Pitfalls And Profits In The Wake Of The BP Spill

“I think we should expand domestic exploration. My chances of doing that now are zero because of the oil spill.” Senator Lindsey Graham (R-S.C.)

The climate is changing. I am not talking about the record heat wave in the Northeast but rather the political climate in Washington, D.C., where the Greens are just beginning to capitalize on the Gulf Coast oil spill crisis.

The well that rests below the spot BP’s Deepwater Horizon once stood has spewed out almost 5 million barrels of oil into the Gulf of Mexico. That makes the BP oil spill the biggest ever, surpassing the Ixtoc I rig that gushed 3.3 million barrels into Mexico’s Bay of Campeche in 1979. For the environmentalists, the Gulf crisis is a once in a lifetime opportunity to re-shape Federal policies.

President Barack Obama has used the spill as a call to arms for clean energy. And he has put a freeze on new deepwater drilling; the result of which has nearly halted exploration in the Gulf of Mexico, including shallow water projects.

The Louisiana Department of Natural Resources reports that approved shallow water drilling permits in the Gulf have dropped significantly since the Federal moratorium was instituted. In fact, only four shallow-water permits have been issued since the Obama administration blocked deepwater drilling following the accident four months ago. Just four permits have been granted from May through July and those were for wells less than 500 feet deep. That compares to an average of 14 permits issued per month for the year before the moratorium.

The Obama administration is not going to let a little thing like the courts get in the way of its Green objectives. After a ruling against the six-month moratorium, the Obama administration issued a second ban on July 12 which won’t expire until December.

The oil industry is saying that Obama’s “keen to be Green” policies could eradicate hundreds of thousands of jobs in the Gulf and will start a mass exodus of rigs out of the region.

Louisiana Governor Bobby Jindal has said the drilling ban only adds insult to an area already injured.

“New requirements for shallow-water drilling are causing permitting delays that could lead to significant additional economic impacts on top of those caused by the deepwater drilling moratorium,” Jindal said.

The Governor is worried about Louisiana’s economy, but a more pressing worry for Americans could soon be the price of gasoline. That is because the Gulf of Mexico supplies nearly 30 percent of United States domestic oil and gas production. As wells in the Gulf age and are not replaced, the U.S. will experience an accelerated decline in petroleum production. This is bad news for a nation which has already seen its energy output fall steeply. The U.S. is producing less than 5 million barrels of oil per day, the lowest production levels in 60 years

You may recall the dire warnings from President Jimmy Carter’s sweater clad Oval Office chats. It is worth noting that back then the U.S. was pumping almost twice the amount of oil as is being produced today. That Democratic President fussed that the nation wasn’t producing enough oil.

Decades later and with billions of barrels in reserves spent, President Obama is preoccupied with how to limit U.S. oil and gas exploration. This despite the fact that the U.S. is importing 13 million barrels of oil per day. That is almost 60 percent of U.S. oil consumption and it costs America $300 billion per year. That is just the fixed cost which will only increase as the price of petroleum rises.

Then there are additional costs. The U.S. military spends an estimated $100 billion a year to protect the flow of oil out of the Middle East. With higher crude prices the U.S. could soon be spending half a trillion dollars per year on imported oil. And that doesn’t account for two Middle East wars this past decade which have cost a trillion dollars and counting.

Furthermore, America’s involvement in the Middle East appears to only be deepening despite Obama’s claim to the contrary. While the President has withdrawn more than 90,000 troops from Iraq, he has tripled the U.S. contingent in Afghanistan to almost 100,000 soldiers. Meanwhile more U.S. troops died in Afghanistan last month than any month since the nine-year conflict began.

The move by Obama and Democrats to reduce oil exploration in the United States—offshore or otherwise—will only deepen America’s involvement in Middle East conflicts, and could perhaps lead to a war with Iran. The results of such a foray would destabilize the nation’s energy supplies and send the price of crude oil sharply higher.

Outlook
With crisis can come opportunities and such is the case with the BP spill. Crude oil prices have moved above the $80 per barrel mark and price momentum is on the upswing. Meanwhile President Obama promises to the Green lobby to restrict drilling will not only hamper domestic petroleum production; it will also deepen America’s involvement in the Middle East. That is a mix that could send crude oil prices above $100 per barrel before the end of this year.

 

With the exception of BP, I would buy and hold shares in Big Oil. One company that is moving in the right direction and has a lot of leverage to higher oil and gas prices is Talisman Energy Inc. (NYSE: TLM, $17.00).

Talisman is a large upstream oil and gas company headquartered right in here in Calgary, Canada. In fact Talisman is one of Canada’s largest petroleum companies and it is well insulated from the Middle East. The company’s three major operating areas are Canada, the North Sea and Southeast Asia.

Talisman has a market capitalization of just under $18 billion, which makes its shares very liquid. Yet Talisman is better leveraged to rising energy prices than a giant concern like Exxon Mobil Corp (NYSE: XOM, $63.00), which has a market cap of $320 billion.

Talisman was originally part of BP, but in 1992 it became an independent company. Three years ago Talisman’s longtime President and CEO James Buckee retired and John Manzoni, a former BP executive, took over. There is one further connection between the companies. Last month as BP was liquidating assets to pay for the massive Gulf spill, Talisman stepped in and cut a deal, paying C$858 million for a 49 percent stake in BP’s Colombian operations. This purchase is in keeping with Talisman’s strategy of staying out of the Middle East and investing heavily in exploration plays.

And there is more good news: last month Talisman reported a near 10-fold increase in second-quarter profits. And the company expects oil and gas production to grow as much as 10 percent in 2011.

What impresses me most is that last year Talisman replaced 162 percent of its oil and gas production. That makes Talisman is one of the few large oil and gas companies that is growing its reserve base while slashing liabilities. At the end of March the company’s liabilities declined to $1.8 billion, just half what they were the year before.

Talisman’s emphasis on growth through exploration along with the relative safety of its vast reserves of oil and gas makes it an excellent investment. To learn more go to the Talisman’s Web site by clicking here.

Action To Take
Call your stock broker and buy Talisman Energy (NYSE: TLM) at market.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

Afghan Folly: Why We Should Have Dropped The Bomb

“It is fatal to enter any war without the will to win it.” –Douglas MacArthur.

America’s longest war is again under scrutiny in the wake of the recent flood of WikiLeaks Afghanistan documents. For me the news resurrected a question I have been asking myself for nearly nine years: why wasn’t the war in Afghanistan ended before it even began?

In the wake of 2,740 dead innocent Americans killed on 9/11, why didn’t the United States government deal with al-Qaida and Osama bin Laden with extreme prejudice? I am talking the N word. That is because I believe that Americans would be safer and the world would be a better place if the U.S. had launched a tactical nuclear strike against an organization whose goal is to kill Americans.

The argument against a nuclear strike ranges from breaking international law to harming the environment and killing innocents. But nine years of conventional war has done plenty to hurt the environment and kill combatants and civilians.

So instead the U.S. has become bogged down in its longest war ever; a war with no end; a war that has no recognizable enemy; a war that the nation can ill afford to wage.

The New Pentagon Papers
Daniel Ellsberg, a former U.S. Marine and military analyst, precipitated a rethinking of the Vietnam War in 1971 when he released the “Pentagon Papers.” The papers comprised the U.S. military’s account of what was going on in the Vietnam War.

