2) CRUDE OIL PRICE WATCH. By Ken G. Martin: 12/12/06.
I come from Crowley, Louisiana, deep in south Louisiana’s “Cajun” country. For those of you that don’t know me, I was governor of Louisiana from 1972-80, from 1984-88, and from 1992-96. I was elected to my first term by an unprecedented combination of Cajun and black voters from . . . well, most were from Louisiana and (picky, picky) most were alive.
The day after my victory, the front page of New Orleans’ Times-Picayune carried a bold headline, announcing a 40-story office building for the heart of New Orleans' business district. It was to be called "Edwards Place." the accompanying news release suggested it would be a great place to do business and proposed that businessmen consider its merit. The building was proposed by my close friend and strongest political backer.
For some reason, my backer took a lot of heat for this proposal and "Edwards Place" was never built. But he nevertheless found other ways to harvest fulfillment for having chosen to back me.
"Edwards Place" was worth a try. In hindsight, we were admittedly a little aggressive. Hell, we were just following Huey's lead. He started it all. He wrote the rules. It didn't take long to learn the ropes.
Have you ever heard of the Huey P. Long bridge? Huey offered the railroads a route through south Louisiana if they would build a bridge over the Mississippi at New Orleans to carry vehicular traffic - no tolls, free both ways. The high bidder got the route and Huey got his bridge.
New Orleans was founded in 1718, but didn't have a bridge over the Mississippi at New Orleans until Huey's was built in the 1930s, about 220 years later. And it remained the only one until the late 1960s. St. Louis had about six at the end of the 1950s.
Along the way, I somehow acquired a reputation as a carousing Cajun (admittedly true) who neither smoked nor drank (admittedly true), but had a penchant for high stakes gambling (admittedly true), back-room deals (I liked only two things better), under-the-table deals (one of the two things better), off-color jokes (admittedly true) and beautiful women, especially those who would entertain me (a legend in my time).
I offer this explanation of my knowledge about Louisiana as a way of establishing my credentials. As The Beacon apparently realizes, I am uniquely qualified to write about my beloved state and I’m deeply grateful to The Beacon for giving me this opportunity.
However, you may wonder why a man of my stature would take time to write a piece for such a small, up-start publication like The Beacon that is circulated to such a small, back-woods community like Horsepooh Bay – not even a one-stop-light town. Well, if the New York Times or even some lesser light would come calling, you bet I’d take them up on it. I hear they pay pretty well, and I’m still addicted to, you know, “side" income.
Yes, times are much tougher today. I’m pushing 79 now, and you know how aches and pains get to us old folks. What I’m having trouble saying is . . . well, I take on odd jobs from time to time, you know, cooking a little here and there, just piddling, but I'm not in it for the money. I've got such a great deal here that I'm not really looking for work.
I could pretend to be magnanimous and say I'm using some spare time to give back. But the guys around here would rib me for that. I happen to have more time on my hands these days than you could possibly imagine.
Let me begin by saying, in the interest of full disclosure . . . hell, that won’t work either. I never learned how to do that.
Maybe you’ve already heard. In return for my years of service to the great State of Louisiana, I‘ve been hanging out for awhile with a bunch of my white-collar friends at a Country Club, all expenses paid, on the banks of the mighty Mississippi River, up here near St. Francisville, in Audubon country, north of Red Stick (you know, Baton Rouge), in the piney woods of Louisiana’s Florida parishes. Now isn’t that something?
In fact, I made a deal with the some of the state’s highest leaders that I’d accept this extraordinary tribute on a gratis basis for 10 years, but not for a day more, not wanting to take advantage of the generosity of the fine, upstanding folks of my great State.
However, I’m sorry to say, I’m told that the day they gave me an expense-paid trip up here, once again practically throwing money at me in gratitude, the gentlemen most responsible for making it all possible tried to defame me. All the guys around here know him well. They call him "Black Pete, the Getting-Even Prosecutor."
Although I haven’t had a chance to see the newspaper yet, I understand his ugly, unfounded comments were printed in the Times-Picayune. Come to think of it, I've not seen a copy of the paper since I've been here.
