Missed Opportunity
I realize I opened a can of worms yesterday with my comments about Congress and the suggestion that members of both parties are now more beholden to corporate interests (via campaign contributions) than they ever have been.
Don't worry, I'm not going to back away from that statement. In fact, I plan to pursue it because it is of critical importance right now.
But first, I must acknowledge several comments I received from Daily Profit readers taking me to task for griping about corporate campaign contributions but ignoring campaign contributions from unions and other special interest groups.
Sorry about that: I will gladly add unions and special interest groups to my list that should be prohibited from making direct contributions to political campaigns.
I'd also like to add that I don't see the campaign contribution issue as a Democrat or Republican issue. The point is that our politicians - all of them - are more concerned with getting re-elected (or elected in the first place) than making the right decisions for the country.
It seems to me that virtually all legislation we've seen passed by the current Congress has been heavily influenced by the hand of Corporate America.
The financial regulation bill was toothless because the banking lobby succeeded in removing virtually all of the "Volcker Rules." The healthcare bill puts an unfair burden on small businesses because the insurance lobby was successful in removing the "public option" that would have attacked the insurance sectors profits.
Of course, this is not new to the Obama administration. We saw Congress kowtow to corporations during the Bush years as well. And the Clinton years. Only now, the stakes are getting higher because we have some serious issues to deal with. Like energy…
Oil recently moved above $82 a barrel. That pushes gasoline prices at the pump up to the $2.75-$3 a gallon area. Obviously, this is a further drag on household budgets that are already stretched thin.
Energy economist Gregor Macdonald, from Energy World Profits, just completed some very interesting research on food stamps in San Bernardino County, California.
The average food stamp benefit is approximately $340 a month, or $85 a week. If you're commuting 60-90 miles a day, and gas prices rise a $1 a gallon, well, there's your $85 a week. The link between debt/poverty and energy prices is worthy of more debate.
Arial","sans-serif";">So what is Congress, the administration and Corporate America doing about reducing our dependence on oil? Not much.
The current administration came into office with much fanfare about how alternative energy, including natural gas, was a key component not only to economic recovery, but also national security.
What has happened to that talk? When was the last time you heard any elected official mention natural gas as transitional energy source?
I expect you haven't heard about natural gas from a politician in a while. And I don't think it's by accident. It's as if, magically, the whole idea of using America's vast natural gas reserves for our own energy needs has been completely stricken from the agenda. I wonder why…
When the $700 billion bailout package was approved by Congress in 2008, there was approximately $60 billion set aside for renewable energy and smart-grid subsidies.
On Tuesday, President Obama signed a bill to grant $26 billion in emergency aid to states, in order to keep teachers, police and fire department personnel employed. A worthy move, no doubt.
But do you wonder where the funds came from? That's right, renewable energy earmarks from the original $700 billion bailout money. In fact, the original $60 billion in renewable energy subsidies has now been cut twice. Only around $25 billion is left.
Also, in late July, the Senate leader Harry Reid released an energy bill that failed to include a requirement that utilities generate a certain amount of electricity from renewable sources, a key industry priority.
I'm not one who expects the government to solve all of our problems for us. But there are times when government intervention is necessary. A meaningful transition to renewable energy sources is one of those times.
AT&T (NYSE:T) could only build out telephone infrastructure because it was given a virtual monopoly to service that infrastructure and recoup its investment.
Building new infrastructure is expensive. But when we talk about adopting renewable energy sources (including natural gas), we're talking about building out an entirely new infrastructure. And without incentives or some guarantee that the investment will be recouped, it won't happen. And the owners of existing infrastructure will fight to maintain the status quo.
In my opinion, energy is the #1 challenge. Higher and higher oil prices are staring us in the face. I'm not a pie-in-the-sky idealist. I'm heavily invested in oil stocks in my Energy World Profits advisory service. Because even if we embark on energy transition with man-on-the-moon fervor, oil will still be a primary energy source for decades.
I also have several renewable energy stocks in the Energy World Profits portfolio. But if we, as a country, don't have the political will to move toward a sustainable path for energy generation, I'll sell those renewable energy stocks and enjoy the profits as my oil stocks double, triple and quadruple in the coming years.
And I'll also regret the opportunity America missed to make some critical changes. The energy situation is not going to get better.
As always, you can write me with your comments at dailyprofit@wyattresearch.com.
