Federally funded energy storage projects took another hit when a company called Ener1 was delisted from by NASDAQ after its stock price underwent a calamitous plunge because the company released false financial information. A class-action lawsuit against the company filed on behalf of shareholders claimed that Ener1 made “materially false and misleading statements concerning Ener1’s financial condition and prospects.” The company received $118.5 million in DOE grant money.27
There’s more. The government also lost millions in funding these projects: $5.3 million to Evergreen Solar Inc., $500,000 to Spectrawatt (which, as it reorganizes under Chapter 11 bankruptcy, plans to move its manufacturing plant to China), $424,000 to Mountain Plaza Inc.—after the company had declared bankruptcy—for “truck stop electrification” so long-haul drivers could turn their rigs’ diesel engines off during extended rest periods, and $10 million to Olsen’s Crop Services and Olsen’s Mills Acquisition Company, again after they had gone into Chapter 11.28
Another taxpayer-funded project, this one in Vice President Joe Biden’s home state of Delaware, threatens to drive energy prices for that state’s residents through the roof. Delaware legislators have put their constituents on the hook for underwriting the bad business practices of another energy company, Nichols & Driessen.
The legislators have committed state taxpayers to provide financial guarantees to a California company, Bloom Energy, that manufactures fuel cells that are supposed to replace natural gas and coal to power electric generating plants. No private investors could be found to back this loser of a green energy company, so the pols stepped in, guaranteeing the company’s finances and huge increases—$600 million over the next 20 years—in Delaware residents’ energy costs.29
It’s not just the guarantee that I’m concerned with. The way the legislation is written, if the Delaware legislature in any way changes the law that requires Delaware residents to pay the energy tariff to underwrite Bloom, the entire $600 million sum will be due and payable on demand.
Bloom’s fuel cells don’t even represent clean energy. They use large amounts of two rare earth elements that are mined only in China, and China is controlling their distribution and cost. The United States imports 100 percent of these elements. On top of that, the company is privately held and is not required to share its financial data with the public.
Even ten years ago I wouldn’t have believed that things could come to this, where a bunch of communist punks in our own federal government has become the controller of capital markets and is making lousy bets on companies that have no chance of success—and using our money to do it.
Did you know that the green energy funding scandals I’ve told you about are only the tip of the iceberg?
The Inspector General appointed to look into the green energy funding scandals has opened up more than 100 criminal investigations into the Obama administration’s illegal use of taxpayer money to fund projects for his cronies!30
The economic illiterates in the Obama administration are trying to pick winners based on political favoritism. They’re putting taxpayer money at risk, wasting money on paybacks to their fund-raisers that could be used in the market as legitimate venture capital for companies that might actually have a chance of survival and profitability. They’re taking private capital out of circulation and using it to back guarantees to their cronies.
The Solyndra failure is important because it helps reveal the extent of the corruption that is rife in the Obama administration, but it’s just the beginning of the president’s plan to gain control over energy production and use that control to paralyze our economy.
I’m the only one who will tell you what’s really happening in this area.
Obama’s Energy Strategy: Beg, Tax, and Persecute
Obama’s Secretary of Energy, Steven Chu, has made the president’s policy on oil production very clear: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.”31
Chu’s reason for this? The higher the price of gasoline, the more likely “green” energy projects like Solyndra—of which Chu was an outspoken supporter—are to be competitive in the marketplace. Without astronomical gasoline prices, green energy is dead.
Average Americans are the target of this strategy: If they’re hurt financially by rising prices at the pump, they’ll see the wisdom of going green.
Obama appointed Chu because he’s a global warming propagandist of the first order. It’s hard to believe someone with Chu’s credentials—Nobel Prize-winning atomic physicist, head of the Lawrence Berkeley National Laboratory at the University of California, Berkeley—would stoop to using phony evidence and bad science to support his position, but like everyone in the Obama administration, Chu is shameless in lying to promote global warming: “Stronger storms, shrinking glaciers and winter snowpack, prolonged droughts and rising sea levels are raising the specter of global food and water shortages. The ominous signs of climate change we see today are a warning of dire economic and social consequences for us all, but especially for the poor of the world.”32
The administration’s strategy for raising prices is working.
At the end of 2008, gas prices in the U.S. averaged $1.61 a gallon. By late spring 2011, the price of a gallon of regular had reached $3.89.33
The public’s dissatisfaction with high prices at the pump caused Obama to implement a three-step strategy.
He said it was to reduce the price of oil.
I say it was just the opposite: He needed to divert attention from everything he’s doing to keep oil prices high.
First, he implored oil-producing countries like Saudi Arabia, telling them that they “need to increase supplies.”34
His reasoning?
Out-of-control oil prices would be detrimental to the global economy.
In his own words, “We are in a lot of conversations with the major oil producers like Saudi Arabia to let them know that it’s not going to be good for them if our economy is hobbled because of high oil prices.”35
In other words, it was the fault of the Arab nations, and they were “hobbling” our economy by not producing more oil themselves.