It's actually hard for me to believe the Times-Picayune would publish such trash, after all my years of service to this great State. My buds are probably spoofing.
This place is so laid back and isolated that its hard to get any kind of mail delivered here, at least that’s what the Club Manager tells us. Anyway I’m told Black Pete said something to the effect that “The people to this day think, thanks largely in part to Edwin Edwards, that Louisiana is a hostile and dangerous place to do business. It's the Edwards legacy."
I thank The Beacon for letting me use this opportunity to officially respond. For once, I'm going to give you guys a scoop and will tell it like it is, as follows: “Pete, you've got to be kidding. Thanks for the legacy compliment, but Governor Huey Long earned that distinction.
If truth be known, it actually accrues to the ignorant people of Louisiana, who bought the demagoging and subversive political pitch first used successfully by Huey in the 1930s and subsequently fostered by his younger brother, ole Governor 'Uncle' Earl in the 1950s and 60s. They offered promise upon promise (well, more like false promise upon false promise) to this unfortunate group, entrapping them, making them dependant upon the system, instilling in them a passionate feeling of entitlement.
Although the Cajuns remained largely unaffected, any understanding of how to be self-reliant was bred out of the black populace over the generations that followed. They lived by their TV set, and multiplied.
They learned to avoid work, play the system, support the Saints and wait out front on "Votin Day" for the bus to come by. They had learned to count on a $5 bill, coffee and desert in return for their party-line vote – a predictable Democratic block vote of massive proportions.” Me and my buds could always count on New Orleans.
None of us ever truly delivered. We didn’t have to! Hell, who was watching? They couldn’t read and we saw to it that they never could, but their schools, that admittedly grew to become drug havens and wild kingdoms, had great ratings, nevertheless (wink, wink).
With votes in hand, we milked the corporate world practically blind, relatively speaking - for our personal benefit, of course, to the fullest possible extent, of course. In the process, we ran off all the major oil and natural gas companies, the oil-field service companies, the pipeline companies, their associated business infrastructure - literally most of the smart folks. They moved west to Houston, and other cities, in that business-friendly state.
Me, I was basically just following orders from a long established and deeply entrenched system. Huey, the socialist of his day, was quite a guy. He would have beaten Roosevelt for the 1936 presidency if they hadn't shot him. I was just playing the game, you know, for what could be had.
Now let me get on with what The Beacon is paying . . . excuse me, asking me to write about: "Lessons from Katrina."
I’ve been giving it a lot of thought. I ran my response by my buddies here and they recommended I take an entirely different course . . . thinking I might get another ten more years of vacation if I divulged the party line.
I'll fool them. I’ll take my chances. Besides, I've grown to like this place.
So let me try this pitch, putting things in perspective first, as follows, by asking:
"What is a billion? The next time you hear a politician use the word billion in a casual manner, think about whether you want politicians spending your tax money. A billion is a difficult number to comprehend. I was playing with numbers the other day, I was always good with numbers, and came up with some interesting observations.
It can also mean that if you’re one of the 484,674 residents of New Orleans (including every man, woman, child that were there when Katy hit), you each get $516,528. Or, if you have one of the 188,251 homes that were in New Orleans before Katy, your home gets $1,329,787. Or, if you are a family of four, your family gets $2,066,012.
Chasing, that sounds like a good way to go, but look what it did to ole Uncle Earl! He went out in a Blaze and got a movie made on himself. I'm smarter, outliving both. And I looked ahead, providing for retirement.
A guy my age thinks of his legacy. There was a time I could have lived with an Earl-like departure. It was crazy, but certainly better than Huey's - getting laid out in the back hall of the Louisiana State Capitol Building's main floor, full of lead. Me, maybe it's best I just finish out up here at the Club with my old friends.
I think I'll go tell the Club Master that cutting short my vacation is intriguing, but I’m happy where I am, and thank him for the offer. Time to let the young fellows have a go at it.
He did offer, didn’t he?"
2) CRUDE OIL PRICE WATCH. By Ken G. Martin.
Considering HSB has always marched to the drumbeat of the oil business, we may be getting more good news relative to HSB’s future well-being. Members of the Organization of the Petroleum Exporting Countries (OPEC) meet in Nigeria today, the 14th.
