The Pew Research Center for the People and the Press, an independent opinion research group has released a nationwide study finding that "amid record gas prices, public support for greater energy exploration is spiking . . . and an increasing proportion (of people taking the survey) also says that developing new sources of energy - rather than protecing the environment - is the more important national priority.

The survey's found that an increasing number of support for energy exploration came from groups that previously had "viewed this as a less important priority."

Click here to read the entire survey.

Yesterday, the widely anticipated announcement of the winners to Iraq's no-bid contracts was delayed. Today's New York Times reports that Iraq's oil minister, Hussain al-Shahristani made the announcement at a news conference in Baghdad. Click here to read the entire article.

Expectation was that Iraq would award the contracts to a handful of western oil companies. Instead Iraq invited foreign companies to bid for contracts to develop key oil production fields.

The Financial Times in London reports that:

Iraq's oil minister, specified conditions that illustrate the extreme political sensitivity of allowing western oil companies into Iraq, where many people believe the US-led invasion of 2003 was designed to seize control of the country's resources. Click here to read the entire article.

Hey - Maybe it is time to lower the "talking-while driving" age!

Using a cell phone without hands-free equipment while driving is now unlawful. Yet according to the LA Times talking to a fellow passenger while driving is as bad or worse than driving drunk.

What is it that makes a phone so dangerous? Why isn't listening to the radio or talking to a passenger equally deadly?

Is it possible that driving and phoning skills are a function of age?

If you are over the age of 35, you probably learned to relate to the phone differently than younger generations. Young people are far more familiar with multi-tasking, but for the middle-aged, we grew up relating to a phone that had a cord attached to the wall.

When middle-aged people talk on the phone, we tend to mentally revert to the "phone attached to the wall" mode. We get engaged in the conversation and start driving like old people ... really old people.

Just imagine for a moment, John McCain, Barack Obama, and Chelsea Clinton in a NASCAR style road race where each of them had to drive and answer tricky policy questions on a cell phone. Who do you think would win? I'm betting that Obama and McCain would come in dead last, with an emphasis on dead.

This is one area where young adults (not teenagers) have superior skills, because they have grown up learning how to multi-task. Perhaps younger people who have learned this skill should be exempted from laws that limit driving while talking. We don't allow people over the age of 40 to enlist in the military because of their advanced age, so why should they be allowed to use a phone while driving?

Just a thought.

With age comes wisdom, but youth could well come with the ability to talk on the phone while driving safely.

Memo to Congress:

Our troubled economy and skyrocketing energy prices are hurting some of our nation’s most vulnerable – our senior citizens.            

Seniors on fixed incomes have seen their savings and the value of their homes diminished. Many depend on programs that provide home-delivered hot meals or meals at senior centers as well as transportation to medical appointments and social activities.

 One example: The San Francisco Chronicle reported that drivers with the Alameda County Meals on Wheels program cover 1,600 miles a day delivering 2,200 meals to homebound seniors -- two-thirds of them 75 and older.  

Executive Director Cindy Houts said: “Our programs are just reeling from the double whammy of increased fuel and food costs. It’s happening throughout the county and throughout the country.”

Locally, Meals on Wheels told KPBS that it has lost 30% of its drivers since the first of the year.  This means fewer drivers must deliver to more homes (about 1,500 a week in San Diego).  

These costs will be magnified further in the face of a population that is growing older and will need even more of these services.

Senior citizens on fixed incomes may increasingly become victims in this economy as they skimp on medication and medical care, scale down their daily nutrition due to rising grocery prices, and find themselves isolated at home because of rising gas prices and transit programs that are curtailed.

These factors can trigger depression and other medical problems that will cost our economy even more in terms of increased costs for medical treatment and early institutionalization of seniors who rely on these programs to maintain their independence. For America’s seniors in this economy, the “golden” years are in jeopardy and many will suffer in silence.  

Cc:  John McCain

       Barack Obama

The U.S. Energy Department has released its Annual Energy Outlook 2008 report with projections to 2030 this week. The following excerpt is under the title, Oil Production:

There is considerable uncertainty surrounding the future of unconventional crude oil production in the United States. Environmental regulations could either preclude unconventional production or raise its cost significantly. If future U.S. laws limited and/or taxed greenhouse gas emissions, they could lead to substantial increases in the costs of unconventional production, which emits significant volumes of CO2. Restrictions on access to water also could prove costly, especially in the arid West. In addition, environmental restrictions on land use could preclude unconventional oil production in some areas of the United States.
Click here to find all of the reports.

Today, Jim Jelter of Marketwatch covers the reports in his column. He says:

The Energy Department reasons that much of the supply tightness currently gripping the market, whether real or imagined, is likely to ease as major new oil fields come on line in Brazil, Azerbaijan, Kazakhstan, Russia and even here in North America. That would signal a fundamental shift in the supply-demand picture, even though output would need to increase by about 12 million barrels a day -- over half the 20 million barrels of oil the U.S. currently burns in a day -- to keep pace with global demand.

