Would the Keystone pipeline raise Ohio's gasoline price?

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    [Would the Keystone pipeline raise Ohio's gasoline price?]

    COLUMN from The Plain Dealer, 1-16-12, By Dennis Kucinich

    Last week, The Plain Dealer reported that the closure of several refineries on the East Coast will drive up prices for gasoline in Northeast Ohio because supplies of gasoline from Midwest refineries will be diverted from the Midwest to the East Coast, where they will command higher prices.

    However, the real threat to Midwest gas prices is not this marketplace response to the reduced use of gasoline by the American public. The real threat is the major shift of supply, away from Midwest refineries and down to Gulf Coast refineries, which will occur if the Keystone XL pipeline is constructed.

    Most Canadian oil is refined in the Midwest because there is not enough pipeline capacity to carry it to the Gulf Coast. The result is an excess of supply over demand in the Midwest, and lower gasoline prices here.

    If the Keystone XL pipeline is built, most of that Canadian oil will be sent to refineries on the Gulf Coast, most likely to be refined into products that are shipped to foreign customers. The oversupply of Canadian oil in the Midwest will be eliminated, and prices for gasoline here will increase.

    This is not just my conclusion. This is the conclusion of TransCanada, the company that wants to build the Keystone XL Pipeline. This is the conclusion of international energy consultant Purvin & Gertz Inc. (PGI), the company that TransCanada hired to evaluate its Keystone XL pipeline. And this is the conclusion of respected oil market economist Philip Verleger. That is why TransCanada wants to build this pipeline.

    TransCanada's permit application to the Canadian government for the pipeline included documents and testimony that said that Canadian oil companies could use the pipeline to increase America's fuel bill by up to $4 billion per year by limiting the supply of Canadian crude to Midwest refineries and rerouting it to Gulf Coast refineries.

    This benefit to Canadian oil companies was used by TransCanada to argue that approval of the pipeline was in Canada's interest. But this information was conveniently hidden when TransCanada applied for a U.S. Presidential Permit from the State Department ...

    Through manipulation of U.S. oil markets, the Keystone XL pipeline will increase U.S. gas prices by 10 to 20 cents per gallon across the United States, according to Verleger. However, the greatest price increase -- twice as much, by one estimate -- will occur in 15 states: Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee and Wisconsin. It is expected to increase prices by an estimated $6.55 per barrel of crude oil in the Midwest and $3 per barrel across the United States.

    This market manipulation will gouge American consumers, forcing them to hand over up to $3.9 billion in hard-earned American dollars to foreign oil companies every year. While this boon may benefit TransCanada and Canadian oil company shareholders, it will only further devastate the American people, American businesses and American farmers, who are already struggling financially and cannot afford a gas price hike.

    Americans want low gas prices. Permitting the Keystone pipeline would deliver the opposite by increasing prices at the pump and making Americans pay more for almost every commodity they purchase. I urge my colleagues to protect Americans from being further gouged by foreign oil companies.

    Commentator 1 wrote:

    What makes you think that the Canadian oil sent to Houston via the Keystone pipeline will remain in the US? The US is a net exporter of refined oil products, including gasoline, and Houston is a port city. As Kucinich pointed out, this gas will probably be exported to other countries and will not lower US gas prices. Meanwhile, it imposes great environmental issues. We are being misled on this pipeline.

    Commentator 2 wrote:

    I have been wondering why we need a pipeline to take the Canadian oil all the way to the gulf coast when it can be refined and used further north.

    Now I have the answer - it is destined for the gulf coast so it can be exported.

    The pipeline is being pushed under the mantra of "jobs", but after the couple thousand construction jobs dry up we'll be left with billions of dollars in higher gasoline prices.



    NEWS ARTICLE from The New York Times, 1-18-12, By JOHN M. BRODER and DAN FROSCH

    [Obmam Rejects Keystone Pipeline Proposal]

    WASHINGTON -- President Obama on Wednesday rejected, for now, the proposed Keystone XL oil pipeline, saying the $7 billion project could not be adequately reviewed within the 60-day deadline set by Congress ...

    The president said his hand had been forced by Republicans in Congress, who inserted a provision in the temporary payroll tax cut bill passed in December giving the administration only until Feb. 21 [2012] to decide the fate of the 1,700-mile pipeline, which would stretch from oil sands formations in Alberta to refineries on the Gulf Coast ...

    The Republican presidential candidates have already made clear that they intend to use the Keystone issue to portray the Obama administration as an enemy of business that is doing the bidding of extreme environmentalists.

    The pipeline issue has also become part of a broader narrative that the Republican candidates are trying to develop about Mr. Obama, one that argues that his administration is vastly expanding regulation in ways that prevent private industries from expanding and hiring ...

    The American Petroleum Institute, the industry's main lobbying group, has begun a multimillion-dollar lobbying and advertising campaign promoting the pipeline ...

    Canada has the world's second-largest proven oil reserves after Saudi Arabia, with 170 billion out of its 174 billion barrels residing in oil sands in the West, according to the Canadian government.



    NEWS ARTICLE from Bloomberg, 3-1-12, By Bradley Olson

    Keystone Oil Pipeline Seen Raising Gas Prices in Midwest

    Philip Verleger, principal of PK Verleger LLC. said "the Canadian plan was to use their market power to raise prices in the United States and get more money from consumers."

    TransCanada Corp. (TRP)'s Keystone XL oil pipeline, a project backers ... say will create cheaper U.S. gasoline, instead risks raising prices as much as 20 cents a gallon in the Midwest, Great Plains and Rocky Mountains.

    The line would create a new way to carry Canadian imports outside the Midwest and reduce an oil surplus that's depressing prices in the central U.S. ...

    The purpose of the $7.6 billion Keystone is to move 830,000 barrels of oil a day from landlocked Alberta to the Texas Gulf Coast, obtaining new customers and a higher price for heavy Canadian crude, Canadian regulators said in a 2010 report. The oil sold for $23.38 less per barrel in 2011 compared with heavy grades of Mexican crude, according to data compiled by Bloomberg.

    "The Canadian plan was to use their market power to raise prices in the United States ... and get more money from consumers," Philip Verleger, founder of Colorado-based energy consulting firm PK Verleger LLC, said in an interview. Prices may gain 10 to 20 cents in central states, he said.

    Producers including Exxon Mobil Corp. (XOM), Suncor Energy Inc. (SU) and Cenovus Energy Inc. (CVE) may reap as much as $4 billion more in annual revenue if prices rise as expected following the construction of the 1,661-mile (2,673-kilometer) Keystone XL conduit, the 2010 report says.

    Such a change would erase the cost advantage for refiners such as Marathon Petroleum Corp. (MPC) and HollyFrontier Corp. (HFC), whose Midwest plants profited on cheaper oil supply ...

    Consumers in Colorado and Wyoming currently pay less for gasoline than anywhere in the nation because of the supply glut in the Rocky Mountains caused by stranded Canadian imports and growing oil production from onshore fields.

    Denver's average price of $3.13 a gallon today [3-1-12] was 43 cents lower, or 12 percent, than Houston's $3.56 average, according to AAA. The average gasoline price of $2.99 a gallon in Cheyenne, Wyoming is the same as a year ago ...

    Canadian producers will be able to charge more for their oil after Keystone XL is built, boosting revenues by $2 billion to $3.9 billion, Canada's National Energy (TAQA) Board said in the 2010 report approving of TransCanada's pipeline plan ...

    Completion of the entire pipeline would raise prices at the pump in the Midwest and Rocky Mountains 10 to 20 cents a gallon, Verleger, the Colorado consultant, said in an e-mail message ,,,

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    Bringing Joy into the 'Dismal Science'

    Economist offers ways to include economic thinking into decision-making.

    Summary of a presentation by Joseph P. Kalt Professor of International Political Economy John F. Kennedy School of Government Harvard University

    No Such Thing as a Free Lunch

    Economics is sometimes called the "dismal science" because what some consider its pessimistic view of the world -- unlimited wants, and scarce resources.

    This conundrum is at the heart of most public policy debates and indeed most of what drives society.

    Joe Kalt: "The core problem for us human beings and as a society -- given that we're not all the same and we can't agree unanimously -- is facing the challenge of how to allocate our resources: `Should we build a new school or a jail? Should we build a new road or a hospital?' The problem is making those choices as a society and finding ways of using resources that is the best for people," Kalt said.

    In economics parlance, the result of these choices is an "opportunity cost": The opportunity cost of building a new jail is the new school that could have been built with the community's resources. In more basic terms, opportunity cost means there is "no such thing as a free lunch," Kalt said. "You can't do it all. Somewhere something else is going to give ...

