All Episodes
Previous Next
April 25, 2006 - Rush Limbaugh Program
36:08
April 25, 2006, Tuesday, Hour #1
| Copy link to current segment

Time Text
Welcome to today's edition of the Rush 24 7 podcast.
Well, thank you, uh Johnny Donovan.
Thank you uh very much.
What a pleasure it is to be back here.
I know I know you're disappointed that Rush isn't here.
I'm always disappointed when Rush isn't here when I turn it on.
At least he gave you a heads up.
He is on a long planned day off.
He's not on vacation, but this was long planned, I'm told.
And it still upsets people.
I I've read the emails.
People say, How dare you take a day off?
We need you on the front line every day.
Well, he he has a day off, and I'm here and uh and uh happy to be here as a I'm a fellow student uh here at the uh Limbaugh Institute for Advanced Conservative Studies, where there is never a final exam, but we are tested every day.
And uh as a as a fellow student, I I guess I would be uh merely a teaching assistant.
I'm a teaching assistant with one little uh caveat, one switch.
I will never go on strike.
I'm a TA that will n never go on strike, and you're right, uh H.R., I'll never get tenure.
I can be fired.
J for no reason even.
I there doesn't even have to be a reason.
They can come in and say, Paul, you're fired.
I hope they j I just hope they don't do it like Donald Trump.
That's all I hope.
That's what I hope.
Well, we have so much to talk about today.
And and obviously we're always want you to be a part of it at 1800-282-2882.
That's the direct line for fellow students here at the Limbaugh Institute for Advanced Conservative Studies.
It's one eight hundred-282-2882.
The president spoke out today.
He's the president has gone headlong into the politics of big oil.
And he had to.
He's got he's not getting re-elected.
He doesn't care about that, but he does care about his party, and he cares about how other people are going to be uh elected or re-elected.
So the president has entered the political fray.
You got frisk, you got Hastert, you got all these guys in here calling for an investigation and price fixing and uh uh the profits of the oil industry.
So we're gonna hear from the government today.
We're gonna hear from big oil.
They've taken out big full page ads with facts that they say are true that kind of build on their case, which is what you'd expect them to do with their full page ads.
The pundits will weigh in.
Ben Stein, I love Ben Stein.
I'll explain later why specifically I love Ben Stein.
There are a lot of reasons.
But uh Ben Stein has uh hit some things right on the money, I think, bullseye in some of his explanations of what's going on with the oil industry.
Plus he has a new book out that nobody has spoken with him about yet.
It's uh how successful people win using bunkhouse logic to get what you want in life.
We will welcome in Massachusetts Governor Mitt Romney.
And he has worked out a deal that included the Heritage Foundation and Senator Ted Kennedy.
Now you got the Conservative Heritage Foundation and the not conservative Ted Kennedy agreeing to what may be the groundwork for universal health care.
Now, some people are for it, some people are again it, and and that we'll hear from both sides and we'll hear people, and you too will weigh in uh on our line at 1800-282-2882, because I want to hear what you have to say.
And of course, somebody after Mitt Romney, somebody from the Heritage Foundation will explain to us how this universal health care is supposed to work.
So we've got a a nice uh list of guests coming up.
And he had to we had to talk about oil.
There's no there's just no way around it.
Let's face it.
Where you are, the headlines are the same thing.
Uh where where I am, and with with the television monitors on, it's all oil all the time.
Summer in the city fuels gas pains.
Uh USA Today was uh today it was the pain and the gain.
Gas prices soar, hit records in California, and if you don't live in California, you don't care, but you know how much it costs for you to pump your gas where you are.
Oil companies expected to report robust earnings today that will add fuel to the fire, no pun intended.
Big rage at big oil dems and Republicans demand probe, petroleum paranoia, senator calls for gasoline price fix probe.
The list goes on and on.
A U.S. population explosion increases demand for oil.
The explanations or excuses and uh are running rampant.
