Tag Archives: big oil

Why We Elect the Wrong People?: #1 Business Wants Dumb Politicians

27 Saturday Jan 2018

Posted by in Aging, Business, Ethics, Generational, Government, Government Regulation, Honor, Politicians, Politics, Taxes, US History

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Business loves Republicans for a reason

Fifty-six percent of U.S. citizens don’t approve of Donald Trump’s job as President. The job disapproval rating for Congress is at 75%. Why do we hate our politicians? Why don’t we elect people who will make us proud instead of disgusted? The answer is that it is our fault, but not completely. 

Dumb Politicians Are Good For Business

Making money is easier for unethical people in business. Finding a cure for Type 1 Diabetes would be great, but there is no money in curing diabetes. There is a lot of money in selling diabetic supplies and insulin. There is more money if a pharmaceutical companies work together and raise prices. It is not in the interest of the pharmaceutical industry to have a government looking over their shoulder telling them what they can and can’t do.

This is why businesses and business-related lobbying groups don’t want intelligent, caring people elected into a political office. It is not good for business. They want less intelligent, unethical, uncaring people as politicians because it makes less trouble for them. Big business puts their money behind candidates that won’t ask questions and won’t interfere when they do something unethical.

Follow the Money

In 2016, pharmaceutical companies spent almost a quarter of a billion dollars ($247,033,814) to lobby politician’s favor. They increased that by over $30 million in 2017. This is not money being spent for good government. This is money spent by the pharmaceutical industry, for the pharmaceutical industry.

Republicans feel the love from business

Energy companies give to the Republican party by default

Energy companies spent over $171 million in campaign contributions during in 2016, and 77% of the money was given to Republican candidates. There is no doubt that the energy industry knows who will support them and they make sure that their candidate has the money needed to win.  

There is a reason that Republicans won the White House and Congress. Business wants unintelligent, unethical, and uncaring politicians. Business is good when politicians are bad.

Character Assassination

It’s not enough to just spend money on the politician that business wants to win. They also spend money to destroy the character of the opposition. Business overlooks the character flaws of the candidate they want to win, but focus an intense eye on the person they don’t want to win.

A thinking, considerate, competent person running for office can expect to have business mount campaigns to expose any flaw or perceived flaw in her or his character. It effectively discourages anyone who doesn’t support big business from running for political office.

Tuesday:  #2 We Don’t Understand the Purpose of a Republic

Ryssdal Allows Guest To Euphemize High Crude Oil Price As Desirable

26 Wednesday Apr 2017

Posted by in Aging, Business, Customer Service, Ethics, Government, Government Regulation, Green, History, Management Practices, Politics, Public Image, Public Relations

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As host and senior editor of NPR’s (National Public Radio) business-focused, Marketplace, Kai Ryssdal has a tough job. He and his staff have to meld business, politics, and society into small chunks of edible information for his listeners to consume during one of four syndicated shows that air multiple times each day.

For most people, developing and presenting an informative, factual, unbiased radio program about business and everything around it would be a tax that is over 100% of their brain’s income. But Ryssdal isn’t ‘most people.’

So it would be perfectly reasonable to give Mr. Ryssdal a break and overlook a segment that didn’t really measure up to a perfect journalistic standard. Sorry, Kai, but you don’t get that break.

Last week, (April 18, 2017,) Ryssdal and Maria Hollenhorst produced a segment on oil pricing called, “Why boom-bust oil prices may be here to stay.” Ryssdal was interviewing former President George W. Bush advisor, Robert McNally who recently came out with a book called, Crude Volatility.

In his book, and during this interview, McNally attempts to generate fear that low oil prices are bad. Only, he doesn’t use the words, “low oil prices.” Instead he refers to price instability and price swings. McNally uses the euphemism of price stability to indicate artificially high crude oil prices are good, and free market, low crude oil prices are bad.

Historical Crude Oil Price (red line = adjusted for inflation. Credit: Wikipedia)

Adjusted for inflation, crude oil prices were relatively stable for forty years at around $20/barrel from 1933 to 1973. McNally implies that once OPEC began controlling the oil market in the 1970’s, the artificially high price of crude oil was a ‘stable’ oil price. He seems to suggest that the return to lower oil prices at the end of the 20th century and in the past two years are a sign of instability, simply because the free market is controlling the prices.

From his book and interview, it is clear that McNally is a conservative, on a first name basis with major oil executives, and one who believes that the future consumption of oil, as Agent Smith might say, is the sound of inevitability. It is also clear McNally desires to be a mercenary for oil corporations that seek to manipulate the market for their gain.  

What isn’t clear is why Kai Ryssdal gave him a pass on his attempt to generate fear of free market influences on crude oil prices. Ryssdal is too smart to not see McNally’s pandering to his oil clients, and the Marketplace staff had to know that McNally is not an unbiased source of information. 

