China's Quest for Black Gold with Green Dollars

Way back in October of 2004, Time magazine quoted Chen Huai of the Development Research Center of Beijing as saying, "The world has the oil, and China has the money."  If anything has changed about that statement, it is that it has become more true. China's supply of money and its demand for oil have both grown at an amazing rate.


In 2007, China consumed about 7,578,000 barrels per day (bbl/day), nearly 9% of the world's petroleum. By 2009, China consumed an estimated 8,200,000 bbl/day and its demand continues to rise.


Meanwhile in the United States, over the same time period, the US consumption dropped from 20,680,000 bbl/day to an estimated 18,690,000 bbl/day. While the US is still the number one petroleum consumer by far, its consumption has dropped.


My point for those on the left that blame the US for "Global Warning" is that rising economies such as China and India are quite willing to use petroleum and coal laden with sulphur and they are unencumbered by EPA regulations. A patriotic keepsake sold in the White House gift shop that is made in China - No, I'm not making this example up - will necessarily have been the cause of more pollution than that same item made in the United States - even before we factor in shipping.


Driving up energy costs in the United States doesn't mean less pollution - it means more. Driving up energy costs in the United States means fewer US jobs and more jobs overseas. Even the threat of additional energy costs will encourage companies to expand overseas rather than in the US. Something a rookie US Senator from Illinois never bothered to learn. Remember this?


In an interview with the San Francisco Chronicle back in January of 2008, then-Presidential candidate Barack Obama said:

"You know, when I was asked earlier about the issue of coal, uh, you know — Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I’m capping greenhouse gases, coal power plants, you know, natural gas, you name it — whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers."

So when an Obama loyalist says that President Obama is a friend of business and is pro-growth, remind him of this interview. Anyone who aspires to be President should understand that their words have consequences. Combine that foolish statement with the continued ban on drilling - extended through 2017 for the eastern Gulf of Mexico and even off the coast of Virginia back in December. Meanwhile, Russia has plans to drill off of our southern shores and Washington sits idle.


Meanwhile China is aggressively seeking oil contracts around the globe, fueled by interest payments from our own country. So, you hypothetically say, who cares how China spends our old money? I'm glad you asked.


No one buys petroleum just for fun. It's not collectible; it's not ornamental; and it smells funny. People buy petroleum so that they can manufacture energy which is then used to manufacture items that are worth more than they cost to make. It's called making a profit - and producing trade goods.


So who buys those trade goods? The US buys about $273 billion more per year from China than they buy from us. Hey, no problem, we just borrow the money from China. Back in June, 2009, the US Treasury Department owed China only $757 billion just in long-term debt. Is it good news that this is only about five percent of our overall debt? I'll let you work that out.


So how do we get out of debt? Well, we spend less, but in the long-run, we must produce more 
and the only way to produce more is to use energy. Let's face it: a guy living in a cave with a wood-fueled fire is not going to manufacture a new car.


The Obama Administration may have forgotten, but business owners and conservatives know that energy is required to produce things. Back in 1776, Adam Smith wrote a book called An Inquiry into the Nature and Causes of the Wealth of Nations. Smith's "system of natural liberty" was capitalism unfettered by government interference. So, while our government prevents us from using our natural resources, China is making the most of the opportunity. It would appear that what government has forgotten - or chooses to ignore - China has learned.

The SOTU on Truth Serum

My fellow Americans, tonight I’m going to be straight forward and rather than hold a political rally or berate the judicial branch of government, I’m going to stick to the state of our union.

Let me begin by discussing our foreign relations. We’re involved in two wars in which we are not fighting other countries, but are fighting against religious zealots who wish to destroy our nation, our culture and our right to religious freedom. They cannot defeat us on the field of battle and have chosen to sacrifice innocents through the practice of terrorism.

Their way of winning is to control our actions through fear. With that in mind, I am asking that we develop less intrusives means of screening potential terrorists at our airports and increase interdiction at our borders.

In the past, I gave deadlines for our withdrawal and had to retract those promises because reality is a harsh mistress. The war in Iraq and the war in Afghanistan are different. In Iraq, the people have shown a real interest in freedom. Many Iraqi policemen have been killed by suicide bombers, car bombs and IEDs. Still, they continue to sign up to be policemen and serve their country. For this reason, we will continue our commitment to the people of Iraq, but they need to understand that we cannot remain in Iraq over a long period of time. Americans will leave Iraq when we believe it can remain stable on its own.

I know many of you want us to withdraw from Iraq immediately, but we cannot afford to snatch defeat from the jaws of victory. To leave now would jeopardize all we have accomplished and leave a free Iraq at the mercy of internal terrorists and oppressive theocracies such as its neighbor Iran.

