Govt Slaves | August 16 2012

Douglas & Joe Hagmann ~ We’re seasoned investigators, so we have an inherent desire to dig for the truth. Experience and common sense has shown us that we should never rely on the “accepted” explanation for something when that explanation involves money or politics, and is repeated without challenge by the media. We don’t like liars and thieves, and will expose them whenever possible.

We wanted to get to the bottom of why we’re paying nearly $4.00 per gallon for gasoline at the pump. We wanted to know who or what is responsible for the current high price of gasoline? In addition to being a major economic burden for American families, it is also a national security issue, especially when our petrodollars are subsidizing Islamic terrorist activities.

The task to determine the truth was indeed a daunting one, not only because of the complexity of the issue but due to the facts being tightly wrapped inside various political and globalist agendas, “cooking the books” by using different reporting standards, and various other tangential issues. During our investigation, we even found two energy “analysts” using the same graph to arrive at opposite conclusions.

Nonetheless, we’ve conducted an extensive investigation in an effort to provide our readers with a concise and unbiased report that explains why we are suffering at the gasoline pumps. In the process, we’ve identified several significant lies that we are told to accept as the truth.

Publicly “accepted” explanations

We first reviewed the “official” explanations offered for high gasoline prices that can readily be found in the statements by political leaders and from the media. They currently include Iran’s threats to block oil shipments through the Strait of Hormuz, unrest in the Middle East, and even problems in Africa, although the reasons offered through recent history seem to change with events of the day. Although these reasons sound plausible, our investigation determined the actual reasons for high prices at the pump lie closer to home, and not for the reasons alleged by the government and repeated by the media. Whether it is due to simple ignorance or for the purpose of advancing a particular agenda, the talking heads on the far left, the conservative pundits of the right and the reporters in the middle have got it all wrong.

To exacerbate matters, explanations by “accepted” or commonly cited Internet sources, such as Wikipedia, were found to be factually incorrect and illustrative of an editor’s obvious bias:

“As of 2012 high oil prices are largely a function of institutional investors using oil profits to rig the markets, using oil profits to falsely constrain supply and artificially constrain supply, at a time when imports are at an all time low and there is a glut of oil. The U.S. energy policy is largely seen as a corrupt oligopoly.” (1)

This explanation places the blame squarely on market speculators, suggesting that these speculators actually drive the price of gasoline upward rather than interpret and respond to existing market factors. We found this claim to be untrue, although it sounds simple enough to be plausible and readily repeated. Our investigative findings differ and are presented below.

Finding #1: It’s the value of the U.S. dollar

By far, the devaluation of the U.S. dollar is the most important and significant contributing factor that explains why we are all paying more at the gas pump. Despite the numerous explanations that exist for high gasoline prices, nearly everyone avoids mentioning impact that the devaluation of the U.S. dollar has on all aspects of our economy, including the price being paid at the pump.

At the core of this problem is the Federal Reserve, the producer of our “fiat currency,” and the criminally scandalous relationship that exists between elected officials and the financial community. Much like the matter of constitutional eligibility of Barack Obama, this is perhaps the most underreported and least understood issue in America. Nonetheless, it is this devaluation, coupled with the fact that we pay for oil in U.S. dollars, that we found to be primarily responsible for the price of gasoline at the pump.

That this is, in fact, the number one cause of higher gas prices at the pump, but it will take a lot to get the majority of people to fully understand this. It is so important that we will provide our own separate investigative report on this matter alone. Before moving on, however, we leave this topic with a statement attributed to Henry Ford:

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Finding #2: The current administration is hiding evidence

Our investigation required us to research the historical price of oil, initially leading us to the Energy Information Administration(EIA) website maintained by the U.S. Department of Energy. When we accessed that site, we learned that the current data, as well as all of the historical data was scrubbed from the site as shown here:

That, in turn, led us to the writings of author and industry expert analyst Seldon B. Graham, Jr.(2) who disclosed that the data was removed by the U.S. government on 11 November 2011 – Veteran’s Day, no less. Mr. Graham stated that at the time the data was removed, it showed the price disparity between U.S. (domestic) oil and OPEC oil. The reason the data was removed, according to Mr. Graham (and we concur) is that it clearly showed that U.S. consumers would save over $21 billion per year by using oil from the U.S. rather than buying it from OPEC.

Mr. Graham implies that the data was deliberately removed by this administration to hide this important fact from U.S. consumers. Based on the findings from our investigation, we concur with his assertion and find arguments to the contrary to be motivated by thinly veiled political agendas.

The importance of this deliberate removal of information cannot be understated. Although the information can be found elsewhere, it is akin to a business owner suspected of accounting fraud hiding the company’s books. The figures are still there, but it makes the quest for information more of a burden.

We ultimately found the necessary current data and successfully accessed the previously scrubbed data using the Internet archive, confirming that the cost of oil produced domestically is much less expensive than the price we pay to foreign suppliers. Based on our investigation and analysis, it is our professional opinion that the administration of Barack Obama and his Secretary of Energy Steven Chu are deliberately hiding the potential savings that could be realized by domestic oil use. Showing the savings would serve to inform the public, and an informed public would be a liability to this administration’s catastrophic energy policy.

