Monday, January 17, 2011

Oil, Spending, and National Security

America is hurting and we all know it. American's expected great things when Barrack Obama was elected President of the United States of America, but the hopes of the American people were dashed by a reckless and out of control Congress and an American President who owed his allegiance to Marx more so than he did to the American people. Since taking office, the Democratic Party has been aggressively pursuing the Cloward - Piven strategy of collapsing the American economy under the massive weight of entitlements and Keynesian spending. Their goal? To sweep away the capitalist system in favor of stark socialism.

To this end they have stifled the exploration and development of our native oil supplies and prevented us from drilling in Anwar, preferring instead to funnel billions of dollars to our enemies and to terrorist nations and that is precisely where our next economic threat will originate. OPEC put the screws to the United States once before and the results were disastrous. In 1973 Libya refused to sell crude oil to the United States and this caused a cascade effect among oil producing nations in the Middle East who were angry with us for supporting Israel during the Yom Kippur War. The effect of this embargo was immediate.

Prices rose, long lines at fueling stations formed, rationing of fuel ensued, and many gas stations closed forever. I recall waiting in line with my mother for forty-five minutes to roll up to the pumps on an even day and being told how much gasoline we could buy. The effects of the embargo on the nation were severe enough to prompt the creation of the strategic oil reserve to insure that we were never again held hostage by the Middle East. But sadly, the strategic reserve has not been adequately maintained.

When price fluctuations in gasoline caused economic impacts, the strategic reserves were raided in order to reduce pressure on the American economy. Unfortunately, the reserve is crude oil only and does not include refined products such as gasoline. Add in the fact that a refinery has not been built in the United States in the past thirty years and the American position becomes readily apparent.

These facts are important because Venezuela, Iran, and Libya are once again threatening the American oil supply. Each of these nations are members of OPEC and each of these nations are not our friends. Additionally, our reliance upon our enemies for our crude oil supplies has been enhanced by a Democratic strategy that seeks to force Americans into smaller, green cars and public transportation. The Democrats believe that by restricting our ability to exploit our own oil resources they can force the American citizen to bend knee to their green agenda and increase the pressure on the American economy by maintaining high prices for crude oil. The added bonus of having OPEC to blame for the dilemma is icing on the cake.

Some will say that the Deep Water Horizon disaster was an excellent reason for denying the exploitation of native oil resources, but such an objection is fatally flawed. First, the Deep Water Horizon project was forced to drill in deep waters because the left refused to allow drilling anywhere near the coastlines of America. What this means is that no fail safes had ever been tested at the 5,000 foot depth in the event of a disaster. Had the accident occurred closer to shore, the disaster would have been greatly reduced in scope and environmental damage because the well would have been capped quickly. Secondly, the administration failed to implement emergency plans that were prepared for such an event until it was too late to do so, and the administration did not take a leadership role in the emergency for weeks afterward thus allowing the situation to spiral out of control. When it became political suicide to continue to ignore the disaster the President finally stepped in with, "I want to know who's ass to kick." While the President looked tough on television, his dithering caused untold environmental damage. Today, we are better prepared for such an event, though the lack of any governmental leadership would doubtless prove just as damaging.

The sad truth is that we can do nothing to avoid the bitter pill that we must swallow. However, we can prevent having to take our medicine once again in the future. By drilling in Anwar and expanding exploration and drilling in the Gulf we can greatly reduce our dependence on foreign oil. Unfortunately, it is too late to have any negative impact on our enemies' economy by our withdrawal of dollars because Chinese yuan stand ready to take their place nullifying the decrease in American demand. However, this reveals another problem. China is quickly becoming the worlds number one consumer of foreign oil.

This will mean that they will get the top grade of oil first because they purchase the majority of it. The lower grades of crude are sold to second, third, and so on. As a result, our refining costs will grow, thereby increasing the cost of a gallon of gasoline that much more. The fact that our refineries are thirty years old and that there is no reserve in our refining capacity means that natural disasters, such as another Katrina, will have far more pronounced impacts on the American public. Further, terrorist attacks on these vulnerable pieces of infrastructure would have profound implications for national security.

Fuel prices in the United States are expected to exceed $4.00 a gallon and could go as high as $7.00 a gallon by the end of the summer. Given that most of our consumer products are shipped by truck and that most people commute to their daily jobs, our demand is somewhat fixed. As the cost of fuel increases you will see the costs of food and goods passed on to the consumer. This is why price increases proposed by Venezuela, Iran, and Libya will have a negative impact on the U.S. economy. If these OPEC nations get their way, the price of crude will exceed $100 per barrel. The question is: how much more can the U.S. economy take?

The Democrats have spent taxpayer monies like drunken college kids with dad's credit cards and they roll new money off of the printing presses to cover the daily expenses of government. They have done this to the tune of 12 trillion dollars in accumulated debt and they seek to continue this trend by steadily increasing the debt ceiling. Currently, the national debt stands at 94% of the American GDP. Further, American unemployment is around 14 percent when the chronically unemployed are factored in. That is a figure that has not been seen since the days of the Great Depression. How then are we still able to function as a nation with such an economy?

