Trickle Down Tyranny (34 page)

Federally funded energy storage projects took another hit when a company called Ener1 was delisted from by NASDAQ after its stock price underwent a calamitous plunge because the company released false financial information. A class-action lawsuit against the company filed on behalf of shareholders claimed that Ener1 made “materially false and misleading statements concerning Ener1’s financial condition and prospects.” The company received $118.5 million in DOE grant money.
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There’s more. The government also lost millions in funding these projects: $5.3 million to Evergreen Solar Inc., $500,000 to Spectrawatt (which, as it reorganizes under Chapter 11 bankruptcy, plans to move its manufacturing plant to China), $424,000 to Mountain Plaza Inc.—
after the company had declared bankruptcy
—for “truck stop electrification” so long-haul drivers could turn their rigs’ diesel engines off during extended rest periods, and $10 million to Olsen’s Crop Services and Olsen’s Mills Acquisition Company, again after they had gone into Chapter 11.
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Another taxpayer-funded project, this one in Vice President Joe Biden’s home state of Delaware, threatens to drive energy prices for that state’s residents through the roof. Delaware legislators have put their constituents on the hook for underwriting the bad business practices of another energy company, Nichols & Driessen.

The legislators have committed state taxpayers to provide financial guarantees to a California company, Bloom Energy, that manufactures fuel cells that are supposed to replace natural gas and coal to power electric generating plants. No private investors could be found to back this loser of a green energy company, so the pols stepped in, guaranteeing the company’s finances and huge increases—$600 million over the next 20 years—in Delaware residents’ energy costs.
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It’s not just the guarantee that I’m concerned with. The way the legislation is written, if the Delaware legislature in any way changes the law that requires Delaware residents to pay the energy tariff to underwrite Bloom, the entire $600 million sum will be due and payable on demand.

Bloom’s fuel cells don’t even represent clean energy. They use large amounts of two rare earth elements that are mined only in China, and China is controlling their distribution and cost. The United States imports 100 percent of these elements. On top of that, the company is privately held and is not required to share its financial data with the public.

Even ten years ago I wouldn’t have believed that things could come to this, where a bunch of communist punks in our own federal government has become the controller of capital markets and is making lousy bets on companies that have no chance of success—and using our money to do it.

Did you know that the green energy funding scandals I’ve told you about are only the tip of the iceberg?

The Inspector General appointed to look into the green energy funding scandals has opened up more than 100 criminal investigations into the Obama administration’s illegal use of taxpayer money to fund projects for his cronies!
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The economic illiterates in the Obama administration are trying to pick winners based on political favoritism. They’re putting taxpayer money at risk, wasting money on paybacks to their fund-raisers that could be used in the market as legitimate venture capital for companies that might actually have a chance of survival and profitability. They’re taking private capital out of circulation and using it to back guarantees to their cronies.

The Solyndra failure is important because it helps reveal the extent of the corruption that is rife in the Obama administration, but it’s just the beginning of the president’s plan to gain control over energy production and use that control to paralyze our economy.

I’m the only one who will tell you what’s really happening in this area.

Obama’s Energy Strategy: Beg, Tax, and Persecute

Obama’s Secretary of Energy, Steven Chu, has made the president’s policy on oil production very clear: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.”
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Chu’s reason for this? The higher the price of gasoline, the more likely “green” energy projects like Solyndra—of which Chu was an outspoken supporter—are to be competitive in the marketplace. Without astronomical gasoline prices, green energy is dead.

Average Americans are the target of this strategy: If they’re hurt financially by rising prices at the pump, they’ll see the wisdom of going green.

Obama appointed Chu because he’s a global warming propagandist of the first order. It’s hard to believe someone with Chu’s credentials—Nobel Prize-winning atomic physicist, head of the Lawrence Berkeley National Laboratory at the University of California, Berkeley—would stoop to using phony evidence and bad science to support his position, but like everyone in the Obama administration, Chu is shameless in lying to promote global warming: “Stronger storms, shrinking glaciers and winter snowpack, prolonged droughts and rising sea levels are raising the specter of global food and water shortages. The ominous signs of climate change we see today are a warning of dire economic and social consequences for us all, but especially for the poor of the world.”
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The administration’s strategy for raising prices is working.

At the end of 2008, gas prices in the U.S. averaged $1.61 a gallon. By late spring 2011, the price of a gallon of regular had reached $3.89.
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The public’s dissatisfaction with high prices at the pump caused Obama to implement a three-step strategy.

He said it was to reduce the price of oil.

I say it was just the opposite: He needed to divert attention from everything he’s doing to keep oil prices high.

First, he implored oil-producing countries like Saudi Arabia, telling them that they “need to increase supplies.”
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His reasoning?

Out-of-control oil prices would be detrimental to the
global
economy.

In his own words, “We are in a lot of conversations with the major oil producers like Saudi Arabia to let them know that it’s not going to be good for them if our economy is hobbled because of high oil prices.”
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In other words, it was the fault of the Arab nations, and they were “hobbling” our economy by not producing more oil themselves.

After that, he threatened the oil companies because they make too much money, telling us that the tax credits given to oil companies for a variety of purposes, including to help them defray the expense of exploration, should be taken away.

The total revenue that would generate? Four billion dollars.

