Saturday- Sound the Alarm to Save Our Nation

Obama, the Carbon Tax Whore

Obama’s involvement in Chicago Climate Exchange--the rest of the story





By Judi McLeod Wednesday, March 25, 2009
Good news to know that the truth will always out--even when you’re Barack Obama.

“Obama Years Ago Helped Fund Carbon Program He Is Now Pushing Through Congress” is a FOXNews story by Ed Barnes. In short, “While on the board of a Chicago-based charity, Barack Obama helped fund a carbon trading exchange that will likely play a critical role in the cap-and-trade carbon reduction program he is now trying to push through Congress as president.”

The charity was the Joyce Foundation on whose board of directors Obama served and which gave nearly $1.1 million in two separate grants that were “instrumental in developing and launching the privately-owned Chicago Climate Exchange, which now calls itself “North America’s only cap and trade system for all six greenhouse gases, with global affiliates and projects worldwide.”

And that’s only the beginning of this tawdry tale, Mr. Barnes.

The “privately-owned” Chicago Climate Exchange is heavily influenced by Obama cohorts Al Gore and Maurice Strong.

For years now Strong and Gore have been cashing in on that lucrative cottage industry known as man-made global warming.

Strong is on the board of directors of the Chicago Climate Exchange, Wikipedia-described as “the world’s first and North America’s only legally binding greenhouse gas emission registry reduction system for emission sources and offset projects in North America and Brazil.”

Gore, self-proclaimed Patron Saint of the Environment, buys his carbon off-sets from himself--the Generation Investment Management LLP, “an independent, private, owner-managed partnership established in 2004 with offices in London and Washington, D.C., of which he is both chairman and founding partner. The Generation Investment Management business has considerable influence over the major carbon credit trading firms that currently exist, including the Chicago Climate Exchange.

Strong, the silent partner, is a man whose name often draws a blank on the Washington cocktail circuit. Even though a former Secretary General of the 1992 United Nations Conference on Environment and Development (the much hyped Rio Earth Summit) and Under-Secretary General of the United Nations in the days of an Oil-for-Food beleaguered Kofi Annan, the Canadian born Strong is little known in the United States. That’s because he spends most of his time in China where he he has been working to make the communist country the world’s next superpower. The nondescript Strong, nonetheless is the big cheese in the underworld of climate change and is one of the main architects of the failing Kyoto Protocol.

Full credit for the expose on the business partnership of Strong and Gore in the cap-and-trade reduction scheme should go to the investigative acumen of the Executive Intelligence Review (EIR).

The tawdry tale of the top two global warming gurus in the business world goes all the way back to Earth Day, April 17, 1995 when the future author of “An Inconvenient Truth” travelled to Fall River, Massachusetts, to deliver a green sermon at the headquarters of Molten Metal Technology Inc. (MMTI). MMTI was a firm that proclaimed to have invented a process for recycling metals from waste. Gore praised the Molten Metal firm as a pioneer in the kind of innovative technology that can save the environment, and make money for investors at the same time.

“Gore left a few facts out of his speech that day,” wrote EIR. “First, the firm was run by Strong and a group of Gore intimates, including Peter Knight, the firm’s registered lobbyist, and Gore’s former top Senate aide.”

(Fast-forward to the present day and ask yourself why it is that every time someone picks up another Senate rock, another serpent comes slithering out).

“Second, the company had received more than $25 million in U.S. Department of Energy (DOE) research and development grants, but had failed to prove that the technology worked on a commercial scale. The company would go on to receive another $8 million in federal taxpayers’ cash, at that point, its only source of revenue.

“With Al Gore’s Earth Day as a Wall Street calling card, Molten Metal’s stock value soared to $35 a share, a range it maintained through October 1996. But along the way, DOE scientists had balked at further funding. When in March 1996, corporate officers concluded that the federal cash cow was about to run dry, they took action: Between that date and October 1996, seven corporate officers--including Maurice strong--sold off $15.3 million in personal shares in the company, at top market value. On Oct. 20, 1996--a Sunday--the company issued a press release, announcing for the first time, that DOE funding would be vastly scaled back, and reported the bad news on a conference call with stockbrokers.