Ellsberg understood there was a consensus within the Federal government that the U.S. had no realistic chance of victory in Vietnam; that political considerations prevented them from saying so publicly. Ellsberg argued that Secretary of Defense Robert McNamara and others continued to state in press interviews that victory was "just around the corner,” even though they knew it was not true.

President Nixon put Ellsberg at the top of his enemy’s list. Nixon’s Oval Office tape from 1971, with H.R. Haldeman talking, shows why the White House was out to get Ellsberg: “To the ordinary guy, all this is a bunch of gobbledygook. But out of the gobbledygook comes a very clear thing: You can’t trust the government; you can’t believe what they say; and you can’t rely on their judgment.”

Nearly 40 years later WikiLeaks released nearly 92,000 secret military documents about the fighting in Afghanistan. Its founder, Julian Assange, told The Guardian that, “The nearest analogue is the Pentagon Papers that exposed how the United States was prosecuting the war in Vietnam.”

According to The Washington Post, “The WikiLeaks Afghanistan War Logs will fuel political opposition in the U.S. to American troops continuing combat operations in Afghanistan.”

The commentary itself, provided below by the The New York Times, is chilling: “IN HEAVY CONTACT… We have mortars pinned down and fire coming from everywhere…. Multiple enemies running through… and fire coming from the mosque… The police station is shooting at us.”

As it turns out the Combat Outpost Keating barely hung on. Yet eight Americans were killed along with several Afghans. And several more wounded. All this from a mission that was to provide security and back-up the local government.*

Blame It On Bush
It’s not like we don’t already have plenty of reasons to be upset over the war in Afghanistan. But unlike Nixon, who wanted to repress the Pentagon Papers, the Obama administration takes the view that the WikiLeaks Afghanistan documents are old, dating back to when the war was being neglected by President Bush. The Obama White House points out the fact that the WikiLeaks documents end last year, just as President Barack Obama began his new strategy and pledged 30,000 additional troops.

If Vietnam demonstrated anything it is that more troops don’t ensure victory. Not against a battle-hardened enemy that can’t be easily recognized from the overall population.

As the chart above shows, in three years President Johnson almost tripled America’s troop levels in Vietnam. Despite ramping up the war the American military was sideswiped by the Tet Offensive in 1968 which lead CBS anchorman Walter Cronkite to say: “It is increasingly clear that the only rational way out will be to negotiate, not as victors but as an honorable people who lived up to the pledge to defend democracy.”

After Cronkite’s broadcast Johnson said, “If I’ve lost Cronkite, I’ve lost Middle America.” Not long afterward Johnson announced he would not seek re-election.

Don’t let LBJ’s decision get your hopes up. Obama is intent on staying for the long haul regardless of what happens in Afghanistan. That means the continuation of a war that kills our sons and daughters; a war that is costing our nation hundreds of billions of dollars. Just last week the Center for Defense Information, estimated the cost of the wars in Iraq and Afghanistan will reach $1.08 trillion by the end of fiscal year 2010. But the real cost is much worse. As of the end of last month more than 1,200 American service men and women have died fighting in Afghanistan. More than 4,400 American service personnel have died in Iraq.

The WikiLeaks Afghanistan documents only confirm our worst fears—that despite a recent $7.5 billion aid package Pakistan is double-dealing and back-stabbing us. And regardless of how much Secretary of State Hillary Clinton gushes over Pakistan’s alliance, it doesn’t change the fact that the Taliban and al-Qaida have key support from Pakistan’s intelligence service and key players in the Pakistan government. This, and the fact Afghanistan has seen invading forces come and go including the Greeks, Turks, British and the Soviets, makes it impossible to imagine a scenario where America can now win this war.

Perhaps the only opportunity to win in Afghanistan was squandered nine years ago when the U.S. refused to marshal all of its strength to destroy al-Qaida.

Action To Take
More than four decades ago my father C.V. began writing Myers’ Finance & Energy because he believed that the war in Vietnam was unaffordable and that the debt acquired by the Federal government to win it would be extremely inflationary. He and his subscribers bet big on gold and silver beginning in 1967, right before the Tet Offensive. He was proven correct and his subscribers profited.

From 1970 to 1980 the price of silver rose from $1.60 per ounce to more than $50 per ounce and the price of gold increased from $34 per ounce to $850 per ounce.

The war in Afghanistan is every bit as unwinnable now as the Vietnam War was then. Look for even more war spending by the Federal government; the results of which will push precious metal prices higher. That is why I urge you to buy and own physical gold and silver.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

*Footnote: If you want to learn more about the war in Afghanistan and what our troops are really up against, I urge you to read the 2010 bestseller, War, by Sebastian Junger, Harper Collins. Junger was embedded with a combat platoon in the perilous Korengal Valley in 2007 and 2008. Read a review of this book at Boston.com by clicking here.

JM

Green Lies About Oil Sands Put America’s Energy Future At Risk

Alberta’s oil sands are back on the Green’s hit list. And this time the Greens are playing dirty.

A couple of weeks ago the San Francisco based environmental group, Corporate Ethics International—which has few ethics and works closely with the Sierra Club and Greenpeace—spent $50,000 erecting billboards in Denver, Portland, Seattle and Minneapolis that deride Alberta as home to "the other oil disaster.” The campaign urges tourists not to go there.

The billboards—which may be coming to a city near you even if you live in Europe—showcase a dead duck found in a Syncrude tailings pond and an oil-soaked pelican in the Gulf of Mexico.

Now I have been to Alberta’s oil sands on a couple of occasions and I can tell you that the land is scarred. Squeezing oil out of shale is a tough and dirty business and the waste ponds there do kill ducks, although hardly enough to create a frenzy over. In fact fewer ducks die from being soaked in tailings ponds in the oil sands than are killed by flying into wind power turbines.

I need to make one more point: Canada produces 2 percent of the world’s greenhouse-gas emissions and the oil sands account for about 5 percent of that total. So while the Fort McMurray area is tarnished, it has a smaller carbon footprint on the world than a handful of Chinese coal-fired power plants. Still I can’t remember Greenpeace damning people that went to the Summer Olympics in Beijing.

I can also tell you that the last time I was up in the Fort McMurray area where Alberta’s giant oil sands are located was October, 2001. I took this trip in the wake of blown-up buildings and murdered Americans—Americans killed by Arabs, most of them Saudis, whose oil production American Greens don’t seem to have a problem with.

At that time I told my subscribers to Outstanding Investments that if I had to choose between energy security and some scarred land I would choose energy security. I also told them that if I had to choose between ducks and people; I would choose people every time.

My real outrage over this slander by the Greens against Alberta is that it is full of lies and it doesn’t even target what the environmentalists consider to be the problem—the oil sands themselves. Instead, it goes after an entire province and its tourist industry.

It was a topic of conversation here in Calgary last week at the Pacific Northwest Economic Region Summit. I was on hand and heard as people in business and government on both sides of the United States/Canada border condemned the latest smear tactics.

“I voted with my feet, I’m here (in Calgary),” said David Jacobson, the U.S. Ambassador to Canada. “To tell you the truth I think that ad campaign makes about as much sense for people not to come to Alberta to vacation because of the oil sands as it does for people not to visit Chicago because Illinois has coal.”