    Demagogues and Spin ...

    Much of what journalists cover is the debate over these resources in city council meetings, county board meetings, school boards, state legislatures and Congress. Invariably, someone will come along and say we can have it all -- both the school and the jail, the guns and the butter. This is where understanding economics is critical for journalists, policy makers and anyone else ...

    "If you make it more expensive for industry to spit carbon or sulphur into the air, they emit less. Why? Because we are rational, and we are using the law of supply and demand."

    In the past, environmental policy has used quotas and emission prohibitions rather than market-based incentives, such as emission permits that can be bought and sold.

    "Over the years we have switched away from the `mom and dad' way of running the economy -- `Don't do it,' or `Just say No,'" Kalt said. Instead, the philosophy is, "`You can do it, but you just have to pay more to do it.' And this is how we design public policy. Just wagging your finger doesn't do a lot." ...

    "Almost everything depends on the government and its policies. The government lays down rules of the game."

    [A] stark example of the results of poor governance is Latin America. Geographically, the region has abundant natural resources [and] might seem to be a place ideal for economic development. But corrupt governments and weak civil societies keep the region poor.

    "If the rules of the game are set up such that rather than being productive, a society's best and brightest are devoted to taking resources from the other guy, you can destroy a society," Kalt said.

    If a political party's sole aim is to maintain a monopoly of power, while extorting the population, as is common in much of the Third World, economies and societies will not develop. In the developed world, similar problems can arise through unchecked lobbying ...

    If markets are working well, they send signals -- through prices -- to help people financial decisions. If something becomes scarcer, the price goes up. If price goes up, signals are sent to both consumers and suppliers. This is the "invisible hand" that economist Adam Smith famously ... described in the 18th century ...

    "No one likes high prices, but people like waiting in line even less, because that makes the real price higher. And if you're third in line, and there are only two pieces of meat, you can't get it at any price," Kalt said. "China looked at what happened in the Soviet Union and deregulated all of the food and retail markets. This is the reason China survived.

    "Market economies generally work better than anything else because they send signals in a way that doesn't require a central planner. That was the Russian problem," Kalt said ...

    One of the ways markets can fail is through artificial restrictions in supply, as can happen when cartels conspire to reduce production, thus driving up the price ... [as in 2003 when "terrorists" crossed the Iraqi borders to blow up pipelines after the US occupation of Iraq]

    [The cartels] are not violating rules of supply and demand, they are using them in their favor," Kalt said. "As more and more people turn to using markets, they are also looking for ways to control competition in those markets."

    Free markets can also fail the environment if adequate protections are not set in place. In a totally unregulated economy, no one stops polluters from dumping chemicals into streams, oceans and the air.

    "If I'm spitting out chemicals into a river and killing all of the fish downstream, but I am not bearing the costs for killing all of the fish; the costs are external. But I am hurting consumers," Kalt said. "When you don't have to bear out all of the costs of your actions, the true social costs are hidden."

    Kalt said it is important that external costs be factored into the market. Environmental laws attempt to address market failure.

    Countries with weak environmental laws tend overproduce things because external costs are not factored in. "They are sending the wrong signal that it's cheaper to produce things in that country, but the producers don't have to pay for costs of their behavior. The market depends on rules of the game that requires that you bear the costs and consequences of your actions," Kalt said ... [See the Koch record below.]

    Domestically, markets can fail when mergers eliminate competitors and result in too few competitors or [in] monopolies.

    Kalt said there may be other reasons to intervene in markets or even shut them down. "Ethics can and should trump the market," he said. "Markets can produce all kinds of illicit and illegal things. We have a whole body of public law about this. It's why we have the Food and Drug Administration, truth and lending laws, and lemon laws."



    Origin of the Tea Party


    FEATURE ARTICLE from The New Yorker, 8-30-10, by Jane Mayer

    ``Covert Operations

    The billionaire brothers who are waging a war against Obama.

    In Washington, Koch is best known as part of a family that has repeatedly funded stealth attacks on the federal government, and on the Obama Administration in particular.

    With his brother Charles, who is seventy-four, David Koch owns virtually all of Koch Industries, a conglomerate, headquartered in Wichita, Kansas, whose annual revenues are estimated to be a hundred billion dollars. The company has grown spectacularly since their father, Fred, died, in 1967, and the brothers took charge.

    The Kochs operate oil refineries in Alaska, Texas, and Minnesota, and control some four thousand miles of pipeline. Koch Industries owns Brawny paper towels, Dixie cups, Georgia-Pacific lumber, Stainmaster carpet, and Lycra, among other products.

    Forbes ranks it as the second-largest private company in the country, after Cargill, and its consistent profitability has made David and Charles Koch ... among the richest men in America. Their combined fortune of thirty-five billion dollars is exceeded only by those of Bill Gates and Warren Buffett.

    The Kochs ... believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry, especially environmental regulation.

    These views dovetail with the brothers' corporate interests. In a study released this spring, the University of Massachusetts at Amherst's Political Economy Research Institute named Koch Industries one of the top ten air polluters in the United States. And Greenpeace issued a report identifying the company as a 'kingpin of climate science denial.' The report showed that, from 2005 to 2008, the Kochs vastly outdid ExxonMobil in giving money to organizations fighting legislation related to climate change, underwriting a huge network of foundations, think tanks, and political front groups ...

    The advocacy wing of the Americans for Prosperity Foundation [AFP], an organization that David Koch started in 2004, held a ... gathering. Over the July 4th [2010] weekend, a summit called Texas Defending the American Dream took place in a chilly hotel ballroom in Austin ...

    Five hundred people attended the summit, which served, in part, as a training session for Tea Party activists in Texas. An advertisement cast the event as a populist uprising against vested corporate power. "Today, the voices of average Americans are being drowned out by lobbyists and special interests," it said. "But you can do something about it." The pitch made no mention of its corporate funders ...''



    Op-Ed Column from The New York Times, 8-28-10, By FRANK RICH

    ``The Billionaires Bankrolling the Tea Party

    Another weekend, another grass-roots demonstration starring Real Americans who are mad as hell and want to take back their country from you-know-who. Last Sunday the site was Lower Manhattan, where they jeered the "ground zero mosque." This weekend, the scene shifted to Washington, where the avatars of oppressed white Tea Party America, Glenn Beck and Sarah Palin, were slated to "reclaim the civil rights movement" (Beck's words) on the same spot where the Rev. Martin Luther King Jr. had his dream exactly 47 years earlier ...

    There's just one element missing from these snapshots of America's ostensibly spontaneous and leaderless populist uprising: the sugar daddies who are bankrolling it, and have been doing so since well before the "death panel" warm-up acts of last summer [2009]. Three heavy hitters rule. You've heard of one of them, Rupert Murdoch. The other two, the brothers David and Charles Koch, are even richer, with a combined wealth exceeded only by that of Bill Gates and Warren Buffett among Americans. But even those carrying the Kochs' banner may not know who these brothers are ...

    All three tycoons are the latest incarnation of what the historian Kim Phillips-Fein labeled "Invisible Hands" in her prescient 2009 book of that title: those corporate players who have financed the far right ever since the du Pont brothers spawned the American Liberty League in 1934 to bring down FDR ...''

    [The stakes for the kleptocracy are higher than ever -- the Kazakh oil of central Asia, and the chance to make Afghanistan another Congo. For more on the U. S. invasion of Afghanistan and the Unocal pipeline, see]




    Bloomberg Markets Magazine By Asjylyn Loder and David Evans - Mon Oct 03, 2011

    Koch Brothers Flout Law Getting Richer With Secret Iran Sales

    The most visible part of Koch Industries is its consumer brands, including Lycra fiber and Stainmaster carpet. Georgia- Pacific LLC, which Koch owns, makes Dixie cups, Brawny paper towels and Quilted Northern bath tissue.

    Charles, 75, and David, 71, each worth about $20 billion, are prominent financial backers of groups that believe that excessive regulation is sapping the competitiveness of American business ...

    A Bloomberg Markets investigation has found that Koch Industries -- in addition to being involved in improper payments to win business in Africa, India and the Middle East -- has sold millions of dollars of petrochemical equipment to Iran, a country the U.S. identifies as a sponsor of global terrorism.

    Internal company documents show that the company made those sales through foreign subsidiaries, thwarting a U.S. trade ban.

    Koch Industries units have also rigged prices with competitors, lied to regulators and repeatedly run afoul of environmental regulations, resulting in five criminal convictions since 1999 in the U.S. and Canada.