“On Monday, the stock plunged by 49%, soon landing at $5 a share. By early 1997, furious stockholders had filed a class action suit against the company and its directors. Ironically, one of the class action lawyers had tangled with Maurice strong in another insider trading case, involving a Swiss company called AZL Resources, chaired by Strong, who was also a lead shareholder. The AZL case closely mirrored Molten Metal, and in the end, Strong and the other AZL partners agreed to pay $5 million to dodge a jury verdict, when eyewitness evidence surfaced of Strong’s role in scamming the value of the company stock up into the stratosphere, before selling it off.

In 1997, Strong went on to accept from Tongsun Park, who was found guilty of illegally acting as an Iraqi agent, $1 million from Saddam Hussein, which was invested in Cordex Petroleum Inc., a company he owned with his son, Fred.

These are the leaders in the Man-made Global Warming Movement, who three years later were to be funded by the man who was to become President of the United States of America.

If we follow the time line on where Obama was during the funding of the Chicago Climate Exchange, he was still a professor at the University of Chicago Law School teaching constitutional law, with his law license becoming inactive a year later in 2002.

It may be interesting to note that the Chicago Climate Exchange in spite of its hype, is a veritable rat’s nest of cronyism. The largest shareholder in the Exchange is Goldman Sachs. Chicago Mayor Richard M. Daley is its honorary chairman, The Joyce Foundation, which funded the Exchange also funded money for John Ayers’ Chicago School Initiatives. John is the brother of William Ayers.

What a flap when it was discovered that the senator from Chicago had nursed on Saul Alinsky’s milk, had his political career launched at a coffee party held by domestic terrorist Bill Ayers, and sat for 20 years, uncomplaining in front of the “God-dam-America pulpit of resentment-challenged Jeremiah Wright.

Folk were naturally outraged that the empty suit who would go on to become TOTUS was spawned from such anti-American activism.

But the media should have been hollering, “Stop Thief!” instead.

The same Chicago Climate Exchange promoting public rip-off was funded by Obama before he was POTUS.

Even as man-made global warming is being exposed as a money-generating hoax, Obama is working feverishly to push the controversial cap-and-trade carbon reduction scheme through Congress.

Obama was never the character he created for himself in the fairy-tale version in “Dreams of My Father”. He’s the agent of Change and Hope for cohorts making money down at the Chicago Climate Exchange.

The Barbarians are pushing at the gate of the Global Warming fraud, and to borrow a line from children playing Hide and Seek, Here they come, ready or not!

UN 's Green Enslavement Taxes

U.N. 'Climate Change' Plan Would Likely Shift Trillions to Form New World Economy
Friday, March 27, 2009
By George Russell

United Nations document on "climate change" that will be distributed to a major environmental conclave next week envisions a huge reordering of the world economy, likely involving trillions of dollars in wealth transfer, millions of job losses and gains, new taxes, industrial relocations, new tariffs and subsidies, and complicated payments for greenhouse gas abatement schemes and carbon taxes — all under the supervision of the world body.

Those and other results are blandly discussed in a discretely worded United Nations "information note" on potential consequences of the measures that industrialized countries will likely have to take to implement the Copenhagen Accord, the successor to the Kyoto Treaty, after it is negotiated and signed by December 2009. The Obama administration has said it supports the treaty process if, in the words of a U.S. State Department spokesman, it can come up with an "effective framework" for dealing with global warming.

The 16-page note, obtained by FOX News, will be distributed to participants at a mammoth negotiating session that starts on March 29 in Bonn, Germany, the first of three sessions intended to hammer out the actual commitments involved in the new deal.

In the stultifying language that is normal for important U.N. conclaves, the negotiators are known as the "Ad Hoc Working Group On Further Commitments For Annex I Parties Under the Kyoto Protocol." Yet the consequences of their negotiations, if enacted, would be nothing short of world-changing.

Getting that deal done has become the United Nations' highest priority, and the Bonn meeting is seen as a critical step along the path to what the U.N. calls an "ambitious and effective international response to climate change," which is intended to culminate at the later gathering in Copenhagen.