As an American who was born and now lives in Alberta, I can tell you it is a majestic place to visit. I have not seen greater beauty anywhere in the world than the Rocky Mountains that flank Calgary.

You might think that the Corporate Ethics group would understand that propaganda doesn’t work when the truth is allowed to get out.

Even the infamous liar, Supreme leader Kim Jong-il, has a better understanding of propaganda writes the Montreal Gazette: “The North Koreans don’t let their citizens travel. That is why Corporate Ethics International would like Alberta to be as isolated as Albania.”

There is just another tiny problem with the Alberta attack ads—they are filled without outright lies. Alberta Premier Ed Stelmach is particularly angry at the anti-Alberta ads, calling them a "propaganda campaign that is full of lies.”

Stelmach pointed out that claims about the size of the oil sands development, as well as the damage to water and air, are all grossly wrong.

Corporate Ethics International claims that Alberta’s oil sands are “twice the size of England.”

Not even close says Travis Davies, a spokesman for the Canadian Association of Petroleum. "There is a massive difference between 260,000 square kilometres and the reality of the Alberta oil sands, which is 600 sq. km. impacted and 65 sq. km. reclaimed." So much for truth in advertising.

Still, Alberta’s oil sands might seem like an easy target for the environmentalists, even in an age where radicals in the Middle East are targeting the U.S. That doesn’t mean that the Greens are being honest about the utility of Alberta’s oil sands.

“The environmental risks of the oil sands have been greatly exaggerated and overblown by activist organizations that have different agendas,” says Hal Kvisle, the former CEO of TransCanada, a North American pipeline giant. “These parties, such as Natural Resources Defense Council and Greenpeace, make statements about the oil sands that mostly aren’t true.”

America Needs Alberta’s Blue-Eyed Sheiks
I have some other news for the Greens—if they want to count on Arab oil—some of it from places where extremists continue to plot death and destruction on America—Alberta has plenty of other buyers. In fact China must be tickled pink at the Greens’ attack on Alberta because they are plowing plenty of money into Alberta’s oil sands so that they can secure their energy future in America’s backyard.

As for the U.S., it is on track to import as much as 3 million barrels of oil per day from Alberta’s oil sands by the end of this decade. Right now the U.S. consumes almost 1 million barrels per day of Canadian oil sands. Yet there are Greens in the Obama administration and in the Democrat party that want to derail oil sands imports in pursuit of more expensive green energy technologies—technologies that frankly do not yet exist and may not exist for years or even generations.

The politics of Green are blissfully ignorant that Canada has one of the largest stable oil deposits in the world just a scant distance from America’s borders.

If the Greens get their way and reduce or shut down the flow of Canadian oil, the U.S. will be more vulnerable, paying higher energy prices; in some cases for oil held by maniacal mullahs. And inevitably, China, America’s major competitor, will be enriched and empowered. If you ask me, it is a pretty stiff price to pay over some dead ducks.

Action To Take
Could Alberta’s oil sands do a better job of cleaning up the mess they are making? You bet. Meanwhile there is too much at stake for the U.S. to turn its back on this rich and secure energy source. As a result oil sands stocks will continue to prosper. I recommend you buy Suncor Energy Inc. (NYSE, SU, $30.82) and Canadian Oil Sands Trust (TSX: COS-UN.TO, C$27.52).

In fact just last week the Oil & Gas Journal wrote: “The blowout in the Gulf of Mexico and resulting ban on deepwater drilling in U.S. waters may prove a boon for Canadian oil producers,” including oil sands stocks. I couldn’t agree more.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

Confessions Of An Illegal Alien

I believe Arizona’s Immigration Law S.B. 1070 is going to be damn effective. In fact I think it should be adopted across the United States. What special insight do I have into the matter? I used to be an illegal alien.

Twenty-seven years ago this month I was sitting at my desk in the Peyton Building in downtown Spokane, Wash., and I got a letter from the Immigration and Naturalization Service (INS). I jerked it open and realized my worst fears. My work visa had not been extended.

Immigrating to the United States had been a disaster right from the start, even though it shouldn’t have been. My dad, C.V. was a U.S. citizen by right of his father being born in Oklahoma. At least that’s what the U.S. State Department said when they issued C.V. a U.S. passport.

Yet INS thought otherwise. They hadn’t forgotten that C.V. had sold gold to Americans when it was illegal for them to own it. INS wanted to deport him. It was a legal fight that would take a decade to resolve. In fact a U.S. Federal judge finally ruled in C.V.’s favor a few months after his death in 1990.

But on that day in 1983 the only thing that mattered was the letter on my desk; the letter that said I had to leave the U.S. or face deportation. It didn’t matter that I had paid my taxes, bought a house and that my wife and I had an American-born son.

Despite the fact my dad was ill I decided that I didn’t really have a choice. Better to move back under my own terms than to be roped-up like a criminal and be “escorted” by deportation bus.

Of course my dad, who was also my boss, was dead set against me going back to Canada. Besides the fact that he hated the Federal government, he had a U.S. passport that proved to him that I was entitled to a green card. He talked to his lawyer Bob Magnuson, who was the brother of Idaho mining legend Harry Magnuson, and set up a meeting with a young immigration lawyer named Dan Keane.

Before Dan became an immigration and criminal lawyer he had worked as an INS agent. In fact his father was a well known immigration judge.

I showed Dan the INS letter and he read it carefully. Then he smiled and said, “So what’s the problem?”

“What’s the problem? This letter says if I don’t leave I am going to be deported!”

“That’s not likely to happen. You’re dad’s citizenship is going to get sorted out and when that happens you will get a green card. Until then I wouldn’t worry about it.”

I told Dan I was plenty worried about it. That I was afraid to get so much as a speeding ticket; that the cop would check on my immigration status and that my wife and I would be headed for Canada.

Dan started laughing. “Hell John, the cops don’t enforce immigration law. They don’t care.”

“They don’t care!” I was astonished. Here I was, living illegally in a country and this lawyer—my lawyer—was telling me that law enforcement didn’t care.

“You could get caught robbing a bank and your immigration status probably wouldn’t be called into question,” explained Dan.

Because of Dan’s advice and my father imploring me to stay, I decided to be an illegal until there was a ruling on C.V.’s citizenship. Fortunately I was given amnesty and granted a green card by the Immigration Reform and Control Act of 1986. A decade later I became a U.S. citizen.

I have always been grateful for the opportunity to become an American. But I also know it would never have happened if I had fretted about the police enforcing the law. And while Arizona Governor Jan Brewer has been called a bigot for signing S.B. 1070, she has struck upon an idea that is long overdue: That state law enforcement should enforce U.S. laws and that in doing so the U.S. can at least slow the flood of illegals entering the country.

In fact, on July 12th azcentral.com wrote: “The upcoming enforcement of SB 1070 has caused many illegal immigrants to flee Arizona.”

It is hard for me to understand why the Obama administration is challenging assistance from local law enforcement when clearly the Federal government needs all the help it can get.

There are as many as 30 million illegal aliens in the U.S. That’s the population of Canada. And no place has been impacted harder than Arizona.

According to the Connecticut Law Tribune, “Three state counties have been lost to violent Mexican drug cartels. More than a thousand attempt to cross the border every day. Between 1996 and 2009, the illegal alien population in Arizona increased 300 percent.”