They appear ready to set a higher floor for crude oil prices amid worries of weakening demand from a slowing U.S. economy. The world is going to see OPEC displaying more and more market muscle as its market leverage continues to increase over the foreseeable future,
At first glance, raising prices in the midst of weakening U.S. demand from a slowing U.S. economy does not make sense, but OPEC’s action is based on the fact that although U.S. demand is down, world demand is up. It’s also in response to the sharply declining U.S. dollar (see later).
OPEC members, excluding Iraq, agreed at a meeting in October to reduce daily production 4%, amounting to 1,200,000 barrels, starting November 1st. Last week, OPEC’s President said the group may decide to cut daily production by another 2% - 500,000 barrels - when it meets Dec. 14th. Global demand is growing so "the real reason for OPEC’s cut is to keep prices as high as possible without throwing the global economy into a recession and tripping the inflation figures," said John Person, president of National Futures Advisory Service.
Standing out among all this is one for-certain fact. If higher prices do end up beginning to stifle growth, Saudi Arabia will act once again as the swing producer and pump extra production into the marketplace. With the Saudis’ having standby production available, if OPEC misjudges, the Saudis will be there to keep OPEC from shooting itself in the foot by being too greedy.
CBS MarketWatch reports “that since demand has not been destroyed at the current $60/barrel price level, OPEC thinks the world can afford a higher floor. With OPEC seemingly intent on pursuing a higher floor, the trick will be to balance oil at a price that doesn't destroy demand. What's surprising to many experts is OPEC’s plan to cut output at a time when world demand for oil is growing.”
DUH!!!!! Why would that be a surprise? OPEC’s action merely points to radical Islams’ growing leverage against the world in the form of not only increased market control but increased political strength. It’s sad that the majority of Americans don’t understand. Instead, they vent misguided anger and condemnation on the likes of great, world-beating American companies like Exxon/Mobil, Chevron/Texaco, Halliburton, et cetera. We’re shooting ourselves in the feet, right and left, with no Saudi-like good fairy to keep us from ourselves.
An excellent example of the Muslim world’s growing strength is reflected by the U.S.’ abrupt-180 degree change in Middle East policy since the November elections. Both the seven carrier task forces and the 1,000-ship armada that the U.S. had positioned opposite Iran coming into the elections have been substantially released. The U.S. had orchestrated naval forces from 20 countries into a flotilla that occupied the Persian Gulf, Red Sea, western Indian Ocean and the eastern Mediterranean. It had Iran surrounded under the guise of “war games,” setting up possible attacks from practically every conceivable direction.
However, in backing off as we have done over the past five short weeks, America now struggles over whether we are manly enough to carry out our policies as we would have in the past or whether to holler UNCLE and acquiesce - abandoning the field and forsaking needed sacrifices, leaving our kids and grandkids to deal with a much stronger set of militant Islamics, and with the Declining Dollar, and with Energy Security, and Social Security, and Medicare, and Health Care, and Unfunded Pensions, and out-of-balance Trade Debt, and on, and on, and on. Unlike the great legacies left to us by our Dads’ and Granddads’ generations, our generation is seemingly focused more and more on self-indulgence - pigging out on an embarrassment of riches while they last, to hell with legacies and future generations. The next two years could define us in a terrible light.
DECLINING DOLLAR. Many economic factors with negative implications for the U.S. dollar have been coming together over the past few years. Last week, the dollar’s value fell to a multi-month low against the yen, to a 20-month low against the euro, Australian dollar, and Swiss franc, and to a 14-year low against the British pound. Since crude oil is traded worldwide in U.S. dollars, OPEC is penalized by the dollar’s drop in the value, lowering their net take from the dollar-denominated product.
“The value of the dollar has seen a particularly sharp drop since the end of August,” says Rakesh Shankar, an economist at Moody's Economy.com. "This is eroding the purchasing power of OPEC-member countries. The decline in purchasing power is "just one more reason why OPEC members will support a higher dollar price for oil."