Just how ambitious the U.N.'s goals are can be seen, but only dimly, in the note obtained by FOX News, which offers in sparse detail both positive and negative consequences of the tools that industrial nations will most likely use to enforce the greenhouse gas reduction targets.

The paper makes no effort to calculate the magnitude of the costs and disruption involved, but despite the discreet presentation, makes clear that they will reverberate across the entire global economic system.



Among the tools that are considered are the cap-and-trade system for controlling carbon emissions that has been espoused by the Obama administration; "carbon taxes" on imported fuels and energy-intensive goods and industries, including airline transportation; and lower subsidies for those same goods, as well as new or higher subsidies for goods that are considered "environmentally sound."

Other tools are referred to only vaguely, including "energy policy reform," which the report indicates could affect "large-scale transportation infrastructure such as roads, rail and airports." When it comes to the results of such reform, the note says only that it could have "positive consequences for alternative transportation providers and producers of alternative fuels."

In the same bland manner, the note informs negotiators without going into details that cap-and-trade schemes "may induce some industrial relocation" to "less regulated host countries." Cap-and-trade functions by creating decreasing numbers of pollution-emission permits to be traded by industrial users, and thus pay more for each unit of carbon-based pollution, a market-driven system that aims to drive manufacturers toward less polluting technologies.

The note adds only that industrial relocation "would involve negative consequences for the implementing country, which loses employment and investment." But at the same time it "would involve indeterminate consequences for the countries that would host the relocated industries."

There are also entirely new kinds of tariffs and trade protectionist barriers such as those termed in the note as "border carbon adjustment"— which, the note says, can impose "a levy on imported goods equal to that which would have been imposed had they been produced domestically" under more strict environmental regimes.

Another form of "adjustment" would require exporters to "buy [carbon] offsets at the border equal to that which the producer would have been forced to purchase had the good been produced domestically."

The impact of both schemes, the note says, "would be functionally equivalent to an increased tariff: decreased market share for covered foreign producers." (There is no definition in the report of who, exactly, is "foreign.") The note adds that "If they were implemented fairly, such schemes would leave trade and investment patterns unchanged." Nothing is said about the consequences if such fairness was not achieved.

Indeed, only rarely does the "information note" attempt to inform readers in dollar terms of the impact of "spillover effects" from the potential policy changes it discusses. In a brief mention of consumer subsidies for fossil fuels, the note remarks that such subsidies in advanced economies exceed $60 billion a year, while they exceed $90 billion a year in developing economies."

But calculations of the impact of tariffs, offsets, or other subsidies is rare. In a reference to the impact of declining oil exports, the report says that Saudi Arabia has determined the loss to its economy at between $100 billion and $200 billion by 2030, but said nothing about other oil exporters.

One reason for the lack of detail, the note indicates, is that impact would vary widely depending on the nature and scope of the policies adopted (and, although the note does not mention it, on the severity of the greenhouse reduction targets).

But even when it does hazard a guess at specific impacts, the report seems curiously hazy. A "climate change levy on aviation" for example, is described as having undetermined "negative impacts on exporters of goods that rely on air transport, such as cut flowers and premium perishable produce," as well as "tourism services." But no mention is made in the note of the impact on the aerospace industry, an industry that had revenues in 2008 of $208 billion in the U.S. alone, or the losses the levy would impose on airlines for ordinary passenger transportation. (Global commercial airline revenues in 2008 were about $530 billion, and were already forecast to drop to an estimated $467 billion this year.)

In other cases, as when discussing the "increased costs of traditional exports" under a new environmental regime, the report confines itself to terse description. Changes in standards and labeling for exported goods, for example, "may demand costly changes to the production process." If subsidies and tariffs affect exports, the note says, the "economic and social consequences of dampening their viability may, for some countries and sectors, be significant."

Much depends, of course, on the extent to which harsher or more lenient greenhouse gas reduction targets demand more or less drastic policies for their achievement.

And, precisely because the Bonn meeting is a stage for negotiating those targets, the note is silent. Instead it suggests that more bureaucratic work is needed "to deepen the understanding of the full nature and scale of such impacts."

