A Note From Managing Editor Sara Nunnally: Let me be blunt… High crude oil prices are drowning our economy. On Tuesday, oil prices climbed back above $96 a barrel. Our trade deficit soared to $50.2 billion as we imported an average of 9.01 million barrels of crude oil every day in May — each barrel adding another $100 to our import tab.
These are huge numbers… but even bigger are the profits Big Oil is making off our unhealthy addiction to crude oil.
And they offer no apologies.
Indeed, their greed and laziness is notorious throughout crude oil’s history. It hasn’t just been in the past decade that oil companies have sought to suck as much profit out of a barrel of oil as possible. They’ve bludgeoned every rule and regulation in their way.
New crude oil found in Libya that Big Oil doesn’t own? The industry drove ’em out of business by slashing oil prices. Profits should be for big oil companies alone, the dominators figure, not some “rogue” nation in the middle of a desert.
Project in the Gulf of Mexico behind schedule? Take some short cuts to get that oil out of the ground as quickly as possible! Who cares if that negligence results in the worst oil spill in history…
U.S. at war in the Middle East? That’s a great time to gouge the Pentagon out of millions of dollars! Our military needs oil and gasoline, so companies like Halliburton can charge what they want for fuel.
Unscrupulous, outrageous and barbaric…
These examples are just a few of the reasons why Sandy Franks and I wrote Barbarians of Oil. This book uncovers the real motivations behind Big Oil, oil-bought governments, OPEC… the unholy trio of oil barbarians with the power to hold economies hostage to black gold.
Today, I’d like to show you to a little bit more of why we wrote Barbarians of Oil. I’ve asked Andy Snyder, our editorial director and editor of Taipan Insider to stand in as MC for today’s Smart Investing Daily.
Take it away, Andy…
It is not every day I get to escape my perch on the “Inside” and join in a conversation with two of the industry’s brightest minds. When Sara asked me to help shine a spotlight on Big Oil’s barbaric ways, I felt obligated.
After all, we spend so much time and effort showing our paid readers the opportunity hidden deep inside the fallacies of the nation’s leadership. It’s only right we spread the truth to Smart Investing Daily subscribers.
My first question for the duo is simple…
Andy: Out of all the topics affecting us today, why this one? Why did you write Barbarians of Oil?
Sandy: When Sara and I wrote our previous book, Barbarians of Wealth, we concentrated our efforts on Wall Street, the banking industry, lobbying groups and the Federal Reserve. Little did we know that our research would lead us to the oil industry and specifically Big Oil.
Oil is a dirty business, figuratively and literally. Oil has created multibillion-dollar businesses, the largest corporations on the planet. Money changes people — sometimes for good, sometimes for the worse. Most often, money is the oil industry’s only allegiance.
As we looked deeper into the industry, we saw how often money influenced the decisions related to this country’s energy policies. For example, as Secretary of Defense, Dick Cheney gave millions of dollars’ worth of contracts to Halliburton until he was chosen by Bush to serve as his vice presidential candidate.
Although he resigned his post, as vice president, he AGAIN gave hundreds of millions of dollars’ worth of contracts to Halliburton during the Gulf War in 2003.
Turns out Halliburton was overcharging the government by as much as $61 million for transporting fuel from Kuwait to Iraq. Bunnatine Greenhouse, a whistle-blower in the Army Corps of Engineers, brought the incident to the public’s attention. She was fired for doing so.
Money rules this industry. And therefore the barbarians need to be exposed.
Andy: Interesting. I had no idea Greenhouse was fired. That brings me to my next question. What is the most surprising thing you learned while writing the book?
Sandy: What surprised me the most was that we’ve been addicted for oil so long, we forget there are alternative sources of energy available. The truth is the U.S. has the resources to gain a competitive advantage in alternative energy sources. But the oil barbarians will stop short of nothing to prevent that from happening.
For example during the Arab oil embargo, interest in wind-generated energy soared. In fact the U.S. Federal Wind Energy Program was established. A federally backed wind-power test center was set up in Colorado. At that test center, at least 25 different wind turbine systems were tested including residential, commercial and agricultural designs.