Investors have a choice in the weeks and months ahead. They can either pay attention to underlying fundamentals in the marketplace or, like Macbeth, they can continue to listen to witches playing on their innermost fears and succumb to madness. Click here to read more from Marketwatch.

Iraq's no bid oil contracts are being scrutinized by Senators Charles E. Schumer, John Kerry, and Claire McCaskill. Filing a letter today with the State Department is a step in a right direction to shed light on what potentially can be very lucrative contracts. Read more from The New York Times.
More importantly, the no-bid deals could inflame sectarian tensions in Iraq. Read more from The Washington Post.

The New York Times reported Thursday that BP, Exxon Mobil, Shell, and Total were in the final stages of negotiations on the no-bid contracts.

The oil industries' chief executive officers' got fat in 2007, well at least their wallets did.

Here are some excerpts from the June 17 magazine article:

Equilar's study found that for the 12 CEOs at the largest U.S.-based, publicly traded oil companies, median total compensation increased by more than four times the rate of that of executives in the Standard & Poor's 500-stock index as a whole.

Some analysts say these CEOs are receiving pay raises based more on factors they don't control-such as sharply rising oil prices-than on managerial prowess. "Energy companies' improved performance is almost entirely due to high oil prices," says Paul Hodgson, an executive pay expert for Corporate Library, a Portland (Me.) corporate governance research organization. "But if [their executives] deny culpability for high oil prices, why are they getting rewarded for them?"

Link to BusinessWeek's news analysis here. 

Today the Washington Post reported that John McCain has a solution to America's energy crisis: Drill more oil by opening up more federal lands. The solution is not surprising, given that Sen. McCain has taken nearly $1 million dollars in contributions from Big Oil so far this year.

There's only one problem: There is no guarantee that the leases will be drilled. And even if they are drilled, there is no guarantee that the oil won't be sold to foreign nations.  Second, the plan is little more than a continuation of Dick Cheney's 2001 energy plan.

The flaw in McCain's plan is that it relies on the oil industry to actually drill for oil on the land that it leases. It assumes that we have a competitive market for oil and that large mulitinational oil companies will rush to drill once the lands are made available.

This assumption is highly unlikely. According to a new report by the Congressional Committee on Natural Resources, oil companies could immediately begin harvesting an estimated 4.8 million barrels of oil each day from existing leases on U.S. lands.  The report notes that according to the federal Minerals Management Service, 79% of the USA's underground/undersea oil supply is already available for leasing.  

"Drill Our Way Out of It" is not a new idea. In fact, it is a very old idea crafted entirely by the oil industry in an effort to keep the USA dependent on imported oil for the next 50 years.  "Drill Our Way Out of It" is Dick Cheney's original, failed energy policy of 2001 (click here to read the actual policy). It should be noted that the Cheney Plan was crafted entirely by oil and energy industry executives (source) including convicted energy criminal Ken Lay, who was later identified as a key participant in creating the rolling blackout energy crisis of 2001.

For years the oil industry has used a similar argument to "Drill Our Way Out" to explain high gas prices. For example, it has repeatedly stated that "no refineries have been built in the last 35 years."  This is a carefully crafted statement that is intended to deceive voters into thinking that the government is rejecting refinery applications. 

The reality is that the oil industry doesn't want to build new refineries because more refineries mean more gasoline. More gasoline means the price of gas goes down, and that's bad for profits.  If the industry really wanted to build more refineries, it could have taken advantage of George Bush's 2005 energy plan, which made abandoned military bases available to oil companies that wanted to build refineries. To date, not a single company has taken Mr. Bush up on his generous offer.

So far, Big Oil's phony supply side arguments have worked. Millions of Americans believe that the solution to high gas prices is to let the industry build more refineries.  Now, Big Oil is using the same distorted lie to explain high oil prices by suggesting that we can drill our way out of this mess by exploiting treasured national parks.

And unfortunately, Sen. McCain believes them. 

Hypothesis: Some gas stations' pumps are not reflecting the amounts of gas you put into your tank. So, a call to action is requested.

To confirm or negate this hyporthesis, all of San Diego County residents are challenged to check each pump used to make sure you're getting what you pay for by taking the time to protect yourself and stop any potential rip-offs. Whichever grade you are using, put EXACTLY 10 GALLONS in your tank and look at the dollar amount. If the dollar amount is not EXACTLY 10 times the price of the fuel you have chosen, then the pump is rigged.

Wherever you pump gas, please check the 10 gallon price. If you do find a station that is cheating, please do the following: 1) Keep your receipt; 2) Note the pump number; 3) Note the grade of fuel; and 4) Note the time of day and date. IF you have a cell phone, take a photo of the pump. 5) Note the name of the station and the location.

Action: 1) File an on-line complaint so we can notify the authorities.

I hope this practice isn't widespread. But, if we're trying to save money and stop price gauging, then let's get proactive in ways we can gather evidence and get the rip-off stopped.

