such technologies. There is no need for Obama’s “WE”, which in this context apparently means the government, to hurl Billions in taxpayer money, and cause more years of bureaucratic delay, to help “US” recover more oil from existing fields.

Government could help by simply getting out of the way, or at the very least, by streamlining permitting processes. Here’s an example:

The PXP Company operates the Inglewood oil field in the Baldwin Hills of West Los Angeles. Oil was discovered here when Standard Oil drilled a test well in 1924. It took Standard Oil only one year to develop a full-blown oil field with dozens of wells, producing 90,000 barrels of oil per day. Since then some 1600 wells have been drilled. Today, only a few of the wells are still operating, pumping about 7,000 barrels per day.

I grew up about a mile from the perimeter of the Inglewood oil field and as a child I rode my bike on the oil field roads. After 84 years as an active oil field, it’s covered with winding roads, wells, pipelines, tanks and sundry oil field infrastructure. It’s a dirty, ugly place. But it’s already there, and most of it is out of sight of surrounding homes and businesses.

PXP has the technology and the financial resources to extract a lot more oil from this existing oil field, by drilling new, deeper wells. Sounds pretty good, huh? New oil production without touching any new site! Just keep drilling in the same place, a place that’s already degraded from almost a century of oil and natural gas production.

But this isn’t 1925. Before PXP can drill new wells it must apply to and receive blessings from all of the following:

• California Environmental Protection Agency
• Los Angeles County Department of Toxic Substances Control
• California Air Resources Board
• California State Water Resources Control Board
• South Coast Air Quality Management District
  
• California Department of Conservation
• California Geological Survey
• California Division of Oil, Gas and Geothermal Resources
• City of Los Angeles Environmental Affairs Department
• Baldwin Hills Community Standards District
• Los Angeles County, Department of Regional Planning

PXP has invested years and millions of dollars in bureaucratic processes, with no guarantee that permission can be secured, or that lawsuits won’t stall the project. Nobody yet knows if this additional oil will be produced.

Obama is dishonest when he speaks as if more oil from existing oil fields could be had if only “WE” – government – would “invest” your money. In truth, a lot more oil could be produced in this country without spending a single taxpayer dollar. The only barriers are political.

We’re in what the financial press calls earnings season. Four times a year corporations report their sales and profits, giving politicians four opportunities each year to perform their “outrageous oil profits” dance, hoping to divert the voter’s wrath over $4 gas from themselves to to the oil companies.

On the campaign trail Senator Obama bellowed:

You’ve got oil companies making record profits. No companies in history have made the kind of profits the oil companies have made. One company, ExxonMobile, made Eleven Billion dollars – thats billion with a B – last quarter. The Bush Administration’s energy policy reads like an oil company wish list.

A few hours later he announced:

I am proposing that we pay for a [tax] rebate by taxing the windfall profits of oil companies like ExxonMobil — a company that announced yesterday that it made nearly $12 billion last quarter, more than any U.S. corporation has ever made in a single quarter. It’s time we used some of their record profits to help you pay record prices.

Senator Obama went on to repeat his promise to seize more of ExxonMobile’s earnings with a “windfall profits tax.” Some relevant facts Obama seems not to know include:

• A company that isn’t profitable eventually must resort to layoffs and other measures that spread economic misery.
• ExxonMobile pays dividends out of profits to share holders who are real people or pension funds or mutual funds that are the retirement savings of real people – who vote.
  
• Normally, higher than average profits in a particular business sector draw new investment into that sector by new competitors, eventually resulting in lower prices to customers, and lower profits. But that isn’t happening in the oil sector because of government interference and bans on production of oil and natural gas.
• At the top of any oil company “wish list” would be the opportunity to explore and drill to produce more product to sell. But current US law bans exploration and drilling almost everywhere on US soil and in US waters. Democrat leaders Congress refuse to even permit a vote on repeal of the ban. Just yesterday Democrat leaders adjourned the House of Representatives for the rest of the summer without permitting a vote on lifting the bans.
• Oil and gas prices would be lower, and most likely oil company profits would be lower as well if, over the past two decades, they had been allowed to produce more product to sell.
• Oil companies pay more in federal taxes than any other business sector. This year one company, Exxon Mobile, will pay more in federal taxes than the bottom 50% of individual income tax payers combined.

Diverting even more oil company resources to government might buy some votes for Obama and the Democrats from duped followers. But if the goal is lower gas prices, the oil companies must be allowed to use those resources to produce more oil in America.

The chart below compares the Second Quarter performance of ExxonMobile with some politically “good” companies. We assume they’re “good” because politicians aren’t accusing them of doing harm to “working families” or targeting them for tax punishment.

ExxonMobile’s sales were 3.3 times as much as these five “good” companies, but ExxonMobile paid 8.3 times as much in federal taxes.