The CLT goes on to point out that, “In 18 months alone, more than 22,000 people were killed in an ongoing drug war in Mexico near the Arizona border. Thugs are now throwing rocks at the heads of our border patrol agents.”

Yet even as Arizona suffers the highest kidnapping rate in the world outside Mexico City, the Obama administration wants to obstruct Arizona from protecting its own people who are, after all, American citizens.

U.S. News & World Report says there may be method to the Federal government’s madness, with both the Obama administration and the Republican Party, “spending way too much time bowing to the interests of illegal immigrants (who come in all races and colors) and refusing to enforce existing laws or pass new ones limiting immigration to that which improves our environment and our economy.”

Through the Justice Department President Barack Obama declares that S.B. 1070, “illegally intrudes on federal prerogatives,” and further states that Federal law “trumps state statutes.”

Is the State Department serious? After all, if somebody is hijacking an airplane or kidnapping someone across state lines do we worry whether they are arrested by the Feds or the local cops? Of course we don’t. So why then should we worry who is enforcing immigration laws? We should only worry that they are being enforced.

As a person who once feared deportation I am not sure what if any of S.B. 1070 has to do with race or racism. I knew that if the INS caught me I was in fact going back to Canada. It wasn’t like they were going to say, “Oh heck you’re a white guy, we will let you stay.” As far as I could see back then and right now, Federal immigration laws are color blind. It is the Federal government which is blind to America’s needs.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

Is President Obama As Hapless As Herbert Hoover?

“Herbert Hoover is the greatest humanitarian since Jesus Christ.”
The Chicago Tribune, 1928

With all due respect to Oprah Winfrey, she was not the first person to anoint a Presidential candidate as “The Chosen One.” The Chicago political machinery was doing that with regard to the father of the Great Depression—Herbert Hoover—seven decades earlier. Could it be that Oprah was just as wrong about her President? It looks that way.

Is It Live, Or Is It Memorex?
The double dip recession that became the depression of the 1930s is playing out once again. And as my mentor Chip Wood—the geopolitical editor of Personal Liberty Digest™—sometimes points out: “History might not repeat but it certainly hums.”

A whopping 8 million jobs have simply evaporated since the Crash of ’08 despite the more than $3 trillion in stimulus money, most of it courtesy of President Barack Obama. America hasn’t got much bang for the buck when you consider that the official unemployment number is almost 10 percent. And just two days ago 2 million Americans lost their unemployment checks. That number will continue to soar in July while Congress takes its vacation.

Consumer confidence continues to decline while the housing market looks to be heading off a cliff. The national mortgage delinquency rate grew to 9.2 percent in May, up 2.3 percent from a month earlier and almost 8 percent from a year earlier.

Like many Americans Allan H. Meltzer, a professor of economics at Carnegie Mellon University and the author of A History of the Federal Reserve, wanted to believe the President’s assertion during the 2010 State of the Union address that he would grow the economy. However, in the June 30 issue of The Wall Street Journal, Meltzer says that the President has done little to improve things.

“The administration’s stimulus program has failed. Growth is slow and unemployment remains high. The president, his friends and advisers talk endlessly about the circumstances they inherited as a way of avoiding responsibility for the 18 months for which they are responsible.”

Earlier this year The New Republic declared: “Barack Obama, You Remind Me of Herbert Hoover.” “It might seem ludicrous or unfair to compare Obama to one of the most vilified presidents of the last century. But to his contemporaries, Hoover had been the American most suited to be president.”

In fact Henry Ford practically gushed over the Hoover nomination. And yes, you are forgiven if it all sounds a bit familiar.

“The reason we must have a new kind of President is that we are on the threshold of a new kind of world,” said Ford. “(We need a man) who can direct and oversee and referee between all parties and keep them all busy at the main task of creating prosperity which shall be continued and equally distributed throughout the country.”

This comes from the man who once said, “History is bunk.” Perhaps it is not so surprising then that Ford adored Hoover; the man many say was a crucial cog in causing the Great Depression.

A Very Depressing Depression
I heard a lot about the Great Depression because it hit my parents so hard. They were just getting started in life and it changed them in so many ways. But even as I continue to read more on the past I am shocked at how bad things were.

From 1929 to 1933 national income in the United States reduced by half; from $88 billion to $40 billion. Output from U.S. factories fell by half and automobile production fell by 20 percent. By 1934 American steel mills were operating at just 12 percent capacity. In fact, pig iron production fell to its lowest level since 1886.

But the banking crisis is what crushed the spirit of the nation. In 1929, 659 banks failed. In 1930, 1,352 banks failed. And in 1931, 2,294 banks closed their doors.

Deflation was in full swing. Farming, still the centerpiece of the American economy was crushed. In 1930 alone farm income fell from $12 billion to $5 billion. Factories did little better. From 1929 to 1933 factory wages fell by the same totals. U.S. M2 money supply dropped from $47 billion to $32 billion.

At the depths of the downturn 1 million people in New York City were out of work. As for Chicago, there was payback to be had for backing Hoover. Times there were so bad Al Capone’s soup kitchen provided 120,000 free meals in the space of six months.

Double Dipping Dow
Most people associate The Great Depression with 1929—the year of the infamous stock market crash. Yet the worst of the Depression was in 1933. The Dow Jones Industrial Average rebounded smartly after hitting its 1929 low of 195.35 on Nov. 13, 1929. By December 9 it had bounced to 267.56—a gain of nearly 37 percent in less than a month. By April 16, 1930, the Dow had risen to 297.25—a gain of 52 percent from the 1929 lows.

Many investors thought the worst was over and piled in looking to recover losses suffered in the ’29 Crash. They couldn’t have picked a worse time. The Dow collapsed, shattering the 1929 lows. In December of 1930 the Dow finished at 154.45 on Dec. 17, 1930. The ultimate bottom was not hit until 1933 when the Industrial Average closed at 49.68 on February 27.

The Crash of 1929 was triggered by a crisis of credit similar to what we are experiencing now. In fact, one could make the argument that today’s debt implosion is even worse, encompassing not only stocks purchased on margin, but also real estate—both residential and commercial—as well as consumer credit. Credit cards weren’t around in 1929. Neither were adjustable-rate mortgages.

The Bulls claim that stocks always seem to climb a wall of worry. And until a few months ago it just looked as if they might be correct. The Obama stimulus package seemed to erase fears of deflation.

The Dow Industrial Average, which hit 6,440 in March of last year, did make a remarkable recovery. This past March the Dow was back close to 12,000. However, the Dow never did break the 12,000 mark and it has since fallen back to about 10,000. Meanwhile we seem to be slipping into a summer of discontent.

I believe we are at the edge of another depression, an economic collapse that began with the failure of Lehman Brothers.

Of course this is not what was expected to happen. Obama was supposed to usher in a new age of prosperity. Then again the New York Herald Tribune declared that Herbert Hoover’s election: “Marks an epoch in American political history… America stands at the threshold of a new era.”*

Action To Take
Sell equities in anticipation of history repeating itself. Physical gold, blue chip gold shares and a handful of resource stocks will provide protection from the storm. Do not delay in taking action. Summer will provide only temporary reprieve at best. My long-term target for the Dow Jones Industrial Average is 6,000, almost 40 percent lower than where it currently sits.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

* If you want to know about the Great Depression, including its causes, I strongly recommend you pick up a copy of, The Year of the Great Crash, 1929, by William K. Klingaman, 1989, Harper & Row, New York. You can buy a new or used copy of it in hardcover at Amazon.com by clicking on the link above.