Paper money chasing paper barrels

The cost of oil keeps screaming higher while reports keep showing that demand for oil is down. Even the Saudis admit that their product is overpriced, yet oil and gas markets remain more volatile than ever.

At issue is the fact that the market mania has been driven by two factors: a weak U.S. dollar and speculators trading paper barrels with paper money on the New York Mercantile Exchange (NYMEX) futures market. Let's look briefly at each factor:

Speculators are creating artificially high prices and the illusion of high demand by "flipping" paper barrels.

You've heard of "flipping" homes, right? In a home flip, you buy the home, take possession of the mortgage, and resell it quickly at a profit without even living in it.

Right now, investors are flipping paper barrels of oil. These investors will never take possession of the oil they buy - they're just in it for a quick-and-dirty profit. This flipping of paper barrels has helped create an artificially high price for oil on the NYMEX.

Here's how it works:

NYMEX, or the Merc, is a clearinghouse for barrels of oil delivered one month into the future for WTI oil, which stands for "West Texas Intermediary" oil.

Today, early trading on the NYMEX set the price of a barrel of WTI at nearly $140 a barrel - an all-time hand-me the nitro-and-call-the-paramedics record high.

Now what's important to know about the NYMEX WTI price is that this is the price that everybody in the world watches, even though the amount of oil that is actually delivered or used through NYMEX is a very small amount.

What this means is that when the price of NYMEX oil goes up, it sets off a chain reaction on global oil markets. If the NYMEX price surges, prices will also surge for Brent Crude futures in London. oil futures on the Nikkei, and so on.

None of the traders buying these contracts will ever use the oil they purchase. In fact, most of them have nowhere to store the oil because they are speculators, not oil people. Yet, it is these same speculators who are driving up the price of oil by creating the perception of artificially high demand and artificially high prices.

San Diego recently encountered a similar situation with housing: Real estate agents were buying up multiple condominiums as investments. These investors purchased far more homes than they could live in, believing that they could resell them at fantastic profits. So many real estate agents began flipping homes that it created an artificial demand for housing. Across the street from UCAN, a "condo-flipper" paid nearly a million dollars in 2005 for an 800-square-foot condo on 5th Avenue. The buyer was certain the price would increase. That buyer was wrong. in 2007, the same condo was auctioned off on the street last fall for less than $350,000.

What's important about this story is that our greedy, condo-flipping Realtor helped create a false demand for condos that helped drive up the price. He or she had no intention of living in their new condo. And because of this condo-flipping, real homeowners ended up paying too much because there was a shortage of housing.

The same thing is happening on the NYMEX - the people who are buying the oil have no use for it. They do not own refineries, pipelines, or gas stations. All they own is the paper. They are just like that condo buyer with a mortgage for a home they'll never live in.

And this is where the paper trades get crazy.

According to OPIS, the Oil Price Information Service, on Friday, June 6, more than one million contracts for oil were traded. This represented more than ONE BILLION barrels of crude oil. The numbers are as ridiculous as that overpriced condo we mentioned earlier - one billion barrels of oil is equal to 15 years of WTI production. Paper, not oil, is changing hands. If one billion barrels of oil were actually being delivered in New York Harbor next month, the value of a barrel of oil would drop to about three dollars a unit, gas would cost 78¢ a gallon, and Wall Street would be submerged in about three feet of oil because there would be no place to store it.

Oil prices haven't increased that much, rather the value of the dollar is dropping ...

In November 2002, the Euro and the dollar were almost equal in value: one dollar was equal to one Euro (see graphic).

At that time, NYMEX oil was trading for about $25 US a barrel (or about €25 Euros per barrel). Today, that same barrel of oil costs $131, or about €85 euros (click here for historic conversion rates, click here for historic NYMEX oil prices).

In other words, if the U.S. dollar wasn't being devalued, the price of oil right now would be about $85 a barrel. That means the dollar is inflated by about 154% over the Euro.

This has resulted in "capital flight" away from the dollar into oil. Meanwhile, the relative value of oil has increased because it is worth something, whereas the dollar is being aggressively devalued.

The problem is that the U.S. has been forced to devalue its currency in order to pay its war debts. This is the traditional method that governments use to pay off war debts. By inflating the dollar (i.e. printing more dollars), it allows the government to pay off its debts in cheaper dollars than what were originally loaned. It's sort of like borrowing an ounce of gold from somebody and then paying them back with half an ounce of gold. It's a great deal for the debtor.

This is why inflation has been called the "cruelest tax of all." Strong dollars that were borrowed by the USA are being paid back in weak dollars that aren't worth as much money.

And that's why your gasoline costs so much more than it did a few years ago: Traders are buying paper barrels with paper money.

No wonder Alan Greenspan recently wrote that the current crisis will likely be "the most wrenching since the end of the second world war." (Financial Times)

It all sounds good on paper. But in the real world, the fate of nations hang on the cost of oil.