Posted on 07/24/2013 8:57:04 AM PDT by Red in Blue PA
Some surprising people, including the CEO of Exxon (XOM), think true American energy independence is actually a bad idea.Add Berkshire Hathaway (BRK-B) Vice-Chairman Charlie Munger's name to that list.Munger recently spoke at the Committee of 100 U.S.-China relations conference (via Farnam Street Blog's Shane Parrish notes and Tim Harford).The moderator asked Munger a basic question about which sectors Berkshire believes are ripe for growth.He responded by begging off that question and launched instead into a critique of America's energy policy, especially the continued insistence on independence.
(Excerpt) Read more at finance.yahoo.com ...
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The idea is anti-globalist so of course they are against it.
Literally speaking, they are correct of course. For the low info voter, we should probably revise the terminology. We need to produce and refine 100%+ of the volume of energy making materials that we consume.
This is not to say we should not continue to import and export per free market capitalism ideals. This is the only way we can affect the world market. And speculators, whether we like it or not, drive the price of crude. The alternative is for our government to enact laws that control the sale, distribution and cost of energy producing materials. WE DON'T WANT THAT anymore than we already have it.
When America can bring our full resources to bear to saturate the world market, and we are a net export nation, the added supply will force OPEC to compete for business. They will either have to continually reduce their output to fix the supply and let American companies have more of the market share. Or they will have to ramp up production to keep their net cash flow consistent with the lower prices. Their additional output along with ours will create a self feeding cycle of supply, which should drive down speculator costs.
We should be careful here, however. If the cost of a barrel of oil drops to dramatically too soon, the motivation for private industry to produce more will fall as profit margin potential goes lower.
Ideally, we would relax all regulation on exploration, extraction, refinement and new refinery production and distribution for 10 years. Let our people push out capabilities hard. Nuclear, Oil, Coal, natural gas.... This would drive down the cost of energy for America and the entire world. Lower energy prices frees up private capital. And so the snowball begins....
But alas, with the current administration and political discourse in this nation, this is but a fantasy.
If we were drilling and producing offshore in 20 states like we do in TX and LA, anyone that wanted a job in this country could get one.
I read this article with disbelief. The guy must be trying to get a job in the current Administration.
America’s energy independence will crush the Islamists. Without petrodollars, the Middle East will go back to being a Shiite-hole.
Think about it.
If the US becomes energy independent, what will happen to the world oil price?
It will fall to historic lows, adjusted for inflation.
Would the president of EXXON be expected to be happy at the sight of $10 oil?
Almost everyone of the big boys in our economy have been corrupted to believe that it is more profitable to game the system than it is to fight it.
So EXXON and its competition have learned how to profit from the government’s present mismanagement of their industry.
Every now and then you see where they are getting huge grants for windmill and solar farms. One example of how they game the system.
Munger doesn’t know how much oil there is out there. It is simply astronomical. The shale oil being mined now by fracking is from the source rock of all the oil that’s ever been drilled. All the oil that’s ever been drilled since the mid 1800’s is only 10% of the oil underground. That oil percolated up from source rock and was trapped under salt domes and similiar formations. Fracking allows us to get at another 30% of the oil from the source rock itself. That’s three times the amount of oil that ever been drilled since the beginning of the oil age.
But there’s several orders of magnitude more oil out there.
There is an unlimited supply of oil locked in the oil shale of the green river basin in Utah colaorado and wyoming.
In 10-20 years the cost of electricity will collapse —making that oil shale cheap enough to extract byo of insitu mining—if there is any demand for oil after the collapse of the cost of electricity.
It might allow people to compete with them. Can’t have that.
I is doing JUST FINE, thank you.
SCREW the rest of youse.....................
The other reason they are against it is the same reason they specifically helped Il’Douchbag oppose the Keystone Pipeline; they own the railroads and lines that are shipping all that Bakken oil. They want dependence on oil, until it is no longer profitable for them.
Buffet is a corporate raider and in reality a lousy businessman. So I will say to him, paraphrasing the words of a president he admires. "You didn't build that, someone else did."
BUFFET built nothing, just gutted companies for his own profit at the expense of these companies and customers they serve and served.