The G-20 Pig-out And What It Means For Gold

Listening to President Barack Obama at the Group of 20 summit in Toronto, Canada, last week reminded me a bit of myself. As a person who has gained, lost and then gained back 100 pounds over the past decade, I have given much consideration to the very best time to start a diet. Without a doubt the answer is always: tomorrow.
                     
For nearly 18 months Obama has been on a spending orgy that would make the Roman Emperor Caligula blush. Yet Obama says that the United States and other nations need to cut spending; just not yet, damn it!

"Because durable growth must also include fiscal responsibility,” said Obama after the G-20, “we agreed to balance the need for continued growth in the short term and fiscal sustainability in the medium term." Then the President added: “We can’t all rush to the exits at the same time, so countries that have surpluses should think about how we can spur growth."

In other words, “Of course I will have that piece of cheesecake.”

This is especially true if you not only think the cheesecake isn’t bad for you, but if you have in fact convinced yourself that you just might die without it.

After offering up $7 trillion in spending to re-flate the economy following the Crash of ’08 you might think that the industrialized nations had already bitten off more than they could swallow. This is apparently not so. The G-20 summit concluded with Big Governments showing their still insatiable spending appetites.

As a native born son I can tell you that nobody knows how to borrow and spend better than Canadians. Prime Minister Stephen Harper proved it by urging advanced and developing countries set aside their differences and spend until it hurts.

Harper bragged after the summit ended that the world will adopt a “carefully calibrated” plan that rightly puts growth and jobs first and then tackles market-rattling deficits in a big way.

Harper advocated what he called the, “continued role for ongoing stimulus in the short term,” adding: “The G-20 still has a lot to do to fully entrench the global recovery.”

In their final communiqué the G-20 leaders said that “strengthening the recovery is the key.” Nevertheless the G-20 leaders agreed to cut deficits in half by 2013 and to put government debt loads on a stable or downward track by 2016.

It all sounds a bit like Kirstie Alley at Thanksgiving dinner.

World’s Biggest Loser
And in case you were wondering, nobody has a bigger appetite to spend than Obama. The President says that he fears an austerity program will choke off the global recovery, inviting another crisis. But even he concedes that ballooning American and European deficits will be pared back eventually (just one last box of chocolates… I swear it).

“We are moving in the same direction,” the President said as the summit came to a close. Exactly what direction that is remains unclear, but I for one think it might require an economic liposuction also known as deflation.

Of course that is all down the road. The good news for the U.S. is that the G-20’s six-year window leaves Obama the latitude to front-load stimulus and bring in austerity later. No doubt that will come sometime after the President’s bid for re-election.

Meanwhile, Washington is currently running a $1.4 trillion deficit, or a number which almost totals 11 percent of gross domestic product (GDP). Still the President has said he is determined to keep on spending until we see a permanent economic turnaround. When that will be is anyone’s guess, but one thing is clear: it won’t be easy to stabilize the debt load, much less set it on a downward path. For the 31 members of the Organization for Economic Cooperation and Development, unemployment now stands at 46 million, up some 50 percent since 2007.

Trillions have already been spent trying to resurrect the global economy and if the G-20 meeting is any indication, world governments are about to double-down on their bet. One has to wonder if even John Maynard Keynes—the father of deficit spending—would recognize what is going on now in his name. Perhaps Keynes would fear that runaway deficits threaten an even worse financial crisis.

Eventually deficits become counterproductive. They cause concern and eventually fear in the credit markets. This will invariably lead to skyrocketing interest rates and despite government’s best intentions, an economic collapse.

Germany—a country whose people are known for their boorish appetites—is urging caution when it comes to more government spending. At the G-20 summit German Chancellor Angela Merkel warned: “It’s not about growth at any price, it’s about sustainable growth.”

German Finance Minister Wolfgang Schaeuble added: “Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of the crisis.”

And German Economy Minister Rainer Bruederle threw in his two euro-cents, saying that the U.S. and Europe need to “urgently” slash spending.

Fat chance I say. A doctor at an obese clinic is more likely to stop fat kids tumbling into an abandoned Twinkie truck than the German Bundestag will be at reining in the spending of other G-20 members.

In fact President Obama has staked his reputation and more importantly, his re-election, on more stimulus spending.

The Wall Street Journal writes that the Obama administration is insisting on new stimulus measures—”convincing evidence that they too recognize that the earlier measures failed.

“The administration’s stimulus program has failed. Growth is slow and unemployment remains high. The president, his friends and advisers talk endlessly about the circumstances they inherited as a way of avoiding responsibility for the 18 months for which they are responsible.”

The latest market evidence says that the WSJ is spot on. Consumer confidence is anything but confident. The Dow Industrials are on the edge of a cliff—perched below 10,000 points, while the S&P 500 is at its lowest point since the dark days of October 2009.

And don’t look for any help from our so-called friends at the Federal Reserve. The central bank has already cut the cost of money as close to zero as it can go. In fact, the yield on 10-year Treasury notes has fallen to less than 3 percent, one of the few times in our history.

All in all it’s enough to drive a fella to run out to Wendy’s and buy up Baconators.

But there is something out there that would soothe us a whole lot better than grease. I am talking about gold.

Bullion prices have risen almost 50 percent since I first recommended it to you on this site last summer—even in the wake of last week’s big correction that took place mostly on profit taking and some fears of deflation. Still, I am convinced that Washington’s next flood of money will push the Midas metal higher—much higher—up to $1,800 per ounce within the next year. That makes bullion at $1,200 a bargain.

Most importantly, gold looks to be the only dependable investment out there. Government policies will soon unleash a tidal wave of inflation which will rock the stock and bond markets as well as the banks themselves. The only profitable place, in fact the only sensible place to be fully invested right now is in gold.

I started out by talking about diets. I want to finish up by telling you something my dad said to me about gardening: “The best time to plant a tree was 20 years ago. The second best time is right now.”

Of course it would have been better to have bought more gold sooner. But let’s do the next best thing and buy some today.

Action To Take
Sell all Big Board stocks and all bond instruments this very day and use the funds to buy physical gold. I recommend American Gold Eagles, Canadian Maple Leafs and African Krugerrands. I prefer these because they are stamped in English, have their gold content stamped on them, come in convenient, well-known sizes (1-ounce, half-ounce, quarter-ounce and one-tenth-ounce) and sell at small premiums over the value of their gold content.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

Paradise Lost: For The Gulf Coast And The United States

“So many and so various laws are giv’n;
So many laws argue so many sins.” –Paradise Lost, John Milton, 1667

In the epic poem Paradise Lost, Adam and Eve have taken the forbidden fruit and God is asking Adam why. As in Genesis, Adam is passing the buck, telling God that this woman whom He made gave him the fruit. Adam asks God how such evil could have ever been expected from one so lovely.

God tells Adam that the mistake is Adam’s not Eve’s; that Adam was to look out for Eve. God points out that just before Eve met the serpent Adam had told her that they should stick together because the Archangel Raphael had warned them of the serpent. Yet Adam let Eve stray away to meet her fate, the consequences of which changed the world.

And in the end God holds Adam accountable for the loss of paradise.