But what we all we all smell blood and we want blood.
And you know why?
I mean it's simple.
It's very simple.
When I'm standing there filling my car with gasoline and paying three bucks a gallon, I'm thinking of Lee Raymond.
I can't help it.
He may even deserve it.
He retired from Exxon Mobile with a four hundred million dollar retirement Package, and there's all kinds of ways it can be justified.
And it probably is justifiable.
I'm a free market kind of guy.
This guy was the overseer of an amazing turnaround at Exxon and uh phenomenal profits, thirty-six billion dollars, etc., etc., etc.
He is to be rewarded in the way our system is set up.
And boy, was he rewarded.
And I promise you, if the story hadn't just run recently that he got a $400 million in uh retirement package, he the story would not be as big as it is right now.
It's always going to be a big story.
I do think that maybe the politicians forget that we do have memories.
We don't have long memories, I understand that.
But every year at about this time when gas prices go up, there's a call for this kind of an investigation.
You know what the only difference this year is, and I'm not certain why, although there have been a lot of questions I've had about our friends on the Republican side of the aisle, they never jumped in the way they've jumped in this time.
And that's because uh while they're trying to save us at the pumps, they're trying to save themselves at the polls.
No question about it.
That's it, plain and simple.
Otherwise, you wouldn't see Republicans acting like Democrats.
It's a part of the Democratic playbook to do this sort of thing.
But we're a little bit surprised that the Republicans are doing it, and a lot surprised, frankly, that this president is doing it, because he hasn't generally played in to this sort of thing.
But I guess when Frist and Hastert and others in his party come to him and say, You gotta look into this stuff, the president says, I do have to look into this stuff.
You're right.
I have to look in to see if there's uh price fixing.
I have to see if if they're doing something uh that they should not do.
That is the government's responsibility.
He also went on to say, of course, today that it is all of our responsibilities uh to uh to uh get off our dependency on oil.
We've talked about that for so long.
Back in the failed uh practices of Jimmy Carter where we then had shortages.
Do you remember sitting in line to buy gas or having uh to do it every other day, or I can't even remember what it was.
It was some kind of a uh what was it uh uh odd even uh with our license plate or with yeah, uh odd even, I guess, with our license plate, thanks, Mamon.
Uh uh I it that was ridiculous.
But that again was when a president stepped up and got involved in price fixing uh of the of the worst kind.
So there's a lot to talk about, and I know you're angry, and I don't blame you, but I don't know that the answer is to go after uh our energy security, because that is one thing that we do have, uh, and we'd like to continue it.
And there are people who point out all kinds of things.
You know, you you might want to ask the uh the the political people making hay in your backyard on this oil issue.
Why don't they go after something that they really can control?
Because unless they're doing something illegal in the oil business, there's not a lot government can or should do to control prices.
On the other hand, if they're doing something illegal, then they should throw the book at them, you know, as hard as they throw the book at, say, illegal immigrants.
But anyway, uh the fact of the matter is.
You work thirty days to fill your tank, and a hundred and sixteen days to pay your taxes.
Tomorrow, tomorrow is tax freedom day.
Two days later than last year, two days more that you have worked full time for the government.
Full time to pay your taxes, one hundred and sixteen days to pay your taxes, thirty days to fill your tank.
Your representative can do something about the letter, the 116 days to pay your taxes.
There's not a heck of a lot they can do, but say they're on your side and feel your pain on the gas issue.
But be that as it may, we'll uh get headlong into that with a representative of the government, the uh president's National Economic Council head Al Hubbard is going to be here with us in just a moment.
Uh we will then uh talk with John Felmy, chief economist, director of the American Petroleum Institute.
We'll get their side of the story, the big oil side of the story, uh, and then various pundits and uh phone calls like your own.
Uh and Ben Stein, who I think we're just gonna love.
I've never talked to Ben Stein before.
I've always read his work and enjoyed it very much.
