Thursday, June 23, 2011

Strategic Oil Reserve Tapped

In another "re-election" maneuver our illustrious leader has made another ill fated move to reduce oil prices.

U.S. to Release 30 Million Barrels of Oil from Strategic Reserve

Published June 23, 2011 |

The U.S. is releasing 30 million barrels of oil from the Strategic Petroleum Reserve as part of an international effort to make up for the loss in supply from the disruption in Libya's production in the face of ongoing "kinetic military action," the Energy Department announced Thursday.

The release coincides with another 30 million barrels to be released in the coming month from other nations in coordination with the International Energy Agency.

U.S. Energy Secretary Steven Chu said the SPR is currently at a record 727 million barrels in storage.

He said the situation in Libya -- which the U.S. began bombing in March, but which has been under NATO control since May -- has caused a loss of roughly 1.5 million barrels of oil per day -- particularly light, sweet crude -- from global markets.

"We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery," Chu said in a statement. "As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary."

The IEA, a 28-member nation organization created to create a collective response to major disruptions in oil supply, said the coming release of oil inventory is the third time the agency has taken such action.

"I expect this action will contribute to well-supplied markets and to ensuring a soft landing for the world economy," said Executive Director Nobuo Tanaka.

The IEA said that the percentage distribution of stocks from each country is based on the proportionate share of consumption. As a result, the U.S. is releasing 50 percent of the total while European countries release about 30 percent and Asian countries provide the remaining 20 percent.

The IEA also said that even though the crisis in Libya began in February, tightening of supply by OPEC and recent European refinery outages linked to "seasonal maintenance work" along with summer demand in the Northern Hemisphere "represents an imminent risk." Chu noted that U.S. demand is at its highest in the summer driving months of July and August.

The U.S. Strategic Petroleum Reserve, created in 1973-74 after the Arab oil shock, is designed as an emergency reserve in case of a severe disruption in oil supply. The U.S. has sold oil reserves three times -- after Hurricane Katrina in 2005, after the Persian Gulf War in 1991 and as a deficit reduction measure in 1996-1997.

It has also been tapped several times for short-term loans to oil companies suffering disruptions from natural disasters, refinery problems and accidents.

But the release causes unexpected price changes in the market, and Wall Street took immediate notice. Oil had already been falling from $115 per barrel a month ago to $94 per barrel on Wednesday.

On Thursday, oil prices fell 4 percent almost immediately and energy stocks like Exxon Mobil Corp. sharply lower. The Dow Jones industrial average also plummeted 157 points, or 1.3 percent, in early trading.

However, Rep. Ed Markey, D-Mass., who had introduced legislation earlier this year ordering the administration to pull 30 million barrels out of the SPR said the release will have "a huge effect on the everyday lives of American families."

"With our economy teetering on the brink of a double-dip recession, and American families still struggling during peak driving season, this is the one tool America has at her disposal to immediately help drive down prices at the pump," said Markey, ranking member of the House Natural Resources Committee.

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Monday, June 13, 2011

Food For Thought

I found this article today:

Welfare Steak and Lobster May Kill the Middle Class
by Benjamin Wiker

I almost feel sorry for the enterprising Louis Wayne Cuff. The government does so much to discourage private enterprise that it’s a shame to see the entrepreneurial efforts of Louis nipped in their promising bud. Here’s a man who had the gumption to get up in the morning, buy six lobsters, two porterhouse steaks and five 24-packs of Mountain Dew, and resell them at a 100% profit.

The interesting thing here is that the government itself was actually funding the effort. You see, Louis bought all of it using his Bridge Card, i.e., the welfare debit card that replaced the old-fashioned food stamps. Louis “swiped” the food, then turned around and sold it for 50 cents on the dollar. For him, pure profit. For the government, well, it’s probably better than the usual return on its investments. For the taxpayer, the usual sham and scam.

The really interesting thing, of course, is that buying $141.78 worth of lobster, steak and Mountain Dew does not violate any laws. If Louis had gone home and thrown a block party, he’d be a free, well-fed, and popular man today.

Welfare steak and lobster. Why didn’t I think of that?

Because I’m foolish enough to work for a living, my wife is forced to be very careful with how we spend our money. We’ve got a tight budget and a lot of mouths to feed. Our grocery cart has only small amounts of meat—chicken and hamburger—and they’re usually stretched out in some kind of casserole. We’ve been married almost 30 years, and have never bought a steak or a lobster.

How many times have I been in line at the grocery store and watched someone unload a cart full of big hunks of beef, tray upon tray of TV dinners, frozen pizzas, etc., and then magically swipe a welfare card, while I set out our 25% fat hamburger, rolls, flour, potatoes, dried beans and rice?

If I stopped working tomorrow, and joined the ranks of those enjoying the government largesse, our food budget would double. We’d eat like we never had before. We could have steak twice a week. I know this because I actually got on the government website and figured it out. No more pinching pennies.

This is not a new “development.” My wonderfully brash but diminutive mother-in-law (God rest her soul) was standing in the checkout line one day with her usual penny-pinching fare, and watched an exceedingly overweight woman unload a cart full of various lovely cuts of beef. “I wish I could afford that!” she snapped at her.

That must have been 30 or 40 years ago. Things haven’t changed.