Obama’s Blame Game
Just as Adam did with Eve, President Barack Obama is shifting as much blame as he can onto BP.

According to The Daily Telegraph, BP CEO Tony Hayward’s grilling looked like a kangaroo court. He had to listen to a litany of accusations from United States lawmakers before he was able to say a single word in his own defense: “As far as the members were concerned, he was there to take the blame, whether or not there were mitigating circumstances, or companies other than BP should be sharing culpability. It was as though, in a criminal trial, the victim’s statements were being read out before the verdict had been passed, although that was a foregone conclusion—a resounding ‘guilty.’ A kangaroo court would have offered a fairer hearing.”

What The Daily Telegraph doesn’t understand is that the Congressional inquisition of BP and Big Oil was never intended to be fair. The goal was to keep the elected elites in office and increase their influence.

Just as Adam thought Eve was a perfect foil, so too, does President Obama think that of BP. And he is right. Last week White House spokesman Bill Burton mocked BP’s CEO and all-around English twit Hayward for attending a luxury yacht race on crystal waters while the Gulf of Mexico is turning into the Black Sea.

Burton opined that Hayward should take part in the cleanup operations in the Gulf of Mexico with the $400,000 yacht he co-owns.

"You know, look, if Tony Hayward wants to put a skimmer on that yacht and bring it down to the Gulf, we’d be happy to have his help," Burton said to a chorus of yuck-yucks in the White House briefing room.

It is almost beyond my comprehension that BP could have such bad PR, from Hayward saying he “wants his life back,” to BP Chairman Carl-Henric Svanberg calling the people of the Gulf Coast, “small people.” But it seems the people of the Gulf are small people, not just to BP but to Obama as well.

The same weekend that Hayward was skipping his yacht, Obama was walking the links. Even as tar balls washed up on Destin, Fort Walton and Panama City Beach, Obama was busy hitting golf balls.

Just as Adam was quick to condemn Eve, the Obama White House sees no hypocrisy in pointing out BP’s sins while denying their own.

Caught Between The Devil And The Deep Blue Sea
One estimate reported by CNN says the catastrophe of the Deepwater Horizon platform spill could cost just the Florida Gulf Coast alone 200,000 jobs before it is all over. Yet the cost on all of us is only starting to climb. Seafood is becoming more expensive and oil prices have resumed their climb towards $80 per barrel.

It is important to note that before the explosion of the Deepwater Horizon, the Gulf of Mexico was producing about 1.6 million barrels of oil per day. That is almost a third of domestic production.

If the Obama administration follows through with an overall ban on offshore drilling in the Gulf of Mexico, and further tightens the screws on exploration in Alaska, the consequences of this crisis will have a devastating affect on our oil needs.

Last week a New Orleans Federal judge lifted the six-month moratorium on deepwater drilling imposed by the President, saying: “The court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium.”

However Interior Secretary Kenneth Salazar responded that he will issue a new order on deepwater offshore oil drilling.

“We see clear evidence every day, as oil spills from BP’s well, of the need for a pause on deepwater drilling,” Salazar said. “Based on this ever-growing evidence, I will issue a new order in the coming days that eliminates any doubt that a moratorium is needed, appropriate, and within our authorities.”

Expect the White House to throw its full weight behind suspension of deep water drilling. And that is bad news for the nation which desperately needs oil from the Gulf of Mexico. Without it we will be left begging OPEC.

Does BO Have A Backdoor Deal With BP?
Meanwhile BP has kicked in $20 billion to pay for their mistake. That led Congressman Joe Barton (R-Texas) to apologize to BP saying that the $20 billion escrow fund was a “shakedown” by the White House.

I think Barton was not only ignorant of the political winds but was dead wrong. I believe that BP and the White House made a deal for the Federal government to funnel that money back to BP in the back door. One of just a handful of ways for this to work would be to give BP sweet deals on future leases.

In the end it will cost the taxpayers more than it will cost BP. Still, Obama probably considers the price tag a bargain if it can turn the nation Green.

“The motivation for allowing the well to blow and prolonging the crisis isn’t merely financial, it’s political too,” writes Prison Planet. “The motto for the people who pull the strings inside the Obama administration, people like Rahm Emanuel and Hillary Clinton is to ‘never let a good crisis go to waste’—and Obama himself has certainly taken that to heart over the course of the last two months.”

Prison Planet speculates that Obama and BP are joined at the hip: “The Obama administration has aggressively exploited the BP oil spill in the Gulf of Mexico to manufacture an artificial urgency in an effort to speed the passage of cap and trade in pursuit of a ‘green economy,’ an agenda firmly supported by the transnational oil corporations Obama is claiming to be reigning in. British Petroleum is one of the founding members of the cap and trade lobby, and has consistently lobbied for greenhouse gas restraints… and subsidies for oil pipelines, solar panels, natural gas and bio-fuels.”

Prison Planet concludes that BP stands to profit to the tune of billions.

Unfortunately what is good for BP is not good for the U.S. Some economic studies have indicated that going Green costs 2.2 jobs for every new job created.

In the Gulf, not only are shores being infected with a killer sludge, but now the Federal government is putting a moratorium on drilling. At stake are hundreds of thousands of jobs for people who have neither the time nor the money to go to yacht races or country clubs. It is their, and even our, paradise lost.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

BP: Blame Petroleum

Birds covered in oil make a great advertisement for renewable energy.”
The Financial Times, June 16, 2010.

As I watched President Barack Obama’s Oval Office speech last weekin which he offered up empty buckets of hopeI reflected on the Greens and the crisis their President is muddling through. Like a cop, there never seems to be a Green around when you need one.

Certainly the Save-The-Earth Squadron has been noticeably silent on the Gulf oil spill. In fact there hasn’t been a peep from the animal rights activists, even in the face of CNN’s continuous coverage of oil stricken pelicans.

According to Politico, “As the greatest environmental catastrophe in U.S. history has played out on Obama’s watch, the environmental movement has essentially given him a passall but refusing to unleash any vocal criticism against the president even as the public has grown more frustrated by Obama’s performance.”

In fact, environmental groups sacrificed some seals to run a full page ad in The Washington Post earlier this month. Incredibly, the ad does not fault Obama over the ecological catastrophe. In fact it thanked him for putting on hold an Alaska drilling project. “We deeply appreciate your decision…” the ad tells Obama.

It gets even more surreal.

“President Obama is the best environmental president we’ve had since Teddy Roosevelt,” Sierra Club chairman Carl Pope told the Bangor Daily News earlier this month. “He obviously did not take the crisis in the Minerals Management Service adequately seriously, that’s clear. But his agencies have done a phenomenally good job.”

Good job? Can you imagine if this disaster belonged to John McCain and Sarah Palin? The Greens would be marching on Washington with ropes in hand. So what is going on?

I think the answer is pretty easy: Greens are not outraged by what is happening in the Gulf of Mexico because it is a means to and end. The end being a President that wants to reshape the U.S. economy right down to the last solar panel.

“These guys have bet the farm on this administration,” said Ted Nordhaus, chairman of an environmental think-tank, the Breakthrough Institute. “There has been a real hesitancy to criticize this administration out of a sense that they’re kind of the only game in town. These guys are so beholden to this administration to move their agenda that I think they’re unwilling to criticize them.”

Even as Obama compares the oil spill to 9/11, the silence of the environmentalists is deafening. It is all part of the Green’s strategy to paint petroleum as the enemy. And Obama is marching lockstep with them.