Finding #3: Media ignorance & lies

Citing Mr. Graham once more, we note that there is a critically important aspect of the U.S. oil industry that is the victim of disinformation, either by inexcusable ignorance or a deliberate manipulation of facts. All of the media pundits on the “left” without exception, and many on the “right,” including and especially Bill O’Reilly in the latter category misinform the American public by misrepresenting two important factors: the availability of domestically produced oil and the method that U.S. oil producers sell their product.

First, oil from wells currently operating in the U.S. is not “plentiful.” U.S. wells currently produces 5.7 million barrels of crude oil per day, but the U.S. consumes about 19.6 million barrels per day. That’s a difference of almost 14 million barrels per day. U.S. oil companies export less than one percent of what they obtain domestically, mostly for geographical reasons.

Secondly, there is a myth about U.S. oil companies that they “price gouge” the public by raising the price of their product based on demand. Our investigation confirmed what Mr. Graham contends: domestic oil producers do not sell their product to the highest bidder. Instead, oil producers and refineries use well established avenues to move their product, accepting what is known as the “posted price” (the price U.S. refineries will pay for a barrel of oil). This process actually removes the expense that would otherwise be incurred to establish a new or alternate “gathering line.”

The reason these two facts are critically important is that the deliberate demonization of domestic oil producers advances the political agenda of the Progressives, the green movement, and all elected officials lobbied by foreign oil interests. Perhaps an audit of the financial portfolios of elected officials, environmental agencies, unelected “Czars” and a few media giants is in order.

Finding #4: the Obama administration is not telling the truth about U.S. oil production

The current claim by this administration is that U.S. oil production has risen under his administration. This assertion is disingenuous at best, and an outright lie at worst. The truth is that oil production on federal land actually fell by 14%, but increased on land privately owned or controlled by the states. The rise of oil production in that sector is completely unrelated to this administration or its policies, or is in spite of those policies.

Overall oil production in the U.S. from all sources has steadily declined over the last twenty-(20) years as illustrated in the chart below. Additionally, domestic oil and natural gas production combined has declined by 40% over the last ten years.

Research has determined that U.S. oil production has actually been in a steady decline since 1970, or concurrent with the establishment of the Environmental Protection Agency.

Although domestic oil production has declined over the last four decades, the policies of the Obama administration have been extremely hostile to domestic oil producers and production.

Finding #5: the Obama administration’s war on domestic oil

When not being actively and openly hostile to U.S. oil companies and domestic oil production, the Obama administration is at least passive-aggressive. Our investigation found that Obama and his energy “czars” are employing tactics and creating policies that are forcing U.S. oil companies out of business – or at least restraining their ability to operate. Meanwhile, thy present an entirely different account to the American public, which is never questioned by a sympathetic media.

To be certain, we did not arrive at this point overnight. Our investigation found ample evidence that Democrats and Republicans, Progressives and Conservatives are responsible for our currently flawed energy policies that are directly responsible for our pain at the pump. The following are the most significant factors that have played a role:

The Clean Air Act of 1970(3) and across-the-board price controls instituted by the Nixon administration in 1971 can be identified as the beginning of the end of domestic oil production. Combined with the concurrent debauchery of our currency by its removal from the gold standard, we are not only paying a premium for imported oil, but we are doing so with devalued currency.

The Emergency Petroleum Allocation Act of 1973 (P.L. 93-159), instituted as a result of the Arab oil embargo (October 1973-April 1974), extended by the Energy Policy and Conservation Act of 1975 involved price controls and regulation of domestic oil industry products.

The Carter “energy doctrine” was especially destructive to the U.S. oil industry, starting with theCrude Oil Windfall Profit Tax on U.S. oil (P.L. 96-223). Despite its name, it is not a tax on profits but an excise tax which diverts money from domestic oil producers to the federal government.

The Energy Tax Act of 1978, authorizing an “excise tax exemption” for biofuels

It is important to note that our legislative branch has the ability to create a favorable environment for U.S. oil production but has failed to do so over the last 40 years. This includes our current congress and our so-called conservative republican leaders and elected officials. Why? Well, nearly all are benefitting from the increasingly powerful “alternative energy” lobby. In the ten year period from 1998 through 2008, money spent by lobbyists grew from about $2.5 million to well over $30 million, most making its way into the pockets of our elected leaders.

As this administration is financially courted by the influential alternative energy lobby, they are subsidizing companies that are outgrowths of the “green agenda” of the United Nations. In fact, this administration has spent about $80 billion on a massive “clean energy” program, including nearly $4 billion in federal grants and financing that went to 21 companies that were traced to five Obama administration staffers and advisors.

Finding #6: Corn, growing gold

As it is important to understand the role that the EPA plays in perpetuating high gasoline prices, it is equally important to identify it’s administrators.Deserving an exclusive section of this report is the nonsensical but mandated use of biofuels in America. Ethanol, derived from corn, fueled Henry Ford’s first automobile. It was replaced by gasoline due to a number of factors, including better efficiency of the latter. The federal government began its odyssey into the absurdity of mixing biofuels with gasoline in earnest with the establishment of the Environmental Protection Agency (EPA) on December 2, 1970.