I what was his uh Ben Stein's money?
He had a television show I saw a couple of Win Ben Stein's Money.
It was a it was a funny show, it was a great show, and that's when I realized how brilliant he was watching that and reading some of his work, and I think you'll enjoy his take on this.
He may even talk about McCarthy, you know, the the the leaker.
I'm not sure he you know because uh Deep Throat's out there again he wrote a uh uh a very uh cutting wonderful piece on Deep Throat a year or two ago.
Maybe we'll we'll dig that up too and share that but uh and we'll talk about his new book as I mentioned and the Massachusetts Governor Mitt Romney with his universal health care uh that some people are totally against Wall Street Journal hates it.
They just have written time and time again uh uh about it uh in a negative way on the other hand he did get the Heritage Foundation and Ted Kennedy together to get this thing worked out.
Now last time I was here well by the way uh and I think we can HR I think we can do this.
I think uh HR on the elevator coming up just now and he said you know I don't know how reliable elevator news is I'd say about same as CNN the same on the same level riding up in the elevator.
You know in New York they because everybody's so fidgety and and they got to sell advertising on everything in elevators there are television screens with sometimes cartoons if they haven't had a very successful sales month or commercials or news or whatever.
On the elevator you know how we when you get in an elevator you're you're kind of afraid to look at anybody well in New York it's really true.
You look down at your feet or you look up.
Well now when you look up there's actually a television monitor and on the television monitor, HR said it it just reported this just in to the elevator that consumer confidence is at a four year high how can that be consumer confidence is at a four year high.
You can trust it, you can believe it, it was just on the elevator.
I think this would be as good a time as any to say I'm Paul W. Smith in for Rush Limbaugh.
As we continue here on the Rush Limbaugh show 1 eight hundred two A two two eight eighty two one eight hundred two eight two two eight eighty two I'm Paul W. Smith in for Rush Rush with the day off he'll be back in the chair tomorrow as uh scheduled.
We have Al Hubbard online head of the President's National Economic Council.
Mr. Hubbard welcome to the program.
Delighted to be with you Paul thanks for the kind invitation.
Uh we have uh just a few questions and and want you to uh maybe uh help us understand a couple of things.
You know i when the oil prices touched on about seventy seventy one dollars seventy dollars and eighty five cents according to Kevin Hall who kept better record than I last August uh many experts thought that such high prices if sustained would toss the U.S. economy into a recession where it's seventy five dollars a barrel.
I haven't heard a word about recession and uh and you're not going to understand what I'm talking about, but I hope our listeners do.
By the elevator news, in fact, we're at a four year high in consumer confidence as well.
What's going on here?
This economy is very, very strong.
That's what's going on, and the American people are understanding that.
And there's no question we're all concerned about high gasoline prices and high fuel prices, and we're particularly concerned because of the impact it has on lower-income people and small businesses because they haven't budgeted for this.
But the good news is our economy is very resilient, it's very flexible, and it's been able to absorb these high energy prices and continue to grow quite handsomely.
In fact, most economists are projecting first-quarter growth this year will be north of 4%, maybe as high as 5%.
We believe that we will grow in the low threes this year, which means we'll be creating more jobs and job entrants, so that low 4.7% unemployment rate will continue to drift down.
The bottom line is this economy is remarkably strong, and it's not because of the government.
It's because the government has left more money in the hands of the people.
the American people are very entrepreneurial, they're very hard working and the result is this strong economy.
What would you like us to uh take from the president's speech just a few minutes ago in fact uh y you you've gone over this this is some of this stuff has been a repeat of what he said last week what's the most important thing we as Americans should take with what the president had to say he went into uh uh growing America's energy security uh getting off the dependency on oil uh he did mention what you just did the economy is growing and the entrepreneurial spirit is strong and and the economy's growing very fast.
Uh he called for the the tax cuts to be permanent.
There were a lot of things.
