World wide demand for black gold is increasing as Brazil, Russia, China, and India motorize billions of their citizens.   Hurricanes have wreaked tens of billions of dollars in damage to our oil infrastructure.     The desire to conserve died in the eighties.   The supply of oil is limited and the cost of a barrel of oil peaked in early September at over $70 per barrel.   With all that in mind, what will it cost to keep our US economy going and our SUVs and hybrids humming?   What are our options, the likelihood of their success, and when does it become cost effective to invest in those options?

In Why $5 Gas Is Good for America, Spencer Reiss wrote, “For the better part of a century, cheap oil has fatally undercut all comers, not to mention smothered high-minded campaigns for conservation, increased efficiency, and energy independence.    But growing demand is outrunning the oil industry’s carefully computed supply curves, bidding up long-term expectations for the price of energy.   The long term may not mean a lot when you’re standing at the pump, but the oil industry lives in a world where big projects take a decade to build and the checks that pay for them have eight or nine zeroes.   Crude hit $70 a barrel last August, but oil companies have learned the hard way how quickly prices can crash.   They adjust their expectations accordingly – downward.”

Mr. Reiss goes on to say that recent oil industry long term expectations for making profits on investments in new technologies have been based on $20 per barrel of oil, in today’s dollars.    So far, this level of investment has resulted in “advanced analysis of rock cores, 3-D seismic imagery, software for diagnosing underground oil flows – all integrated using something called fuzzy logic.”   There is also the “digital oil field” that takes the well to the petroleum engineer half way around the world and could add oil reserves equal to more than what is available from Iraq by 2013.   Then there are the deep water free-floating rigs that drill in water twice as deep as 30 years ago that account for 90 billion barrels of liquid oil reserves.

Unfortunately, all of these recent investments only improve access to about 16 percent of the world’s known reserves – those that are liquid.     According to a graphic in the published version of Mr. Reiss’ article, over 49 percent of the known reserves are in tar sands and the rest, 35 percent, are in oil shale.

Tar sands “is a hot commodity at today’s prices,” but the environmental issues of open-pit mining will take time to resolve and that will increase the costs of extraction from the current $15 to $20/barrel.   Also, most of the reserves are outside of the USA -  Venezuela, Canada, and elsewhere.

As for Oil shale, Mr Reiss reports, “The US has 85 times more shale oil than crude,”  which could provide the US with independence and enough oil for “212 gasoline years”.     A gasoline year is the calculation of how many gallons of gasoline we all use each year.   However, the problem here is that crude oil would have to cost $70-$95 a barrel to make this option a profitable long term investment.   On the other hand, recent efforts by 160 Shell employees, 30 in Colorado and 130 in Houston, may bring this cost down to $25-$30, and the extraction won’t require the bulldozing of the countryside.

So, if oil is to remain our best option, then oil shale might be the best possible source for the future.     

But what about the non-oil options?   What about other liquids or gases?   Liquids can be created from coal and plants like soybeans, corn, or other biomass.   Gases include methane, natural gas, and hydrogen.

To help compare other liquid and gas options to the cost of oil, the article introduces a ‘barrel of oil equivalent’ (boe), which equates to what oil would have to cost to make investing in the other option profitable.      

To make coal liquefaction profitable, its cost would have to be around $35 to $40/boe, which makes it more expensive than tar sands and the low end for oil shale.   On the other hand, this option could provide 363 gasoline years for our cars and trucks and improve carbon emissions.   However, the land would suffer considerably.  

As for gases, the most promising of the bunch is methane hydrates.    There is the equivalent of 10,882 US gasoline years locked away in the Arctic permafrost and seabeds.   There are also serious technological issues and the cost is around $90/boe.

One other option of note is biodiesel.    It rates high for environmental friendliness and technical maturity, but has a cost of $45 to $50/boe.    There is also the issue of having enough arable land to grow the soybeans needed to replace just one US gasoline year.   The amount of land needed is approximately 2,000 times larger than what is used for growing soybeans now.     To put that in a little better perspective, this required land is about 30 times larger than all the arable land in the US.   There is also a moral issue.   Which do you prefer, burning food or feeding the hungry? 

A more likely alternate liquid replacement is ethanol.   It only requires about one third of all arable land in the US to replace one US gasoline year and has a cost of $60 to $75/boe.

For more details, and other alternatives and their chances of keeping your SUV or hybrid humming, here are other articles by Mr. Reiss from the same issue of WIRED.   To see the related graphics referenced for this article, you will have to buy the magazine.

1.) As Prices Rise, Technologies Emerge
2.) As the long-term price of a barrel of oil reaches $20-$30
3.) The Data Pipeline
4.) As the long-term price of a barrel of oil reaches $30-$70
5.) Fill ‘Er Up With Frankenfuel
6.) As the long-term price of a barrel of oil reaches $70 & up
7.) Tapping the Rock Field

In a previous article, I provided details on the increases in prison population through mid 2004.   This article deals with information through the end of 2004, adds in those under community supervision, and compares growth in these areas to USA’s population growth for the same time frame.

