Who is a Friend of Oil and Oil Companies?
I couldn’t help but ask that question while sitting at a McDonalds, watching my kid play and striking up a conversation with someone who complained about how much money the oil companies were making at the time of $4/ gallon gas.
I then asked the question on this diary entry http://www.redstate.com/vladimir/2009/05/23/the-climate-industrial-complex-or-green-energy-whores/#comment-589. The article that the diary referenced stated, “There would be an outcry — and rightfully so — if big oil organized a climate change conference and invited only climate-change deniers.” The issue that I had with that statement is that some oil companies are also pursuing green technologies and are at least addressing the climate change issue on their web sites and are least looking for ways to lower emissions even if they are not pursuing alternatives to oil.
The biggest concern is the GW 2007 Energy bill which aims to have $ 36 billion gallons worth of ethanol available by 2022. The issue with that is that it would take the entire current corn and a large portion of the grain crop, and that at least a gallon of regular gasoline is needed to produce the ethanol. Sen Kay Bailey Hutchison proposed freezing ethanol production to current levels. Noting that the switch to ethanol had added approximately $600 million worth of costs to food since 2006 until the April 2008 timeframe. Ethanol at more than 10% of the gasoline mix is corrosive etc. Even my new push mower warns against using gasoline with more than 10% ethanol because of the corrosive characteristics of the higher than 10% ethanol blends.
With the above mandate in mind, the 2007 Energy Bill, fast forward to now, the state of energy is thus: there is still a subsidy for the corn and switchgrass ethanol and as noted on a BP website, they are partnering with Dupont and the Brazilians to produce ethanol from cellolosic sources of energy. BP is adverse to using food stock for ethanol. One of my favorite stock commentators, www.joe-duarte.com made mention of this development and that investors are accumulating BP stock, see his late May entry. After a perusal of the BP web site, Exxon Web site and Chevron web site, BP has the most extensive section on their alternative fuels and the most encouraging progress in this area due to their bio butanol efforts and work with the Brazilian ethanol producers along with Dupont.
Politicians and oil companies must address the climate change issue due to the subsidies due to their corn and grain farmers and to hedge against government or environmental extremists and activists. Even the conservatives at the Republican Study Committee are addressing the alternative fuel issue by promoting “ an all the above “, pursuit of energy sources. No one can afford to be a denier even if they don’t subscribe to the “Peak Oil Theory” that originated from the 1950s and are current on some estimates that American oil sources may well have around a trillion barrels of oil locked away in federal lands and on nearby coasts. (http://www.ibdeditorials.com/IBDArticles.aspx?id=326073872477255&kw=trillion%20barrels%20of%20oil)
When using OpenSecrets.org, with 2007 statistics- for identifying the favorite companies for Congress to hold stock in, there is General Electric at the top of the list with 96 members of Congress holding stock with 53 Dems and 43 Republicans. #5 Bank of America with 30 Dems and 29 Republicans. #8 Exxon Mobil with 19 Dems and 36 Republicans. So there are plenty of energy companies and a variety of companies that Congressional leaders hold.
What was intriguing was finding a group called www.Cleantech.com and the www.worldenergysummit.com . Among the sponsors for the world energy summit were GE, Exxon Mobil and Media Watch.
Among the networking clients that raise the hairs on the back of my head for the www.cleantech.com group is the American Federal Reserve and the American Treasury Department. No other Central Banks from any other country are mentioned as sponsors.
Why is that critical? The Federal Reserve and other Central banks should be known for their lack of influence from political forces and known for their inflation fighting or price stability maintaining abilities. Now, seeing the Fed and Treasury listed as policymakers that can be contacted through the Cleantech networking throws that into doubt since the Cleantech group promotes green technologies and jobs. (There was a CNBC article on Fed President Lockhart’s concern about keeping rates low in the US for too long, which I believe was a reason for the USD appreciation against commodity currencies today, June 5, 2009)Even with Lockhart’s USD strengthening comments, Geithner’s got the reins on the Fed and the interest rates and is there any question about where his heart is in regards to supporting the Global Warming dogmas?
The independence question is further thrown into doubt when an article from a professional investor notes the following regarding the Fed and Treasury policies while giving lip service to a strong USD. http://www.deltaga.com/market-commentaries/the-plummeting-dollar-prosperity-plan.html
The Plummeting Dollar Prosperity Plan
By Michael Pento It is becoming painfully obvious that the Fed, Treasury, and Administration’s disastrous recovery plan hinges on the devaluation of the U.S. dollar. Their specious strategy stems from the belief that a falling currency can re-ignite exports and spark a recovery in manufacturing while putting a floor in U.S. asset prices. But just as the President’s initials indicate, the plan stinks of B.O.
My take on the above plan for weak USD is to prop up commodities and the grains for the ethanol corn producers. Sure, the banks need the lower interest rates to nurse them back to health ASAP. On the other hand, all the pundits, are expecting inflation. ( Can you name who isn’t expecting inflation down the road?) The Democrats ditched the exploration for our own oil plan right after the election so how else would they produce energy except for the corn and switchgrass ethanol subsidy plan?
(The following links detail additional reading on the subject over the last 20 years of ethanol subsidies.
President Obama flew on a corporate jet owned by Archer Daniels Midland, who also benefits from the ethanol subsidies. Senator Grassley is also a fan of the ethanol products thanks to the ethanol subsidies as well. See below http://www.ibdeditorials.com/IBDArticles.aspx?id=254621504525068&kw=ethanol%20lobby
So how many other politicians across the political spectrum are beholden to the ethanol subsidy and campaign refinance plan?