Uh would do you expect uh any kind of a pushback on the uh on waiving the EPA regulations to relieve the fuel shortages.
What are the most important notes you want us to take from what the president had to say.
Well I think that the the the the two things that I think are most important when it comes to energy right now is obviously the President's very concerned about high energy prices and high gasoline prices.
And uh I think you can tell based on his speech today that you know he's committed to doing everything he can to to mitigate to minimize uh uh the impact of the the high fuel prices and uh but he's also very candid in and and making it clear that you know it took us a long time to get into this situation.
Uh we've known that we were becoming too dependent on on foreign sources of fuel.
Uh and unfortunately, you know, we we haven't done what we should have done.
I mean, ten years ago we should have passed uh Anwar, and then we would be producing from Anwar today, and that would represent a million barrels a day of of of oil.
Uh and there are uh a number of other things we should have done.
Uh but at the same time uh uh the the President wants to make those those com those investments today that are gonna pay off to you know, not you know, we're not gonna get an immediate relief, but in the long run, we're gonna sever our addiction to oil, we're gonna achieve energy independence.
And in the meantime, he's gonna make certain that the oil companies are not gouging or taking advantage, uh unfair advantage of the American consumer.
That's why he's directed the uh uh chairman of the uh Federal Trade Commission and the uh attorney general to be the uh ever vigilant in making certain that there's uh no illegal activity, no collusion, no monopolistic pricing action.
Just a quick note here.
This is this has been called for before by people running for office, hasn't been called for by the president of the United States in a long while.
Uh it seems to me that when these investigations have happened on a state by state or even local basis, there's been very little of that price gouging, price fixing.
Well, that's right.
This I mean the economists will tell you that that the oil industry is a very, very competitive industry.
At the at the same time, we want to make certain that there are no markets where uh uh companies are are taking advantage of of you know uh uh a short supply situation and and behaving illegally, either colluding with their uh uh uh other competitors or uh using monopolistic pricing power.
Uh we want to ensure that the the free market is in fact working.
Uh but you know, s and by the way, the you know, the president's calling on the attorney general, calling on on on the chairman of the of the FTC who are in turn asking the attorney generals of the states to again to to do the same thing to make certain there's no price gouging going on.
Uh but this is something that is ongoing.
Uh the the the uh chairman of the trade com Federal Trade Commission has a study that's been going on that she's gonna be reporting in the next several weeks.
So uh uh, you know, fortunately we haven't discovered any colluding activity going on, but we will remain ever vigilant to make sure that that that there's none going on.
Before we let you go, uh uh the president did say there are too many localized fuel blends, boutique fuels.
Is that something he can snap his fingers and do away with?
And also he said that we haven't had a new refinery built on our soil in like thirty years.
Can he also snap his fingers, get rid of the the tough regulations and all the stuff that uh the the companies have to go through to open a refinery?
Unfortunately he can't snap his fingers and do either.
You know, our system is is uh requires that Congress pass legislation and and the president called on Congress to make it possible to for for refineries to to get their permitting within a year.
Uh because you know, we need our refineries to expand.
We we have uh uh a shortage of refinery capacity and we we need them to expand and we'd love to see new refineries being built.
And the good news is that there's actually a million and a half uh barrels of oil on the drawing board of new refinery capacity.
With respect to boutique fuels, that is very inefficient.
The President has asked uh administrator Johnson to call the governors together to work on uh reducing the number of boutique fuels, so uh, you know, it it will be a much more efficient way of delivering the uh our our gasoline and and the result will be a lower price.
But uh again, that can't happen without the involvement of Congress, without the involvement of the states, but the President is gonna is showing his leadership to make that happen.
Mr. Hybert, thank you for joining us.
Thank you, sir.
Do appreciate it very much, sir.
Al Hubbard is the head of the President's National Economic Council now under great security.
And uh probably from a secret location.
In this next half hour, besides taking your phone calls, we will hear from John Filmy, chief economist and director of the American Petroleum Institute.