    From 1999 through 2003, Koch Industries was assessed more than $400 million in fines, penalties and judgments [but the actual damages may hve been in the billions] In December 1999, a civil jury found that Koch Industries had taken oil it didn't pay for from federal land by mismeasuring the amount of crude it was extracting ...

    In 1999, a Texas jury imposed a $296 million verdict on a Koch pipeline unit -- the largest compensatory damages judgment in a wrongful death case against a corporation in U.S. history. The jury found that the company's negligence had led to a butane pipeline rupture that fueled an explosion that killed two teenagers ...

    The Koch brothers have vaulted into the American political spotlight in recent years. Koch Industries has spent more than $50 million to lobby in Washington since 2006, according to the Center for Responsive Politics, a nonpartisan group that tracks political donations.

    The company opposed derivatives regulation and greenhouse gas limits.

    The brothers have backed a foundation that has trained thousands of Tea Party activists. The Tea Party, a popular movement whose name stands for Taxed Enough Already, has grown into a potent force in national politics. Sixty representatives of Congress, out of a total of 435, identify themselves as Tea Party members ...

    [Sales to Iran]

    On Aug. 14, 2008, investigators from the U.S. Department of Homeland Security met with George Bentu, who had worked as a sales engineer from 2001 to 2007 for Koch-Glitsch in Germany, Bentu says. In a four-hour interview at the U.S. consulate in Frankfurt, the officials asked about documents showing details of the company's trades with Iran, he says ...

    Internal company records show that Koch Industries used its foreign subsidiary to sidestep a U.S. trade ban barring American companies from selling materials to Iran. Koch-Glitsch offices in Germany and Italy continued selling to Iran until as recently as 2007, the records show.

    The company's products helped build a methanol plant for Zagros Petrochemical Co., a unit of Iran's state-owned National Iranian Petrochemical Co., the documents show. The facility, in the coastal city of Bandar Assaluyeh, is now the largest methanol plant in the world, according to IHS Inc., an Englewood, Colorado-based provider of chemicals, energy and economic data.

    "Every single chance they had to do business with Iran, ... they did," Bentu, 46, says.

    Bentu, a German engineer who earned his master's degree in chemical engineering from Montana State University in Bozeman in 1990, joined Koch-Glitsch in 2001. His duties included drawing up bids for potential buyers of the company's distillation equipment, which is used in making fuels, fertilizers, detergents and other products.

    Bentu says he had been working at Koch-Glitsch in Viernheim, about 80 kilometers (50 miles) south of Frankfurt, for two months when he first saw an order destined for Iran. Concerned that the transaction might run afoul of U.S. law, Bentu asked his manager about it, he says. Bentu says his boss told him not to worry, that the company's U.S. lawyers made sure the deals with Iran were legal.

    U.S. companies have been banned from trading with Iran since 1995, when President Bill Clinton declared it a threat to national security. Iran supports Iraqi militants and Taliban fighters as well as terrorist groups, including Hamas and Hezbollah, according to the U.S. State Department ...

    In his annual State of the Union address on Jan. 29, 2002, in the wake of the 9/11 attacks in New York and Washington, President George W. Bush said that Iran was part of what he called the "Axis of Evil."

    A year later, in his Jan. 28, 2003, address to Congress, Bush said, "In Iran, we continue to see a government that represses its people, pursues weapons of mass destruction and supports terror."

    The following day, Koch-Glitsch was sent a purchase order to supply petrochemical equipment for the Zagros plant, which was being designed and built by two engineering firms, Pidec in Iran and Lurgi in Germany, according to company documents.

    On May 31, 2004, Koch-Glitsch secured another contract for 1.2 million Euros, to help expand the Zagros facility. The plant helped Iran turn its vast natural gas reserves into methanol, which is used for making plastics, paints and chemicals ...

    In April 1996, Koch environmental technician Sally Barnes- Soliz walked into the offices of Texas regulators in Corpus Christi and told them the company had lied about spewing benzene into the air.

    Koch Refining Co. had recruited Barnes-Soliz in 1991 to work in the safety department at the company's Corpus Christi refinery. Barnes-Soliz, then 30, had earned a bachelor's degree in science and environmental health and a Master of Science in industrial hygiene at Colorado State University in Fort Collins ...

    Federal rules in 1995 required the plant, one of two refineries Koch owns in Corpus Christi, to reduce benzene emissions to less than 6 metric tons a year. Benzene, a chemical compound refined from crude oil, was found to cause leukemia in 1928 by two Italian doctors who detected the cancer in a worker exposed to benzene for five years.

    Four federal agencies -- the National Institutes of Health, the Food and Drug Administration, the Environmental Protection Agency and the Occupational Safety and Health Administration -- say that benzene is a cause of cancer.

    On Jan. 6, 1995, Koch's refining unit informed the Texas Natural Resource Conservation Commission, or TNRCC, that it had installed a new anti-pollution device called a Thermatrix that used flameless heat to burn off the benzene. The machine lacked sufficient capacity for the job, Barnes-Soliz says, and refinery workers disconnected it within days.

    "The refinery was just hemorrhaging benzene into the atmosphere," she says.

    Three months after disconnecting the machine, Koch filed a quarterly report with Texas regulators, while concealing that it had violated the emission rules.

    On Aug. 17, 1995, Koch Industries attorney Vincent Mietlicki wrote a memo to another company lawyer, Thomas Meek, saying the refinery had given the state incorrect information about its uncontrolled benzene emissions.

    "I think it goes without saying that there is a need to correct our first quarterly report which is misleading and inaccurate," he wrote.

    That December, a refinery manager asked Barnes-Soliz to tally the plant's annual benzene emissions for a report to state regulators, Barnes-Soliz says. She found 91 metric tons of uncontrolled benzene emissions, more than 15 times higher than what the rules allowed ...

    Those levels of emissions could increase the cancer risk to refinery employees and the public, she says. Barnes-Soliz reported the results in a document dated Jan. 4, 1996, to Mietlicki, the same lawyer who had written the memo calling out the inaccuracies in the quarterly report Koch filed with the state. She says Mietlicki and other Koch executives pressured her to lower the figures in her report ...

    Barnes-Soliz's bosses went around her. On April 8, 1996, Koch reported to Texas regulators that its Corpus Christi plant had uncontrolled emissions of 0.61 metric tons for 1995, or 1/149th the quantity she had found.

    "When I saw they had actually falsified that document, I had no recourse but to notify the authorities," Barnes-Soliz says ...

    Oil Slick

    The EPA had sued Koch Industries a year earlier for a series of pipeline leaks in several states, including one that left a 12-mile-long oil slick on Nueces and Corpus Christi bays in October 1994. Her statement triggered another probe by state regulators and the FBI.

    During the next three years, investigators compiled evidence that included hundreds of internal memos about benzene emissions. In 1999, Koch's lawyers tried to stop prosecutors from using the documents in court.

    Koch argued that records of the company's internal investigation regarding benzene rules were protected by attorney-client privilege. U.S. District Judge Janis Graham Jack in Corpus Christi rejected that claim, ruling that the privilege doesn't apply when used to help commit a crime or fraud. She singled out Mietlicki.

    "The government has submitted evidence which indicates that Koch was intentionally using Mietlicki and his investigation and expertise in reference not to prior wrongdoing, but to future wrongdoing," the judge wrote. "The February memo strongly suggests that Koch was using Mietlicki (and his investigation and expertise) as a 'front man' to impede the TNRCC [Texas Natural Resource Conservation Commission] from ascertaining the extent of its noncompliance."

    The February memo was sealed by the court.

    A federal grand jury issued a 97-count indictment against Koch Petroleum Group, Mietlicki and three refinery managers on Sept. 28, 2000. Koch Petroleum Group pleaded guilty to a felony charge of lying to the government about its benzene emissions in April 2001.

    Judge Jack fined Koch Petroleum $10 million and ordered that it pay another $10 million to fund environmental projects in south Texas. Koch earned $176 million in profit from the Corpus Christi plant in 1995, prosecutors told the court. The company said in a hearing that it would have cost $7 million to comply with the benzene emission regulation [and the real damages and clean-up costs may have been in the $100 million range.]

    Koch Petroleum changed its name to Flint Hills Resources in 2002.

    In the agreement to plead guilty, prosecutors dropped the charges against the four individuals ...

    Uhlmann, the federal prosecutor who led the probe, says Koch's after-the-fact response is a public relations whitewash.

    "The Koch case was a classic case of environmental crime, significant violations of law occurring alongside widespread efforts to conceal those violations, which Koch has admitted," Uhlmann says ...