ExxonMobile’s profit was a modest 8.46% of sales. The “good” companies’ profit average 20% of sales.

Finally, as these figures make clear, the real “windfall” from the oil business goes to government, which does not produce a single barrel of oil or a single gallon of gasoline.

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to repeal it’s bans against drilling for oil on

American territory and in American waters.

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From the Democrat leaders in the House and Senate came the usual insipid response that “Bush policies” caused high gas prices. As always, they were unable to identify or describe the bad “policies” or explain cause-effect connections between policies and gas prices.

On the campaign trail Barack Obama announced that YOU could save more oil than the oil companies can produce if allowed to drill more. How? Inflate your tires and get a tuneup! Here’s the video!

In reality, $4 gas and massive dependence on imported oil result from a “policy” enacted into law by Congress twenty years ago, that bans new exploration and drilling for oil almost anywhere on US soil or in US waters. Also banned, is extracting oil from shale, even though America has the world’s largest shale oil deposit. The Bush Administration produced an energy report in April, 2001 that called for lifting some of the bans but the Democrats condemned it as “written by big oil” and refused to consider it.

So, the bans stayed in place and now, here we are, once again, enduring the tediously familiar Washington dance: finger-pointing, incoherent debate and stonewalling against resolution of a crisis.

The anti-drilling politicians cloud the issue with the misplaced use of “we-ours-us.” They talk about how “we” must not drill for oil because “we” must instead use “our” resources to invest in alternative energy sources.

Politicians introduce ambiguity, confusion, and deception, when they use the we-ours-us terms to describe decisions that, in a society built on the principles of individual liberty, should be private and not under government control. The misplaced use of we-our-us leads, over time, to a sort of numbed popular acceptance of the notion that nothing can happen unless government authorities first do the thinking and then provide official blessings and release funds.

The we-our-us rhetorical device obscures the truth: if permitted to drill, the oil companies will invest their own, not “our” or government’s resources into growing their own business – and create tens of thousands of new American jobs along the way. It isn’t necessary for “us” – meaning politicians and regulators in Washington – to choose between investment in drilling and investment in alternatives.

At the same time oil companies, if permitted, invest their resources to produce more oil, other companies are investing and will continue to invest their own resources in research and development of oil-alternatives and fuel saving technologies. General Motors has invested heavily in hydrogen fuel cell powered cars, including buying a stake in fuel cell researcher Quantum Technologies. At this moment a fleet of GM fuel cell cars is undergoing long term testing by “regular people” in New York, Washington D.C. and Los Angeles. Honda has also developed fuel cell prototypes and has put a test fleet on the streets of Los Angeles.

Other companies are researching wind, solar and other exotic alternatives. There is no reason for the big “we,” meaning politicians and bureaucrats in Washington, to decide which research should or should not be conducted, or to pick research projects to fund, or to subsidize some forms of energy and penalize others. Politicians and regulators have no track record that would demonstrate them qualified to pick winners and losers in advance, before all research and development has been completed.

The best thing for government to do is remove the barriers and get out of the way. Government should allow individuals, groups and companies to do which ideas are most promising and do as little or as much research and development as they wish, without any political interference. Government should allow oil companies to produce as much oil as they can sell.

America would not be in this critically urgent situation if the activists and lobbying groups – who always use the we-our-us cloud to confuse and deceive us – had not persuaded Congress to overstep its Constitutional authority, banning production of oil and natural gas and nuclear power and thus creating a shortage energy and high priced gasoline.

The politicians should solve the energy crisis they created in Washington by stepping back, removing politically motivated barriers, and allowing liberty to work!

joined the propagandist’s chorus chanting

“NO! We can’t drill our way out of this!”

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On July 11 at town hall meeting Obama said

“Even if you opened up every square inch of our land and our coast for drilling, America still only has three percent of the world’s oil reserves. in the meantime we use about a quarter of the world’s oil – 25%. Drilling is not a real solution to our energy crisis.

This is ambiguous language, sloppy reasoning, and fictitious data.

Senator Obama reveals himself as condescending and arrogant, believing he can dupe voters with meaningless sophistry.

America has not used up 25% of the world’s oil. Most of the world’s oil still lies beneath the surface of the earth and nobody knows how much there is under all the lands and all the oceans of the earth.

America does consume some fraction of the world’s oil production, but probably not even close to 25%. In truth, the fraction is unknowable because there isn’t enough publicly available data.

American Oil producers are accountable to shareholders and the government. Thus, they produce verifiable production data. But most of the world’s oil production is owned by corrupt, authoritarian governments that are not accountable to anyone, and thus, not required to disclose production information. In truth nobody knows how much oil is extracted by all the world’s oil producing nations, so it isn’t possible to determine what fraction the US consumes. And, it doesn’t matter.