That's right.
We will actually speak to someone from big oil.
The bad guys in this whole story.
As I say, under great security.
And I don't even know.
HR, do you even know where he is?
Complete secrecy.
He's he's not he's not on the elevator, is he?
Getting all of his news from the elevator.
I'm told that that, by the way, is the Captivate Network, which pretty much says it all.
Though it does remind me of a good book called Captivating, but that's another story.
And we'll continue other stories here on the Rush Limbaugh program.
I'm Paul W. Smith.
Thanks, Johnny Donovan, and uh we're gonna get to uh some of your calls.
You've been kindly standing by.
I appreciate that.
You know the number, it's one eight hundred two eight two two eight eight two one eight hundred two eight two eight eight two, the Rush Limbaugh program.
And uh and we went from uh Al Hubbard, uh the President's spokesperson, if you will, to now John Felmy, uh Chief Economist and Director of the American Petroleum Institute Statistics Department.
Uh and uh John, welcome to the program.
To some you may be considered the enemy.
Uh it's an emotional issue when you stand at the pump and you pay that kind of money for gasoline that you have to to pay.
And uh and then you think of uh the Exxon Chairman, Lee Raymond retiring, four hundred million dollar retirement package.
Uh whether he deserved it or not doesn't matter.
It's an emotional issue, and people, as you know, are are angry, and it's become very politicized, and so we wanted to get your side of the story.
You have full page ads out in many newspapers around the country.
That generally means either A, you're really in trouble, B, you you believe that your true story isn't getting told, which probably is is closer to the reality here, and that you have some things that you want to say to uh at least mitigate some of the the anger and feelings.
And some of our listeners will probably be angry.
I would suspect many more of them are in a uh in a sense on your side.
Good uh it good to have you with us, uh John, with that lengthy introduction.
Well, thank you very much.
I very much appreciate coming on, and I want to thank you all because uh because of uh the Limbaugh show, you've probably extended my life sum because you lower my blood pressure.
So I appreciate it and honor an honor to be here.
Uh you're right, I mean it is an emotional issue, and the fundamental problem we face is one of a lack of information.
Most consumers, well, everybody in the world knows the price of gasoline.
But nobody knows what goes into the price of gasoline.
You know, nobody knows that, you know, crude oil was seventy-five dollars a barrel on Friday, and that works out to a dollar seventy-nine a gallon almost.
And they pay taxes nationwide average of forty six cents, eighteen federal and the rest state.
And uh they have no idea that we've changed the fuel this year because of environmental regulations to lower the sulfur content and to change from MTBE, which is an additive to ethanol because of state bans and a variety of uh of challenges we face, and so they don't know all these things happening, and so it it gives an opportunities to politicians to try to exploit that uh lack of understanding, and they surely have.
Well, they certainly have, and it's easy.
It's uh y what's what's different this time around is there are as many uh seemingly as many Republicans as Democrats that are uh quote unquote exploiting this, and that's gotta be a little annoying and a little frustrating because you need somebody out there to uh at least see your side of the story.
Uh uh earlier uh I had mentioned uh on my morning program that uh one of your ads was very helpful in that you were showing how many cents per dollar of sales you actually get, uh, where banks are getting seventeen point seven cents of every dollar or pharmaceuticals sixteen point seven cents.
You guys uh uh at least in this ad, oil and natural gas, about five point nine cents.
That's correct.
That's the five year average.
Now it improved last year.
We did have uh a higher rate that it was about eight and a half, but it was still below uh these other industries.
And it um, you know, we think is a is a fair rate of return, but uh you've got to s accurately state it because we've we've uh you know heard that uh a lot of consumers, you know, half of them probably think that we make thirty percent profit rate, and then even more uh think that that it's as much as eighty percent.
So we're just trying to set the record straight in terms of what the facts are versus the rhetoric.