    After the company found out that Barnes-Soliz had tipped off state regulators, Koch stripped her of her responsibilities and moved her to an empty office with no tasks and no e-mail access, she says ...

    The Corpus Christi case was one of a series of challenges Koch Industries faced in the 1990s over environmental issues. In 1997, a company now owned by ConocoPhillips sued Koch for toxic waste dumping at a refinery in Duncan, Oklahoma.

    In March 1998, U.S. District Court Judge Vicki Miles- LaGrange in Oklahoma City ordered Koch to pay for 15 percent of the cleanup costs for dumping at the site between 1946 and 1953. That decision was upheld by the U.S. Court of Appeals for the 10th Circuit in May 2000.

    "The record is replete with evidence Koch used unlined ditches, pits and ponds to dispose of hazardous waste at the site," the appeals court ruled, finding that Koch had tainted groundwater. "The pollution of any Oklahoma waters, including groundwater, has been prohibited by state statute since the early 1900s -- well before Koch's waste disposal activity at the refinery."

    By March 2007, Koch Industries had paid just $440,899 and still owed $2.97 million for its share of the cleanup, Conoco told the court.

    "Koch simply refuses to pay its share as ordered by this court," Conoco said.

    The two companies settled in February 2009. Terms weren't disclosed ...

    A Koch unit in Rosemount, Minnesota, pleaded guilty in 1999 to two federal misdemeanors of violating the Clean Water Act and paid $8 million in fines and penalties. The company used fire hydrants to pump more than a million gallons of wastewater contaminated with ammonia onto the ground.

    Koch also increased its dumping of wastewater on weekends when it didn't monitor discharges, circumventing the reporting requirement of its permit, the EPA said. Koch also admitted that it negligently released between 200,000 gallons ... and 600,000 gallons of aviation fuel into a nearby wetland ...

    Koch Industries also spent much of the 1990s defending itself against what a U.S. Senate subcommittee called a widespread scheme to steal oil on Indian land.

    The Senate held hearings in May 1989 after Bill Koch, David Koch's twin brother, told a U.S. Senate special committee on investigations that Koch Industries was stealing oil on American Indian reservations, cheating the federal government of royalties.

    Bill Koch had a long-standing feud with his brothers after his failed attempt to take over the company in the early 1980s. He sold his shares in June 1983 and later lost a lawsuit claiming he'd been shortchanged.

    The Senate committee sent investigators to Oklahoma to secretly observe oil companies ... The investigators caught Koch Oil's employees falsifying records so that the company would get more crude than it paid for, shortchanging Indian families, Elroy said.

    Koch's records showed that the company took 1.95 million barrels of oil it didn't pay for from 1986 to 1988, according to data compiled by the Senate ...

    The committee concluded in a November 1989 report that Koch Oil had engaged in a widespread, sophisticated scheme to steal millions of barrels of oil. The Senate referred the case to the Justice Department, which convened a grand jury that never indicted the company ...

    Bill Koch brought a lawsuit on behalf of U.S. taxpayers, claiming that Koch Industries' scheme defrauded the government of royalties. The case came to trial in 1999. Former company employees testified that Koch Industries trained them to steal.

    Phil Dubose, who worked for Koch Industries from 1968 to 1994, told the jury how the scheme worked.

    "The Koch Method is to cheat the producer out of crude oil," he said.

    He testified that he was able to steal 2,000 barrels a month from one customer.

    "You used every available tool to mismeasure the crude oil in Koch's favor," says Dubose, who is now retired.

    Charles Koch testified in the trial, saying the company had the highest standards ...

    24,587 False Claims

    Two days before Christmas 1999, the jury delivered the verdict: Koch Industries had made 24,587 false claims in buying oil, underpaying the U.S. government for royalties on Native American land from 1985 to 1989. Koch paid the U.S. $25 million to settle the case in 2001.

    The Koch brothers, meanwhile, reached an agreement, with undisclosed terms, dropping all litigation against each other.

    While the Koch brothers battled over oil, Koch Industries clashed with regulators over its failure to properly maintain its pipelines. In 1995, the EPA sued the company, saying poor maintenance resulted in corrosion that contributed to hundreds of spills.

    The following year, before the EPA case was resolved, a leak in a Koch butane pipeline led to an explosion that killed two teenagers.

    Burned Alive

    On Aug. 24, 1996, Danielle Smalley and her high school friend and neighbor Jason Stone, both 17, smelled gas outside Smalley's mobile home in rural Lively, Texas, 50 miles southeast of Dallas. The house had no telephone, so they decided to drive the Smalley family's pickup truck to a neighbor's home to call 911.

    They never made it.

    The truck stalled after the couple drove into a fog-like cloud, says Danielle's father, Danny Smalley, who watched them drive away. It was butane vapor, leaking from a corroded steel pipeline. Seconds later, as Danielle restarted the truck, the gas ignited into a fireball, burning Danielle and Jason to death.

    Smalley's father sued Koch Industries in 1997 in the Kaufman County, Texas, district court for the wrongful death of his daughter.

    [Is this the vaunted Texas "business-friendly" environment? a triumph of deregulation?]

    Koch Pipeline Co., the unit that managed the Texas pipeline, knew the line had corroded and didn't fix it, an investigation by the National Transportation Safety Board concluded in November 1998.

    The 570-mile-long pipeline carrying liquid butane from Medford, Oklahoma, to Mont Belvieu, Texas had corroded so badly that one expert, Edward Ziegler, likened it to Swiss cheese. The company didn't give 40 of the 45 families near the explosion site -- including the Smalley and Stone families -- any information about what to do in case of an emergency, the NTSB wrote.

    Danny Smalley hired Ziegler, a third-generation oilman and certified safety professional, as an expert witness. Ziegler had previously been retained by Koch Industries as an expert witness in an unrelated case. Ziegler told the jury that he'd never seen a company disregard safety to this extent in his more than 25- year career.

    "This is an example of a total failure of a company to follow the regulations, keep their pipeline safe and operate it as the regulations require," Ziegler, who now operates his own pipelines, testified ...

    The state jury awarded Danny Smalley $296 million in its Oct. 21, 1999, verdict. The jury found that Koch Industries acted with malice because it had been aware of the extreme risks of using the faulty pipeline. Smalley later settled for an undisclosed amount. Stone's family also settled ...

    Three months after the Smalley verdict, Koch settled the five-year-old EPA case for pipeline leaks, along with a second EPA case brought in 1997. The company paid $35 million to resolve those cases, which covered more than 300 oil spills in six states. [The actual damages may have been in the billions]

    For six decades around the world, Koch Industries has blazed a path to riches -- in part, by making illicit payments to win contracts, trading with a terrorist state, fixing prices, neglecting safety, and ignoring environmental regulations ...

    Top -- Home


    ARTICLE from Twisted Politix, 2-7-12

    [Will Executive Order 11110 be re-issued?]

    Twisted Politix: Obama Rumored to Sign Executive Order 11110 -- the first U.S. President to sign Executive Order 11110 was John F. Kennedy.

    Tuesday, February 7, 2012

    Obama Rumored to Sign Executive Order 11110, Signaling the Return of the Greenback

    An unnamed White House official shared with Bloomberg, news of a plan to bring back the greenback. The Greenback was the name given to the government controlled paper currency that U.S. President Abraham Lincoln printed to fund the American Civil War. While Lincoln only printed around $600 million of his initial greenbacks, they remained in circulation until 1994.

    Speaking on strict terms of confidentiality, the White House official stated "This debt free money will be used to pay down the national debt and begin to de-leverage the U.S. economy."

    President Obama is said to be beefing up his security detail and is constantly moving from one location to another, changing his official schedule. And with good reason, the last U.S. President to sign Executive Order 11110 was John F Kennedy in June 1963 and he was assassinated only a few short months later.

    "Either by coincidence or conspiracy, every major war and presidential assassination has been preceded either by a Congressional refusal to renew the private central bank charter, or by releasing a government controlled debt-free currency." notes historian Cindy Mullins, daughter of Eustace Mullins, who wrote the original unauthorized autobiography of the U.S. central bank, in a book entitled "Secrets of the Federal Reserve".

    Speaking on record to Bloomberg journalists, Cindy articulated the uncanny coincidences in American history. "The American War for Independence was fought when the British Royal Crown and the Bank of England learned of the success of Colonial Scripts, which was the fiat currency traded in the original 13 colonies.

    After years of war, debt accumulated and a private central bank called the Bank of North America was chartered in 1781, modeled after the Bank of England in which ... the issuance of interest bearing U.S. government bonds was required.

