Jump In, Jack Ca$h! It's A Mass Gas Pass!

by pessimist

Recently, King George announced his energy 'policy', which hasn't exactly been playing to rave reviews. Even former President Clinton is speaking out against the plans.

In a manner similar to every other economic aspect of the Bu$hevik regime, most of the people are losing out: Alaska will see new oil drilling in environmentally-sensitive areas, the first round of entitlement benefit cuts is about to commence, and the budget deficit is still growing anyway.

But there are still those who win under the Bu$hCo Economy. The wealthy get new tax cuts, and the oil companies will continue to reap massive windfall profits:

Since the end of 2003, Royal Dutch/Shell Group of Cos., BP Group PLC, Exxon Mobil Corp. and ChevronTexaco Corp. have earned a combined $97 billion, including $23.8 billion during the first three months of this year.

With profits like this, shouldn't the oil companies be paying for the 'War on Terra'?

Pumped up by persistently high energy prices, the oil industry maintained its streak of massive — and growing — quarterly profits this week, aggravating motorists and amazing financial analysts. "I have been following this industry for 18 years and I have never seen anything like this," Oppenheimer & Co. analyst Fadel Gheit said Friday. "It's like they're printing money."

"As far as you can look out, things look pretty rosy for (oil) refiners," said Tom Kloza, chief energy analyst for the Oil Price Information Service in Wall, N.J.

The bottom line for consumers: U.S. gasoline prices seem likely to stay above $2 per gallon through the summer — traditionally the time when more drivers are hitting the road for vacations and burning up more fuel. That's unwelcome news for motorists like Henry Shin, who already has been cutting corners so he can afford to fill up his sports utility vehicle at $50 per tankful.

"It bugs me big time," said Shin, a 19-year-old college student from San Ramon.

"I feel like all my money is going straight into the gasoline tank."

Those high prices threaten to cause a backlash against the oil industry because of its "Caligula-like" profits, Kloza said, referring to the decadent reign of a famous Roman emperor. "It really causes people's blood pressure to rise when they see gas prices going up like they have," Kloza said.

But market conditions seem to be indicating a slowdown, which confirms a recent government report of reduced economic growth. Thus, in an effort to protect their long-term profit margins, it looks as if last Monday's disgraceful suck-up handholding with the Saudi Crown Prince had a more believeable purpose after all - it was a sucker-punch to be delivered to the Saudis:

Several of the major oil companies already seemed to be preparing for a possible price reversal. Exxon Mobil, ChevronTexaco and Royal Dutch/Shell curbed their first-quarter oil production by a combined 474,000 barrels a day, according to the companies. The downturn offset a 500,000-barrel-per day production increase by Organization of Petroleum Exporting Countries, or OPEC.

Note a few specifics here. The first quarter ended a month ago, and this production curbing by domestic oil companies neatly coincides with the incresed gas prices. While our companies were cutting back, they sent King George to kiss Abdullah's camel saddle and get him to pump more of his dwindling crude supply to make up the difference. Here's a confirming piece of evidence:

The global oil supply cushion is already thin, said Refco Group energy analyst Marshall Steeves. "If we don't see non-OPEC production growth ... that's going to put more of a burden on Saudi Arabia and other OPEC members."

I will be surprised if the Saudis ever decide to play cards at The Crawford Kid's Saloon again! They have very long memories, and they don't like being beaten at their own game!

But while the Saudis were in part blinded by their long-term alliance with Bu$hCo, what argument is to be made defending the actions of Bill Clinton, who has been extremely visible in support of certain Bu$hCo-benefitting initiatives? Maybe I should let him speak for himself:

Former President Bill Clinton lashed out at the Bush administration's energy policies Friday, criticizing them as "dumb economics" during a wide-ranging speech to a friendly crowd at Brown University. Clinton -- received enthusiastically by more than 4,000 students, politicians and top state Democratic fundraisers -- called Bush's energy policy selfish. "I also think it's really dumb economics," he said.

