Texicans Look On In Horror At Earth Day Debacle

Bad news on the bayou sends business into a tail spin

Black gold can make a man a fortune;
black gold can make a man a king.
Black gold is the Devil's treasure;
roused from the grave and crude is he.
- old-timey song from the awl patch

Earth Day. The news was not good.

Thinking men sat in offices sprinkled across the southwest,
the afternoon sunlight streaming through their windows, and
thought, "Now what?"

A $600 million loss, the world's record-setting ultra-
deepwater drilling rig - Transocean's Deepwater Horizon
leased to BP - sank on Earth Day in mile-deep water off
Grand Isle, Louisiana, just a little before lunch.

Suddenly, the crew got snake bit. Hundreds of thousands of
pounds per square inch of pressure driven by natural gas and
crude, brine and surface tension came to bear on casing pipe
and the Kelly.

It blew drilling mud, seawater, strings of pipe, drill
collar and drill stem out of the hole, sparked a fire that
burned out of control for a day, then twised the entire huge
structure, something as big as two football fields, off its
dynamically positioned moorings and sent her to Davy Jones's
locker.

It blew 11 men off into the Gulf. They're lost.

At an estimated rate of 336,000 gallons of sweet light
crude, in a month's time, the raw hole on the floor of the
Gulf will have spewed as many barrels of crude into the
water as the Exxon Valdez spilled when the drunk ran her up
on the reef.

Coincidence?

Who knows? Who cares?

You might say it's over the common man's head. A deep
subject, no doubt.

The bottom line is that there is no real predictability to
be obtained in divining the cost of fuel over a projected
period of two to five years, the length of most contracts
for hauling, drilling, harvesting, earth moving or anything
else old boys do for a living, thereby providing jobs,
paying taxes, contributing to their communities.

Take it away and it's agreed around here from Kilgore to
Odessa, New Orleans to Tulsa - money gets too tight to
mention, yeah.

Nor has there been any predictability attached to the
subject of what it costs to run a truck down the road since
a certain day way back in 1969 when the Islamic nations
began to nationalize oil fields overseas and conduct a low
grade and slowly intensifying campaign of terror and
retribution against the infidel.

Their doctrine: With the sword in one hand, the Koran in the
other, subdue the unfaithful, either convert them or put
them to the blade, as commanded by the Prophet. There is
but one God; his name is Allah and Mohammed is His Prophet,
saith the Muslim.

His word is his bond; he never wavers. He refers to
Americans, Israelis and any other adherent to creeds and
practices that thwart his intentions as "The Great Satan."

Ouch.

So, what happened in 1969?

The same thing that happened in 1963 when President John F.
Kennedy reversed his earlier pledge to independent oil
operators like H.L. Hunt, Sid Richardson, and Clint
Murchison to preserve, protect, defend and uphold Lyndon
Johnson's Oil Depletion Tax Allowance - the same one first
introduced way back before World War One and sweetened in
the Revenue Act of 1926. The reduction caused them to have
to cut their earnings by anywhere from 15 to 30 percent
overnight.

There was no happiness in Big D. They told JFK not to come
to Dallas on his good will mission of November 22, 1963.
Said there was no good will to be obtained there.

He didn't listen.

The powers that be in the Congress had struck down the Oil
Depletion Tax Allowance for domestic producers who
previously had been allowed to take 27.5 percent off their
gross revenue from petroleum and natural gas produced from
wells in the U.S.

The rate of allowance went to 20 percent in 1970.

Suddenly, Libyan dictator Muammar Quadaffi's oil fields and
their produce were worth a lot more money in 1969 dollars.

He stole it all back, fair and square.

What Patton and Rommel, with an assist from the British and
the Italians, had fought so hard and long to obtain or
retain, Quadaffi took with a flourish, thereby setting in
motion a slowly developing and terrible chain of events that
has led to such acts of terror as the 9/11 attacks, public
beheadings of American contractors and technicians, terror
sniping attacks on Washington, D.C., and bombings of
underground trains in London and Madrid.

Come 1974, the depletion allowance came under further attack
from President Jimmy Carter.