The higher oil prices we are experiencing in the U.S. are not being felt much (if at all) by countries whose currencies are not tied to the U.S. dollar. Almost all other major currencies have strengthened substantially against the dollar, and for that reason, the U.S. can expect little if any sympathy for our dollar’s fall.
Although there is strong reason for concern over the dollar’s demise and the negative overall effect it has on our national economy, our interest here is focused on measuring how the decline specifically impacts Texas’ economy in general and HSB’s in particular. And since it’s clear that as the dollar declines, the price of oil goes up, the decline is definitely good news for Texas and HSB - because as we have learned through feast and famine over the past 35 years: “As the oil business goes, up or down, so goes HSB!”
3)WAR WITH ISLAMIC MILITANTS - Its Impact on HSB. Part 1. By: Iam Scaredouttamygourd-Butt.
Part 1: The Driving Force – Oil. This weekend, I called my childhood friend - Abdul - whose family still lives in the Middle East. I hadn’t talked to him in 12 years, since just before we were to start the third grade.
My family moved to America that summer. The local schools were converting to a curriculum favored by “Wahhabi” Muslims, who are known for their conservatism and intolerance. My parents had been talking about moving to America and they decided the time had come.
I called Abdul to express concern about the developing war and to get the latest Muslim view on what’s going on. I recognized Abdul’s voice when he answered.
I said: “Hey, is that you Abdul?” “Well,” he hesitated, “Hell no, Iam” he replied, very firmly. He then shouted: “I changed my name. I’ve got a new one: Iwanna Getyourass!”
As I stuttered to respond, I could hear Iwanna taking off a shoe. He pounded it on a table, loudly, then screamed - “WE ARE GOING TO BURY YOU!”
My phone went dead with a cracked receiver. So, let me tell it as I see it.
Islamism arose with Prophet Muhammad, who died in 632 AD. Adherents of Islam are known as Muslims.
No religion in history grew as fast, in its infancy, than did Islam. The reasons for this growth are not hard to explain when you understand what the world was like at the time of Muhammad’s death in 632 AD.
The Western Roman Empire was in ruins. The Eastern Roman Empire, based in Constantinople, was desperate to keep the power of its early grandeur while transitioning to Christianity. The costs to the average person were unbearable - being required to meet the constantly rising taxes levied from the state along with the tithes coerced by the Church.
Islam offered “carrots or the sword.” If you became a convert, your taxes were immediately eliminated, as was your tithe. If you didn’t, you faced death.
The Islamic religion's rapid and dynamic rise with Muhammad’s death was accompanied by what Muslims call the “Great Jihad” – the first of Islamism's three Holy Wars. This first jihad lasted some 200 years, ending in the early 800s.
Islams "Second Great Jihad" accompanied the rise and fall of its Ottoman Empire, which came to an end in 1683 after a series of monumental defeats. The Empire's collapse from world prominence and domination led the Muslim world into deep decline and disarray.
These two Great Jihads each lasted a couple hundred years or more. Today, mid-2006, we are entering the fourth decade of militant Islamics’ “Third Great Jihad” – a war that began with the Arab Embargo of 1973, followed shortly thereafter by the Iranian Revolution of 1979. Both were based on oil.
Much of America’s populace has been slow to recognize the agenda. Many are also unaware that Muslims comprises 21 percent of the world’s self-identified population – the second largest segment. Christians make up the largest - 33 percent. However, from a point of view of who’s practicing, there may be more practicing Muslims than practicing Christians.
Militant Islamics comprise a very small but increasingly larger segment of the Muslim population. The militants - al Qaeda and the like - see this “Third Islamic Holy War” as a unique opportunity to regain world prominence and domination. They see the opportunity arising largely from the fact that the world's ever-growing dependency on Muslim countries for its energy supplies gives Muslims a huge leg up.
The militants believe timing favors their cause and that they can succeed by merely achieving two goals:
They have positioned themselves to do both and are currently passionately active on each front - attempting to acquire WMDs from third world sources while simultaneously undermining the governments of leading Islamic countries - Saudi Arabia, Iraq, Egypt, Jordan, Pakistan, Afghanistan, Indonesia, Malaysia and the like. These countries, plus Iran which militant Islamic’s already govern, hold most of the oil reserves they are attempting to control.