On November 2, 2005, the Houston Chronicle printed an AP article by REBECCA CARROLL stating that “Nearly 7 million adults were in U.S. prisons or on probation or parole at the end of last year, 30 percent more than in 1995 …”. Details were provided by the Bureau of Justice Statistics in a news release, “The nation’s total correctional population was 6,996,500 in 2004, of which 4,151,125 were living in the community on probation; 1,421,911 were in a state or federal prison; 765,355 were living in the community on parole; and 713,990 were in [local] jail[s] ….   The number has grown by more than 1.6 million adults under correctional authority control since 1995.”   That is a 10 year growth of 29.6%.

Relative to prisoners only, another BJS press release included this additional detail, “As of December 31, 2004, there were 2,267,787 people behind bars in the United States, of which 1,421,911 were held in federal and state prisons (not including the 74,378 state and federal inmates incarcerated in local jails), 713,990 in local jails, 102,338 in juvenile facilities, 15,757 in U.S.   Territory prisons, 9,788 in Bureau of Immigration and Customs Enforcement facilities, 2,177 in military prisons and 1,826 in Indian country jails (as of June 30, 2003).”

The second BJS press release also included the following, “The nation’s incarceration rate rose from 411 sentenced inmates per 100,000 U.S. residents in 1995 to 486 inmates per 100,000 at the end of last year [2004] – an 18 percent increase.   (A ‘sentenced’ prisoner is an inmate serving a sentence of more than a year.)”   The report also showed a 53 percent growth in the number of women prisoners, “As of December 31, 2004, 104,848 women were held in state and federal prisons – up from 68,468 in 1995.”

However, these changes need to be placed in the context of population growth of the nation as a whole.   According to Census.gov, the July 1, 1995, estimated residential population was 266,278,393.   According to another Census.gov report, the July 1, 2004 estimated USA population was 293,655,404.   This 10 year growth in population was 10.3 percent.   That’s one half the rate of total prisoner growth, one third the rate of prisoners plus those on parole or probation, and one fifth the rate of growth for female prisoners!!!

An April, 2005 article by ABC News concludes, “According to the Justice Policy Institute, which advocates a more lenient system of punishment, the United States has a higher rate of incarceration than any other country, followed by Britain, China, France, Japan and Nigeria.”

The ABC News report was based on a press release by the Bureau of Justice Statistics (BJS),which stated, “The nation’s prisons and jails held 2,131,180 inmates as of June 30, 2004 …”.

According to the CIA World Fact book, the estimated July, 2005 population of the United states is 295,734,134.   This means that 1 out of every 138 of our citizens is in a jail cell somewhere.   The BJS press release put it another way, “On June 30, 2004, there were an estimated 726 persons per 100,000 U.S. residents in prison or jail.”

The BJS press release also stated:

• “Between June 30, 2003 and June 30, 2004, the number of female prisoners increased 2.9 percent to reach 103,310.   At the same time, male prisoners increased 2 percent to reach 1,390,906.”
• ”Eight jurisdictions experienced double-digit growth in the year ending midyear 2004, led by Clark County, Nevada; Fulton County, Georgia; and Orange County, California — all up 20 percent.”
• “The number of noncitizens held in state or federal prisons increased 1.4 percent in the year ending June 30, 2004, reaching 91,789.   Almost two-thirds of incarcerated noncitizens were held by the federal system.”
• “At midyear 2004, jails were operating at 94 percent of capacity.”

For more detail refer to “Prison and Jail Inmates at Midyear 2004″ (NCJ-208801).   Here are some snapshots from that report:

How much would the Federal numbers change if they included all the terrorists from both known and secret prisons.

The Online Journal.com reported on 10/28/2005, that “The latest critical confirmation of key indicators that the election of 2004 was stolen comes in an extremely powerful, penetrating report from the General Accounting Office that has gotten virtually no mainstream media coverage.”

Here are some other excerpts from the Online Journal about this GAO report:

“Nearly a year ago, senior Judiciary Committee Democrat John Conyers (D-MI) asked the GAO to investigate electronic voting machines as they were used during the November 2, 2004, presidential election. ”

“According to CNN, the U.S. House Judiciary Committee received ‘more than 57,000 complaints’ following Bush’s alleged re-election.”

“The United States is the only major democracy that allows private partisan corporations to secretly count and tabulate the votes with proprietary non-transparent software.   The CEO of one of the most crucial suppliers of electronic voting machines, Warren O’Dell of Diebold, pledged before the 2004 campaign to deliver Ohio and thus the presidency to George W. Bush.”