Almost everyone of the big boys in our economy have been corrupted to believe that it is more profitable to game the system than it is to fight it.
So EXXON and its competition have learned how to profit from the government’s present mismanagement of their industry.
Every now and then you see where they are getting huge grants for windmill and solar farms. One example of how they game the system.
You are spot on with all points. But don't blame the corporations for it. They have a charter to improve returns for investors. Investors pay big bucks to employ smart folks. And the folks they employ are far smarter and more business savvy that the most qualified politician, let alone the breed of degenerates we have running this nation now.
What happens is the government forces a different "survival of the fittest" scenario. It necessarily squeezes out the natural competition that would self regulate the business economics. Instead, the large capital based businesses that can afford to lobby compete TOGETHER for favor with the government. The investors win and the consumers lose. But the consumers are where the government's revenue comes from.
Also, "Big Oil" is amazingly agile. For them to be able to capitalize on everything from the BP Oil disaster, to Fracking, to Clean Energy is something that should be admired from a strictly business management perspective. Think of what they could do if our government were to immunize them against restrictive federal regulations and all litigation for 10 years. They would initially likely panic as a flood of competitors stormed into the industry. The libs would go nuts as rigs went up all over.
Creeps like Munger are not businessmen in the traditional sense. They don’t believe in free markets or free enterprise. They are Globalists who are social engineers and managers. The Corporate Boards they sit on are avenues of social control. They are not like great men like Henry Ford or James J. Hill who built up the country. They are the modern day equivalent of the British East India Company.
I don’t disagree with one word you say.
I am well aware that CEO’s have a fiduciary obligation to stockholders to make as much money as they can, provided they do so legally.
However it is also true that what is good for the short run...five or ten years, is not always good in the long run.
But stockholders are thinking in terms of the present as are CEOs so we can’t fault the CEO.
Okay so...
We don’t need manufacturing...
We don’t need hi tech jobs, because H1-Bs are better...
We don’t need call centers on U. S. soil.
We don’t need any U. S. citizens to to trades associated with home building.
We don’t need any U. S. kids to mop floors and do dishes for entry jobs.
We don’t need any U. S. kids to work in fast food restaurants up front.
Now we don’t need any energy production jobs.
WTF do we need then Mr. Berkshire Hathaway (BRK-B) Vice-Chairman Charlie Munger?
I’d love to drop kick some of you guys to Planet 9.
Our financial, regulatory and tax laws are so fluid and obscure these days, long term business plans are almost useless. Each administration and congress enforces different regulations differently and more or less strictly. Look at the EPA, for instance. No laws have been passed that anywhere near match the "new" jackboots at the EPA. IRS? FDA? Consumer Protection Agency? ETc.? Many big businesses now only plan on what they can predict for the next election cycle. Where to put capital (or hide it), where to invest, whether or not to expand nationally, globally, etc. Technology research? Patten laws, bail outs, government take overs.... it goes on and on.
In the 1980s and 1990s company's had mission statements that spawned long term and short term objectives that would drive business plans for investors to review and support. When the long term objectives have to change every two years because of new indirect challenges, there is no confidence in long term plans.
I have spent year close to VERY wealthy investors. Their business is putting money where it will make more money. These guys got wealthy by staying ahead of trends that were predictable. Guess what? They quit playing in 2007. There was no where to put money. Many started buying gold. Several looked into foreign asset development. These are the SHORT TERM eager beavers (inside 15 years). They are hiding their money now.
Think about the pharmaceutical industry. It can take 20 years to bring a molecule through the process that gets approved into a drug to sell for a few short years before the patten runs out. These companies are very important to the continuous improvement of human life. How do they plan for things like Obamacare? The price of their product has to be very high to overcome the research and regulatory challenges. And they only get to profit from their product for a few short years to recoup costs or invest in the next research.
Look at General Motors! On a dime, the government took over and now they are extremely heavily invested in "clean energy" automobiles. If the price of gas drops back to $1.75 a gallon, GM is screwed again. They'll have to sell the Volt and Cruse for scrap. Short term vision. Meanwhile, Ford is trying to simplify and diversify their product across multiple interests (including fuel efficiency).
Again you are absolutely correct.
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