Morning Report 2/1/06 Fill ‘Er Up With Fear


Changing the subject, a failed oilman talks about failed oil


The Permian Basin POTUS, beating Punxsutawney Phil to the punch by a little more than 24 hours, stuck his head out in public last night, saw the threatening shadow of GOP defeat this fall, and proclaimed something that we already know: We’re “addicted to oil.”

The dreaded “peak oil” theory, ignored by most of the GOP until now, finally rated a peek by the Pennsylvania Avenue groundhog.

But this one’s a bad movie: When we woke up this morning, George W. Bush was still president.

Talk about an endless loop: Bush, the failed “oilman” who is the son of a rich guy who himself dabbled in oil, wouldn’t be the U.S. president if we weren’t addicted to oil, and his family’s pals in the oil bidness hadn’t propped him up with their outrageous profits. And all he was doing in his State of the Union address was mouthing what one of his mentors, billionaire Richard Rainwater, has been saying recently.

Bush’s handlers are just trying to distract us, but the doomsaying is real. First, though, here’s the part of Bush’s speech I really liked, his rap about how “America has become a more hopeful nation.” What a laugh. It was a fearmongering speech, but with the subject changed from Iraq and terrorists to oil. With typical push and pull, Bush’s handlers sought to soothe us and scare us.

There’s no shortage of snake oil: Abstinence, he claimed, has really helped us. Too bad his father didn’t practice it. Anyway, here’s what Bush the Younger said:

These gains are evidence of a quiet transformation — a revolution of conscience, in which a rising generation is finding that a life of personal responsibility is a life of fulfillment. Government has played a role. Wise policies, such as welfare reform and drug education and support for abstinence and adoption have made a difference in the character of our country. And everyone here tonight, Democrat and Republican, has a right to be proud of this record. (Applause.)

Yet many Americans, especially parents, still have deep concerns about the direction of our culture, and the health of our most basic institutions. They’re concerned about unethical conduct by public officials, and discouraged by activist courts that try to redefine marriage. They worry about children in our society who need direction and love, and about fellow citizens still displaced by natural disaster, and about suffering caused by treatable diseases.

As we look at these challenges, we must never give in to the belief that America is in decline, or that our culture is doomed to unravel. The American people know better than that. We have proven the pessimists wrong before — and we will do it again. (Applause.)

Don’t let this groundhog’s bullshit obscure the facts. We’re in the midst of a shocking reversal of the American Dream, a growth of income inequality that threatens not only your children, but their children.

And there’s no doubt that we’re addicted to oil and that down that path lies chaos. For that, don’t listen to me or Bush. Follow the money. Listen to Richard Rainwater, the multibillionaire investor who’s a pal of Bush’s. He’s preaching big-time doom about oil, and there’s no doubt that Bush, who has looked up to Rainwater, borrowed some of Rainwater’s recent obsessions for his speech last night. As Fortune‘s Oliver Ryan wrote in his December 13, 2005 “The Rainwater Prophecy”:

He counts President Bush as a personal friend but dislikes politics, and frankly, when he gets worked up, he says some pretty far-out things that could easily be taken out of context. Such as: An economic tsunami is about to hit the global economy as the world runs out of oil. Or a coalition of communist and Islamic states may decide to stop selling their precious crude to Americans any day now. …

Such insights have allowed Rainwater to turn moments of cataclysm into gigantic paydays before. In the mid-1990s he saw panic selling in Houston real estate and bought some 15 million square feet; now the properties are selling for three times his purchase price. In the late ’90s, when oil seemed plentiful and its price had fallen to the low teens, he bet hundreds of millions — by investing in oil stocks and futures — that it would rise. A billion dollars later, that move is still paying off. “Most people invest and then sit around worrying what the next blowup will be,” he says. “I do the opposite. I wait for the blowup, then invest.”

The next blowup, however, looms so large that it scares and confuses him.

And that is the concept that, indeed, the planet is running out of oil, and transportation — which depends on liquid gold — freezes up and people panic and there’s chaos everywhere. Ryan quotes Rainwater as saying:

“This is a nonrecurring event. The 100-year flood in Houston real estate was one, the ability to buy oil and gas really cheap was another, and now there’s the opportunity to do something based on a shortage of natural resources. Can you make money? Well, yeah. One way is to just stay long domestic oil. But there may be something more important than making money. This is the first scenario I’ve seen where I question the survivability of mankind. I don’t want the world to wake up one day and say, ‘How come some doofus billionaire in Texas made all this money by being aware of this, and why didn’t someone tell us?'”

It’s the “peak oil” theory (derived from the ideas of geophysicist M. King Hubbert), about which there’s a lot of smart writing. (Go to Energy Bulletin and Dry Dipstick, for starters.)

Republican congressman Roscoe Bartlett is another doomsayer on the subject. The aging ex-scientist from Maryland has immersed himself in oil. Check out his April 20, 2005 speech on the House floor. It was one of those after-hours talks before a virtually empty chamber. Here’s a snatch of Bartlett’s December 6, 2005 speech on the same subject:

“The U.S. has only two percent of world oil reserves. We consume 25 percent of world oil production. We contribute eight percent of world oil production. That means we’re pumping our reserves four times faster than the rest of the world. U.S. natural gas production has also peaked. The United States is now the world’s largest importer of both oil and natural gas. From importing one third of the oil we use before the Arab Oil Embargo, the U.S. now imports about two thirds of the oil we use. Oil and natural gas production in Texas declined five percent in the first nine months of 2005. We’re sliding down Hubbert’s Peak.”

Bartlett has been speaking to an empty House since last March; he has given more than a dozen speeches about “peak oil” since then. The warnings have fallen on deaf ears.

Too bad, because his first one was the most dramatic. As he said on March 14, 2005:

“We now are doing a lot of talking here in the Congress and fortunately across the country about Social Security, and it is a big problem. But I tell the Members if the problem of Social Security is equivalent to the tidal wave produced by the hurricane, then this peak oil problem is equivalent to the tsunami. The impact and the consequences are going to be enormously greater than the impact and the consequences of Social Security or Medicare or those two put together.”

Bush and his handlers paid no attention to fellow Republican Bartlett for the past year. So you know they are now desperate to change the subject from Iraq, Wampumgate, and other scandals when the president himself starts preaching doom about oil.

Unfortunately, it was the Bush regime’s addiction to oil that helped lead it to concoct the rationale to invade Iraq and enrich Dick Cheney‘s oilfield-services company, Halliburton. And it was Bush and the GOP who pushed for the SUV tax breaks. Who are the addicts?

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