But outside the Bonn process, other experts have been much more blunt about the draconian nature of the measures they deem necessary to make "effective" greenhouse gas reductions.

In an influential but highly controversial paper called "Key Elements of a Global Deal on Climate Change," British economist Nicholas Lord Stern, formerly a high British Treasury official, has declared that industrial economies would need to cut their per capita carbon dioxide emissions by "at least 80% by 2050," while the biggest economies, like the U.S.'s, would have to make cuts of 90 percent.

Stern also calls for "immediate and binding" reduction targets for developed nations of 20 percent to 40 percent by 2020.

To meet Stern's 2050 goals, he says, among other things, "most of the world's electricity production will need to have been decarbonized."

Global Warming Not Manmade

Original URL: http://www.theregister.co.uk/2009/02/25/jstor_climate_report_translation/

Japan's boffins: Global warming isn't man-made
Climate science is 'ancient astrology', claims report

By Andrew Orlowski (andrew.orlowski@theregister.co.uk)

Posted in Environment, 25th February 2009 12:23 GMT



Exclusive Japanese scientists have made a dramatic break with the UN and Western-backed hypothesis of climate change in a new report from its Energy Commission.

Three of the five researchers disagree with the UN's IPCC view that recent warming is primarily the consequence of man-made industrial emissions of greenhouse gases. Remarkably, the subtle and nuanced language typical in such reports has been set aside.


One of the five contributors compares computer climate modelling to ancient astrology. Others castigate the paucity of the US ground temperature data set used to support the hypothesis, and declare that the unambiguous warming trend from the mid-part of the 20th Century has ceased.

The report by Japan Society of Energy and Resources (JSER) is astonishing rebuke to international pressure, and a vote of confidence in Japan's native marine and astronomical research. Publicly-funded science in the West uniformly backs the hypothesis that industrial influence is primarily responsible for climate change, although fissures have appeared recently. Only one of the five top Japanese scientists commissioned here concurs with the man-made global warming hypothesis.

JSER is the academic society representing scientists from the energy and resource fields, and acts as a government advisory panel. The report appeared last month but has received curiously little attention. So The Register commissioned a translation of the document - the first to appear in the West in any form. Below you'll find some of the key findings - but first, a summary.

Summary
Three of the five leading scientists contend that recent climate change is driven by natural cycles, not human industrial activity, as political activists argue.

Kanya Kusano is Program Director and Group Leader for the Earth Simulator at the Japan Agency for Marine-Earth Science & Technology (JAMSTEC). He focuses on the immaturity of simulation work cited in support of the theory of anthropogenic climate change. Using undiplomatic language, Kusano compares them to ancient astrology. After listing many faults, and the IPCC's own conclusion that natural causes of climate are poorly understood, Kusano concludes:

"[The IPCC's] conclusion that from now on atmospheric temperatures are likely to show a continuous, monotonic increase, should be perceived as an unprovable hypothesis," he writes.

Shunichi Akasofu, head of the International Arctic Research Center in Alaska, has expressed criticism of the theory before. Akasofu uses historical data to challenge the claim that very recent temperatures represent an anomaly:

"We should be cautious, IPCC's theory that atmospheric temperature has risen since 2000 in correspondence with CO2 is nothing but a hypothesis. "

Akasofu calls the post-2000 warming trend hypothetical. His harshest words are reserved for advocates who give conjecture the authority of fact.

"Before anyone noticed, this hypothesis has been substituted for truth... The opinion that great disaster will really happen must be broken."


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Key Passages Translated
What is the source of the rise in atmospheric temperature in the second half of the 20th century?
Shunichi Akasofu

[Founding Director of the International Arctic Research Center of the University of Alaska Fairbanks (UAF)

Introductory discussion.
Point 1.1: Global Warming has halted
Global mean temperature rose continuously from 1800-1850. The rate of increase was .05 degrees Celsius per 100 years. This was mostly unrelated to CO2 gas (CO2 began to increase suddenly after 1946. Until the sudden increase, the CO2 emissions rate had been almost unchanged for 100 years). However, since 2001, this increase halted. Despite this, CO2 emissions are still increasing.

