April/03/2008 1:54AM
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I want to start this with a disclaimer. I spent 33 years in the oil industry. I own no oil stocks except any my investment adviser has in my portfolio. I have no friends left in the industry. I don’t care if the industry goes away. I do, however, have a depth of understanding about the industry. I lived through the shortages of 1973 and 1979. I once had it explained to me by a governor of Illinois, one who is not now or never did go to prison, which may be clue enough to identify him. I went to visit him when the guidelines on aromatics were being instituted nationwide. I took several PHD scientists from our R&D facility with me. We explained to the governor in simple terms why the need to do this was short term. New cars did not and still do not require reformulated gasoline. Now, no cars really do. But, there were only two sources of automatics, MTBE and ethanol. MTBE is nasty stuff and if leaked into the water system stays there for 99 years. There wasn’t enough ethanol at the time to meet demand. Hence, MTBE was used extensively for years.

After we were done, the governor, a real gentleman and a truthful person looked at me and said, "Bill, I have the greatest respect for your company and your science, but you have to understand, this isn’t about science, it’s about votes. Illinois is a corn state and we will be in favor of this regardless of merit or science."

A few days ago, under the title, Karnak the Maginficant, I predicted what was about to happen. Congress called the captains of the Big Oil Companies into their chambers and made a media spectacle of them. Took them right to the woodshed. Made the angry Americans feel their elected officials were really doing something about high gasoline and diesel prices. Did you buy it? If you did please go back and read some of my previous entries. You’ve been had, again. How many times can they drag out this tired old act?

This was theater. Now, the real show begins. They take the $18 billion in taxes from the industry. That will be under reported.

Here’s what will happen. In the US, business can make a fair profit. If Washington wants to beg an industry to give us a break on gasoline prices and give up profit fairly earned by risk and determined by a world market price, they can try. 

Here’s how this will play out. They will take the $18 billion, it’s a forgone conclusion. They will spend it on government jobs, consultants, and scam artists. No real solutions will emerge from the $18 billion. The oil companies will raise prices to offset the lost income. They will look elsewhere in the world to do their exploring for new oil. Our prices will go up more. Our dependency on foreign crude will get higher. Our ability to manage our economy and wage our war will be harder.

Airlines will go back in the tank. The cost for everything will go up. The dollar will fall more. The unemployment rate will go up. No one will be responsible.

Once again, Congress will call in the Big Oil guys. Once again they will beat on them for the cameras and to insult your intelligence again. Then, they will initiate the CO2 cap and the cycle will start all over again.

You had better make up your mind you’ve had enough of this. If you don’t you will be very sorry down the road.

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Comments (3)

  1. Ken says:

    With Hillary and Obama continuing to battle for the nomination, and both making critical campaign mistakes, McCain should be able to get elected. Obama continues to surround himself with losers by offering Al Gore a seat in his cabinet, and having Teresa Heinz Kerry joining Michelle Obama to campaign for Obama. His strategy must be to see just how fast he can crash and burn, even if he does get the nomination.

    Obama continues to say he is about change and criticizes McCain for giving Bush a 3rd term, but Obama is basically doing the same thing by aligning himself with the same old Democratic bad ideas. Even Jane Fonda has just said she is supporting Obama.

    If the Liberal Right gets the White House, I may have to think about moving to Utah and put up signs around my property saying “All Cannibals & Government Agents, Keep Out, or Enter at Your Risk”

  2. Ken says:

    Saint Frances Hospital in Blue Island has announced they are closing because the hospital is losing money at a rate of $1.5 million dollars per month and posted a net lost of just over $20m for fiscal year 07. The hospital employs approximately 1400 people and services about 40 thousand patients per year.

    The corporate parent, SSM Heath Care, which operates a number of other area hospitals in the area say the hospital is about $40m in debt and although they have tried to give it away, but there are no buyers, because no one want s to assume the $40m debt.

    In 2006, SSM Health Care had revenues of $2.5b and operating income of $7.3m. The company has cash reserves of $1.3b and is financially strong. The company states that all of there other hospitals are financially strong, with the exception of Saint Frances. They also say that approximately 30% of their patients at St. Francis have little or no health care, and many of them are illegal aliens with no health care. Those that do have insurance are patients who receive Medicaid from Illinois. Illinois Medicaid reimbursement payments have not gone up since 1993, so the hospital only receives about 10 cents on the dollar for every dollar they spend to provide health care.

    So what is my point? If I were swimming with and dragging a Polar Bear, an Illegal Alien and a government worker to shore, I would take my chances with being eaten by the Bear.

  3. outlicilt says:

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