Does America have 3% of the world’s oil reserves? The absolute truth is nobody knows. Nobody knows how much oil is under all the lands and all the seas of the world. Many oil producing nations keep what limited information they do have a secret.

The 25%/3% politics ratio was invented years ago, by the political movement that calls itself “environmental.” Through constant repetition by mendacious politicians and a lazy news media that doesn’t bother to verify such assertions, the politics ratio has evolved from wild guess to perceived truth. But it has no basis in any verifiable statistics.

Not only are the statistics phony, the reasoning is fallacious. If “drill our way out of this” means producing more oil, which would make the price of oil and gasoline lower, then the answer is YES WE CAN! and the politics ratio, whatever it is, turns out to be completely irrelevant. The relevant question is how much crude oil is available in America, that American companies could extract?

“Proved reserves” are estimates of the amount of oil recoverable from known and evaluated reservoirs, under current economic and operating conditions. The US has some 21 Billion barrels of “proved reserves.” If American companies were to double current production, which most certainly would result in a significant drop in the price of oil and gasoline, it would take more than ten years to extract those 21 Billion Barrels.

But Proved oil reserves reflect only a fraction of the oil that a reservoir may hold, and don’t count reservoirs that have not yet been evaluated, and don’t count reservoirs that haven’t even been identified yet, exploration off shore and in Alaska is illegal.

In addition to the Outer Continental Shelf and Alaska, the largest deposits of shale oil in the world, 1.2 to 1.8 trillion barrels, are found right here in America, in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming. In a previous post we provided a detailed analysis of the potential of shale oil.

No company is ramping up shale oil production because it is against federal law.

Senator Obama’s “position” is based on two statistics that are entirely fictitious, unknowable and irrelevant. Beyond that, his reasoning is fallacious and his conclusion is erroneous.

How can this man claim to be ready to be President when he is so intellectually lazy?

The continental shelf is the gently sloping undersea plain from the shoreline of a continent to deep ocean. The US has jurisdiction over the the Continental shelf from shoreline to at least 200 miles, and in some regions up to 350 miles.  Coastal states have jurisdiction over the first four miles.  The Outer Continental Shelf (OCS) starts at the limit of state jurisdiction and extends to the limit of federal jurisdiction.

Any oil production platforms on the OCS would be many miles out, over the horizon, and not visible from shore.  Nobody’s ocean view would be degraded.  The oil spills of decades ago are no longer a genuine risk.  Even when Hurricane Katrina roared through the Gulf of Mexico, where there are scores of oil production platforms, there were no leaks or spills at all.

Before today, there were two bans on exploring and drilling for oil in the OCS: An executive order signed by the First President Bush, and a Legislative ban, enacted into law by Congress in 1981.  Today, President Bush lifted the executive ban.  Only Congress can lift the Legislative ban.

If the ban were lifted the government could lease sections of the OCS to oil companies.  Those companies would then use their own resources, not taxpayer resources to explore the leased sections to determine how much oil was available.  In those sections where they found deposits of oil large enough to warrant the investment, they would install drilling platforms, and extract the oil – again, at their own expense.

Predictably, The Democrats in Congress reiterated their stone-wall resistance to producing more oil in the United States.  Their excuse is that new exploration and drilling would take many years and thus, could not result in lower gas prices immediately.

What they fail to disclose is most of the delay would be caused by the pre-production bureaucratic permitting requirements imposed by government, and lawsuits launched by so-called “environmental groups” who have advocated higher gas prices for decades, and don’t want any oil production anywhere, under any circumstances.

In one stroke, Congress can pass legislation that lifts the ban, streamlines and simplifies the permitting process, and, invalidates lawsuits.

Nancy Pelosi said “Once again, the oilman in the White House is echoing the demands of Big Oil,” apparently referring to the fact that both the President and Vice President have had some experience in the oil industry.  Speaker Pelosi refers darkly to “demands” when only thing “Big Oil” asks is for permission to use their own resources to extract oil from the OCS!  In other words, oil companies “demand” permission to produce as much oil and gasoline as Americans customers are willing to buy!

The government allows Starbucks to sell as much coffee, and Apple to produce as many ipods, as customers wish to buy.  Someone should ask Speaker Pelosi: Is the government “meeting the demands” of Starbucks and Apple by not restricting their production?

Politicians, especially Democrats, but including some Republicans, have long submitted to lobbying by anti-liberty leftists who invoke “the environment” to justify forbidding domestic energy production.

The political elite rejects reasoned debate and rational policy for insipid slogans like “we can’t drill our way out of this,” and “Americans are addicted to oil.” Instead of permitting liberty to work Senators and Congressmen use the power of government to prevent people from producing more oil and natural gas while they chant vacuous catchphrases about “alternative” or “renewable” energy sources that aren’t yet technologically feasible, and may never be.