After that, he threatened the oil companies because they make too much money, telling us that the tax credits given to oil companies for a variety of purposes, including to help them defray the expense of exploration, should be taken away.
The total revenue that would generate? Four billion dollars.
Obama explained that the United States could put the $4 billion we give to oil companies to better use. He must have been thinking that we could use the $4 billion to pay one day’s interest on the $14 trillion national debt. He’s rung up more than 20 percent of that debt in his first two years in office.36
Finally, at about the same time, in a town hall meeting in Reno, Nevada, the president explained that he had directed Attorney General Eric Holder to assemble a blue-ribbon panel to “stop oil marketing fraud.” Citing speculators who buy and sell oil futures as another key reason oil and gas prices continue to rise, Obama said he wanted to make sure that “no one is taking advantage of the American people for their own short-term gain.”37
That’s it.
That’s all the rookie in the White House was able to come up with.
Beg the Arab countries to ramp up production.
Further hamper American oil companies’ ability to produce oil by removing exploration tax credits.
Investigate commodities futures traders.
I’ll tell you what Obama didn’t tell you about the oil industry and his own strategy.
The oil industry isn’t the guilty party.
When you look more closely at a typical large oil company, you discover it’s not their fault.
ExxonMobil is a perfect example of the fact that it’s Obama himself who’s committing the fraud. And he’s doing it at the expense of the U.S. oil and gas industry and the American people.
We know the president is beholden to radical
environmentalists. They’re an important part of his base. I’ll explain later in this chapter that he’s appointed one of them to head the EPA, and I’ll lay out the damage that agency is doing to our economy and to the U.S. energy industry.
It’s because of his commitment to a radical agenda that Obama must make it appear that the production and use of oil and natural gas are so harmful to the environment that they need to be curtailed, even shut down.
To do that, he tries to convince Americans that the oil companies are making outrageous profits.
When Obama cites numbers like Exxon’s $10.8 billion in profits for the first quarter of 2011, he means to shock you into thinking that the oil company is ripping you off.
Here’s the truth: While $10.8 billion is a fairly large number, it pales in comparison with the president’s own multi-trillion-dollar unpaid-for budgets. And it isn’t the number you should be looking at in the first place.
ExxonMobil’s gross revenues exceeded $114 billion in the first quarter of 2011. The company’s profits for that period were $10.8 billion. That’s a profit margin of a little over 9 percent, respectable but nowhere near excessive.
What Obama fails to note is that Exxon’s pretax earnings were $18.9 billion, and that the company paid $8 billion of that amount in corporate income taxes for the first three months of 2011. That’s a tax-on-income rate of 42.3 percent. High corporate tax rates such as this are one of the reasons many multinational corporations are moving their headquarters out of the United States to other countries, where corporate tax rates are more reasonable. The company also paid $10.3 billion in sales taxes and another $10.3 billion in other taxes, mostly property taxes for the land it owns in the U.S.38
Exxon sells only about three percent of the total gasoline and diesel fuel it produces in the United States. The rest is sold internationally.39
For every gallon of gas Exxon sells in our country, the company makes a profit of about two cents.
On that same gallon of gas, the U.S. and state governments earn between 40 and 60 cents through taxes levied on gasoline and diesel fuel.
Exxon’s profit margin, again, is about nine percent. The government’s profit margin is 100 percent.40
Exxon is a very large corporation. At the end of 2009, the company operated nearly 14,000 oil and gas wells in dozens of countries on five continents.41 It’s part of a very large industry, arguably the most important in the world.
And while large oil companies are very successful, making billions of dollars in annual profits, their profit margins are not large. In fact, the energy industry as a whole is not even in the top 100 for all industries where profitability is concerned. The 6.1 percent average profit margin for all the energy companies in the “Major Integrated Oil and Gas” category ranked 112th among all industries for the first quarter of 2011. Oil industry profits were far behind such other industries as Internet providers (23 percent), cigarette companies (21 percent), and magazine and periodical publishers (51 percent).42
Why isn’t Obama going after these industries for excessive profits?
I’ll tell you why: Because they don’t get in the way of his design to nationalize the oil industry in the same way he’s nationalizing the auto and health-care industries.
Don’t believe me?
Are you aware of the president’s latest attempt to cripple the oil industry and keep us at the mercy of the Islamist Middle Eastern dictatorships that now control our oil supply?
Have you heard about the Keystone XL pipeline?
