"If stupidity got us into this mess, then why can't stupidity get us out?" -- Will Rogers

THE MESS

Over 50 years ago a geologist named M. King Hubbert accurately predicted that US oil production would peak in the 1970s. The arrival of peak oil inspired our political leadership to unleash all their resources of stupidity. They curbed the development of nuclear power, closed most of the American coastline to exploration and extraction of oil and gas, placed a moratorium on the exploitation of our huge shale oil resources out west, put an end to refinery building for thirty years, and forbade the oil companies from disturbing Alaska's sacred caribou. The development of hydroelectric power and wind power have been unsystematically impeded by tangles of environmental regulations and law suits.

Even this was not enough. Democrats and even Republicans have collaborated in deficit spending financed by foreign borrowing which have depressed the value of the dollar, increasing the price of the foreign oil which we must buy to keep our economy going.

STUPIDITY TO THE RESCUE?

Will stupidity get us out of this mess? We'll soon find out. Washington has mounted a massive Stupidity Surge to address the problem.

We have new CAFE standards obliging domestic auto manufacturers to increase miles per gallon performance. Very helpful. GM reports a 37% drop in SUV, pick-up and van sales in May. Did its executives really need Congress to tell them what 4-dollar gas means for their product line?

A gaggle of senators have written a letter to the Commodities Futures Trading Commission requesting them to raise margin calls on futures contracts. Sounds like a good idea, but what's the point? Do they really think the commissioners haven't been considering that step for weeks? Or that they have greater knowledge of the commodities market? The CFTC, of course, is trying to figure how to quell speculative exuberance without creating a crisis in a half-trillion dollar financial market.

Windfall profits taxes? Everybody who hates Big Oil (that's just a little short of everybody) will feel good about that, but it won't lower anybody's fuel bills. The government's take from this profits tax are intended to support the clean energy schemes contained in HR 6049. I refer my readers to Subtitle A, Part I, Section 101, subsection (b), sub-sub section (1), Paragraph B, clause (iii) "PRELIMITATION CREDIT- The term 'prelimitation credit' with respect to any facility for a taxable year means the credit determined under subsection (a) with respect to such facility for such taxable year, determined without regard to subparagraph (A) and after taking into account any increase for such taxable year under clause (ii)."

While we wait for our congressmammals to figure out what they voted for; the government reckons thatwe have 96.4 billion barrels of oil under ANWR and the Outer Continental Shelf. But we are told that we can't drill our way out of this crisis. That means we must buy our way out. It costs us $600 billion of our $700 billion trade deficit to supply our fossil energy needs, which are 85% of our total energy needs.

Do the math. At a hundred dollars a barrel our reserves are worth nearly ten trillion dollars. At two hundred dollars they will be worth nearly twenty trillion dollars. Do we really want this money used tofinance in-door ski slopes for Arabs?

Professor John Frary
www.fraryforcongress.com

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