Well, another uh fact, for example, uh is uh that uh the oil companies have paid more than two point two trillion dollars in taxes over the past twenty five years, that's adjusted for inflation, uh and that's more than three times what the oil companies have earned in profits during the same period, which is uh again I say if you work thirty days to fill your tank and a hundred and sixteen days to pay your taxes, uh and since politicians can do very little about the commodities market because it's not controlled by the United States anymore.
It's controlled all over the world.
We ought to be holding our politicians to the uh their feet to the fire to do something about something they can do something about, which are the taxes.
I think uh we certainly need to uh work with uh the Congress, we need to uh you know, instead of just pointing fingers the way it's been happening for years, of course, but let's really address what will help consumers.
And uh, you know, you've you've heard all these calls for investigations, and of course, uh, you know, it's it's the duty of politicians to look out for their constituents.
But we've been investigated dozens of times, been exonerated every time, but every time somebody calls for a uh you know an investigation, it's a stain on the industry for no good reason.
If we go ahead.
If all of this, if I'm to to accept everything you've said, and I am accepting everything you've said so far, uh uh it does still bring up the question that people uh throw at me, and that is well that being said, okay, they don't make a lot more on each dollar, in fact they make much less than many other industries, and their profits are uh are not up as high as many other industries, etcetera, etc.
How come their profits are so high uh if you're not making that much more on every gallon of gasoline sold?
Why why do why does Exxon make thirty-six billion dollars in such a good year?
There's several reasons.
First of all, the companies have increased their earnings because of mergers.
Uh they've been able to merge like Exxon Mobil was two companies and dramatically cut their costs.
But they the people the average person believes they did that to cut our availability of gas from other people and to to cut competition, which is what has driven prices up, they think.
And and that's what our industry opponents will regularly charge, but it simply is not true.
I mean, if just because you have fewer competitors does not mean you don't have as fierce a competition.
After all, the most concentrated industry on earth is microprocessors, and they're probably the most competitive where you just have Intel and advanced microdices and they try to rip each other's uh throats out over competition.
So there's plenty of competition, but what we do need is scale for these size of companies uh to be able to, you know, span the globe, find oil in two f two miles of water off Nigeria, ship it, refine it, and market to consumers, and you need to have scale to be cost effective to do that.
Uh we've also had, of course, record or near record sales, you know, as demand increases, uh, you know, sales go up, and so if you have record sales, uh if you manage your business properly, your earnings can go up.
Uh and you know, finally, if you were fortunate enough here in this country to be producing oil and gas, which is about a third of what we consume, then you actually did much better last year because of the high prices.
So it's a combination of all those factors, and yes, uh, margins for some refiners did go up, uh some, but uh there's still uh, you know, the average refiner is still not a very profitable business.
So it's all these factors come together for the earnings.
Let's go to uh our callers now.
John Felman is with us, and uh we're uh taking your call at 1800, 282-2882, the Rush Limbaugh Show.
I'm Paul W. Smith in for Rush.
And Dan is in Wooster Mass and checking in.
Hello, Dan.
Hi, Paul.
Hey, I'm pretty angry about the situation, but I'm not angry at the Exxons of the World or any other companies.
I'm at our conservative leadership uh in Congress and the Senate.
And it's for two.
Wait a minute, wait a minute.
What conservative leadership in the Congress and Senate?
That's a great question, but we really don't have time.
I don't think they go down that.
But as you were saying, Dan.
Okay.
Two things.
Number one is that you know, we we're not doing anything to blow open doors to to new resources uh of oil.
Not just the ANWAR, but there's a competing theory of oil that says it's not the product of fossil fuels, but it's a byproduct of the crust.
And that oil fields will actually fill up again.
So we're not drilling new sources.
And the conservatives really should be pushing for this.
If you want an investigation, find out why we're Pit bulllocked on the fossil fuel theory.