The US, Great Britain and Israel have been standing practically alone against this threat while the balance of the Western world has sat paralyzed. The militants are banking that naive US voters, ignorant of the historically negative consequences of appeasement policies, will force policy decisions on the US that will lead to its withdrawal from the middle-East.
Such a retreat opens the door to Islamism's control over the world's energy supply; to its acquisition of WMDs; to its annihilation of Israel followed by the rest of us; and to restoration of the Muslims’ Ottoman Empire – all to the demise of the Western World. If the militants accomplish either of their two basic objectives, the Western world will spiral into chaos literally overnight - and the cost of oil to the Western world will make bottled water look cheap.
4) WAR WITH ISLAMIC MILITANTS - Its Impact on HSB. As Oil Prices Go, Up or Down, So Goes HSB. By Iam Scaredouttamygourd-Butt.
Part 2: Last week, in the first of this two-part report, I told you how my childhood friend still living in the Middle East had changed over the past 12 years and now wanted to “BURY ME”. He had been indoctrinated by Wahhabism.
My family had moved to America when Wahhabism began to take over the local schools. My parents decided to move fearing a coming Muslim trend to this more conservative and intolerant view of the Islam religion, believing it would lead to great trouble.
I had not talked to Abdul since we had left. He had changed his name to Iwanna Buryyourass in the interim.
Last week I also explained how and why oil and WMDs play into all this, and what would happen if the militant Islamists accomplished either of their two basic objectives – 1) control of Middle East oil; 2) obtain WMDs. In either event, the Western world will face chaos literally overnight if the Islamics attain such strength and the cost of oil to the Western world will make bottled water look cheap.
Actually, events may soon prove that they’ve had WMDs for years – shipped to Syria by Saddam. Is this the surprise Hezbollah says it has in store for the Israelis?
Space and time didn’t allow me to explain the impact of all this on HSB. The Beacon only had so much space and I was getting married. The impact is this: I am scared out of my gourd, Butt!
I’m scared because I fear the militants will get over here. All bets are off if this happens on an out-of-control-basis. The ”But” arises from the fact that if the militants can be contained – as is, where is – then, scary as it may seem in the Middle East, the impact on HSB is crystal clear. It will be very positive, for a long time.
The price of oil is HSB’s Pied Piper. As oil prices go - up or down – so goes HSB. Dating back to its beginning, HSB's well being has been tied to the well being of the oil industry.
The fact that the oil industry is in an apparent long-term, demand-driven uptrend after two decades of hardship bodes extremely well for HSB's future. The fact that the militants are perpetrating the destruction of oil production infrastructure inhibits supply - raising prices. The fact that the militants are active today in more than a dozen oil producing countries, where sizable new supply interruptions could come at any time, puts a sizable “terrorist premium” on the real price of oil - currently amounting to an estimated addition of about 50 percent.
But this significant premium pales in comparison to premium the militants’ actions of the 1970s produced. During that period, the price they extracted through their Embargo and revolutionary activities was as much as four times what the fair market price would have been if based on normal supply–demand factors.
More specifically, the prior period of high oil and natural gas prices began with the Arab Oil Embargo of 1973. The Arab Embargo was followed six years later by the Iranian Revolution, which threw out the US-backed Shaw of Iran in 1979 in favor of militant Islamic clerics that rule Iran to this day.
Between 1973 and late 1980, the price of oil had increased 14-fold in actual dollars – from $3 to $42 per barrel. Such a huge increase over a relatively short period of time drove inflation in America to double-digit levels for several years, beginning in 1980. However, on an inflation-adjusted basis, the true increase was only five-fold.
These oil price increases where not demand driven. Oil was in abundant supply. The price rise was basically contrived by the militants. They disrupted the market and extracted a huge premium over normal market prices. That type of premium is today called “the terrorist factor.”
The Arabs' highly successful Embargo demonstrated their massive economic power to an unbelieving world and marked the start of what militant Islamics call their "Third Great Jihad." Since 1973, militant Islamics have been the most important factor affecting the price of oil - and by far the most unpredictable.
