Thursday, April 27, 2006

The Non-Sense

In the movie, “The Sixth Sense,” Haley Joe Osment tells Bruce Willis he can see dead people everywhere he looks. If a sequel to the movie were to be filmed this week, it could be entitled “The Non-sense,” with Osment re-phrasing his famous line in the script to say, “I see stupid people all around me.”

Nothing gets done in Washington until it reaches the threshold of pain no one can tolerate. Then, our sage leaders shift into “crisis mode” to solve the ills of society and the economy with knee-jerk responses and half-baked schemes, that in most cases do very little else than make them look good in the evening news, and do not address root causes of the problems.

The Senate wants to know whether America's oil companies are paying all the taxes they should. A valid question…but why pick on just the oil companies? Let’s also look into the brokerage industry…let’s look at the credit card banks…I think it would be interesting to examine the barristers of the country to determine their level of tax compliance, too.

But you and I both know why the oil companies are taking the heat…and it’s ironic, that the august body of decision makers in our nation’s capitol are looking to make scape goats of people like Exxon CEO Lee Raymond because Congress over the past 15-years has made poor decisions relative to energy in this country.

A special Senate committee panel is asking the IRS to let them peek at oil companies' tax returns, following ConocoPhillips’ latest quarterly report showing 13% growth in profits--thanks to stronger exploration and production results.

Excuse me, but isn’t that the way it’s supposed to be?

By the way, this was the best first-quarter earnings report since Phillips Petroleum Co. and Conoco Inc. joined at the hip in 2002. What message does Congress send when they go on witch-hunts into how businesses do their job…especially when it’s been Congress making it more difficult for companies in this sector to survive and perform?

Haley Joe Osment would see no limits to public stupidity in “The Non-sense,” if filmed on Capitol Hill, where Congress is now talking about sending $100 rebate checks to Americans (translation: voters) to make up for the higher price of gasoline.

Washington does not have the market on assinity cornered. Boneheadedness is also pervasive in even the smallest of constituencies, like Beeville, Texas, where county officials there are jumping on the bandwagon for a boycott of the Exxon gas stations in that town—all three of them.

The only result of that misguided notion will be to bankrupt one of Beeville’s families which runs those three gasoline stations. Other businesses with which that family transacts for goods and services would also lose dollars in a ripple effect through that economic microcosm.

Politicians of all stripes are similarly scrambling to react, not think-through the problem to act appropriately and decisively. Earlier this week President Bush announced steps to ease environmental restrictions on fuel blends, temporarily suspend shipments of crude into the Strategic Petroleum Reserve, and order federal investigators to search for signs of price-fixing. None of these steps will affect what you’re paying at the pump. It's all feel-good smoke blown up your skirt/kilt.

What no one is telling you is that no oil has been going into the Strategic Petroleum Reserve lately—it’s too expensive, and there hasn’t been enough spare petroleum to go around. This point rings hollow.

Instead of looking for price-fixing, our “watchdogs” in Washington would do well to cast their gaze on Wall Street, where it would be very telling to know how speculators have artificially inflated the supply-demand dynamic, thus creating higher prices.

There are enough external factors of a geopolitical and supply-demand nature to keep the oil markets “roiled” without the money mongers piling on. Michael Norman earlier this week boldly suggested a moratorium on investment into the oil futures markets by pension funds and non-industrial users of oil, just to minimize the speculative factor in the pricing.

That’ll never fly. It makes too much sense.

No, the people in power would rather pull strings and push buttons that have no direct connection to the problem, thru taxing oil companies’ profits, punishing retail marketers, and pandering to the whining of the American public through rebates. None of that is going to make a drop of difference in the bucket…or in this case, in a barrel.

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