THE HEROES IN THE GULF

The guys that lost their lives working on the BP well are true heroes of our business. They went to work for weeks at a time away from their families and did an all too dangerous job. God bless their souls, and may God bless their families. Only the military men and women of our country know how tough their job is.

The next-in-line heroes are the guys on the two relief wells, drilling to the same formation to stop the flow of oil. How come we have not heard anything about these brave guys? Maybe they should not be out there when it is so dangerous. I assure you not a single one of them gives it a second thought - they are there to do a job. We should ask our President - how do they fit into the six month moratorium on drilling in the deep water?

What are the most dangerous words in all business - especially the oil business? These five words: THE GOVERNMENT IS IN CHARGE
Good luck to you, BP. There are some of us that think you are doing a fantastic job under incredibly difficult circumstances.

Over

WORLD OIL SUPPLY OUTLOOK

The US Joint Forces Command recently issued a "Joint Operating Environment" report that includes a section on the surplus oil production capacity in the world.

The US Army is thought to be the biggest single user of liquid hydrocarbons in the world. So, they have a vested interest in predicting the future supply of oil.

The conclusion of the report was that surplus capacity could end as soon as 2012 - and supply shortages could start in 2015. The resulting economic and political results of shortages is discussed, with the clear understanding that the US Military would be involved in the resulting crisis.

We will follow the US Energy Information Administration (the US Energy Department) and see if they agree with the US Military study. For years, the EIA has stated that peak oil is decades away. Let's see if the EIA changes its tune. Which one of these reporting agencies would you put your faith in?
Please follow this link to review the section on Energy - starting on page 24.

http://www.fas.org/man/eprint/joe2010.pdf

And by the way, this is an incredibly well written report. It is refreshing that a part of our tax dollars goes to the preparation of a pdf file like this. Extremely well done on all fronts - not just on the energy section. Our political leaders, from the top on down, should be required to read this report. I just wish the Department of Defense would have written the legislation on health care reform. Do you think we would have gotten a multi-thousand page bill?

Jack

Over

THE GENIE IN THE BOTTLE

There is a bit of deflation going on right now. Price deflation-not so much monetary deflation. The cost of many items is going down right now, but this will not last too long. It will just make the coming inflation seem that much stronger.

The Federal Reserve has pumped a great deal of money into the "too big to fail" banks. They printed the money to buy toxic assets held by the banks so that there would not be a systemic failure of the banking system. Good job, they saved the world. They bought toxic, worthless assets at full face value. TheY BOUGHT the assets, so the money is not a loan to be repaid. It belongs to the banks.

OK, so they "bought" these toxic assets (like worthless mortgage paper, credit default swaps, etc.) and now the banks have that cash. Free cash. Almost a TRILLION DOLLARS. In bank lingo, this free, spendable cash is called "excess reserve balances: (ERB-more on that below). The banks have money that they do not now have to hold in reserve - they can spend it on anything. What they are supposed to spend ito on is LOANS. They are supposed to lend the money to private businesses. Stimulate the economy through investment in private business, things like that. They are not lending.

Why are the banks not lending? Because they can make a better, low risk return elsewhere. That elsewhere is actually the Fed - right back where they got the money in the first place. How is the Fed able to pay interest to the banks that is so much better than what is available on the open market? Well, the Fed just prints more money and pays the interest. The Fed makes the banks a better deal because it doesn't really cost the Fed anything.

Why would the Fed do this - give the banks money and then PAY them interest on it? Because, the Fed wanted to save the banks and bankers - the Fed works for these bankers. But that's not all. If the banks went ahead and started lending the money out - there would be an extra TRILLION DOLLARS in the economy. Massive inflation. Inflation is a monetary thing-too many dollars chasing too few goods and services.

The Fed wants to control this money, like a genie in a bottle. This is a temporary fix. The extra TRILLION DOLLARS will not be kept locked up forever. When the bottle is opened-when the money is set free - there will be massive inflation.

Then you will want to own hard assets. Like oil, oil companies, metals, metal companies, etc.

THE DARK PICTURE

We have seen corruption, incompetence and extreme white collar crime nearly bring our country to ruin. Ruin. The government has bailed out the "too big to fail" crooks with our money and the money of future generations.

White collar criminals have literally sacked our country. It is as if the Vikings landed and just raped and pillaged the entire country, seeking to destroy the enemy and take everything that they had.

The Vikings took entire families of females, killed or committed the males to slavery. But the end result was the same as is happening to us today. Total destruction throughout the country, with the need of generations of time for recovery.

OK, I got that off my chest. I will not write many more bloggs about politics, unless it relates to our industry - the great American Oil industry.

Over

Jack

PROUD AMERICAN OIL MAN

I am proud to be an Americanoilman.

But, for the first time in my life, I am not proud to be an American.

Jack

Over

NOBEL PACIFIST PRIZE

Why not give Obama the prize for medicine also? He knows as much about medical science, and has accomplished as many medical breakthroughs, as he has accomplishments in world peace. His Obamacare surely qualifies him for the Nobel in medicine. Anyway, I gave up on the Nobel guys when they rewarded Gore for his fiction movie about global warming - which is now climate change.

This one really may be Bush's fault.

This administration has been blaming all their failures on George Bush. Most recently, they blamed Bush for Obama's failure to bring the Olympic games to Chicago in 2016. The blame game has been the favorite pastime for Obama since the beginning of his campaigning for the presidency. So now that something really could be blamed on Bush, we will not hear a word about it.

Why is it Bush's fault that Obama is receiving the prize? Simple. Europe has a long history of pacifist governments that hate the cowboy USA. Bush epitomized the western US cowboy who ran roughshod over all opponents. Obama is the new American president that sympathizes with the European pacifists. In a classic case of payback, the Nobel pacifists are rewarding Obama, in advance, for the future pacifist actions he will take as the new "global leader for everyone".

Let's see if he makes a Nobel pacifist decision about troop strength in Afghanistan. If he listens to his generals, can the Nobel committee take back their award?

Over

Jack

OBAMA'S OLYMPIC REJECTION SPEECH

This is how I think Obama will explain the Olympic rejection of Chicago. Here is his speech -

"I would like to take this opportunity to thank the committee for your gracious treatment of Michelle and me during this important time. I lent the honor of my Presidency to this noble effort because it is so important to the one world in which we live. It is to the young people in our world that I especially want to express my gratitude. For you have made me see the folly of our past ways.

It is now clear that the sins of our past eight years are continuing to victimize our great country. I inherited an international mess that extended into the international sports world. I want to apologize for the past actions of my country. I know in the past, American administrations have browbeat the Olympic Committee into accepting American cities for the Games. That is why I think it is only fair that the 'chickens come home to roost'.

I look at this NOT AS a personal rejection of my efforts, but as a reaffirmation of what I see as America's role in the future of our one great world. We in America can be a beacon of light showing others where not to go. A light house in the fog that says 'stay away from these rocky shores, do not go where we have tread'.

Thank you , and God bless our one great world".

Jack

Over