    Another private central bank, called the First Bank of the United States, was chartered in 1791 for 20 years. It just so happens that when the charter was not renewed in 1811, the British sent ... troops to force the US to capitulate to the Crown's desire for a central bank, and that became the War of 1812 ...

    If the [Obama] plan to release billions of greenback dollars into the economy is successful, it should begin to de-leverage the nation's economy and begin to put it back on track for prosperity for the next 100 years."



    If Obama signed Executive Order 11110, could it save the dollar and our economy?

    "I believe that banking institutions are more dangerous to our liberties than standing armies," Thomas Jefferson

    "History records that money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance," James Madison

    "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," Henry Ford ...


    Commentator 3 wrote on 12-24-10:

    Here's a brief history of the struggle over who gets to coin money under the U. S. Constitution




    President Andrew Jackson succeeds in destroying the Second Bank of the United States by withdrawing U.S. funds in 1833.

    Skull and Bones Society formed at Yale.

    William Huntington Russell founded the Order of Skull & Bones in 1832 after he returned from studies in Germany. The Russell family's business - Russell & Co. - was the premier American opium shipper and the third largest in the world. In the 1830s, opium became the world's largest commercial commodity, and was the foundation of great wealth with the smuggling of opium into China.

    January 30, 1835


    ``Aassassination attempt on President Andrew Jackson

    What is believed to be the first attempt to [murder] a sitting President of the United States occurred just outside the United States Capitol Building ...''

    April 12, 1861


    The Civil War began when General Beauregard, in command of the provisional Confederate forces at Charleston, South Carolina, opened fire on Fort Sumter.



    Bankers offered loans to the Lincoln government at a minimum 24 percent interest. So the Legal Tender Act of 1862 authorized the "greenback," a fiat paper currency that was issued directly into circulation by the United States Department of the Treasury.

    The London Times printed the following: "If that mischievous financial policy, which had its origin in the North American Republic, should become [established], then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America.

    That government must be destroyed, or it will destroy every monarchy on the globe." (Hazard Circular - London Times 1865)

    April 15, 1865

    President Abraham Lincoln is murdered.


    Federal Reserve System was created.


    The Federal Reserve System was created in 1913 by the enactment of the Federal Reserve Act. It consists of twelve regional Federal Reserve Banks


    ``Thomas Jefferson warned 200 hundred years ago that if private bankers were allowed to issue America 's money, indebtedness, foreclosure and suffering would follow. Yet, in 1913, private bankers gained control over America's money by the passage of the Federal Reserve Act.''


    ``Who owns the federal reserve bank[s]?

    That is a complicated question ... [In other words, "who knows?"]

    It is historic fact that the plan for the Federal Reserve was created by banking interests in great secrecy at Jekyl Island in 1910 ... The operations of the Federal Reserve are secret, have no active congressional oversight, and are not audited by the GAO or the IRS ...''

    June 4, 1963

    John F. Kennedy signed Executive Order 11110 ... which gave Kennedy, as President of the United States, authority to print United States Treasury Notes.

    November 22, 1963,

    John F. Kennedy is murdered

    Only one day after Kennedy's assassination, all the United States notes which Kennedy had issued, were called out of circulation.

    [Also see The Mysterious Collapse of World Trade Center Building 7]


    Commentator 4 wrote on 12-31-08:

    ``In an effort to paralyze the U. S. federal government, just three presidents, Reagan and the Bushes, have incurred most of our current [2008] $11 trillion national debt -- this was not accident or stupidity; it was deliberate policy.

    Paying interest on this debt as it continues to grow should be repugnant to all of us -- what a waste of our tax dollars. So, here is a proposal in the tradition of President Abraham Lincoln:

    Immediately pay off the entire U. S. debt with electronic (and printed when necessary) U. S. Treasury bills, "electronic greenbacks." These treasury notes will pay no interest; and will be "stored" in the U. S. Treasury until the debt-holders give the U. S. Treasury their account numbers for "electronic greenback" direct deposit. All interest payments on notes issued by the Federal Reserve will be banned by law and immediately cease.

    The new greenbacks will be legal tender in the U. S. and must be accepted abroad by U. S. agencies, contractors, and banks chartered in the U. S. no matter where they are operating ...''




    U.S. Marine Corps Major General Smedley Butler ... saw action in Honduras in 1903, served in Nicaragua enforcing American policy from 1909 to 1912, was awarded the Medal of Honor for his role in Veracruz in 1914, and a second Medal of Honor for bravery while "crush(ing) the Caco resistance" in Haiti in 1915. In 1935, Butler wrote in his famous book "War Is a Racket" [and in a speech delivered in 1933]:

    "War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses ...

    I wouldn't go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.

    There isn't a trick in the racketeering bag that the military gang is blind to. It has its "finger men" to point out enemies, its "muscle men" to destroy enemies, its "brain men" to plan war preparations, and a "Big Boss" Super-Nationalistic-Capitalism ...

    I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism:

    I helped make Mexico and especially Tampico safe for American oil interests in 1914.

    I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in.

    I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.

    I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912.

    I brought light to the Dominican Republic for the American sugar interests in 1916.

    I helped make Honduras right for the American fruit companies in 1903.

    In China in 1927 I helped see to it that Standard Oil went on its way unmolested.

    Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents."

    [While the public has borne the costs, the Iraq War has been an outstanding success for the owners of oil wells.]


    December 25, 1968:





    ``U.S. Afghanistan War Secrets Leaked

    LARRY KING: All right, Daniel Ellsberg, you were going to say ...

    DANIEL ELLSBERG: ... The Pentagon papers actually did reveal a number of things, but ... what was NOT in those 7,000 pages of top secret documents ... was a good reason for being in Vietnam or for escalating or for continuing the war ...''

    December 25, 1968: Daniel Ellsberg and Henry Kissinger spend four days at the New York Hotel Pierre, as part of the transition to the Nixon administarion, reviewing A-to-Z options for Vietnam; Ellsberg's recommendation about withdrawal is omitted from the final report ...

    June 13, 1971:

    Pentagon Papers -- The first story appears in the Sunday New York Times focused on the Tonkin Gulf incident of August 1964. It describes how the U.S. conducted extensive actions, causing the South Vietnamese to raid Northern targets with the express purpose of provoking a response that would be used to justify greater U.S. participation in the war.


    [We would not be in Afghanstan another five minutes if the men in black, and the kleptocrats they serve, would abandon the Unocal pipeline project from Kazakhstan across Afghanistan to the port of Karachi in Pakistan. But a lot of Americans have been convinced we are there to bring democracy and freedom to the Afghans, or at least to stop al Qaida, when, in fact, al Qaida is operating openly from Pakistan.



    Some of these Americans may also believe that a troop surge pacified Iraq when, in fact, the "success" was achieved by paying off the Sunni Moslems in western Iraq and by Iran restraining the militant Shiites such as al Sadr's Mahdi Army.

    In the 1980's, we gave Osama bin Laden Stinger missiles to shoot down the Russian helicopters in Afghanistan, creating a chain of events that resulted in the Russians losing most of their Islamic empire.

    Do you think the Russians are going to forget this? We will have to build the Unocal pipeline over their dead bodies. Where did Iran get medium range missiles to threaten Israel and high-tech roadsde bombs used so effectively against us in Iraq? Where are the roadside bombs coming from in Afghanistan?

    Kazakh War of 2020 here we come.]


    Commentator 5 wrote:

    The liars and thieves are having a field day with Social Security. First they steal the Social Security savings of millions of Americans to give the Bush tax breaks to millionaires and billionaires, fight wars in Iraq and Afghanistan, and bail out banks and crooked financial organizations. Then they lie by saying that Social Security is not paying its own way.

    The fact is that Social Security has been fully paid up by American workers to meet its obligations through 2035. Of course, the thieves now have to find the money to redeem the treasury notes that were issued to Social Security when the contributions of the workers were taken. The thieves and liars shout that this contributes to the annual federal budget deficit. They should not have ripped off the money in the first place.

    Should Social Security benefits be cut because the thieves do not want to pay back what they took? Apparently, Archie Bunker voted for the thieves in 2010 because he hates Obama.



    LETTER to The Sun-Sentinel, 3-10-11:

    ``During last fall's [2010] frenzied election process, American citizens were exposed to the cries of Tea Party members who wanted their country back from big government.

    I too want my country back ... from the Supreme Court of the United States ...

    The conservative majority, under the leadership of Chief Justice John Roberts, in the Citizens United case, ruled to allow corporations ... to [secretly] donate unlimited amounts ...