From there about 40 small commercial wind systems were installed in areas throughout the U.S. Some of the systems worked, others couldn’t produce enough energy for large-scale use. But that was only because no large-scale testing had been done yet.
However, once the embargo was lifted, the program was pretty much forgotten. James Schmidt, a wind energy expert, says that if the government had not stopped building windmills so many years ago, the problems they encountered back them would have been solved.
The U.S. would have been ahead of the game. Now we’ve given that advantage to China. Here’s what most people don’t know… China surpassed Germany to become the world’s biggest builder of wind turbines and it added the largest amount of new generating capacity.
Sara: I will jump in here. I was shocked to find out that oil nationalism wasn’t just for Russia, Iran and OPEC. In fact, Harold Ickles, Secretary of the Interior, proposed an idea to nationalize Standard Oil in order to control oil reserves in Saudi Arabia. It would be a very different world if that were allowed to happen.
We criticize governments everywhere when they try to nationalize their energy industries because most often, U.S. oil companies lose out on lucrative oil contracts… but it’s very interesting to note that the U.S. doesn’t have the same standards when it comes to nationalizing its own oil interests, even if they’re located in another country.
Andy: After you found what you did, your perspective must have changed dramatically. How has what you uncovered changed the way you live and invest?
Sandy: First, I don’t trust what the media or the government tells us. Our readers shouldn’t either. Most of what you hear from Washington is “sugarcoated” so as to protect the public.
We don’t need protection, we need the truth. And that’s just something Washington and the media aren’t willing to hand out.
As for investing, I do a large amount of due diligence. I’m looking for the areas that are being ignored. I think there’s a hidden goldmine in alternative energy. I think natural resources and commodities will continue to explode in price. Yes, we’ll have some down periods, but overall, those areas should fare well.
Sara: Writing this book has definitely made me more skeptical of any energy initiative… even renewable energy projects. I question who’s behind these programs, and what do they have to gain from them.
It’s made me a little more cynical about what investments we look at for our readers. Everything has to go under the microscope, and even then the power of these barbarians of oil can smash into an investment idea. Sometimes, we just have to hold our nose and ride their coattails. We know what these oil companies are doing is wrong, but we also have a responsibility to give our readers sound investments.
At the same time, however, we want to prepare our readers for the tipping point in the oil industry. High, unsustainable oil prices are going to radically change the way we look at energy in the U.S., and the turning point is right around the corner.
Andy: A common theme here is the ties between Big Oil and Uncle Sam. Who represents us… the little guy? How do we get our hand under the spigot?
Sara: It’s really a question of who’s driving whom… Government makes it easy for Big Oil to make money, but it’s Big Oil who “owns” the government officials.
And sometimes, Big Oil and government are one in the same. Take former Vice President Dick Cheney, for example. He “double-dutched” his way through Secretary of Defense, to the CEO position at Halliburton, to the vice presidency, giving Halliburton billions of dollars’ worth of government contracts all the while.
Tracking the ties themselves, in addition to the government’s energy policies, is where the opportunities are for oil investors. At the same time, government policies have a big effect on other energy programs. The more money poured into alternative energy, the bigger the market’s response.
That means there are opportunities on both sides of the issue.
Andy: The media seems to have no clue what’s behind the curtain. Is that because it is ignorant to the situation or are they tangled in the web of deceit?
Sandy: It is because as you say, they are tangled in a web of deceit. All readers have a responsibility to dig a little deeper, ask a few more questions about what they read. Take a look at what’s happening with the phone hacking scandal with Murdoch. Doesn’t that show just how far the media will go to get a story?
Our job here is to tell the truth. We expose the truth. Not many are willing to do that. But it’s the right thing to do.
Andy: Thank you… I think. The pair of you raise some serious issues — problems that must be fixed before this nation can resume its path to prosperity. Although alarming and at times disheartening, readers will appreciate learning what you have found.
Editor’s Note: Your glimpse into Barbarians of Oil does not have to end here. To continue reading Sandy’s thoughts on how Big Oil’s net has entrapped us all, follow the link. Let me warn you… it’s not for the squeamish.
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