The point is this. I am not against government assistance for those in need. Our government is, no doubt, dripping with good intentions when it administers its SNAP program (SNAP stands for Supplemental Nutrition Assistance Program, and replaced the old food stamp system). The benefits are so generous, though, that working folk like us cannot afford to buy the kind of food that the government hands out for free.

At some point, the working folk have to ask themselves this: Why am I working and pinching pennies every month to put this food on the table, when I could opt for welfare and get that kind of food without working?

Especially because I would also get, on top of that, $1,105 in cash, full medical, dental and vision (which is worth, at least $1,200 a month), and a housing subsidy. To match all these benefits, and all the others, I figured that I’d have to make at least $65,000 a year.

So what’s the tipping point? At what point will working folk get tired of the struggle and say, “Why work?” Why work a forty-hour week, eat rice, beans, and cheap hamburger, when you don’t have to work at all, and you can eat steak and lobster?

I ask this question, not only because it personally pains me, but because it represents a very large, very present danger, especially in these dark economic times. The middle class—the great class upon which America so very solidly and for so long built itself—is in danger of eroding because people within it are going to realize that they are better off if they lose their jobs.

If (God forbid!) I were out of work tomorrow, our standard of living would leap upward. Instead of worrying about every penny in the food budget, we’d suddenly be faced with the interesting dilemma of how to spend our entire now-doubled monthly food allowance (like all such programs, if you don’t spend it, you lose it). We’d have to shift from our habit of frugality, to a new habit of prodigality.

That’s a real danger—creating a situation in which people are better off dropping downward rather than struggling to stay in the middle class.

Sunday, June 12, 2011

Playing The Columbine Card

"Playing with dolls could result in Tyell Morton spending the next eight years behind bars.

That's where the 18-year-old Indiana high school senior could likely celebrate graduation after his attempt at a senior prank backfired, resulting in a bomb squad evacuation of Rushville High in Rushville last week.

Morton insists all he wanted do was put a blow-up doll in a girl's bathroom as a joke. But when school officials saw surveillance video of a hooded figure wearing latex gloves entering a women's bathroom carrying a suspicious package and leaving empty-handed, they tipped off authorities.

Investigators recovered the inflatable doll and arrested the teen, who has had no previous run-ins with the law. Morton has been charged with felony criminal mischief.

"It's not right. It was a senior prank," Morton told WTHR. "They're blowing it out of proportion. I didn't hurt anybody, I didn't intend to embarrass anybody. What did I do wrong, you know?"
Robert Turner, Morton's attorney, told 6News that the charges are overblown.
"It's interesting that had he gone to school with a gun, there would've been a lesser charge. It would've been a Class D felony with up to three years," he said.

But Rush County Prosecutor Phil Caviness told WTHR that the prank -- which cost the school $8,000 -- was no laughing matter.

"In this post-Columbine world, that's what you get when these kinds of things happen," he said."

Friday, June 10, 2011

Budgets and the Working Class

I read in a recent article that states all across the country are closing State Park facilities. California is closing forty permanently. All of these states suffer from one thing in common; depleted budgets. Unfortunately many of these states also suffer from bloated spending on social welfare programs.

The working class continues to foot the bill for these programs through tax increases that affect everything from beverages to tobacco. While the average forty percent of social program recipients pay next to nothing in income taxes. The inception of social welfare was to put the working man back on his feet during job loss in the Great Depression. Today the definition of social welfare has a whole new meaning.

From matching savings accounts to free cell phones the concept of helping those in need has taken on a new meaning. Discounted untilites, Section 8 Housing are all part of a system that is leading this country to economic ruin.

By continuing to fund these programs at a staggering rate, states and counties continue to have to find ways to raise revenue. These ways usually involve new forms of taxation as well as the continual raising of taxes already established. At the same time these same states and counties must cut other spending in order to foot the bill for these social programs.

Now I am not saying that the only spending is on social programs but the proof is there that these programs continue to grow at an alarming rate. Local municpalites suffer as well. Fire departments and law enforcement offices have been shut down in some areas entirely simply because there is no money to operate them.

The question that many should ask is why? Why should we continue to fund these programs and not hold the recipients accountable? There are those on social programs that need the assistance but for every one on a program there are roughly three to four who are using it simply because they can.

The tax base in many major metropolitan cities is shrinking. The number of recipients on public assistance continues to grow and the number of tax payers continues to shrink. Many frustrated residents try to seek shelter in surrounding suburbs however those same suburbs are now facing their own economic issues. But as the tax paying base shrinks cites will face certain economic doom when the revenue levels continue to fall. Why pay a soda tax in the city when you can purchase it from a suburb that doesn't tax?

The bottom line is the working class continues to suffer. The ones who spend 8 to 10 hours a day working, managing their money, paying their bills, paying the full rates for their utilities and housing, and cannot afford a cell phone but need one for emegencies are the ones who suffer the most. Take for example the average family who makes 65000 per year with a couple of kids. They get a two week vacation and want to take a trip. Unfortunately the state parks, which used to be reasonable are either closed or are charging ridiculous daily rates to camp or use the park. Rates charged because funding has been diverted to other "necessary programs" Again the working class suffers because they are simply unable to enjoy the fruits of their hard work. Instead they must pay for that free cell phone or dollar for dollar matching saving account for those that are having a difficult time saving.

Until the government, both federal and state take a long hard look at the system and decide to dam the river of funds flowing to these programs the outlook is grim. The bigger question is how long before those that work says enough is enough.