    The big spenders did not wish to be identified. Republicans in the Senate successfully filibustered the Disclose Act which would have required lavish contributors to [publicly] identify themselves.

    Common Cause has alerted us ... Justice Clarence Thomas, although required, failed to reveal his wife's income of over $680,000 from the Heritage Foundation ...

    Has the integrity of the Court been challenged when the billionaire Koch brothers, Tea Party supporters, issue invitations to Justices Scalia and Thomas to attend their confidential meetings?

    May I have my country back?''

    Celine E. Riedel, Avon Lake



    NEWS ARTICLE from The Associated Press, 8-21-11, By The Associated Press

    [So called "tax-cutter" Republicans want to raise taxes on workers]

    WASHINGTON -- News flash: Congressional Republicans want to raise your taxes.

    Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, [2012] right?

    Apparently not.

    Many of the same Republicans who fought hammer-and-tongs to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned.

    By their own definition, that amounts to a tax increase.

    The tax break extension they oppose is sought by President Barack Obama ... This policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a social security tax on practically every dime they earn ...

    At issue is a tax that the vast majority of workers pay, ... Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

    As part of a bipartisan spending deal last December [2010], Congress approved Obama's request to reduce the workers' share to 4.2 percent for one year; employers' rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1 [2012].

    [Is it possible that, since 2010, Republican political strategy has been centered on minimizing Democrat election money and maximizing Republican election money? Republican governors in Wisconsin and Ohio are attacking unions to prevent them from donating to Democrats. On the national level, Republicans are protecting their billionaire donors.]


    Commentator 6 wrote:

    Robots will never earn any income. They are slaves. You can't tax income from slaves that never earn income.

    It will have to be the corporations ... that will have to be taxed with an "employment tax". Unfortunately, and particularly within the United States, you can be sure American corporations will resist paying "employment taxes". Super conservative political organizations like the Tea Party organization will have nothing to do with it.

    Nevertheless, governments will have to go after corporations that have systematically thrown out employees in favor of "employing" robots that don't need to be paid and don't need expensive health insurance. Governments will need to institute some kind of a reasonably fair "employment tax" system that these corporations must pay ...

    By not paying any kind of "employment taxes" these corporations will essentially sign our country's economic death warrant ... Too many unemployed will continue to remain unemployed, unable to buy any of the very products and services that these corporations now produce through robotics and artificial intelligence ...

    Hopefully, smarter heads than those running conservative organizations like the Tea Party movement will eventually prevail ...

    This employment/taxation issue is discussed in the book by Martin Ford, "Lights in the Tunnel"


    Commentator 7 wrote:

    Understanding the underlying economics of how many consumer products (like the iPad) are manufactured is going to be a difficult and soul-searching process for most Americans. This probably goes for the entire developed world as well.

    As is becoming obvious to most of us that care to dig a little into the matter, the dirty little secret behind why many consumer products are "cheap" is because they were assembled by hoards of individuals who are being paid wages that are a fraction of what it would cost to assemble if they were assembled within our own affluent borders.

    For a very long time economists and policy makers have felt obligated to grapple with the following conundrum:

    ONE: Should developed countries continue to assemble consumer products outside of their borders in less developed economies, in places where labor is a fraction of what it would cost if assembled domestically in order to make the products cheaper, so that in theory more of "us" in the developed world can afford to buy them? Or

    TWO: do the developed countries endeavor to rehire assembly workers within their own borders at significantly higher wagers, which in turn boosts the price of the product, which in theory means less of "us" in the developed countries can afford to buy them?

    It always seemed to be a trade off.

    But then, as books like "Lights in The Tunnel" by Martin Ford are making clear, the above age-old conundrum may soon no longer apply anymore. Advances in automation, robotics, and Artificial Intelligence (AI) may sooner than we realize render it uneconomical to hire workers in even the cheapest underdeveloped countries - because it's cheaper to "hire" a robot to do it ...


    Commentator 8 wrote:

    The late Louis Kelso recognized this problem many years ago. In addition to his widely known Employee Stock Ownerhship Plan, utilized by about 11,000 companies, he advocated a Second Income Plan.

    The latest incarnation is a Capital Homestead Act. See SECOND INCOMES FOR ALL, at


    The book "Binary Economics" provides a comprehensive analysis for anyone interested.


    Commentator 9 wrote:

    From 2001 through 2008, the kleptocracy must have thought, after being given a deregulated market place to do its thing, that the gullibilty of the American public was unlimited.

    Lynne Cheney, wife of Vice-President Dick Cheney, humorously made this attitude clear in "The Body Politic" (2000) (ISBN 0-312-97963-0).


    Amidst the plundering, two of the greatest thefts in history stand out:

    After the bear raid of 1937, in March 1938, Joseph Kennedy, first chairman of the Securities Exchange Commission, formed under the administration of F. D. Roosevelt (FDR), had the SEC adopt the uptick rule, more formally known as rule 10a-1, which (loosely) said that you could only short a stock following an uptick in its price.

    July 6, 2007



    The SEC eliminates the uptick rule.

    Market conspiracies are always of interest -- the bull market "pump and dump," playing on greed; and the bear market "bear raid," playing on fear. The kleptocrats of 2001 - 2008 have engaged in both types of conspiracies, with the first part of this period dominated by shearing the sheep with "irrational exuberance." and the last part culminating in the Great Bear Raid of 2008.

    On July 6, 2007 The SEC eliminated the uptick rule. So the fall of the Dow Jones industrial average, during the Great Bear Raid of 2008, from 14,164 on October 9, 2007, to 6,547 on 3-9-09 is not some inexplicable mystery. There was nothing to stop the bears piling on as they made fortunes driving down the market.

    The bears made fortunes, and they did collateral damage -- like thieves destroying a cash register as they rob a restaurant -- ruining pension funds and 401k accounts.

    The second great theft of 2001 - 2008 was the transfer of trillions into the pockets of owners of oil wells.

    February 25, 2003


    ``Chief of Staff of the Army, General Eric Shinseki, told the Senate Armed Services Committee that he thought an occupying force of several hundred thousand men would be needed to stabilize postwar Iraq ...''

    His judgment was ridiculed by Defense Secretary Donald Rumsfeld, among others. The general then found himself marginalized until he retired'' -- so much for Bush listening to the advice of those "on the ground."

    The Iraq War was an outstanding success. Taking Iraqui oil off the world market was a great benefit to owners of oil wells who made trillions


    See Craig Unger's book: "House of Bush, House of Saud,"

    March 19, 2003

    War on Iraq begins.

    Oil is selling for about $25 per barrel.

    ``BAGHDAD: The city, which had never seen heroin ... until March 2003, is now flooded with narcotics including heroin.''




    May 22 2008


    From The Economist

    Over the past six years the price of a barrel of crude oil has risen from around $20 a barrel to $135 a barrel today.

    Commentator 9 continues:

    There is no peak oil; and the Oil Gang, having wrung as much out of us as possible for the moment, will probably let oil drop to $40/barrel (busting the union pension funds that are playing the futures) before the end of 2008 to smash efforts toward alternative energy.



    Oil wars have made trillions for the owners of oil wells, leaving the public holding the bag. See Cold Fusion Heat from the Rossi Reactor -- the ECat (Energy Catalyzer) Boiler]


    Commentator 10 wrote:

    Obviously, if Rossi's and related competition claims pan out in the near future, that would initiate a sustained and permanent drop in global oil price.

    Commentator 11 wrote:

    I have discussed this with some economists, including an old friend who is a professor. They say that the cost of a commodity such as oil is mainly a reflection of future expected supply and demand.

    They say that if it becomes generally known that cold fusion is real, and everyone agrees it is real and likely to become a practical source of energy, this will trigger an immediate and very large decline in the cost of oil and other fossil fuels.

    Assuming cold fusion is successfully commercialized, this decline will be permanent. The price will not recover, even if it takes 10 or 20 years for cold fusion to replace most fossil fuel consumption.

    The time it takes cold fusion to replace fossil fuel does not affect the price decline much because there is plenty of oil presently accounted for and ready to be extracted.

    If an oil producer knows that in 20 years there will be no market for oil, it will sell its present supply of oil as soon as possible, even at a drastically lower price.

    Getting some money for your inventory now is better than getting no money in the future. It is like having a warehouse full of obsolete laptop computers. They lose a few percent in value every week. You sell them now, or never.

    When everyone accepts cold fusion is real this will also immediately bankrupt wind turbine manufacturers, the solar cell industry, and all other alternative sources of energy that are not yet economically competitive with coal and oil.