Obama explained that the United States could put the $4 billion we give to oil companies to better use. He must have been thinking that we could use the $4 billion to pay one day’s interest on the $14 trillion national debt. He’s rung up more than 20 percent of that debt in his first two years in office.
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Finally, at about the same time, in a town hall meeting in Reno, Nevada, the president explained that he had directed Attorney General Eric Holder to assemble a blue-ribbon panel to “stop oil marketing fraud.” Citing speculators who buy and sell oil futures as another key reason oil and gas prices continue to rise, Obama said he wanted to make sure that “no one is taking advantage of the American people for their own short-term gain.”
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That’s it.

That’s all the rookie in the White House was able to come up with.

Beg the Arab countries to ramp up production.

Further hamper American oil companies’ ability to produce oil by removing exploration tax credits.

Investigate commodities futures traders.

I’ll tell you what Obama didn’t tell you about the oil industry and his own strategy.

The oil industry isn’t the guilty party.

When you look more closely at a typical large oil company, you discover it’s not their fault.

ExxonMobil is a perfect example of the fact that it’s Obama himself who’s committing the fraud. And he’s doing it at the expense of the U.S. oil and gas industry and the American people.

We know the president is beholden to radical environmentalists. They’re an important part of his base. I’ll explain later in this chapter that he’s appointed one of them to head the EPA, and I’ll lay out the damage that agency is doing to our economy and to the U.S. energy industry.

It’s because of his commitment to a radical agenda that Obama must make it appear that the production and use of oil and natural gas are so harmful to the environment that they need to be curtailed, even shut down.

To do that, he tries to convince Americans that the oil companies are making outrageous profits.

When Obama cites numbers like Exxon’s $10.8 billion in profits for the first quarter of 2011, he means to shock you into thinking that the oil company is ripping you off.

Here’s the truth: While $10.8 billion is a fairly large number, it pales in comparison with the president’s own multi-trillion-dollar unpaid-for budgets. And it isn’t the number you should be looking at in the first place.

ExxonMobil’s gross revenues exceeded $114 billion in the first quarter of 2011. The company’s profits for that period were $10.8 billion. That’s a profit margin of a little over 9 percent, respectable but nowhere near excessive.

What Obama fails to note is that Exxon’s pretax earnings were $18.9 billion, and that the company paid $8 billion of that amount in corporate income taxes for the first three months of 2011. That’s a tax-on-income rate of 42.3 percent. High corporate tax rates such as this are one of the reasons many multinational corporations are moving their headquarters out of the United States to other countries, where corporate tax rates are more reasonable. The company also paid $10.3 billion in sales taxes and another $10.3 billion in other taxes, mostly property taxes for the land it owns in the U.S.
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Exxon sells only about three percent of the total gasoline and diesel fuel it produces in the United States. The rest is sold internationally.
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For every gallon of gas Exxon sells in our country, the company makes a profit of about two cents.

On that same gallon of gas, the U.S. and state governments earn between 40 and 60 cents through taxes levied on gasoline and diesel fuel.

Exxon’s profit margin, again, is about nine percent. The government’s profit margin is 100 percent.
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Exxon is a very large corporation. At the end of 2009, the company operated nearly 14,000 oil and gas wells in dozens of countries on five continents.
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It’s part of a very large industry, arguably the most important in the world.

And while large oil companies are very successful, making billions of dollars in annual profits, their profit margins are not large. In fact, the energy industry as a whole is not even in the top 100 for all industries where profitability is concerned. The 6.1 percent
average
profit margin for all the energy companies in the “Major Integrated Oil and Gas” category ranked 112th among all industries for the first quarter of 2011. Oil industry profits were far behind such other industries as Internet providers (23 percent), cigarette companies (21 percent), and magazine and periodical publishers (51 percent).
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Why isn’t Obama going after these industries for excessive profits?

I’ll tell you why: Because they don’t get in the way of his design to nationalize the oil industry in the same way he’s nationalizing the auto and health-care industries.

Don’t believe me?

Are you aware of the president’s latest attempt to cripple the oil industry and keep us at the mercy of the Islamist Middle Eastern dictatorships that now control our oil supply?

Have you heard about the Keystone XL pipeline?

It’s a $7 billion project developed by a company called TransCanada to build a 1,700-mile pipeline to carry crude oil extracted from Canadian oil sands fields down to U.S. refineries on the Gulf coast. The company has already spent more than $2 billion on the steel needed to build the pipeline, and it expected approval after an extensive review process that had satisfied 57 specific environmental and other requirements and that exceeded all safety standards.
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The U.S. Chamber of Commerce puts the number of American jobs that would be created by the project at “more than 20,000.” That’s not counting the thousands of other jobs and businesses—from restaurants to manufacturers—that would benefit from the project.
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Not a single cross-border pipeline request has ever been denied.
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The decision to allow the pipeline to go forward should have been automatic. Despite Obama promising to be Brazil’s “best customer” for oil, that country’s ability to produce it is declining. Right now, we’re Hugo Chavez’s “best customer.” We buy 900,000 barrels of oil every year from the Venezuelan dictator;
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the Keystone XL pipeline would pump that amount of oil to Gulf coast refineries. The Canadian pipeline would not only increase America’s oil supply from a reliable source rather than from a South American tyrant bent on our destruction. it would mean that U.S. refineries would have additional work and that we’d be able to ship some of the refined oil back to Canada.