The market forces of supply and demand explain the entirely predictable result of politcally driven bans on domestic energy production: Global demand for petroleum products has risen faster than the global supply of oil. The result has been continuously increasing oil prices, and continuously increasing gasoline prices.

With the pump price surging past $4.00, formerly indifferent, uninformed citizens demand an explanation. The politicians who, when most citizens weren’t paying attention, caused the artificial scarcity and resulting price spike now seek to divert the blame away from themselves. Some are blaming the companies who produce gasoline for realizing too much profit.

OilCo profits have increased recently because they are selling a commodity that Congress has deliberately made scarce! If Congress hadn’t banned domestic oil production there would be greater supply, lower prices, and probably, less profit!

Senator Richard Durbin, Number 2 Democrat in the Senate said last week:

“The oil companies need to know that there is a limit on how much profit they can take in this economy…we’re going to find ourselves in a deep recession.”

Mr. Durbin should try to explain how recessions are caused by profits. In reality, falling profits are a contributing cause of recessions, and rising profits signal the end of recessions.

In a June 20 video, placed on Youtube by the Obama Campaign, the Senator acknowledges gas prices as “a crushing burden on working families.” But rather than put the blame where it belongs, on Congress for not allowing liberty to work, and forbidding oil produciton in the US and in US waters, Senator Obama says his plan is…

“…taxing some of the record, multi-billion dollar profits of the oil companies and using some of that money to pay for a thousand dollar middle class tax cut that would go to 95% of all families.”

Based on recent IRS data, it would cost approximately $127 Billion dollars to issue a $1,000 tax credit to 95% of families. Could an additional tax on oil profits fund it?

The Table above shows federal taxes already paid by, and the after tax profits earned by the eight largest American oil producers.

Obviously, Senator Obama is either uninformed or deliberately trying to deceive listeners he hopes won’t take the time to look into the facts. Obviously, taxing “some of the profit” and “using some of that money” would not begin to fund $127 Billion in tax credits.

On the other hand, the taxes these companies already pay would fund those tax credits with $74 Billion left over!

We haven’t heard any of the politicians who caused the recent spike in pump prices admit that government profits from gasoline sales much more than oil companies. By the way, the tax figures in this table don’t include state taxes paid by local gasoline retailers, that probably exceed $50 Billion.

Next, we’ll compare oil industry “obscene” profits, with those of other sectors.

Readers comments invited

The real culprits are in Congress. Their crime is preventing liberty from working. Senators and Representatives have deliberately caused the high gas price, while at the same time enriching potential Middle Eastern enemies and exporting tens of thousands of oil jobs.

There are several examples of malfeasance by Congress. Today we’ll deal with just one, oil shale policy, or Shale-gate.

Oil shale is sedimentary rock formed millions of years ago from silt and organic debris. It’s called “the rock that burns” because it usually contains enough oil to burn without additional fuel.

Extracting the oil in liquid form requires mining the shale/rock and then “retorting” or heating it to a high temperature. This process costs roughly $60 per barrel, or less than half the current global market price of crude oil. Researchers are developing a new extraction process called “situ retorting,” or heating the shale/rock while it is still underground and then pumping the liquid oil to the surface.

Oil Shale is found in many places around the world. But according to a government study, the largest deposits in the world, 1.2 to 1.8 trillion barrels, are found right here in America, in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming.

Researchers estimate that 800 billion of those barrels are “recoverable” using currently available technology. According to the Government Office of Energy Statistics, American companies import about 5 Billion barrels of oil per year. Thus, if fully developed, domestic shale oil extraction could free America from dependence on oil imports for 160 years.

If we were to continue importing oil at the current rate from stable and friendly countries like Mexico, Canada and England, domestic shale oil could replace all the oil that comes from unstable, unfriendly nations for 244 years.

At the same time the global market price of oil would decline, reducing revenues to unfriendly Middle Eastern regimes, and substantially reducing the pump price of gasoline. Shale oil extraction would provide high paying jobs for tens of thousands of Americans.

So why aren’t the oil companies extracting oil from shale in Colorado instead of buying oil from corrupt dictators and Middle Eastern sheiks?

The answer is simple: For decades the US government has forbidden extraction of the shale oil in the Green River Formation. Period. It’s as simple as that.

Only last week, even as gasoline surged past $4.00 in most of the country, the Senate Appropriations Committee voted to continue to forbid extraction from the Green River Formation.

If this makes no sense to you, if you want to do something about it, find your state’s two Senators on this list, click on the “web form” link, and let them know you’re watching. Tell them to permit the oil companies to invest in shale oil extraction. No taxpayer funding is necessary. The private sector is perfectly capable of providing millions of barrels of additional oil daily, as soon as the politicians get out of the way.