    It may not kill off ethanol immediately because that is not a source of energy. It is an energy sink. It is a political plum. It is a method of ripping off consumers and wasting millions of barrels of fossil fuel to enrich big agriculture and OPEC. [While Republican candidates were climbing over each other to propose drastic slashing of Social Security, not one word was said about the farm subsidy during the Iowa caucus debates.]

    Because of the Fukushima disaster, cold fusion could cause the quick demise of conventional nuclear power ... Conventional nuclear power is a dead duck in Japan no matter what happens. I do not think they will ever build another reactor there. With one major accident, it went from being the cheapest source of energy to the most expensive. It may bankrupt TEPCO which is one of the largest power companies on earth.


    Commentator 10 wrote:

    I gather you remains highly sceptical that most traditional energy providers would be capable of making the transition.

    Commentator 11 wrote:

    Yup. See the books and articles by Prof. Clayton Christensen for the reasons why. See especially "The Innovator's Dilemma." He describes the dynamics that usually prevent established businesses from adapting new technology. He shows many examples from history.

    It is not unheard of. IBM made major transitions in the 1980s. However, that was after losing the largest amount of money any corporation ever lost up to that time, and after nearly going out of business. It was a near death experience. Most businesses do not survive such things ...

    The gist of the problem is what you saw with U.S. passenger railroads in the 20th century. First the automobile business took away most of their local business in the 1920s. Then, after WWII, airlines took away their long distance business.

    Railroad executives might have invested in Ford Motor. They might have tried to start their own airline. But they never did. They saw themselves in the business of running trains on steel tracks. Not in "the transportation business."

    They had few relevant skills that applied to running an airline. Okay, they knew how to issue tickets and keep track of baggage and freight. They had no experience with airplanes. They had no competitive advantage over start-up airline companies, especially not compared to people such as Eddy Rickenbacker, president of Eastern Airlines. He knew a lot about airplanes. He could learn how to issue tickets.

    The people at Exxon Mobil know how to drill holes in the ground and under the sea. They know how to operate gigantic tankers, and how to refine and deliver thousands of tons of gasoline a day. They have a deep, sophisticated skill set. But they have no experience relevant to competing with Defkalion ...

    I think that GM, Ford and Toyota will be well positioned to transition to cold fusion automobile engines. That is an entirely different dynamic. That is replacing one core technology with another, leaving your business itself in place. Big corporations often do a great job of that. The railroads had no difficulty transitioning from stream locomotives to Diesel. That is not the same as entering a different market segment. Christensen discusses this in detail.

    Top -- Home


    FEATURE ARTICLE from The American Scholar, 1-1-12, By Richard Striner

    [Can greenbacks save the economy?]

    Congress could create money, as it did during the Civil War, funding public projects that shock the economy back to life.

    Just after the election of 2008, the Nobel laureate liberal economist Paul Krugman made a prophecy: we will not restore prosperity, he warned in The New York Review of Books, "unless we are willing to think clearly about our problems and to follow those thoughts wherever they lead."

    But as Krugman's thoughts drifted back to the maxims of John Maynard Keynes -- maxims he called "more relevant than ever" -- our thoughts could be turning to the older and in some respects wiser innovations of President Lincoln and the Republican Congress during the Civil War.

    Here's the gist of it: using the monetary methods of Lincoln ... we could pay for a faster recovery and a great many worthy projects without higher taxes, without more national debt, and believe it or not, without inflation. How? By letting Congress exercise a little-known power that is used (very quietly indeed) by the Federal Reserve: the power to create new money ...

    Federal Reserve Chairman Ben S. Bernanke: In an interview with 60 Minutes on March 15, 2009 [by] Scott Pelley ...

    Bernanke: "... The banks have accounts with the Fed - so, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It's much more akin to printing money."

    Pelley: "You've been printing money?"

    Bernanke: "Well, effectively."

    If the Federal Reserve can create new money, couldn't Congress do the very same thing? The answer is yes, and here's the precedent: the Legal Tender Act of 1862, in which the Republican-controlled Congress authorized creation of "United States Notes," known as greenbacks, that were printed up and spent into use.

    The U.S. Constitution has no provision for this practice, but it does authorize the minting of coins ...

    Three main factors explain the success of the Legal Tender Act:

    First: the underlying strength of the Northern economy.

    Second: the fortuitous timing of the law. It went into effect during the months of Union military success in the spring of 1862, floating the greenbacks on a buoyant mood of confidence in victory.

    The third reason was the enactment of a comprehensive tax law on July 1, 1862, which soaked up much of the inflationary pressure produced by the greenbacks. The Union ultimately raised half again as much war revenue from taxes as from the issuance of paper money ...

    Notwithstanding the overall success of the Union greenbacks -- and notwithstanding the importance of the 1871 Supreme Court decision in the case of Knox v. Lee, which declared the Legal Tender Act constitutional -- Civil War greenbacks were slowly withdrawn from circulation (and were redeemed in gold beginning in 1879).

    Some people, many of them farmers who wanted government and not banks to control the currency, protested against this policy and founded the Greenback Party in 1874. Some social reformers recommended financing federal relief measures with greenbacks during the Gilded Age.

    In 1894, a maverick Ohio businessman named Jacob Coxey led an "army" of unemployed Civil War veterans to Grover Cleveland's Washington in the middle of an economic depression. They demanded a multimillion-dollar "Good Roads" bill that would wipe out unemployment through job-creating public works. The finance method they proposed: greenbacks ...

    The Great Depression led some distinguished American economists to recommend reviving the greenback method. Their program was trumped by the influence of John Maynard Keynes, whose 'General Theory of Employment, Interest, and Money' hit the shelves in 1936. The result of our adherence to some form of Keynesianism ever since has been a staggering national debt.

    Conservatives and liberals alike should step back from conventional thinking in the face of our current conditions.

    None of the prevailing economic orthodoxies -- neither the liberal ones of Keynes nor the conservative counterorthodoxies of Milton Friedman or Arthur Laffer -- touch sufficiently on the central point that we ought to be considering now: the nature of money ...

    The conventions of our money supply are so arcane that explanation is daunting. Journalist William Greider once observed that the American process of money creation is "a powerful mystery to most citizens." ...

    In `Secrets of the Temple: How the Federal Reserve Runs the Country,' Greider quoted the head of the Federal Reserve Bank of New York, who went so far as to assert that "no President really understands these things." If that's true, it's nothing less than a major civic tragedy ...

    Where does modern money come from? And what does it consist of?

    Generations ago, the coined money created by our government consisted of gold and silver -- precious metal that was clearly private property -- an internationally portable treasure that was brought to the mint on occasion by its owners, then stamped into coin and given back ...

    In 1934, when monetary gold was largely removed from circulation through the Gold Reserve Act (it was melted into bullion and eventually shipped to Fort Knox), its possessors got paper currency in exchange.

    But the precious-metal standards are defunct as the basis for our money. And even in their heyday, money created by the gold and silver standard amounted to less of the total money supply than that created in a different way.

    The ... truth is that most of our money supply is not created by the federal government, as most people seem to believe, but instead by banks.

    Centuries ago -- as early as the founding of the Bank of England in 1694 -- money lenders figured out a clever way to make double, triple, or quadruple use of the coin deposits that they received from their customers.

    The bankers made loans in the form of paper bank notes emblazoned with a clear-sounding promise: "payable to the bearer on demand." But bankers issued far more of these notes (via loans) than they could ever redeem at one time. That is to say, the volume of bank notes in circulation vastly exceeded the coin deposits "on reserve." [the more notes, the more interest income for the bankers]

    The bankers figured it was unlikely that everyone possessing a banknote would storm into the bank at the same time, demanding redemption in cold hard coin. Under normal circumstances ... these moneylenders won their gamble ...

    The privately issued bank notes expanded the money supply, not as legal tender (under law, people weren't required to accept them) but as a purchasing power that functioned as a surrogate for money ...

    In the United States by the 1870s most banks began to shift from the issuance of bank notes to "checkable deposits" -- modern-day checking accounts.

    Instead of giving a borrower a loan in the form of bank notes, bankers would give borrowers a checkbook and say that the loan had been credited to their account as a new deposit. All they had to do was write checks, and then the bank would redeem the checks in coin from its cash reserves when the checks were presented at the bank ...

    From checking deposits, this practice evolved into the lines of credit that we all know and use every day, with our credit cards, cash cards, online bill paying, and so on ...

    Consider how it works. Write a check, and then presto, you have paid: you have made a real purchase. A sale has been recorded in the books ... Swipe the credit card, and once again, you have paid. When the bank extends credit, it creates new purchasing power.