“In the same way that our view of our vulnerabilities and our foreign policy was shaped profoundly by 9/11,” said the President, “I think this disaster is going to shape how we think about the environment and energy for many years to come.”

Obama is using the catastrophe to push forward climate and energy reform. These are not my conclusions. This is what the President has vowed: “(We will) move forward in a bold way in a direction that finally gives us the kind of future-oriented… visionary energy policy that we so vitally need and has been absent for so long.

“One of the biggest leadership challenges for me going forward is going to be to make sure that we draw the right lessons from this disaster,” the President said.

Obama said he did not know if America would shift from an oil-based economy in his lifetime, however he added that now was the time to “start making that transition.”

Obama’s comments and the Federal government’s need to look like it is doing something about the oil spill led the CEOs from Big Oil to Capitol Hill last week with promises to reform while pleading their case for petroleum.

The executives of the five biggest oil companies operating in the U.S. faced accusations that the Deep Horizon oil spill is somehow the fault of all of them. The bosses of BP, Shell, ExxonMobil, Chevron and ConocoPhillips delved into the safety of offshore oil exploration and drilling and even had to muster arguments as to why oil is a necessity to the American economy.

Woulda, Coulda, Shoulda
I can see why BP was grilled by Congress; but I am baffled why the other Big Four were called before the House Energy and Commerce subcommittee.

"This blowout happened at a BP well,” declared Congressman Henry Waxman (D-Calif.), “but, if it occurred at an ExxonMobil or Chevron well, they wouldn’t have been any more prepared to respond.”

Excuse me Mr. Waxman, but it didn’t occur at an ExxonMobil or a Chevron well. It happened at a BP well, and while we are on the subject let’s talk about why it happened. It happened because the available terra firma of the U.S. has been over drilled, over pumped and sucked dry.

Still Chairman Waxman and the rest of the committee have Big Oil back-peddling. ConocoPhillips CEO James Mulva looked like a kindergarten kid ready to cry as he explained that the Federal government’s energy policy must "recognize that we have a robust oil and gas industry that generates vital U.S. jobs, as well as substantial state and Federal revenue from tax and royalty payments."

Obama’s Testing The Waters
Common sense suggests that Mulva and the rest of the non-BP executives should have told Congress to shove-off, that they are in fact keeping America’s economy afloat and, oh by the way, providing you with transportation home. Big Oil isn’t doing this. Instead they are allowing themselves to become whipping boys for Must See Congressional TV. That tells me that something bigger is afoot. Exactly what that is is being revealed by Obama.

From the Oval Office Obama said: “The time to embrace a clean energy future is now.”

It just so happens, writes The Financial Times, that wind turbine makers and solar panel companies are ramping up their pressure on Congress and getting a sympathetic ear.

A member of the Clinton White House (Bill’s not Hillary’s) told The Times that renewable companies had to seize the moment quickly. "Most events do not engage people’s heartstrings and neurons together. This one does," he said, adding: "It cries out for the President to push the Senate to act this year."

First come the heartstrings then come the purse strings. By the time this thing finishes up the environmentalists will be tickled silly. For them the catastrophe in the Gulf of Mexico is a perfect storma stupendous way for the Greens to collect a lot of green from ordinary people like you and me.

Action To Take: The rant against Big Oil is mostly for show. However, BP (NYSE: BP, $29.58) is a mess and it is only going to get worse.

Chart

Fortunately we sold BP on May 5 and recommended you do the same in A Crude Coincidence—The Gulf Oil Spill Works Out Well For The Greens. BP traded that day at $52 per share. At this writing it is trading under $30 per share. If for some reason you still haven’t sold your shares, do so now. Obama and the Big Green Machine may bankrupt BP.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold

Between A Rock And A Slippery Place

It’s taken the biggest environmental crisis in American history to drive home a simple point—Washington’s energy policy has been reckless and could yet be the ruination of this once great United States.

The latest polls show that 38 percent of Americans approve of President Obama’s handling of the Gulf oil crisis. Which makes one wonder, what would it take for these people not to support the President?

Of course there is the latest success that appears to be working almost seamlessly above the Deep Horizon oil well 5,000 feet below the Gulf of Mexico. The containment dome is now trapping more than 15,000 barrels per day of spewing oil, up from just 6,000 barrels per day when it was first placed over the ruptured hole. That’s amazing; the Obama administration said that the ruptured well was only leaking 5,000 barrels per day to begin with!

The President has promised that the U.S. will bounce back from this cataclysm. “We will get through this crisis,” said the President, echoing the words of President Carter who declared that he would bring the American hostages home from Iran, even as the daily calendar on that catastrophe clicked forward endlessly. Will this one reach day 100, day 150, perhaps even day 200?

Better Than Ever
Last week Obama said that the people of the Gulf coast "are going to need help from the entire country," but that he is determined to see that the region will be restored to a condition better than it was before the BP well blew up.

Better? That is like saying Vietnam is better after being raked with Agent Orange?

It is estimated that BP is on the hook for $14 billion but that will never make things better. Not for them (The BP brand has been tarnished for decades); not for the wildlife and certainly not for the people along the coast that make their living from those waters. And that is if we don’t get another “incident.”

But wait! The Deepwater Horizon is not the only well spewing oil into the Gulf of Mexico. According to a Federal document a nearby drilling rig, the Ocean Saratoga, has been leaking since at least April 30. While much smaller than the BP spill it has nevertheless produced a 10-mile-long slick that can be seen on satellite images. Diamond Offshore, which owns the drilling rig, said that they could not comment on the ongoing spill but it appears as if a boat is putting dispersants on the slick.

It all adds up to one thing—even after BP antes up billions you can bet the Federal government is going to be on the hook for a substantial part of the tab. The President promises that he is going to squeeze every penny for the cost of this problem out of BP but Obama has a pretty poor record when it comes to holding companies accountable for their mistakes. Just ask bank executives who threw the economy into a tailspin then collected billions in bailouts and then gave themselves millions in bonuses.

Regardless of the cost, the Gulf of Mexico is not the real problem. The 2 million barrels of crude oil that will have spilled into the Gulf of Mexico is a symptom of a much bigger problem; one that is getting progressively worse. I am talking about America’s unrequited addiction to oil which has been drilled dry within our borders.

The U.S. is now pumping less than 5 million barrels of oil per day. We pumped almost twice that much oil 30 years ago during the first Iranian crisis.

That leaves the U.S. dependent on harvesting petroleum wherever it can, including 5,000 feet deep in the Gulf of Mexico. It also leaves the U.S. importing more than two out of every three barrels we burn, much of that from countries that hate us.

Oil discoveries have been declining since 1964

As the graph above shows, the discovery rate for oil in the United States has fallen off a cliff. The U.S. is tapped out and drilled out. You have to go back to the 1920s to find a decade where less oil was discovered in the U.S. than will be discovered this decade. In case you are wondering, in 1920 there were 7.5 million automobiles in the U.S. Today there are about 250 million registered vehicles on the road.

Driven To Disaster
“Over the last 25 years, opportunities to head off the current crisis were ignored, missed or deliberately blocked, according to analysts, politicians and veterans of the oil and automobile industries,” wrote The New York Times.