The second thing is if we're not going to do anything about new oil supplies, then what we need to do is set a strategic national or national strategic initiative to say in ten years we will be off ninety percent of our dependency and offer tax credits,
significant tax credits to get uh the infrastructure in place for for fuel cell, uh get rid of some of the get rid of the ridiculous regulations on natural gas so that we have an alternative fuel in house.
We've got self-combusting Muslims around the world and Chinese that are driving up the price of this stuff.
Neither one of them are our buddies.
So what we need to do is put ourselves in a position to flip the bird to the rest of the world and say we can take care of ourselves.
All right, uh Dan, uh let's find out what John Felmy has to say about that.
John?
Well, you know, the the I guess um uh theory of of oil is one that of course is uh is uh debated intensely uh and unfortunately we lost the uh chief debater of the uh viewpoint that Dan is talking about, and that was Thomas Gold, um, where he said that you know it is the chemical processes within the earth that cause continual generation of oil, and it is not uh a fossil fuel in that sense.
And so uh, you know, it's it's very interesting.
I mean, they found oil where there's no reason to believe it was fossil oriented, uh so I remain open to more convincing on it.
I think I probably come down more on it.
You know, it's it is interesting.
What about I'm sorry, go ahead.
Well, in terms of dependency, I mean there's no question that you could make major investments uh that uh could improve efficiency, could get other fuels coming in, and we strongly support that.
You know, the the what this what's called the cellulosic ethanol um uh approach, as the president has touted repeatedly, really is in a sense a kind of a holy grail, because if we can turn waste into fuel, uh that that is really very, very good.
And but we've got a lot of technological challenges to go through to make it commercial.
We can do it now, but it's very, very expensive.
Before we uh take a break, let's go to Livonia, Michigan, my backyard, and Paul is here on the Rush Limbaugh Show.
Hello, Paul.
Hi, Paul W. Hi.
My question is, how are speculators setting the price on the commodities market?
Could it be just like one group, renegade group, just bidding up the price that's making the...
You've got a lot of financial speculation in oil contracts.
That has to add to the price volatility.
Well, it can in the short run.
I mean, you have the NYMEX as the main exchange on which prices are determined.
You've got buyers and sellers of all different types there.
You know, things from like refiners buying oil to producers selling oil to banks to all manner of financial intermediaries such as these hedge funds that they've talked about.
They can move the price one way or another depending on perceptions of the markets and so on for a short period of time.
But, you know, in the case of a lot of these financial uh participants, they don't take delivery of oil.
So if they buy it and drive up price, eventually they've got to sell, and the question is then what happens with price that way.
So uh it is possible there may be some volatility.
The uh New York Mercantile Exchange and the Commodities Futures Trading Commission, which regulates the NIMEX, uh, however, indicates that they don't feel it is their these funds are causing this, that it's more important that they're adding liquidity to the market, which of course can lower volatility.
Uh that's in some studies they've done.
So I'd say suffice to say, there's a lot of allegations, but uh I think we need more study to really get a sense of what really is going on.
Back to your calls with John Felmy, chief economist for the American Petroleum Institute at 1800-282-2882.
On the Rush Limbaugh Show, I'm Paul W. Smith.
The Rush Limbaugh Show, Paul W. In for Rush, and uh very quickly with uh John Felmy so we can get some quick callers in.
Uh I'm gonna ask a quick question, you give me a quick answer because people always say this to me.
Hey, how come when I go to the gas station and oil just j went up to 75 dollars a barrel, they raise their price on the pump when we all know they didn't pay that price for the gas that's already in the ground at their gas station?
How come that price goes up so quickly when that gas in the ground didn't cost them that amount?
The simple answer is what the the convenience store folks have said, and they and it's called replacement cost.
These guys tend to be small businessmen who have limited cash flow, and what happens is they look around and see the prices going up.
Uh, and if they don't charge what uh the market price is, uh no matter what's in in their tanks, uh they may not have the cash to buy the next uh tank car.
And then uh Chris in San Antonio has a follow-up question very similar, and I want you to be able to ask it.
