Month: January 2006

Energy as a weapon

There were a couple articles I stumbled across in the last week that piqued my interest, and involve two countries who are or were among our biggest enemies. But both have some long-term ramifications for us and our Western allies.

The first article was about the China National Offshore Oil Corporation (CNOOC), more specifically a publicly traded subsidiary that wanted additional rights to purchase overseas assets and compete with its non-public parent company. While it sounds like just another international business deal gone sour, bear in mind that CNOOC was the company who offered over $18 billion to buy out Unocal and enter the United States gasoline market. (After heavy political opposition here, Chevron eventually bought Unocal.)If the deal had gone through though, all the Union 76 stations in the country (there weren’t many but they existed) would have been owned by a country who aims nuclear missiles at us.

Personally, I don’t see this stockholder revolt as much more than a temporary setback to the expansionist dreams of CNOOC, who already partners with Royal Dutch Shell on a $4 billion petrochemical project. A large reason that our oil prices have risen to previously unimagined heights is the continuing demand by China on supplies. Recently China supplanted Italy as the 6th-largest economy in the world, and I think within the decade they’ll pass the three largest Europeans (Great Britain, France, and Germany.) That would place them with us and Japan in the top 3.

Europe has trouble of a different sort to its east. With the Russian bear being a large natural gas supplier to these countries, a spat involving Russia and Ukraine over natural gas prices spilled over to affect Western countries. As of January 1st, Russia enacted a nearly fivefold increase in their price to supply Ukraine. The Ukrainians allegedly countered by siphoning natural gas off pipelines through their territory intended for points west like Hungary, Poland, and Serbia.

So, in the midst of winter, several European nations had a temporary natural gas supply shortage. With some of these countries being onetime Soviet satellites who are still in the early stages of democracy, it’s not out of the question that the Putin regime could certainly extract major concessions from these governments for them to maintain this energy link to their former masters. In the case of the Ukraine, their government has fallen out of favor with their Russian neighbors as they look to Westernize more. With the parliamentary elections in Ukraine occurring this coming spring, some saw this move as a play to prop up opponents of Ukraine president Viktor Yushchenko. He defeated a Russian-backed contender in Ukraine’s 2004 election, a vote claimed by some to be tainted with fraud.

This is another reason that I think the U.S. should be heavily investing in finding their own energy supplies. Having these two incidents occur so close together timewise serves as a reminder that when our economy becomes too dependent on others, one hardly-noticed incident can grow to become a wrecking ball to our economy.

Instead of more regulation and red tape, the federal government needs to step aside and let our energy companies (at least the ones that remain ours) do their work to find energy sources within our borders. Are you listening, opponents of ANWR oil exploration?

Hearing from the other side

I have a little help in the “Fair Share” battle.

In my recent post, “The battle is joined” I noted that one of the things on my “to do” list was to call both of my state delegates, Bennett Bozman and Norman Conway. Last Friday, I did so. While I still haven’t heard from Delegate Bozman or his office, I heard quickly from Delegate Conway. He was very polite and listened to the points and arguments I made to help convince him to vote in the right manner.

There were some points that Delegate Conway brought up that I found interesting. Chief among them is that he’s the head of the Appropriations Committee, so I suppose if anyone knows about the state’s budget he would be the guy to know. He told me that the state is facing what he termed a $160 million structural deficit. I looked this up on Maryland’s website and the Spending Affordability Committee report from 2005 does show structural deficits in “out” years (FY 2007 on.) (Note: this is a 105 page .pdf file.) That report shows FY 2007 as a $300 million deficit.

However, since the report came out there has been news of a $600 million surplus from this year’s budget. So I’m a little bit confused about whether these numbers the SAC came up with aren’t too pessimistic. Possibly the $160 million Conway spoke of includes an adjustment for this, but it’s hard to say.

Delegate Conway also cited Wal-Mart’s profitability from last year, noting that floor testimony stated the company made $10 billion and cost the state of Maryland $250 million in Medicare expenses because of gaps in Wal-Mart’s health insurance.

Let’s look at this in two different ways. Assume that both numbers Conway cited are correct. Maryland is almost a perfect “average” state in population, our roughly 5.5 million people is right around 1/50 of the nation’s total. So if every state decided to tax Wal-Mart in a similar way that Fair Share would, suddenly the $10 billion profit is a $2.5 billion loss. Then Wal-Mart would have to lay off workers and close stores, thus putting these people right back on the public dole.

Plus, I saw a report the other day that is cited on the “My feedback” page as I responded to a post on Duvafiles. That report showed that the typical low-wage employee is a $898 drain on the state’s Medicare system. That means it’s not just Wal-Mart – it’s K-Mart, Target, McDonald’s, Burger King, Best Buy – all those employers put a little drain on the system.

I will say one thing about Del. Conway – he did sound surprised about the union-sponsored radio commercials citing his stand on the issue, claiming he didn’t know about them until he heard one himself. And I’ll believe him. I did tell him that he is pursuing a solution in the correct arena, since Medicare truly should be a state issue rather than a federal one.

He does have a good, principled stand – I just happen to think it’s the wrong stand.

But the pro-Wal-Mart side has finally gotten some of their message out. I found this link right on the Sun’s website. Also, the Maryland Chamber of Commerce weighed in with an opinion that “Fair Share” violates portions of the federal ERISA Act.

So it’s going to be an interesting week to come.

Now, since I’m on the subject of health care, I have a bone to pick with the health care industry.

Why is it that I get a bill for $131 from my doctor, but when the health insurer pays the doctor, they give the doctor’s office $77? I understand that the doctor’s office has a good deal of overhead, but is it possible that having to deal with all the red tape creates the majority of it?

My doctor’s office has at least one person who handles solely billings and another person who handles referrals. They have nothing to do with patient care, but the doctor has to pay them and lease that little extra bit of space for them. There’s really something wrong with the health care industry.

And I can tell you right now, just based on experience and observation, that the WORST thing we can do is make it solely a government-run program like “HillaryCare” promised to be. I think something on the order of Medical Savings Accounts would be a good idea. I wouldn’t have to worry about having a chiropractor who is out-of-network. MSA’s also discourage needless trips to the emergency room, at least as I see it.

The more things in the health-care sphere that are directly controlled by the patient, the better the system works. And the less red tape there is (along with a serious tort reform measure to help curb the cost of liability insurance), the easier it is for a doctor to actually practice medicine rather than play defense.