Sure, high oil prices are good for oil companies and their investors, but wasn’t this past election allegedly about making things fair for the poor guy who has to pay the price at the pump?

(Marketplace is owned and operated by American Public Media)

2016: Oil Prices Near $5/Gallon?

12 Monday Oct 2015

Posted by in About Reno, Business, Ethics, Government, History, Management Practices, Politics, US History

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Oil prices have more excuses than a meth addict. Demand in China, oil refinery fires or in maintenance, OPEC restricting supply, Saudi Arabia flooding the market, etc. Reality in oil pricing is elusive; however, despite what some experts say, next year will likely see the price at the pump jump based on current factors and on politics.

Minor Influence:  Supply and Demand
We have always been told that supply and demand rules the capitalistic market. Most people mistakenly assume that free market means the market can’t be manipulated, but a free market is ripe for manipulation, especially for the unethical business person.

A prime example of market manipulator is Saudi Arabia. Big oil producers are constantly seeking a bigger piece of the oil market, and fracking in the United States has revitalized US oil production. The Saudi response has been to flood the market with oil to bring down the price/barrel, leaving US producers with increased expenses and less revenue.

World oil supply carefully follows demand (Graphics credit: Yardeni.com)

Graphic 1.0:  World oil supply carefully follows demand (Source: Yardeni.com)

Despite temporary manipulations of the oil supply, the ratio of world supply and demand has not significantly changed in recent history. Demand has steadily increased (See Graphic 1.0,) and supply has increased just slightly less than demand. In fact, the supply of oil carefully follows demand so perfectly that it seems unnatural. It’s almost as if oil companies knew that an over supply would force oil prices down and oil shortages would lead to high gas prices, which would stimulate the development of alternative fuels.

Monthly imported crude oil price (1980 to 2014) Source: Energy Information Administration (eia.gov)

Graphic 2.0:  Monthly imported crude oil price (1980 to 2014) Source: Energy Information Administration (eia.gov)

There is no obvious correlation when comparing the wild deviations in crude oil price (See Graphic 2.0) to the world supply and demand (See Graphic 1.0.) This raises the question: If supply and demand doesn’t control the price of oil in the United States, what does?

US and Europe Oil Demand

Graphic 3.0:  US and Europe Oil Demand. The 2008 recession-triggered a drop in demand (Source: Yardeni.com)

The Game of Oil Pricing
World oil demand has been on the increase, but not in the United States and Western Europe (See Graphic 3.0.) The Recession of 2008, pushed demand down in the United States and Western Europe, but as the world economy collapsed, the price of crude oil rocketed up, then dropped dramatically for six months, then returned to its pre-recession price and resumed a steep climb for the next five years. The price of crude oil didn’t coincide with pre-recession, recession, or post recession demand.

Interestingly, retail gas prices (See Graphic 4.0) make even less sense than crude oil prices, as the price at the pump spiked while crude oil prices dropped. This deviation between crude oil prices and retail gas prices would be repeated, in 2012. The common denominator? The Presidential election. 

2016
Some experts are saying oil prices will remain low in 2016. The problem with these predictions are that the demand for oil is increasing, Republicans are self-destructing, and the economy is in good shape. Low prices at the pump in 2016, would be death to Republicans, and that is not what conservatives in the oil industry do in an election year.

October 2008 and 2012 pricing show a dramatic deviation from past years

Graphic 4.0:  October 2008 and 2012 pricing show a dramatic deviation from past years (Source eia.gov)

Since 1980, oil pricing just prior to Presidential elections in the United States follows an interesting pattern. According to the Energy Information Administration (eia.gov) the average retail regular unleaded price has a strong correlation to the  imported crude oil prices; however, during the last two Presidential election years, the October retail price jumped dramatically, while crude oil prices fell (See Graphic 4.0.) The rare deviation in the price of retail regular unleaded gasoline just before an election again indicates that the market was influenced by political, not free-market, forces. 

Oil pricing during Presidential election year follows a consistent pattern

Graphic 5.0:  Oil pricing during Presidential election year follows a consistent pattern

As 2016, is another election year, and as the Republican party is in deep trouble, the conservative leadership in the oil industry will likely follow the past pattern of attempting to create an economic crisis through manipulation of retail oil prices. Based on the Presidential election years since 1980, the average at-the-pump price of regular unleaded (See Graphic 5.0) will be about $270/barrel or around $4.91/gal.

(NOTE:  Personally, it’s hard to believe we could see $4.91/gallon next October. Despite what the trendlines suggest, I would expect the price to be closer to an average of $4.50/gallon. However, I’m confident that the average price of regular unleaded gas will be over $4.25/gallon.)