According to the IPCC panel, global atmospheric temperatures should continue to rise, so it is very likely that the hypothesis that the majority of global warming can be ascribed to the Greenhouse Effect is mistaken. There is no prediction of this halt in global warming in IPCC simulations. The halt of the increase in temperature, and slight downward trend is "something greater than the Greenhouse Effect," but it is in effect. What that "something" is, is natural variability.

From this author's research into natural (CO2 emissions unrelated to human activity) climate change over the past 1000 years, it can be asserted that the global temperature increase up to today is primarily recovery from the "Little Ice Age" earth experienced from 1400 through 1800 (i.e. global warming rate of change＝0.5℃/100).

The recovery in temperatures since follows a naturally variable 30-50 year cycle, (quasi-periodic variations), and in addition, this cycle has been positive since 1975, and peaked in the year 2000. This quasi-periodic cycle has passed its peak and has begun to turn negative.

(The IPCC ascribes the positive change since 1975, for the most part, to CO2 and the Greenhouse Effect.) This quasi-periodic cycle fluctuates 0.1 degrees C per 10 years, short term (on the order of 50 years). This quasi-periodic cycle's amplitude is extremely pronounced in the Arctic Circle , so it is easy to understand. The previous quasi-periodic cycle was positive from 1910 to 1940 and negative from 1940 to 1975 (despite CO2 emissions rapid increase after 1946).

Regardless of whether or not the IPCC has sufficiently researched natural variations, they claim that CO2 has increased particularly since 1975. Consequently, after 2000, although it should have continued to rise, atmospheric temperature stabilised completely (despite CO2 emissions continuing to increase). Since 1975 the chances of increase in natural variability (mainly quasiperiodic vibration) are high; moreover, the quasiperiodic vibration has turned negative. For that reason, in 2000 Global Warming stopped, after that, the negative cycle will probably continue.

Regarding the current temporary condition (la Nina) JPL observes a fluctuation of the quasiperiodic cycle [JSER editor's note: this book is is still being proofed as of 12/19]. So we should be cautious, IPCC's theory that atmospheric temperature has risen since 2000 in correspondence with CO2 is nothing but a hypothesis.

They should have verified this hypothesis by supercomputer, but before anyone noticed, this hypothesis has been substituted for "truth". This truth is not observationally accurate testimony. This is sidestepping of global warming theory with quick and easy answers, so the opinion that a great disaster will really happen must be broken.

It seems that global warming and the halting of the temperature rise are related to solar activity. Currently, the sun is "hibernating". The end of Sunspot Cycle 23 is already two years late: the cycle should have started in 2007, yet in January 2008 only one sunspot appeared in the sun's northern hemisphere, after that, they vanished completely (new sunspots have now begun to appear in the northern hemisphere). At the current time, it can clearly be seen there are no spots in the photosphere. Lately, solar winds are at their lowest levels in 50 years. Cycle 24 is overdue, and this is is worrisome.

So, have there been other historical periods with an absence of sunspots? As a matter of fact, from 1650 to 1700 approximately, there were almost no sunspots. This time period has been named for the renown English astronomer Maunder, and is called the Maunder Minimum.

There is a relationship between transported energy and the light emissions from the photosphere and sunspots. It was thought that times of few sunspots are times of lower energy. Satellites were launched in 1980 to research this, and results were contrary to expectations. It became clear that these times were more energetic than periods of high sunspots. Periods of low sunspots have vigorous solar activity. The total change during sunspot cycles is usually .0.1%, from the Maunder Minimum to today the increase is .05%. The Maunder Minimum fell in the middle of the period of 1400-1800, the Little Ice Age, and it was theorized that this was due to a cut in solar emissions. The theory is that solar activity began to increase after that, and from 1800 global warming increased and recovery from the Little Ice Age began.