In Afghanistan, President Hamid Karzai has shown himself to be an opportunist and a coward, unable to commit to the freedom of his people. Karzai has continued his relationship with members of the Taliban, narco-terrorists and drug warlords, such as his own brother. A free country cannot be built on the foundation of such a corrupt state. We will not begin withdrawal of troops from Afghanistan at this time; however, because we need to invade northwest Pakistan where we are fairly certain that Osama bin Ladin is hiding like the coward he is.

While we do not wish to destabilize our ally Pakistan, we also know that the continued presence of bin Ladin will definitely cause the collapse of that government. We are asking the Pakistani government to clear all of its troops from that region until such time as we are convinced that bin Ladin is dead, captured and in our hands, or located in another country. In addition, we ask that civilians offer no resistance if they do not wish to be harmed. We have been patient long enough and we will bring all available resources to bear so that this criminal will be brought to justice.

In the area of trade, free trade only works if it is free on both sides. Our trade agreements with China now hinge upon the opening of China’s markets and proof that they are cracking down on the multi-billion dollar piracy of American trademarks and copyrights, especially intellectual properties such as software, music, movies and patents. This must end or we will close down our markets completely to goods of Chinese manufacture. Currently we have a $200 billion trade deficit to China. They need us more than we need them.

On the domestic side, we are in trouble.

We are approaching our debt limit of $14.3 trillion dollars. Over the past decade we have spent a tremendous amount of money in an attempt to make the country prosperous. That idea, which I was convinced was a good one, has failed. We must allow the private sector to grow. In order to do that, I am proposing three things.

First, I want to meet with a committee of committed deficit hawks from both sides of the aisle. We will consider all things, with the exception of the commitments we have made retirees and those within 10 years of retirement. We will look at all government subsidies and sweetheart deals. As a sign of commitment from our party, I will ask for the repeal of the Davis-Bacon Act, and related laws, which cause our government to spend far more money than necessary to appeal to our union friends.

Second, I will form a group similar to the Grace Commission to examine regulations and see which ones can be either revamped or repealed to make it easier to do business in this country. We have handcuffed business and asked it to carry far too large of a burden in unnecessary regulations.

To show my sincerity, as of now I am withdrawing my Executive Order restricting the drilling of oil in the Gulf of Mexico. In addition, I am asking Congress to withdraw some of the more onerous, previous restrictions on all offshore drilling. I will also ask Congress to come to a compromise about Anwar. We will separate the areas of interests to tourists and reasonable environmental concerns, while allowing small footprint drilling for oil.

Also, concerning energy, I am asking the energy companies to construct three additional oil refineries. We will waive any unnecessary regulations while maintaining necessary controls to protect the environment. In exchange, I ask the oil companies to construct at least two of the three away from areas likely to be impacted by hurricanes.

I will also ask the auto manufacturers to lend us a hand. The American people were generous with their assistance and now we need help. I ask that 50% of all internal combustion engines made in the US, be altered to accept concentrated natural gas as fuel. This will result in lower uses of petroleum and we have natural gas in abundance.

Finally, regarding energy, I will ask Congress to consider a law rewarding retail manufacturers for installing energy stations for electric automobiles in their parking lots. The technology is available to allow consumers to swipe a credit card so that their vehicle can be charging as the customer shops. Enough of these retail outlets across the nation will increase the viability of electric cars and decrease our dependence on foreign oil.

Third, this is a much longer term solution, but I will ask for another committee to review our income tax situation. For individuals, sole ownership businesses, partnerships and S-Corporations any person of average intelligence with a high-school diploma and a decent command of the English language should be able to complete a tax form and have 100% certainty that they have accurately completed their forms and paid the proper amount.

In exchange for this, I ask the following from conservatives. All farm subsidies to C-Corporations should be ended as of the end of this fiscal year. Credit Card companies will not be limited in the interest rates they charge, but they cannot change the interest rates on money previously lent to consumers, so that prior balances remain at the same rate of interest. Penalties for late fees can be increased to help compensate for this loss of income.

I also ask for a bill to subsidize medical schools’ expansion and interest free loans to students in medical schools. In return, while I do not favor making malpractice lawsuits go away or capping damages, I do favor limiting them to situations where real malpractice or negligence can be shown. This should help lower doctors’ insurance rates while simultaneously allowing the protection of patients.

Finally, I ask for a real review of our health care system. Republicans and Democrats agree that the current system is broken, but disagree on the solutions. Let’s find the common ground and enact those laws so that improvements can be made.

Thank you and may God continue to bless the United States of America.