It’s a $7 billion project developed by a company called TransCanada to build a 1,700-mile pipeline to carry crude oil extracted from Canadian oil sands fields down to U.S. refineries on the Gulf coast. The company has already spent more than $2 billion on the steel needed to build the pipeline, and it expected approval after an extensive review process that had satisfied 57 specific environmental and other requirements and that exceeded all safety standards.43 The U.S. Chamber of Commerce puts the number of American jobs that would be created by the project at “more than 20,000.” That’s not counting the thousands of other jobs and businesses—from restaurants to manufacturers—that would benefit from the project.44
Not a single cross-border pipeline request has ever been denied.45
The decision to allow the pipeline to go forward should have been automatic. Despite Obama promising to be Brazil’s “best customer” for oil, that country’s ability to produce it is declining. Right now, we’re Hugo Chavez’s “best customer.” We buy 900,000 barrels of oil every year from the Venezuelan dictator;46 the Keystone XL pipeline would pump that amount of oil to Gulf coast refineries. The Canadian pipeline would not only increase America’s oil supply from a reliable source rather than from a South American tyrant bent on our destruction. it would mean that U.S. refineries would have additional work and that we’d be able to ship some of the refined oil back to Canada.
On Veterans’ Day, 2011, Obama vetoed the project by delaying it until after the 2012 elections. He ostensibly bowed to the radical environmentalists who have impeded energy development in the U.S. for decades, saying that more study needed to be done to determine the impact on the environment and the climate. In the process, he went against the construction workers’ unions, who overwhelmingly favor going ahead with the project.
In fact, he’s just making sure we don’t produce enough energy to maintain our status as the world’s most powerful nation.
It’s unbelievable to me that the American people aren’t demonstrating in front of the White House demanding that Obama resign. This action alone is enough to demonstrate that he is not intelligent enough or informed enough to be our president, and that he has everything but the best interests of the United States in mind when he makes decisions like this.
It may well be that Obama just killed the Keystone XL pipeline project permanently by this delay. If Canada can’t wait another year and a half to see if the pipeline will be built, there’s a waiting buyer for their oil. All they have to do is transport it to British Columbia and load it on oil tankers for shipment to China.
That may be what the Traitor-in-Chief had in mind all along.
It’s not just a sop to environmentalists. It’s another direct attack on America—like the others I’ve been cataloging for you in this book—that Barack Obama has been waging since he came to power.
What no one seems to be paying attention to is the fact that Mexico is drilling a deepwater oil well in the Gulf of Mexico, only 22 miles from U.S. territorial waters. Cuba is drilling a deepwater well 60 miles from Key West, Florida. Russia is exploring in the Arctic Ocean, near the coast of Alaska.
Obama is calling on us to “protect the environment” by not drilling, while our sworn enemies are using outmoded technology that is guaranteed to create pollution that dwarfs anything American technology could possibly generate.
Obama won’t rest until he’s brought Big Oil to its knees and crippled our economy in the bargain.
In order to do this, he’s not just beseeching other oil-producing nations to ramp up their production, and he’s not just attacking the oil companies themselves, and he’s not just effectively canceling projects like the Keystone XL pipeline and offshore drilling in American waters.
He’s going after commodities “speculators,” particularly those that buy and sell oil futures.
It’s the third leg of his beg, tax, and persecute strategy to bring the oil industry in the United States under government control.
Tyranny of the Government Regulators
At the center of Obama’s strategy of using regulatory agencies to stifle American economic growth is the idea that commodities speculators are the cause of the rise in oil prices. Where energy is concerned, he’s relying heavily on two of those agencies, the Commodity Futures Trading Commission (CFTC) and the EPA, to help him implement the government takeover of the energy industry. The two agencies were created as part of the surge of new regulatory bodies in the 1970s, and they repre
sent the rise of regulation as a punitive force in American politics and business.
At the head of these agencies are representatives of two of the cornerstones of regulatory power that form the foundation of Obama’s power base: Goldman Sachs and the radical left.
The man he’s tapped to go after commodities traders is Gary Gensler.
Here’s what you need to know about Gensler, Obama’s handpicked choice to run the CFTC.
Like so many others in positions of financial industry power in the Obama administration, CFTC Chairman Gary Gensler is a former Goldman Sachs employee. His job duties involve regulating the multi-trillion-dollar commodities futures market. He oversees the commodities exchanges that trade future contracts for products that range from oil to wheat to derivative financial instruments.
Hiring Gensler to regulate these activities is like hiring the fox to oversee the henhouse.
That’s because Gensler, the man now charged with regulating commodities trading, played an important part in creating the financial meltdown that enabled Obama to get elected in the first place. He did that through making sure that close regulation of the trading of financial derivatives did not happen prior to 2008.
During the Clinton administration, Gensler was part of the team that saw to it that banks and other financial institutions were able to continue to package subprime mortgage loans and sell them to other financial companies and investors in order to hedge their own positions without close scrutiny. Gensler also helped rescue Long-Term Capital Management, a hedge fund that had gotten in trouble trading financial derivatives.47 As I explained in Trickle Up Poverty, when banks and traders were allowed to engage in selling suspect financial derivatives and in selling securities short with no checks whatsoever, I believe these practices triggered the financial meltdown that resulted in Obama’s election.
Trickle Down Tyranny Page 25