“Bush’s official margin of victory in Ohio was just 118,775 votes out of more than 5.6 million cast.”

“The GAO also confirms that access to the voting network was easily compromised because not all digital recording electronic voting systems (DREs) had supervisory functions password-protected, so access to one machine provided access to the whole network.   With 800,000 votes cast on electronic machines in Ohio, flipping the number needed to give Bush 118,775 could be easily done by just one programmer.”

“In essence, the GAO study makes it clear that no bank, grocery store or mom & pop chop shop would dare operate its business on a computer system as flimsy, fragile and easily manipulated as the one on which the 2004 election turned.”

“The GAO findings are particularly damning when set in the context of an election run in Ohio by a secretary of state simultaneously working as co-chair of the Bush-Cheney campaign.”

A related Rock River Times article added, “One Ohio campaign operative, Tom Noe, a coin dealer, was indicted Oct. 27 for illegally funneling $45,400 to Bush by writing checks to others, who then wrote checks to Bush’s re-election campaign, allegedly dodging the $2,000 limit on contributions by an individual.”

“In the 2000 election, Florida was the key; in the 2004 election, Ohio was the key.”

In my Other Thoughts category, you will find interests of mine which I felt inspired to write about, but which do not fit the primary intent of the site to record my thoughts on some critical issues that as a group can adversely affect any nation state. Some Other Thoughts may be of interest to you. Others may just be personal and important for me to write about.

(This was originally written on 2/16/06, but I moved it to November. It’s main purpose is to make sure the Other Thoughts category is listed in the navigation section.)

Results for eleven of the fourteen characteristics were down from last month.   However, two of these were down too significantly.   I suspect while recording last months results and fine tuning the search criteria, I did not properly record either the search criteria or the search results or both.

Of note, though, was the increase in the results for protection of corporate power.   Might this be due to all the recent news on profits for oil companies?   Well, that’s difficult to prove without more specific October results to compare to.   So, I will just leave it at that.

There has been lots of news on ‘excess’ profits lately, but it’s only been about Big Oil.   How evil are they compared to other companies we know?

The table at the bottom of this article ranks 31 companies and provides related financial information.   They are listed by the percentage growth in their ‘normalized income after taxes’ for the most recently reported 5 year period with the highest growth first.   The table includes the company name and their 5 year percentage growth in normalized income.   This is followed by the earnings per share, the actual normalized income after taxes, and total assets for each of the five most recent years.

The chart below displays the 5 year income growth for 30 of the 31 companies detailed in the table.   Apple Computer, at a 5,234 percent increase, is excluded from the chart to allow improved display of the remaining 30.   The company next in line and shown farthest to the left in the chart is Conoco Phillips.

Click on image for full view.

Conoco Phillips not only has relatively high earnings per share for each of the last five years, but also has a significant growth in income of 337% over the same time frame.   This income growth is not anywhere near the improvement at Apple, but it is much greater than Time Warner, next in line at 191%.   Further down the list are Wal-Mart and Exxon Mobil.   The income growth for both of them is less than one fifth that of Conoco’s.   Also, Wal-Mart and Exxon Mobil come in 10th and 12th after other well known companies like Toyota, Walgreens, and Coca-Cola.   Imperial Oil, BP, Total SA, and other oil companies appear even further down the list.

For a little more perspective, I just looked up the income growth for Johnson & Johnson.   It was 69%.   How about Hershey Foods (chocolate)?   Their income grew 76% during the last 5 years.   Home Depot comes in at 94%.   All higher than Exxon Mobil, at 52%, but still nowhere near Conoco Phillips.

To add to this, I checked the growth in my average gasoline cost for the last 5 years. I have had the same car, same home, same office for that time. After discounting for some vacation by car in 2000, the growth in my average gasoline cost for the last 5 years is 59 percent.

For a little more perspective, how do you think earnings for Saudi Aramco, who the oil companies in the chart/table buy their oil from, have grown over time.   Well, in one two year period, they grew 929% to $27.8 billion.   This is according to Saudi Aramco World : Foundations: The Introduction.   That was during the last big oil crunch in the early 70s.   In 2001, their earnings were up to $63 billion, according to International Spotlight: Saudi Arabia.   In 2004, earnings were estimated at $116 billion in Saudi Arabia Country Analysis Brief. That is a growth of 84% in three years. The same report indicated that expected earnings for 2005 are $150 billion. That’s another 30% – in one year.

So, with the exception of Conoco Phillips, shouldn’t everyone be equally upset with all companies that have seen earnings growth that is even higher than Exxon Mobil? This includes Home Depot, Johnson & Johnson, Hershey Foods, Toyota, Walgreens, Coca-Cola.

As stated earlier the table below shows earnings per share.   Notice how varied they are between companies.   One of the factors that changes this ratio is stock splits.   For example, Apple had a 2 for 1 split in the last reported year.   If that had not occurred, their EPS for the last year would have doubled to 3.30. Similarly, when a company buys their shares back and takes them out of trading, the EPS will go up.