The Times pointed out that as politicians heatedly debate opening new regions to drilling, corralling energy speculators, or starting an Apollo-like effort to find renewable energy supplies, analysts say the real source of the problem is closer to home. In fact, it’s parked in our driveways.

A whopping 70 percent of the 21 million barrels of oil the U.S. consumes every day goes for transportation, with the bulk of that burned by individual drivers. Americans’ daily use of oil is nearly twice the combined consumption of the Chinese and Indians.

Our nation’s dependence on imported oil has only kept growing in recent years, undermining the trade balance and creating a perfect storm for environmental disasters like the one happening in the Gulf of Mexico.

From Gaza To The Gulf Of Mexico
There has been no summer lull for the Obama administration. Consider:

  • June is turning out to be one of the bloodiest months in the Afghan war.
  • More than seven years after the U.S.-led invasion of the country in March 2003, bombings and shootings still remain common across Iraq.
  • Much of the world is outraged about events in Gaza, which may or may not have been provoked by America’s largest aircraft carrier also known as Israel.

The common denominator between these events and the Gulf spill is oil. If not for oil and America’s strategic need to secure the world’s last rich pools—most of which lay under Arab lands—Washington could pull its armies out of the Middle East, be an honest broker of peace between Israel and her Arab neighbors. That would not only save American lives but also hundreds of billions of dollars that are being spent on a foreign occupation. It would also restore the reputation of the U.S. which would help usher in a new age of prosperity.

But don’t expect peace to break out anytime soon. The President has a lot to say about the need to go Green, but there are two realities:

  • The technologies needed to replace oil are not here nor are they on the horizon.
  • The only Green that this President seems to understand is the kind of green that BP gave him when he was running for office. After all Obama was the largest recipient of BP campaign contributions.

It seems that if you give the President enough mulla, he is willing to let all of us deal with the Mullahs.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

It’s The Greens That Sowed The Seeds Of The Gulf Oil Disaster

To the Greens I have six words regarding the catastrophe in the Gulf of Mexico: Your President, your policies, your fault.

After all Barack Obama was the progressive Green candidate, a thinker who could steer the course in the 21st Century. Oprah anointed then-Senator Obama as "The Chosen One". To Oprah and a great majority of Liberals, Obama was the anti-Dubya; a larger than life leader with savior qualities that would lead us to peace and overcome all obstacles.

So far, so bad. America’s endgame for Iraq is in question because of increasing levels of Shiite-Sunni violence. Afghanistan looks more untenable all the time. The recovery is sluggish and healthcare has been rammed down the throats of the American people. Now we face an enormous crisis in the Gulf of Mexico. It’s been almost two months since an explosion sent crude pumping into the Gulf and the Obama administration has shown an astonishing lack of leadership.

David Gergen, a centrist political commentator and advisor to four Presidents, has pointed out a basic lack of leadership from the Obama administration: “Ultimately it is not the responsibility of BP or any other company to protect American interests but the responsibility of the Federal government.”

While on Anderson Cooper 360° on CNN, Gergen added: “If our government had fought World War II like the way we’re fighting the oil spill, there’s a good chance many of us would be speaking German today.”

Gergen is hardly alone in the criticism. Former Secretary of State Colin Powell, the general who endorsed Obama in 2008, says the President has been far too slow in asserting leadership over the Gulf spill and the time has come for a "comprehensive and total attack" on the problem.

So here it is, a news flash to Oprah and the Liberals: When it comes to leadership, Barack Obama is a lot more Herbert Hoover than he is Harry Truman, regardless of how many “the buck stops here” speeches Obama chooses to give. Little wonder that a recent USA Today/Gallup survey showed that six out of 10 Americans believe the Federal government is doing a “poor” or “very poor” job handling the spill.

The President bristles at criticism that the Gulf crisis is his Katrina. Even in the face of the failure of BP to stem the spill with its top-kill option, Obama was defending the Federal government’s record and promised aggressive action to ensure future drilling is done safely. He has extended a moratorium on new exploration drilling in the Gulf and announced that 33 current projects in the deep water will be suspended along with two permits for exploration wells in the Beaufort Sea off Alaska.

“As we continue our response effort, we’re also moving quickly on steps to ensure that a catastrophe like this never happens again,” he said. “I’ve said before that producing oil here in America is an essential part of our overall energy strategy. But all drilling must be safe.”

Respectfully Mr. President, can we not worry about future leaks until we fix this one? After all, the BP gusher has well surpassed the 1989 Exxon spill in Alaska as the largest ever in the United States. Crude has continued to spew for 52 days after it began with a rig explosion that killed 11 people. Every effort to stop the spill has so far proved unsuccessful.

When I was a boy on the farm we didn’t worry about the horses that might get out; we scurried about to catch the horse that had gotten out. And right now there is a big and nasty animal rolling about the Gulf presenting a clear and present danger to the United States. Meanwhile we are getting the Green lecture—how to stop future oil spills. Which brings me to my second news flash—it is Green policies that got us into this mess in the first place.

The Greens Made Us Drill So Deep
Last January I wrote about the problems and costs of drilling for oil at such extraordinary depths as those being worked off the coast of Louisiana. It was called The Deep Truth About Oil and the Gulf of Mexico.

In that column I said: “Chevron has spent 10 years and a whopping $2.7 billion for this project. This is the cost of running a drill and casing more than 30,000 feet through earth and ocean, the same distance that an airliner flies above the earth. Chevron will spend billions more and in the end, even with all the high-tech in the world, there are no guarantees that its deep-water experiment will hit pay-dirt. In fact there is less than a 50/50 chance that Chevron’s latest deep-sea adventure will yield anything. Still Chevron and their brethren don’t have a choice.

“The Wall Street Journal sums up the situation: ‘Big easily tapped oil fields close to shore have become off-limits.’”

Fast forward a few months and we saw the real danger in not drilling in shallow waters and places like the Arctic National Wildlife Refuge (ANWR). We see what happens when Big Oil is forced to drill in 5,000 feet or more of seawater; depths at which accidents can’t be easily repaired.

I’ve been talking to my friends in the Alberta oil patch about this for weeks. But the problem didn’t see the light of day until the May 29 episode of Meet the Press. There Host David Gregory asked White House Energy Adviser Carol Browner if in response to the Gulf Coast oil spill, America should start drilling in ANWR.

Gregory asked: "Is the problem that we’re drilling in water that’s just too deep?" 

Gregory continued: "Should you (the White House) even rethink your own approach to the environment to say… maybe in the Arctic Wildlife Reserve; we ought to be drilling there… we ought to be going into shallower waters so that this can be done more safely?"

Incredibly Gregory wasn’t given an answer. But even I know this simple truth—that we need to be drilling in shallow water and places like ANWR. Places where accidents can be corrected.

Don’t expect any leadership on this from the President even though his decision to suspend deepwater drilling off the U.S. coast will have consequences.

“An extended moratorium on safely producing our oil and natural gas resources from the Gulf of Mexico would create a moratorium on economic growth and job creation,” said Jack Gerard, chief executive of the American petroleum Institute.

It’s worth noting that the Gulf of Mexico currently produces about 1.6 million barrels of oil per day—an amount larger than the output of Canada’s oil sands. It was expected to grow to 1.9 million barrels by 2025. But the jury is out on this until Obama—"The Chosen One"—chooses leadership over politics and stops this catastrophe.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report