The answer is that when the housing bubble burst we replaced that bubble with a bubble of cash. Prior to the freeze of the commercial banking industry, the American treasury had begun printing money twenty-four hours a day beginning in March of 2008. This flood of money has created an ocean of circulating cash that was designed to prevent a depression in the economy. In a depression the value of a dollar increases. This means that one dollar is worth two or three. Conversely, inflation decreases the dollar's value so that a dollar is worth a quarter or a nickel. Because of the massive amount of circulating currency backed only by the government's promise to pay means that hyperinflation is looming just out of sight. Should the economy take another nose dive into the pavement it is very likely that the American people will experience what it was like to live in the Weimar Republic when it took a wheelbarrow full of Marks to purchase a loaf of bread. This fact is not lost on our enemies and is currently the American Achilles heel. Thus, the left's proclivity to spend America into oblivion represents a very real threat to the security of the nation.

I believe that this is what is behind the efforts of Iran, Venezuela, and Libya to raise the price of crude oil. Iran and Venezuela are allies and Iran has Revolutionary Guard troops stationed in Venezuela granting them access to the Western Hemisphere and providing them with a base of operations against the West. Therefore, neither nation has America's best interests at heart. Libya has been an enemy of the West and has carried out terror attacks against the U.S. using its diplomatic pouches to carry explosives to operatives overseas. By upping the price of crude, our enemies can camouflage their aggression in manufacturing costs and profits, but they are using crude oil as a weapon of war nevertheless.

America may be strong militarily, but economically we are fragile. Sustained overseas combat operations, spending like there is no tomorrow, and having never fully recovered economically from the terror attack of September 11th have all combined to place the United States in a very vulnerable position. Truth be told, this is the reason that we must bring our troops home as the Democrats and our enemies attempt to force us down the same path that the Soviet's walked before their spending caused their economy to implode.

Blind trust in our representatives, leftists infiltrating both the Democrats and Republicans, a Marxist in the White House, and American apathy have all colluded to bring about our current troubles. As I have said before, we are going to have to swallow a bitter pill regardless of what we do today, but we can insure that we don't have to take our medicine twice by living within our means, reducing out of control spending, exploiting native energy resources, and ignoring the ridiculous and economically suicidal assertions of the left.


LD Jackson said...

America has really backed herself into a corner that she can not easily get out of. How we react to this will probably define how our future will be determined.

WomanHonorThyself said...

Blind trust in our representatives, leftists infiltrating both the Democrats and Republicans, a Marxist in the White House, and American apathy have all colluded to bring about our current troubles...well said Bill..not too optimistic though and sorry to are spot on...excellent as always.

Always On Watch said...

America is backed into a corner on this one, all right.

$7.00 per gallon will do so much to damage our economy that I don't have the words to express what a disaster that kind of cost would be.

Leticia said...

Wow!! Excellent post, commentary, etc.

There is still time to crawl out of the hole we Americans dug ourselves into and that is by holding our representatives accountable for their actions. Strike 3 and they are out! Or maybe just strike 1.

The whole point is we cannot allow a rogue government to continue and that includes judges, and supreme court officials.

christian soldier said...

we in the US have been supporting the socialist policies of the EU-by providing our BEST to defend them!!!

so-let's start by getting our BEST out of those countries and let them support their own military..

and - we have been protecting Japan and Korea-for how looooong!

as to the two un-declared and thus un-Constitutional wars in Iraq and Afghanistan---it is time to bring them home - our BEST that is---

you know me WS- I love our BEST and believe we must fight-but-on our terms---

as to oil-other countries drill near our coasts-
our government has banned us in the US from drilling our own oil--
I wounder why ---Grrrrrrr

William Stout said...

LD Jackson- Welcome to Paladin's Page! I agree, but I still have hope. We have faced difficult situations before and come out on top and I believe that the current situation is no different.

Thanks so much for the comments everybody and thank you for continuing to support my page!

Karen Howes said...

And this is supposed to be "progress"???

Lord have mercy.

Bunkerville said...

It is stunning that there is not one word in the MSM about the rising and destructive cost of our energy. Is there no one who recalls the gas lines in the '70's
Looks like we are doomed to repeat history. I am wondering if we have tapped into our energy reserves? I would not be surprised.

WomanHonorThyself said...

have a great week my friend..hang in there!!

MK said...

i'm not entirely sure the price of gas going up is a bad thing, sure it'll hurt in the short term, but i'm hoping that when it does go up, it'll stir enough voters out there to rise up and make our politicians do something about the bans on drilling in our own back yard. I hate to say it, but we will only learn from pain. As an example, i remember here in Australia when the leftist scum were peddling their various carbon taxes to offset the mythical man-caused global warming, most people out there didn't really care and were supportive even. That is until everyone found out how much they'd be coughing up out of their own pockets, things changed very quickly after that and the politicians quickly dropped the issue. It's not dead, but they've sobered up.

"America may be strong militarily, but economically we are fragile."

Yes indeed and the cause of that fragility is the spending like no tomorrow. You folks can turn things around at eye-watering speed, but only if you have the will and the wretched socialist scum get out of the way.

Patrick Carroll said...

I'm with MK on this. I can only hope that in the end it will be people's individual selfishness that wakes them up when they realise that the gravy train has been derailed...

Fabulous but disturbing post William.