Thursday, February 25, 2016

I Love Cheap Gas

My wife and I paid $1.65 for regular, unleaded gas after grocery shopping yesterday. I haven't seen prices this low since my high school years (2000-2004). I am sure Americans across the country are enjoying their newfound wealth.

But what the hell is going on? Is this a short-term blip in the oil markets? And at what point does the benefit of cheap gas get overwhelmed by the detriment of bankrupt oil and gas companies?

Gas is so cheap right now because of a massive game of chicken between the U.S. and OPEC -- the Organization of Petroleum Exporting Countries. Beginning in the mid-2000s, we here in America figured out a way to pump oil and gas out of tight rock formations with new drilling technologies (fracking being one of them). Our production of hydrocarbons erupted and we no longer found ourselves desperately dependent on imports.

Saudi Arabia and other OPEC nations were less than pleased with this development. As the world's oil spigot owners and supervisors, they're used to being able to keep oil prices high by limiting production when prices get soft.

US oil companies and energy policy-makers likely expected that OPEC would continue to cut production as our oil began hitting the market.

But they didn't. And here's why: At $20 a barrel, roughly 62% of Saudi Arabia's oil reserves can still be sold for a profit. That means their production break-even is less than $20 per barrel.

How much of our oil reserves are above break-even at $20 a barrel? Less than 1% -- roughly .60%.

So, really, this isn't a game of chicken -- it's a race off the edge of a cliff. It's the wrong kind of contest in which to have a head-start.  And we (the U.S.) have a head-start.

Wednesday, February 10, 2016

Socialism Isn't Cool: An Obituary

Note: This is a tongue-in-cheek response to a Future Female Leaders article. You can read it here. I suggest you do it before proceeding.

Friends, we gather today to celebrate the life of a precious article: “Open Letter to Millenials: Socialism Isn’t Cool.” Despite the author’s lack of familiarity with spellcheck (Millennials), the worthwhile piece received the beloved attention of young, neo-conservative sympathizers the social-media world over. It is almost shameful that such an earnest attempt at informing the public met with such a sudden end. Let us remember the article.

The bottom of the work reads “Jennifer,” no doubt the maker’s mark, in a bold, pinkish hue. We are left to wonder why the mark of ownership excluded a surname. Whoever she is, this is for her (“Jennifer FFL Contributor”). 

The early sentences of the article’s life were filled with angst and frustration over the increasing popularity of Bernie Sanders and “capitalism bashing.” The young work bursts forth from the confines of adolescence, vowing to consider the facts. She then stumbles a bit, opening the very next sentence with “I think.” Not deterred, she rages onward. The early mistakes of her life have taught her to refer to experts in order to deliver her arguments; she borrows Glenn Reynolds’ assertion that people aren’t that poor compared to a thousand years ago. It was a bold strike, but laughably irrelevant. 

Unlike most adult-aged articles, which typically grow in their understanding and clarity with age, this one did not. The first attempts at her adult-life, where she rested on examples of the “socialist” countries of Cuba and North Korea (Communists), seemed to have suffered an Orwellian-like removal from the record. Without those linchpins, she points to a Greek income tax rate of 46 percent without ever mentioning that more than half of the population bribes tax collectors and turns their tax returns into complete works of fiction. The words are pleading with readers to understand that socialism is collapsing Greece, when in reality, bad debts that were born out of the sacred free-market is one the millstone tied to the Greek foot – EU-implemented austerity is the other. 

Realizing, in her older years, that much of her life’s work was either erased or based on misunderstood statistics, she pleads with socialists and Bernie Sanders supporters, “do you really want this? The economy would plummet and service quality would decrease dramatically according to math and statistics, which Sanders ignores.” It can be difficult to remember the lives of loved ones honestly, but let us do our best: this statement is the equivalent of saying, “I know a2+b2=c2 because of numbers and stuff.”

Her final gasps of air were spent in a desperate plea to millennials, be economically intelligent and aware. We find it almost unbearable that the one thing she asked her successors to be was the one thing she knew she had never been herself. Farewell, dear friend. 

Note to Millennials: Ignore everything from Future Female Leaders.

Sunday, February 7, 2016

Please, Don't Help Us

This is going to be the only new content for the website this week. We're doing a lot of "soul searching" at the BrainBust right now. Trying to figure out where we fit in the spectrum of political commentary is a daunting task -- it's akin to waking up in a life raft in the middle of the Atlantic and trying to decide on which direction to start paddling.

Nevertheless, paddle we must.

Christmas came early for those of you who live for political drama, as much of this year's presidential election ballyhoo started unfolding last summer. To be fair, the success of Sanders in nipping at the heals (now the heart) of Hillary and the vitriol of Trump provided a lot of headlines. Last week's results in Iowa have provided even more. The tone of this election is starting to take on one of serious importance, especially considering that the electorate may face the decision of whether or not to include a de-facto democratic-socialist party in the United States body-politic for the first time in five decades.

As political ads begin dominating local airwaves at an increasing rate, I am bracing myself for the inevitably cliche and liberal use of the idea of leadership:

"America needs [insert favorite politician here]'s proven leadership."

"[insert favorite politician here]. The leader America needs."

The United States needs capable and tenacious leadership, indeed. But where should we look for it?  Some would have you believe that the best model comes from the private sector -- moguls and magnates are often admired for their leadership skills. Others might have you believe that the military serves as a pool of some of the most tried and tested leaders -- many of the world's commanding officers have risen to (inserted themselves into) political importance throughout history. Others still might try and convince you that leaders should be found among public servants and office holders. If we could just find the best businessmen and women; the best soldiers or Marines; the brightest and most successful governors and senators; then we would be selecting from the best leaders in the country (world), right?

Not necessarily -- We might just be confusing position with leadership.

Merrill Lynch executives received millions in bonuses after nearly collapsing their own investment bank. H&M and other "fast-fashion" retailers regularly exploit weaker (poorer) foreign governments in order to provide dangerous jobs to the local populace (the carrot is almost always just big enough to hide the cliff) in order to lower the company's operating expenses. Coca-Cola and Pepsi executives sell poisonous amounts of sugar to children; they even push to get soda in schools (you just can't give 12-year-olds a choice between water and sugar).

I was in the infantry for five years. I have seen, first-hand, captains and majors that hadn't the slightest clue on how to lead suddenly thrust into leadership positions. It didn't take long for them to think they were leaders -- why else would they give me the job? More often-than-not they acted the part, the world didn't fall to pieces under their charge and they got promoted to go "lead" somewhere new.

The lowly public servants and office-holders aren't spared here, either. Are the public employees in Flint, Michigan leaders? Their position says so, but the $100 million they're gearing up to spend on an infrastructure overhaul after a failed effort to save $5 million might say otherwise (not to mention their willful endangerment of up to 100,000 people). This is just the latest big example.

Pundits and politicians often talk about America's leadership position in the world. Does our country really possess the best leaders, or just the most successful people? And is our success really, at its heart of hearts, because we're such amazing leaders? Or, combined with a touch of historical happenstance, did we exploit, connive and usurp our way to such a vaulted position?

There are no clear cut answers to these questions. But if I were the president of some tiny nation, facing the proposition of doing business with the esteemed leadership of some American company or politician, I might be reluctant to acquiesce. I might consider the countless executives that have moved American jobs overseas to take advantage of the weaker leadership of some poorer country. I might consider the fact that companies in America can write laws. I might consider the American generals that command their troops out of the trenches from the safety of the pentagon.

I might even respond to their proposition with a clear message: Please, don't help us. We don't need your "leadership."