    But the mechanics of the process are as deceptive as they were long ago, when many people who read the promise "payable to the bearer on demand" presumed that behind every banknote was cash, real coin of the realm, in the very same amount.

    In fact, cash is unimportant in the ledger transactions that constitute the juggling act today.

    Consider an example of present-day banking practices, carefully expounded by a widely used economics text, `Economics: Principles and Policy,' by William J. Baumol and Alan S. Blinder. "Even a single bank can create money," these economists explain, and they give a quick example to illustrate:

    A man deposits $100,000 of cash in his checking account. So "the bank now has acquired $100,000 more in cash reserves, and $100,000 more in checking deposits." It would sound as if these two different monetary terms -- the $100,000 worth of "cash reserves" and the $100,000 of "checking deposits" -- are interchangeable ways of referring to the same amount of money. But they are not: these banking terms ... represent an accounting trick whereby the $100,000 can be doubled into two equal units of $100,000 apiece.

    Since the Federal Reserve's "reserve requirement" is (in this example) represented to be 20 percent, the bank's "required reserves rise by $20,000, leaving $80,000 in excess reserves." And so the bank lends the $80,000 to another customer.

    But remember: the original depositor can still write checks to the tune of $100,000. What has happened here is pure sleight of hand, and the two economists sum it up quickly: "There is now $100,000 in checking deposits and $80,000 of cash in circulation, making a total of $180,000. The money-creation process has begun."

    Thus commercial banks are allowed in our system to make double use of checking deposits. The legal principle is simple: like insurance companies, the banks are obliged under law to pay money on demand to their customers in certain situations. Consequently, as long as these banks can make good on their promise to pay -- never mind how -- the methods they use to shift money around are almost none of our business, at least in the eyes of the law ...

    Banking regulation at the federal level has a long and interesting history. It began with the chartering of banks by Congress: The First and Second Banks of the United States (chartered respectively in 1791 and 1816), the national banks chartered by Congress in 1863 (which were regulated by the Comptroller of the Currency), and the Federal Reserve System, created by Congress in 1913.

    The Fed was (and is) a hybrid public-private institution that was designed to be a "lender of last resort" in a banking crisis. The regulatory powers of the Fed (as applied to member banks) would be steadily increased down the years ...

    Most of our money is created by the banks in the process of lending. The tangible stuff that we keep in our pockets and use as legal tender -- the coins produced at the U.S. Mint and the Federal Reserve Notes produced at the Bureau of Engraving and Printing -- gets furnished by the Treasury to banks (when they need it) in exchange for securities that function as collateral.

    Such physical money plays a secondary role in our economy. The cash transactions that we make in the course of the day are insignificant compared with our direct electronic transactions.

    So, through the method that is known in economics as fractional reserve banking, this creation of our money supply by the banks takes place with Uncle Sam as a cooperative assistant.

    The term "fractional reserve" refers to the existing money that the banks have to keep on hand to pay depositors and creditors, which constitutes a fraction of the brand-new money that the banks are creating through their lending and credit operations.

    Consider the extraordinary magnitude of this process. Recall our first example: a deposit of $100,000 generates $80,000 more. Now suppose that the borrower who takes out the loan -- the $80,000 -- deposits this newly created money in a different bank. Presuming the same reserve rate of 20 percent, this $80,000 could support yet another loan to the tune of $64,000. And so on, until at last, at the end of the chain, the first deposit has led through a multiplication of loans to $400,000.

    But the principle starts at the top, with the Federal Reserve, which can add to the "excess reserves" of the system by creating new money through "credit." The staff of the Federal Reserve once explained the process in a 1939 guidebook titled `The Federal Reserve System: Its Purposes and Functions.' One sentence in the book, deleted from subsequent editions, reads,

    "Federal Reserve Bank Credit does not consist of funds that the Reserve authorities get somewhere to lend, but constitutes funds that they are empowered to create." ...

    The Fed created credit that was used to buy bonds -- preexisting bonds -- from the portfolios of banks. The money that was paid for these bonds led to larger excess reserves in the banking system, and these excess reserves led to purchases of newer government bonds ...

    William Greider describes the almost circular mechanics of the process:

    To ensure a successful bond sale, the Fed expanded bank reserves by buying up outstanding government securities. The commercial banks lent the expanded money supply to private customers who would in turn lend it to the government by buying the new Treasury issues.

    The customers then sold their new government securities to the commercial banks -- and [the banks] eventually sold them back to the Fed when the central bank was again required to expand the money supply. In a roundabout way, the government was borrowing its own money -- and paying a fixed fee to middlemen for the privilege ...

    [And now the taxpayers are forking over more than $400 billion every year to the money lenders as interest on the federal debt]

    American radicals and ultra-conservatives have steadily protested the conventions of our money supply. The almost violent antipathy of many Tea Partiers toward the Fed is a good case in point ...

    During the Great Depression, several important American economists protested against fractional reserve banking. One was Irving Fisher of Yale ... In 1936, Fisher wrote that "everyone except the banker who lends money lends pre-existing money, not money of his own creation. The government should take away from banks all control over money creation."

    Henry C. Simons of the University of Chicago condemned "the usurpation by private institutions (deposit banks) of the basic state function of providing the medium of circulation."

    John R. Commons, a past president of the American Economic Association, recommended in 1934 that "in order to create the consumer demand, on which business depends for sales, the government itself must create new money and go completely over the head of the entire banking system by paying it out directly to the unemployed, either as relief or for construction of public works." ...

    Greenback spending could have made a great difference in the way Roosevelt's New Deal was financed. An amendment to the Agricultural Adjustment Act of 1933 gave the president authority to issue new greenback currency, but the doctrines of John Maynard Keynes prevailed ...

    The greenback tradition these days is little more than a relic. Now and then a heretical writer has attempted to revive the tradition; in the 1990s, for example, a retired businessman and engineer named William F. Hixson wrote that "it never makes sense for the government to permit banks to create money and then borrow it from them at interest, since the government can create money just as cheaply and efficiently for itself and then have the use of it without a debt to repay and without any burden of interest." ...

    Among the powers that Congress has granted to the Federal Reserve -- beginning with the Banking Act of 1935 -- is the power to set the reserve requirements for banks.

    In 1980, this authority was expanded to include the reserves of all "depository institutions," from commercial banks to savings and loans to credit unions.

    By raising the reserve requirements (as the Federal Reserve began to do under Paul Volcker's chairmanship in the early 1980s), the Federal Reserve can counteract inflation by pulling more money out of the excess reserves, which will tighten up the money supply by reducing banks' power to lend, thus fighting inflation ...

    We shouldn't have to choose between the all-or-nothing options of bank-created money and money created by the government, not if we can employ the best of both.

    Instead of canceling the power of banks to create new money, we could add to the expansion of our money supply with new money that the government creates ...

    Here is how the process might work: Congress would legislate a limited creation of money to be spent through direct appropriation. The new appropriated funds would then be sent by the government through direct electronic deposit to employee or vendor accounts in commercial banks, where the funds would immediately be convertible to cash ...

    As these deposits augment the excess reserves of the banking system -- creating some potential for inflation -- the Federal Reserve would begin to raise reserve requirements ...

    Credit flows electronically now; it is the ghostly "energy" that drives the goods-and-services economy. It constitutes a pure liquid power to purchase. And bankers created it.

    American citizens, represented by Congress, should have the same power. This amounts to the system that we have in place now, except that Congress -- in addition to the Fed -- would have the power to create new money out of nothing.

    This would constitute a very neat division of labor: the Fed would create the new money for private investment, and Congress would create the new money to underwrite our public investments ...

    Novel as it is, a mixed system such as this could work well through responsible management. Its management would not be simple or foolproof, but neither is the system that we have in place now. If it works, the new infusion of government funds could be a shot in the arm for the private sector, building up purchasing power that would stimulate production, employment, and sales.

    The United States is not broke -- and we should laugh at the delusion that we are. The potential for abundance is everywhere around us, but it stagnates for sheer lack of funding. We have contracted our nation's power to produce and consume just to prove that we can live within our means. And that's a formula for economic ruin ...

    Why shouldn't the American people have additional funds to be used for such impeccable purposes as national security, infrastructure maintenance, public safety, environmental protection, and research to counteract global climate change -- funds created by the government without more taxes or debt?

    Does the principle seem too good to be true -- a mere mirage, something for nothing?

    Think it over, for the system that we have right now is an exercise of mind over matter. The system I propose would give the people and their leaders an equal share in money creation with the bankers who are seeking private profit.

    It's a profitable game, the creation of money, and we need more players at the table.

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