The total assets for the companies are listed just to show their relative ‘size’.

As you all know, when our founding fathers laid down the foundation of our country, they based it on three branches of government: executive, legislative, and judicial.   The responsibilities of each was carefully defined to create checks and balances of one branch on each of the others.   They also established the first secular state of its time to separate/protect their new ship of state from any particular religion.

As you have watched the recent events surrounding the President’s nominations to the Supreme Court and the changes to the makeup of our judiciary branch, have you sensed that the process has a new element to it?   Does it seem that interest groups have much more to say about the nominees than the U.S. Senate?

According to a Report for Congress by the Congressional Research Service, which was last updated on March 21, 2005, “Of the 154 nominations to the U.S. Supreme Court between 1789 and 2004, 34 were not confirmed by the Senate.”   Five of the 34 were renominated later and eventually confirmed. For the 29 individuals that were never confirmed there was “a variety of reasons, including Senate opposition to the nominating President, nominee’s views, or incumbent Court; senatorial courtesy; perceived political unreliability of the nominee; perceived lack of ability; interest group opposition; and fear of altering the balance of the Court.”   This report does not include the recent withdrawal of Harriet Miers, but is does include hints to a change.

The repot states, “Observers of the Supreme Court confirmation process have suggested that interest group opposition has not only grown, but has also been effective in preventing confirmations.   The impact of interest group opposition relative to other factors is a matter of continuing study.”   This statement referenced a footnote to a 1998 paper in The American Journal of Political Science, vol. 42, April 1998, by Jack Wright , called “Lobbying for Justice: Organized Interests, Supreme Court Nominations, and the United States Senate.” (Unfortunately, this document is not generally available to the public.   I have contacted the author and am waiting for a reply.)

Again, I ask.   Does it seem that interest groups have much more to say about the nominees than the U.S. Senate?

In Why Miers Withdrew as Supreme Court Nominee, NPR reports, “Such opposition from within the conservative movement was all but unheard of before Miers was nominated.”   In this same story, former nominee to the Supreme Court, Robert Bork, was reported to say, “With a single stroke — the nomination of Harriet Miers — the president has damaged the prospects for reform of a left-leaning and imperialistic Supreme Court, taken the heart out of a rising generation of constitutional scholars, and widened the fissures within the conservative movement.”

So, are outside influences growing?   Are steps being taken by the The Fourth Branch that could result in major changes to our ship of state that our founding fathers carefully crafted?   Remember, back then theocracies were an external threat to the nation and the norm for imperialistic nations.   Now what was an external threat has become a threat from within.   A threat our forefathers were trying to escape.

This threat is a lobby of self appointed ‘representatives’, referred to elsewhere as the American Taliban.   It is growing and contributing to the reduction of the separation of church and state, in not just one but two ways – a very conservative Supreme Court and a restructured government where they are The Fourth Branch?

In Torture – Why Are We Legalizing It?, I stated “The only difference between what the President is proposing and what the terrorists have done is that they broadcast it to the world, while he hides it from the world.”

Well, according to one article at CNN.com, “The CIA has been hiding and interrogating some of its most important al Qaeda captives at a Soviet-era compound in Eastern Europe.”   CNN also stated, “It depends on the cooperation of foreign intelligence services, and on keeping even basic information about the system secret from the public, foreign officials and nearly all members of Congress charged with overseeing the CIA’s covert actions.”

In a related article CNN.com reported, “A man once considered a top al Qaeda operative escaped from a U.S.-run detention facility in Afghanistan and cannot testify against the soldier who allegedly mistreated him.”

No sooner has the news of the Michael Brown’s hurricane relief disaster disappeared from the news, than history is about to repeat itself.

Michael Brown was appointed by President Bush as one of thousands of cronies.   “Brownie” had no applicable experience in disaster recovery and was quickly replaced after his poor performance in the Katrina recovery effort with Vice Admiral Thad Allen from the Coast Guard.   Vice Adm Allen knew about disasters – he had related experience.   Soon, even though it was a mistake to put someone in charge without related experience, it appears that President Bush still has plenty of cronies to appoint.   (I guess the Vice Adm forgot to send in his check?)

According to an article on page A7 of the November 2, 2005, Houston Chronicle by Alexis Grant, Donald Powell will be replacing the Vice Adm “by the end of the year.”   Check out Mr. Powell’s qualifications.   Like “Brownie” being a crony is ranked higher as a job requirement than experience.   In fact, according to Alexis Grant, Powell became a member of a group referred to as the Pioneers after “he raised at least $100,000 for the presidential campaign” for President Bush.

It’s a good thing the hurricane season is about over – but will there be a sense of deja vu all over again after the first hurricane hits America next year.