But sunspot change and climate change are not clearly correlated. Rather, the cycle was not the punctual 11 years, scientific research indicates that climate change is related to that change. Furthermore, according to the IPCC's computational investigation, this energy increase does not significantly contribute to global warming. But then, the IPCC insists that current global warming correlates to CO2, solar influence is estimated as minimal, this calculation should be redone. This 0.1-0.5% is an enormous sum of energy. The energy of solar emissions is not just light from the photosphere. Solar winds cause geomagnetic storms, yet comparisons of solar wind and light energy to particle emissions are rarely carried out. Research into the relationship between geomagnetic storms and climate change has been undertaken for almost 100 years. However, because during this time, this simple correlation has not been seen, no conclusion has been reached. The super-hot temperatures of geomagnetic storms higher than 100 kilometers have increased, and the chances of the stratospheric and tropospheric transference are low.

Through the 11 year sunspot cycle, ultraviolet rays vary considerably, the ionosphere and ozone layer are affected. Whether or not this affects the troposphere is unknown. More research is necessary. On the other hand, cosmic rays continuously fall, it seems that they constantly seed comparatively low clouds. The solar system may shield us somewhat from Geomagnetic storms caused by solar winds, so called "magnetic clouds" may shield us from extrasolar cosmic rays, so solar activity and climate are in a complex relationship.

In this way, climate change and solar activity's relationship is inconclusive. It is necessary to increase research efforts into the relationship between Earth's climate fluctuations and solar activity.


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Predicting the Future with Numerical Simulation

Kanya Kusano, Japan Agency for Marine-Earth Science & Technology (JAMSTEC)

Numerical simulation by forecast models are generally classified as theoretical models and empirical models. The former follows universal laws and carries out predictive calculations, the latter makes models that are thought to be realistic from data of phenomenon. These two methods cannot be strictly differentiated, generally experiential methods gradually become theoretical methods, finally becoming the generally accepted dogma.

Celestial mechanics originated in astrological prediction of solar and lunar eclipses, calendars were experiential predictions; mechanistic theory evolved when we reached an era of accurate computation. Consequently, the predictability of celestial mechanics became extremely high and practical estimates gave way to proof. Similarly, modern Global Climate Models still largely dependent on empirical models. Fundamental principles, therefore must resolve very complex physical/chemical/biological processes and phenomenon. That is why many artificial optimization operations (parameterization tuning) are needed, or we will not be able to reproduce the phenomenon. Because of this, besides mathematical accuracy, the people who construct models' choice of processes and optimum operating guidelines will have large scale effects on the calculated results.

1. Scientific Understanding and Uncertainty
When constructing models, if our scientific understanding is poor, we are not able to capture the model. But we should pay attention to the importance of the naturally occurring processes when our scientific understanding is not yet clearly decided.

In the IPCC's 4th Evaluation Report, a few potentially major processes were discussed; but [since] scientific understanding was too low to decide, the evaluation of these was omitted. In order to scientifically understand the uncertainty of accurate estimates according to the potential importance of these processes, "the cause of lack of scientific understanding and uncertainty" must be assessed.

Finally, uncertainty estimates should be included. For example, the effect of variances in cosmic ray activity on clouds, caused by sunspot activity, solar flares accompanied by energetic protons striking the upper atmosphere and generating NOx and ozone effects [*], etc., are not sufficiently understood and incorporated into the models.

Also, there are great uncertainties in reproducing historical TSI (Total Solar Irradiance), TSI fluctuation and spectral change related climate sensitivity estimates are inadequate.


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2. The limits of modeling aerosols and clouds
The indirect effect of aerosols and aerosol generation as the greatest uncertainty is becoming widely recognized, but fundamental, naturally spontaneous (especially oceanic) aerosols are not yet well understood. Dimethyl sulfide (DMS: CH3SCH3) of biological origin is thought to be a primary source of sulphuric aerosol formation over oceans, but the process of cloud cores forming from DMS is not sufficiently understood. According to recent physical models, the percentage of involvement of cosmic ray ionization processes is not well understood.

Furthermore, the types of aerosols and the ways they affect climate systems are not well understood. The increasing number of aerosols, in this case, augments precipitation, but if it increases too much, water droplet diameter will decrease and cloud generation will be renewed, and the albedo will be changed significantly. Thus, the fine-scale physical processes of clouds causing feedback in geological climate fluctuation now clearly points at this as a decisively material effect.