It’s first director was William D. Ruckelshaus, who later filled various government positions in three presidential administrations. Ruckelshaus went on to join the law firm of Perkins Coie, and also served on the United Nation’s World Commission on Environment and Development. While at the EPA, however, he set the stage for the infusion of biofuels into the marketplace.

The EPA is currently a bloated bureaucracy with over 17,000 employees and a $12 million budget under its current administrator, Lisa Perez-Jackson. Perez-Jackson was appointed to her position by Obama before she could assume her position as then-New Jersey Governor Jon Corzine‘s Chief of Staff, but not before she was appointed by Corzine to the Commissioner of Environmental Protection for the state of New Jersey. Jon Cozine, of course, is infamous for his role in the crime scene known as MF Global.

Through a series of environmental regulations of nearly every administration since 1970 and as a result of over three decades of aggressive legislation passed by congress, the EPA is responsible for the questionably insane mandate for using ethanol in gasoline. We label this as “questionably insane” for the following reason.

Domestic oil refineries are required by the EPA to use cellulosic ethanol (ethanol made from wood, various grasses and the non-edible parts of plants) in their final gasoline product. The problem, however, is that cellulosic ethanol is not in production and unavailable to refineries. Consequently, domestic oil companies are forced to spend millions of dollars to purchase waivers from the government – waivers for an unavailable product. (4)

Therefore and in addition to those waivers, domestic oil companies are compelled to purchase ethanol made from corn to add to their product, ostensibly to reduce pollution while allegedly maintaining fuel efficiency. The bitter truth is that ethanol does neither.

However, ethanol subsidies (where the government actually pays for the corn) line the pockets of large commercial concerns as well as our elected officials. We determined that the biggest benefactor to be the Archer Daniels Midland Company (ADM). A 1995 report issued by the Cato Institute states that every dollar of ADM’s ethanol profit costs taxpayers $30.00. Our investigation found nothing to suggest that this arrangement has changed over the last 17 years.(4)

While the ethanol subsidies were reported to have expired last year, they really did not. They are just hidden better. The continuity of agenda between former President George W. Bush and now Obama is clearly illustrated by Obama’s EPA signing off on the Renewable Fuel Standard. Yet, our government leaders, from Obama to nearly every member of congress, publicly assert that the subsidies have ended. Again, this is materially untrue. (5)

As a result, we, the taxpayers, are paying more for corn due to its use as a fuel, more for gas, while getting less engine efficiency and actually polluting the environment even more. Furthermore, as a result of the recent drought that has affected our nation’s corn crop, expect the cost of gasoline and all products to increase sharply in the near future.

Obama’s “double-tap” to domestic oil production

Whereas our investigation found that nearly all previous administrations have had a hand in the systematic destruction of our domestic oil industry, the Obama administration is undoubtedly responsible for the “double tap” to its head. This metaphor is accurate as it implies a professional “hit” or assassination, and the obvious victim is the U.S. oil industry. The ultimate victims, however, are the citizens of the U.S., who are being forced to pay more for everything due to high gasoline prices.

This administration deserves such a designation, not only for the overt hostility toward the U.S. oil industry, but for the incestuous insider deals that have been made with alternative energy companies. Over $7 billion has been given by Obama’s Department of Energy to a half-dozen groups in the U.S., including the now defunct Solyndra, to fund their projects. That $7 billion of our tax dollars.

In tandem with taxpayer funded subsidies to alternative energy sources, Obama issued a moratorium on offshore drilling, ostensibly in response to the BP gulf oil spill. Considering the timing of that event, combined with Obama’s close ties with alternative energy lobbyists and an open hostility to oil production, it might be reasonable to take a closer look at the alleged cause of the tragedy in the Gulf. It could be said that the Gulf disaster was to domestic oil production as 9/11 was to national security.

The oil spill in the Gulf of Mexico opened the door to an offshore drilling moratorium. The federal agency on point for the moratorium is the U.S. Department of the Interior, headed by Ken Salazar. Salazar, a former Democratic senator from Colorado, recently made headlines by being cited for contempt charges in federal court over his conduct in pushing the administration’s moratorium against the ruling of a federal court. The Holder Department of Justice, however, refused to pursue contempt charges.

Investigative Summary

In summary, our findings indicate that the most significant cause for high prices we are paying at the pump is the devaluation of the U.S. dollar. Other factors that are closely tied to high gasoline costs are the energy policies of Barack Obama, in conjunction with over four decades of EPA regulations that do more to line the pockets of elected officials than to protect our environment.

Contrary to popular belief and media propaganda, it is not the domestic oil producers who are profiting from high prices at the gas pump. Those who are profiting the most are the producers of biofuels, alternative energy companies, and the U.S. government, which has been requiring domestic oil producers to pay for waivers for a non-existent product. Also profiting are the elected lawmakers on both sides of the political aisle, who are heavily involved with energy lobbyists.

Like all matters of importance, the truth can be found by the old investigative adage, “follow the money.”