This militant-induced oil boom lasted through1985. Its effect was widespread. During the 1970s and early 1980s, our nation's stock markets went basically nowhere - their indices staying practically flat, reflecting the economic pain felt by the country as a whole. When oil prices finally collapsed to $10 per barrel in 1986, the economies of "oil patch" states like Texas, Louisiana and Oklahoma - which had thrived during the 1973 through 1985 period - got their due.
The worm had turned! While the rest of the country feasted on the low oil prices, the oil patch states found themselves overwhelmed with foreclosures. They were not to recover for a decade.
But that's history. The worm has turned once more (see LifeAftertheOilCrash.net, and DieOff.org). After 12 long years at uneconomic levels, from 1986 through 1998, oil prices began to rise again in 1999. However, it took five years from the 1998 bottom for the oil industry grow strong enough to get its debt back in order and at the same time have enough funds to take on new projects.
It has only been since mid-2003, after prices had rebounded 2½ times from their inflation-adjusted1998 low, that the oil patch became truly profitable. Today’s prices are the highest they’ve been in twenty-seven years - up another inflation-adjusted 2½ times since mid-2003.
Texas’ oil guys didn’t really begin showing up in HSB looking for second homes and the like until 2005. However, their impact on the price of HSB real estate over the past 18 months has been exceptionally strong. Great news for the industry has been great news for HSB and its real estate values – as it has always been since HSB’s founding in 1971.
Today, our nation's oil industry is much more centralized in Texas than during the last boom. For example, much of the oil and gas exploration operations previously conducted out of Oklahoma and Louisiana are now conducted from Texas - America's best business climate. Major US oil and gas production, marketing, supply, operational and command centers like Houston, Dallas, Fort Worth, San Antonio and Midland/Odessa are thriving and are likely to continue doing so until alternate fuels become competitive, way in the future.
HSB benefits in a huge way because it is located central to this circle of renewed oil-induced prosperity. It is becoming the oil industry’s R & R center – the Petroleum Club of Texas, if not America. All of these petroleum centers contributed immensely to HSB real estate sales during the last boom and individuals best positioned to benefit from the industry’s renewed strength are once again becoming HSB's prime prospects.
During the 1973 through 1985 period, oil prices rose as high as $100 per barrel in today’s dollars, peaking in 1980. This year, prices have traded in a range varying from the low $60s to near $80 per barrel in response to both increasing demand and escalating Middle East problems. Many energy experts think oil prices will be at twice their historical 1980 peak by 2010 – less than four years from now.
In a cover story featured in the August 21, 2005 issue of "The New York Times Magazine," Matthew Simmons, who heads a Houston investment bank specializing in energy and is an advisor to President Bush on energy matters, predicted crude oil prices will grow to $200 per barrel by 2010, adjusted for inflation. His reasoning is laid out in his new book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy."
Remember, As Oil Prices Go - Up or Down – So Goes HSB! With high oil prices here to stay, prices for HSB’s prime real estate will continue extraordinarily strong for years to come! Demand from Texas’ oil guys is already overwhelming supply on HSB’s waterfront.
Nevertheless, I remain scared out of my gourd. All bets are off if the militants get over here, work themselves into our population, as they’ve done in Israel, and wreak out-of-control havoc on America.
Although I am so happy to now live in America, I fear America does not appreciate, let alone relish, what it has. I fear it may be taking its wonderfully good life for granted. I fear America may be asleep at the switch, complacent, lacking in passion, taking for granted its well being and future.
I fear the intense passion and focus of Hizballah, Hamas, Al Qaeda and the like. I fear it deeply, with all my heart.
I know the level of despair in the Middle East. I know the average Muslim is in his mere twenties. I know that there are as many practicing Muslims as there are practicing Christians. I know these young Muslims have all been conditioned to hate Israel, America and the Western world. I know they are bent on destroying us all.
I also know that whereas the Western world is driven by oil, the barbaric world known today by most Muslims, living on a few dollars per day in a 7th-century lifestyle, does not have the luxury of being driven. It is pulled along by a horse, or a donkey, or oxen, or the like - fueled by hay or grass.
My young life has already taught me a hard lesson: It is not the size of the dog in the fight, it’s the size of the fight in the dog! I am scared!
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