Chris, welcome to the Rush Limbaugh Show.
How are y'all doing?
Good.
Uh what part of my question is is uh how come it comes down so slow?
If it jumps up a dollar a barrel today, it'll raise up ten cents tomorrow.
But if it drops the day after five dollars a barrel, how come it takes it it comes down like every penny every couple of days?
It's not near as fast.
And uh sometimes that happens, sometimes it doesn't.
Um a couple things.
First of all, consumers uh even if it came down perfectly, consumer uh perfectly symmetrically, consumers generally don't notice it.
They have a visceral reaction to the prices going up and and not coming down.
Also, there has been some uh economic study that uh indicates that to the extent it does for those events, um, it could be because the consumers don't discipline the marketplace as much as they do on the way down as as on the way up.
So, for example, they see the prices down and they don't uh search out as much.
So they don't enforce a kind of a discipline uh on it.
And that's a theory from an economist uh at a university here.
So it's a whole range of things.
But the other thing is if prices went up because crude went up, then you have to look at what happened to crude.
So you've got to have those relationships uh put together.
Thanks for the call, Chris.
Let's go to Steve and Fort Myers Flora.
Steve, welcome in.
Your question or comment for John Filmy.
Well, hey, John, I just have a quick question.
How are you doing today?
Um good.
Good.
Um as far as your RD, uh, your research and development, are you spending money on uh alternative fuels or energy resources other than oil?
Yes, we are.
Uh the of course the bulk of what we're spending our RD on is in what we call frontier fuels, uh things like shale oils and heavy oils, where there's a vast amount of oil that we can bring to bear, you know, a trillion barrels of shale oil.
But we're also spending on things like cellulosic ethanol I mentioned.
We're spending on RD for uh energy efficient technology breakthroughs, uh we're spending on wind, solar, geothermal, uh, you know, and and methane hydrates, which are an enormous potential source of energy.
So we're spending on all of these, but of course, you know, we got to keep the fuel flowing to consumers, so we're spending more there.
A lot of talk about coal, and coal is in abundance in these United States, and different theories have come around over the years of how coal could be used again as a primary fuel.
What do you say about that, John?
Well, coal can of course be used as a primary fuel uh for power generation.
It's fifty-three percent of our source of of electricity.
Uh but you can also liquefy it.
You know, that's what uh the Nazis.
The Nazis does.
That keeps getting brought up lately.
And it it keeps improving in terms of the technology and the cost.
And so uh the Department of Energy, for example, has a fairly large amount of projected uh coal to liquids uh uh source of energy uh over the next twenty years.
So it's growing in terms of um you know its its potential use and its uh use as a as an automobile fuel.
Is uh uh all the people investigating now uh your industry, are they going to find price gouging?
Well, I can't speak for the 169,000 gasoline stations around the country, but most of those are businessmen who are really just reacting to the markets and and what they pay for gasoline.
So uh we've seen a handful of cases post-Catrina and Rita.
Uh you know, I can't foresee what what actually will happen.
But the key thing is the industry's been investigated dozens of times, and uh, you know, we've been exonerated every time, and uh, you know, we'll just have to see.
The one thing about this investigation at the president has gone for, though, is that because it is with fifty states attorney general, I mean, this appears to be a a massive investigation.
So uh the cost implications for both the government and industry are uh potentially very large.
John Felmy, thanks for being with us.
We appreciate it.
My pleasure and megadiddos.
Uh John Felmy, Chief Economist Director of the American Petroleum Institute.
As we continue on the Rush Limbaugh Show, I'm Paul W. Smith.
I have always liked Ben Stein.
Uh, you see him talking about finance on Fox TV news every week.
Uh he had uh Ben Stein's money spending his money he writes for Barron's Wall Street Journal.
He has uh captured my attention on his take on what an oil company is anyway, and uh celebrate one of his great teachers, C. Lowell Harris.
▲
Export Selection