With all the solutions available from the private sector and from around the world since day one to deal with the oil spill, President Obama has stalled on allowing any of these going forward for the following reasons:
1. To increase the power of government over the private sector. To allow the private sector to solve the problem would defeat and undermine Obama’s assertion that only government and government-owned companies, bureaucracies and labor unions can provide the solution. Obama sees the private sector as inherently evil, as reflected in the fact that he refused to meet with BP to establish a working relationship with the company to cut through all the bureaucratic red tape.
While BP attempts to cap the Deep Water Horizon well, it has to be remembered that the government forced BP to drill at a depth of 5,000 feet, one of the deepest wells ever drilled, creating the crisis. BP had wanted to drill at a depth of 500 feet. The result of the blowout has been that the government, Obama, and Democrats in Congress have threatened and talked down BP and its efforts. On the one hand, they require BP to obtain approvals from the government to move forward, while on the other hand they vilify the BP president and CEO during Congressional hearings, due to the government’s own delays.
Meanwhile, the Obama Administration failed to grant requested waivers to the 1920 Jones Act that would allow foreign ships and skimmers to enter U.S. water, refusing international assistance from 33 countries and stalling and minimizing Louisiana’s creation of sand barriers, as well as stalling numerous private sector solutions that the Administration has refused to take heed of. One such example offered on May 3 was from Dr. Henry Crichlow, the leading oil blowout specialist worldwide, who developed the blowout engineering after Gulf War I for 800 or more wells in Kuwait, who provided quick relatively inexpensive solutions to either recover the oil with the Crichlow connector from the pipe a mile down or to “Kill the Spill” completely.
As part of the orchestration of the crisis, liberals in Congress threatened to put BP into receivership, while Obama played to the radical left with a threat to take over BP’s assets, if they could not force BP to allocate $20 billion in an escrow for a government appointee to administer. The result was that despite BP’s balance sheet, the U.S. government has succeeded to cause a Fitch downgrade of BP’s unsecured debt from AA to BBB, with BP shares losing a market cap value of $90 billion. The Obama Administration demanded that BP make payments it had already agreed to make, thus financially weakening the very company the government asserts it wants to be able to shoulder the burden of the fines, the oil cleanup and claims of lost revenues for the Gulf states.
2. Force Obama’s Cap & Trade bill and energy tax through Congress. Under the Obama policy of “don’t let a good crisis go to waste,” such stalling and delaying mentioned above allowed the crisis to get bad enough for Obama to have the “audacity” in his Oval Office speech to the nation to contrive and justify his Cap & Trade climate bill. Since the beginning of the blowout, the private sector and the States have been fighting with the Administration to get approvals to take action. However, the longer the Administration could stall, the worse the situation would become for BP, the States and Gulf coast businesses, exacerbating a crisis further by creating a moratorium on current and new shallow water drilling threatening hundreds of thousands of jobs.
Cap & Trade, involving a Chicago carbon exchange and other companies that Obama and/or his associates may have financial interests in, was all but dead in the water until the BP oil blowout crisis renewed “hope” that he could revive it again. Cap & Trade is designed to increase the cost of energy to the private sector by more than 10 percent, lowering GDP in the process.
Organization for Economic Cooperation and Development (OECD) studies have demonstrated that for every 1% reduction in the cost of energy there will be a 3% increase in manufacturing and industrial output. This occurred when President Reagan deregulated the oil industry, creating an economic boom. Obama is moving in the opposite direction—that of higher taxes and more federal government control on a permanent basis.
3. To effect “regime change” toward statism. Why would the Administration willfully let the Coastal region be damaged, destroying revenues and lives to create a crisis, as an “end justifies the means” call for Cap & Trade? The answer is that we just need to look at the cause of the systemic financial crisis itself, which was intended to achieve, as Mohamed El Erian, CEO of PIMCO, himself called it, “regime change” in the U.S. and globally. “Regime change” in the U.S. means an inexorable shift of control and ownership of private sector capital and productivity of the populous to the federal government and Federal Reserve.
“Regime change” in the United States entails a paradigm shift away from free enterprise capitalism and the establishment of a socialist government which assumes ownership and control of capital and human resources. Its projected culmination to a “New Normal” of slow economic growth and bigger government within four years will make it forever impossible for the U.S. to reinstate the free enterprise capitalist system, as every political and social act will be dictated by the elite in Washington.
Such “regime change” was facilitated by the government’s stealth regulatory change on November 9, 2007, from hold to maturity accounting to “mark-to-market” accounting, which caused the collapse in private sector capital formation and access to credit in 2008 and 2009, unless accompanied by government ownership or guarantees that allow such debt to be reclassified under the government’s sole right hold to maturity valuation.
Without the mark-to-market regulatory change, the markets would not have collapsed and we would still have a booming economy. Instead, we have a loss of over $10 trillion in private sector wealth and a shifting of private sector ownership and control of capital to the government and Fed. Thus, clearly, if the government and “special interests” are willing to orchestrate an unmitigated economic collapse allowing over $10 trillion in private sector savings to be lost to effect a “regime change” to a “New Normal” culminating in their total ownership and control of financial and human resources, then government stalling in its response to the oil spill to create a crisis to justify the resurrection of Cap & Trade to further such “regime change” is small potatoes by comparison.
4. To start the nationalization of oil and other major industries. An outright government takeover of BP and other oil companies could be the next phase of Obama’s “regime change” policy.