Gasoline Pricing Coincides With Conservatives Political Agenda

30 Tuesday Oct 2012

Posted by in Business, Ethics, Opinion, Politics, Public Relations

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The issue that is clicking with voters during this Presidential campaign is the economy. Despite the fact that America is in a Recovery while the rest of the world struggles economically, conservatives are working hard to maximize the fear of another economic disaster. There is one factor that helps Republican agenda and that is oil prices.

8 Year History of US Gasoline Prices

The cost of oil is a major factor in our economy and conservative oil executives are acutely aware of the impact the price of gasoline has on the psyche of the American consumer. Oil companies (exploration, refining, distribution, and trading of oil products) cannot completely control oil prices, but they can artificially set prices high or low for periods of time to influence the market and our economy.

Cut the revenue for the government, while increasing spending causing a massive debt, starting two wars, and wrecking the economy. George W. Bush MISSION ACCOMPLISHED!

A historical look at the past eight years of oil prices indicates an interesting correlation to a conservative agenda. Shortly before the 2004 Presidential election cycle average U.S. gas prices were under $2.00/gallon. That worked well for the re-election of George W. Bush who needed the economy to seem well-managed under his administration. In 2005 and 2006, gas prices peaked during the summer at just under $3.00/gallon, but prices dropped rapidly just before the 2006 Congressional elections which boosted the image that conservatives were on track with the economy and the two wars in the Middle East.

In 2007, oil prices jumped up again during the summer and then continued to go higher during the Presidential campaign. Oil companies made massive profits and high oil prices reminded skeptical Americans that we needed to have a military presence in the Middle East to keep oil supplies under American control.

This strategy backfired on conservatives as unregulated banking practices brought the American economy to the brink of its second Depression. As it became obvious that is was conservative’s worship of private business and lack of government regulation that caused the disaster, high prices at the pump just made the problem bigger. President George W. Bush was looking incompetent and Republican candidate John McCain was sinking fast in the polls.

Suddenly the U.S. average price of a gallon of gasoline dropped from almost $4.00 to just over $1.50. This occurred in the middle of the summer when gas prices are usually the highest. The historic drop in gas prices didn’t rescue McCain’s bid for the Oval Office, nor did pulling Sarah Palin out of obscurity.

However, low gasoline prices did help to thwart the rapid growth in hybrid and fuel efficient cars that caused a significant drop in the demand of oil in America. Low gasoline prices helped derail many efforts to make alternative energy viable causing losses to those who took a big risk in trying to end dependency on oil. 

If you want to make the economy look bad, gasoline prices are the way to do it

While oil prices increased in the Spring of 2008, gasoline remained steady at around $2.75/gallon with little variation between summer and other seasons until after the 2010 Congressional elections. It was also at this time that the worst of the economic fallout hit the United States. Unprecedented job losses and business failures seemed to stem the up/down cycles of gasoline prices.

That steady trend ended after the Congressional elections with gasoline prices climbing and remaining over $3.00/gallon for the duration of the 2012 Presidential campaign. This coincides with conservatives efforts to put the worst possible face on America’s economy.

Billionaire Oil Refiner David Koch with spouse Julia

Conservative oil executives like David Koch have worked hard to influence the outcome of this year’s elections. Oil executives are spending hundreds of millions of dollars to elect conservatives, and gasoline at almost $4.00/gallon serves their agenda well, and gives them a ready supply of cash.

The problem is that gasoline prices at the current levels will allow alternative energy blossom again, so after the election gasoline prices must come down. If President Obama is re-elected the oil companies will be forced to help improve the economy or face a continued decline in demand. David Koch certainly doesn’t want to be put in that position.

Oil Industry 11 of World’s Top 20 Corporations

01 Monday Oct 2012

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‘Big’ Oil is an understatement. According to Wikipedia, 11 of the world’s top 20 corporations (measured by revenue) are either oil producers, or trade oil. In fact, seven of the top ten corporations of the world are oil industry related. Forget Apple (No. 44,) Microsoft (No. 111,) or Google (not in top 185) because they are not even in the same league as oil corporations.

The Wikipedia study pulled together the financial data from multiple sources, including financial reports of major corporations. Oil companies have 60% of the revenue of the top 20, which means the average revenue per corporation of oil companies exceeds the average revenues of the nine non-oil related corporations. 

World’s Top 20 Corporations by Revenue

The ‘Big Five’¹ oil companies are also made over $200 billion in profits during 2011, and as consumer pump prices remained high despite consumer demand that is at 1997 levels.  Interestingly, oil companies, according to the Wikipedia study, employ only 25% of the total employed by the top 20 corporations.

¹NOTE:  Big Five Oil Companies are: Exxon Mobil, Royal Dutch Shell, BP, Chevron, and ConocoPhillips