The result, a deeper cut to 15 percent, tightened
restrictions on downstream cost depreciation. The bottom
line: People sat in their gas guzzlers designed to burn
ethyl that retailed for less than a half-dollar a gallon,
sat there in line for hours to get a lousy $10 worth of
$1.25 a gallon gas.

That took effect in 1975, so, guess what? The Arab world
through its OPEC trade association imposed an "oil embargo"
that severely limited the amount of crude shipped to
American shores for refinement.

Refinement.

There is a severe shortage of refinement capacity. You
can't build new refineries without extensive EPA regulation
and that expensive regulation goes hand in hand with the
fact that you still have the same number of refineries to
service a nation of 300 million that you had for a nation of
200 million roughly 40 years ago on the first Earth Day.

Okay, let's say you're an oil executive. Brush some lint
off the sleeve of your bespoke tailored Savile Row suit,
settle down in your executive swivel chair and give this
some thought in your corner suite high over the city of
Dallas.

Why stick your neck out for a population whose political
leadership is essentially hostile to an industry that
supplies the motion lotion to do just about everything from
getting the kids off to school on time to hauling Santa's
bounty and the groceries, beans, bullets, band-aids and
boots to a nation of consumers.

There is plenty of cheap product available at a price
shipped FOB to the refineries of Houston, New Jersey and
California for much cheaper than you can raise American
crude above the wellhead.

As long as that situation persists, there is little hope
that the American economy will right itself and take a new
tack of energy independence, a balanced national budget,
lower taxes and a less intrusive grade of government
regulation.

The American people will continue to bear the cost of doing
business by paying huge taxes in support of the deficit
spending required to keep a couple of carrier battle groups
on station - one in the Mediterannean, the other in the
Indian Ocean - and fleets of frigates and destroyers in the
Red Sea and Persian Gulf. This is in addition to divisions
of U.S. Marines, Army troopers and squadrons of Air Force
strategic and tactical planes traveling out of western
Europe, Italy, Spain and Turkey.

Something has to give.

How about the cost of producing and refining American crude
for consumption by American families and companies and
exporting the rest to those who can afford it?

It's an idea that is gaining a foothold in conservative
political circles hour by hour, day by day. Haulers,
construction honchos, bankers and local government officials
are starting to look at one another and say, "Hey, get the
numbers crunchers in here and find out the benefits of this
thing."

Economists, statisticians, petroleum engineers and public
policy types are combing the universities and doctoral
programs looking for the econometric information that will
support or disprove the foregoing, the computer models that
have been devised to learn precisely the same.

It's a matter of survival in world gone mad and ready to go
to the brink of destruction over - what?

A gallon of diesel, a barrel of crude?

Man, it ain't nothing but a thing to an old country boy from
Texas. You just deal with it. What else can you do?

They want to present it to the Republican State Convention
at Dallas.

The Legendary will be there to watch the sparks fly. Can't
wait. I was born in Oak Cliff one hot summer's day in 1949.
My mother said the lions roared all day long at the zoo over
on Marsalis Avenue. I believe her.

It's been that kind of life.

And it's going to be a long, hot summer with lots of shoe
leather burned up on the sidewalks and asphalt of a big old
state with as much petroleum reserves as any OPEC nation.

Yeah, it's like a whole other country.

I'll buy that. How about you, fellow Texican? Man, we
stole it fair and square - way back there. Ask Andrew
Jackson and Sam Houston. They'll tell you.

Is it worth fighting for it? Damn right it is. Look how
many of them want to get an elected position running things.
Gotta be something in that.

What will the liberals say?

Oh, they'll think of something. It won't be good. It never
is. Why waste time talking to them? Let's tell the man and
woman with kids, a mortgage, a ten-year old car and a lot of
bills to pay.

Like my old buddy, the coon hunting trucking company
operator said - told me the other day, "What are the Ay-Rabs
gonna do about it? Shoot oil at us? We stop spending
money, that's all they've got over there. Can't eat the
durned stuff."

Like everyone else in business, he needs to know what fuel
is going to cost him five years down the road.

Now, that will make a mule skinner get down off his wagon
and talk to you if nothing else will.

Giddap! Hyahh!