A Bush administration-backed bill passed by the House this month includes tax cuts and subsidies to energy companies, and would open a wildlife refuge in Alaska to oil exploration.

Clinton also said he would gladly give up the Bush administration tax cuts that he said benefited the wealthy and hurt working families -- a talking point widely used by Democrats during the 2004 election.

And what of those working families who supported Bu$hCo and whose entitlements are now on the block? What have they just lost now that it's too late to do anything about it?

The budget resolution was seen as a must-win for President Bush, who has proposed a range of budgetary changes to trim the federal deficit and make room for his tax cuts. Congress would be expected to shave $35 billion off the growth of entitlement programs through 2010, the first such savings since the 1997 balanced budget agreement. Nearly a third of that total would come from Medicaid, the primary federal and state health program for the poor.

Other entitlement savings could come from the earned-income tax credit, farm programs, federal power marketers and specenterum auctions and nutrition programs. An additional $6.6 billion in savings would come from changes to the federal Pension Benefit Guaranty Corp., including higher premiums charged to companies with pensions covered by the federal insurance program. Some of the largest business groups in Washington warned that increased premiums would force some companies to drop their pension plans, worsening the precarious economic position of the PBGC.

"Sad to say, the country would be better off with no budget plan than with this one," said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities. "Without it, deficits would be lower, and cuts in programs for the needy wouldn't be imposed to pay for more tax cuts for the wealthiest."

It Was Going To Be Worse

Some of those changes -- Medicaid restructuring, agriculture subsidy cuts and student loan savings -- were scaled back in the agreement. The budget's mandated spending reductions could have been tougher, but negotiators were forced to drop $5.9 billion in entitlement cuts yesterday to placate a handful of Senate GOP moderates who worried that the cut would slice further into Medicaid.

Sen. Gordon Smith (R-Ore.) had infuriated GOP leaders Wednesday when he unexpectedly balked at an earlier offer. The $10 billion in Medicaid cuts that Smith accepted are half of what the House had wanted. In all, the House-passed budget would have cut $69 billion from entitlement growth. The Senate Budget Committee had approved $32 billion in savings, but the final Senate budget had only $17 billion in entitlement cuts.

Stoking The War Machine

Defense spending would jump in the fiscal year that begins Oct. 1, to $439 billion from $422 billion, not counting emergency spending bills. But domestic discretionary programs would be frozen at $404 billion, and would stay frozen for three years.

Priming The Pump

The document also includes instructions to the Senate Energy Committee to find $2.4 billion in revenue, giving the green light for a bill to open Alaska's Arctic National Wildlife Refuge to oil drilling. With those instructions, the oil industry will need only 51 Senate votes to win its decades-long fight to explore the refuge, a hurdle that seems surmountable. Last month, a Senate majority beat back efforts to strike the oil-drilling language from the budget on a 51 to 49 vote.

I Got Mine! To Hell With The Rest!

The budget also makes way for $106 billion in tax cuts over five years, about what Bush had requested. Of that, $70 billion would be shielded from a Senate filibuster, enough to ensure that all expiring tax cuts can be extended, including the 2003 cuts to capital gains and dividend tax rates and last year's deduction for state and local sales taxes.

The cost of those tax-cut extensions would more than nullify the savings from the spending cuts, allowing Democrats to charge that the budget agreement actually leaves the federal deficit worse than it would be without a deal. "If you like debt, you've got to love this budget, because it builds a wall of debt," said Kent Conrad (N.D.), the ranking Democrat on the Senate Budget Committee.

Indeed, the budget instructs lawmakers to raise the federal government's statutory debt limit this fall by $781 billion, to $8.96 trillion. The government's borrowing limit will then have climbed by $3 trillion since Bush took office. "The essence of this budget comes down to whether we're going to stick our children and grandchildren with a government they can't afford," said Senate Budget Committee Chairman Judd Gregg (R-N.H.).

I keep saying this, and at some point someone will provide the answer: What is it going to take to wake people up before it's too late to reverse the damage caused by Bu$hCo without resulting in serious deprivation?

Or is it already too late?

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