However, the discussion of the properties and life span of aerosols in clouds in the IPCC 4th Evaluation Report is inadequate.

3. Predictability and estimation rules
The 4th Evaluation Report is confident of the reliability of its assessment that previous data does not differ from its model. But a more effectively persuasive assessment of its predictive ability has not come forth. This is like the ancient Greek Thales predicting solar eclipses, future predictions should be tested in practice. Again, by means of short metaphase models and domain models, future information feedback can be isolated in hindcast experiments (reproducing the past according to the model) and quantitatively compared to long term climate predictions assessments.

4. Conclusion: Anthropogenic global warming theory still hypothetical
To summarize the discussion so far, compared to accurately predicting solar eclipses by celestial mechanics theoretical models, climate models are still in the phase of reliance on trial and error experiential models. There are still no successful precedents. The significance of this is that climate change theory is still dominated by anthropogenic greenhouse gas causation; the IPCC 4th Evaluation Report's conclusion that from now on atmospheric temperatures are likely to continuously, monotonously increase, should be perceived as an unprovable hypothesis; it will be necessary investigate further and to evaluate future predictions as subject to natural variability. ®

[Translation by Charles Eicher.]

We Have the Energy, We Need the Leaders

Why are EAU Parking Lots Full of Cars?

Whats Left of the US Oil Business

As any regular reader of this blog knows, the thousands of independent producers in this country drill over 95% of all wells in the US and produce in the 80's in percentage of US hydrocarbons. That's why we roll our eyes when lying politicians and pundits rage on "Big Oil". They know better. I know. I have spent time in DC on "educational missions". They know the facts. They just choose to lie to you about them. Oh well.



I went to the North American Prospect Expo in Houston this last week and I can confirm that fortunes will be made based upon the next 12 months.


This last boom saw huge amounts of outside capital come into the business, huge land grabs at breathtaking prices that amounted to a massive transfer of wealth from oil companies to mineral owners... certainly amounting to tens and maybe hundreds of billions of dollars, as bonuses began to like tulips did to the Dutch. Acreage was locked up, and services tripled in cost in 3 years. Strangely, the overall IRR weren't any better than they had been at $20 or $40 oil because of the massive ramp up in costs. Three things convereged to make this a craze.


First, easy access to capital in a commodity market that was growing in an overall capital market that had no other place to go.


Second, lots of locations and reserves via resource plays. We identified an oil and gas patch that dwarfs what has already been produced. Bye Bye Hubbards Peak at least with respect to resource and potentian reserves.


Third, we didn't make money actually producing these reserves, but flipping proven undeveloped locations (PUDs) for the same value minus drill and complete costs as proven developed reserves (actual producing wells).


Today, oil and gas are off 70% from their highs, and drilling and completing costs are on their way down as half our rigs have been laid down. A couple of months ago, costs were still needed to drop by 60%, today, maybe 30-40% to get back to normal. I give it 6 months. The mom and pops have been quick to respond, the big publics much slower due to the negative leverage whipsaw endemic to being a public company.


All these expensive big acreage blocks are starting to break apart. No drilling dollars available. A lot less competition. Domestic gas and oil will see this effect on deliverability in 2009, and really see it in 2010. Prices will strengthen, although, in the case of gas, buffered by the delivered price of LNG.


Those that have cash can access huge largely proven resource bases for ten to twenty cents on the mid 2008 dollar, and have a drill and complete cost to reserve base equivalent to what it was at $140 dollars per barrel equivalent. This, in an environment where oil and gas could possibly double in a year or two.


All in all, as a Red-State Texan, a much better for me than the patch of 6 months ago. For my poor brethren subject to the lying vagaries of Federal control, my condolensces. Your highly regulated loss will be my gain. I loved Nancy Pelosi's quote that she hated "filthy hydrocarbons". When she was asked how that jibed with her support for the Pickens Plan, she said she "loved clean burning natural gas". Delightful.


I'll close with a quote from Ronald Reagan, who said "The Federal Government's philosphy towards business is 'if it works, tax it. If it keeps working, regulate it. If it quits working, subsidize it."


Brilliant.