Lower Energy Prices: How It Changes The World's Situation

Photo purchased by myself for commercial use, 2014.

Earlier this week, the price for a gallon of gasoline fell below $2.00 a gallon in some locations around the San Antonio, TX region. The price of oil closed on Friday below $67 a barrel with Natural Gas NYMEX around $4 with forecasts still predicting a free fall in the price. In a world of chaos where Russia is annexing territory, Iraq and Syria is in shambles without effective governments, the Middle East is still suffering from the Arab Spring, Iran is going to get a nuclear weapon while promising the destruction of Israel, plus the growing energy demand in Asia and across the globe; the market should be freaking out and the price should conceivably be closer to $150 a barrel than $67.

Americans will certainly not complain as this will put extra money into their back pockets and may actually give a mini-stimulus to the economy for the Christmas shopping season. Yet, these latest developments in the energy sector will have massive implications worldwide, especially in the foreign policy arena.

The energy-dependent economies need the price of oil to be much higher. Business Week claims Russia made its 2015 budget on the forecast of oil being around $100 a barrel. With sanctions hurting their economy, the Ruble losing much of its power compared to the U.S. Dollar, along with the price of oil and natural gas well below their forecast, Russia will go into a depression. Putin is the man who is known for rebounding the Russian economy and nationalizing its energy industry in response from the collapse of the Soviet Union. Now he may have to answer for the soon-to-be next depression in Russia. Yet, this also raises another interesting question, why is OPEC refusing to cut production if so many of the countries (as shown in the chart above) need oil to be much higher? Saudi Arabia needs it to be around $100 a barrel because it has been subsidizing its population to prevent the Arab Spring there to preserve the House of Saud, yet they are pushing for the same levels of production. There are two reasons for this, which the second is in response to the first reason.

1) The United States of America is now the number 1 energy superpower

2014 is a historical marker for U.S. energy. It officially surpassed Saudi Arabia as the world's largest producer in oil and earlier surpassed Russia as the world's largest producer of natural gas. Because of laws that are around 40 years old banning exports (with certain and limited exceptions); the U.S. is still way behind in selling the commodities on the international market; much to the chagrin of Europe and parts of Asia. The fracking revolution from North Dakota to Pennsylvania to Texas now has America projected to be energy self-sufficient (with Canada as a partner) by 2020. America not even at its full production potential as federal lands still have bans on drilling (as almost all of this revolution is in the private sector and on private lands) yet has crashed the price in energy. On a recent trip in South Texas with some of the best and brightest minds in the sector to visit multiple fracking sites and all stages of the operation (to the pipelines to the refineries in Houston and Louisiana area), it was clear just how beneficial this is to our economy, in fact it's almost incomprehensible. Hotels and Motels charge by the hour (at rates you'd expect to be for a day), restaurants are packed, vehicles are brand new, repair shops are all over, the only industry hurting is fast-food employees. We met with Halliburton's number one team who are breaking fracking and drilling records right here in the United States. The U.S. can control its own destiny soon in energy.

2) OPEC is freaking out and hopes to crash American energy production industry

The price of oil and natural gas right now leaves very little room for profits because in many shales, America has to drill thousands of feet in order in order to reach the resources. OPEC realizes if America stays in the energy game, it's power and control is doomed. Permit requests have been falling in the U.S. as a response to the now low prices. Saudi Arabia is hoping to take a short term loss for a long term goal of American companies pulling out of the U.S. and going elsewhere (largely back to them) for a long term gain of higher oil prices above $100 a barrel which OPEC and Russia need. It's a gamble, but this is their only move.

What Should We Do?

Believe it or not, this question is more complicated than what it may seem at first. The United States should look after its own needs and become energy sufficient. This is a massive opportunity to secure our needs and also revolutionize our own economy and perhaps be a piece to balancing the budget. The refining (we need much more LNG production, the first LNG train in the U.S. is still in production) and export opportunities to Europe and Asia can make the US a potential power player in the exporting of energy as well. Yet, we will also have to face the global consequences of our action.

1) Russia will align with China and perhaps India

For their own economic needs (particularly energy), Russia will be forced to take its energy resources and instead of mainly sending them to Europe, will make it travel east to China. This will only further the rift between the West and Russia and perhaps could bring about a global conflict along the lines of NATO vs. Russia & China. Putin will also have to escalate conflict around the globe because the only way to potentially raise fuel prices is with conflict. Ukraine now could look minor in comparison to future conflicts perhaps spanning from the Caucasus, Scandinavia, to Moldova.

2) The Middle East could collapse

If the United States no longer needs foreign fuel outside of North America, the economies of OPEC will not be able thrive causing a depression. Authoritarian regimes will collapse. Many may argue this would be a fantastic scenario, and the optimist could say democracies would take over. One should be cautious. Is Libya better off without Gadaffi? Is Iraq better off without Saddam Huessein? Both were brutal dictators that now share a special place in Hell. Yet in both scenarios, radical terrorism has taken over and created a nightmare situation. Imagine what will happen to Saudi Arabia, Qatar, and Bahrain where the U.S. has massive military interests if their regimes fall due to low energy prices. Radicals will takeover and bring a huge security threat to sovereign nations across the globe. The American homeland will thrive, yet this situation with leaders such as Putin and an expanding nationalism attitude in China could then cause a third global conflict. The powder keg was all ready in place for World War I; the spark was the assassination of Archduke Franz Ferdinand. The situation in the Mid East coupled with low energy prices could be the modern powder keg.

Is The Republican Party Becoming The Whigs?

2012: Floor of the Pennsylvania House of Representatives.
Photo taken by myself.

Since the emergence of the Tea Party in early 2009, the movement has largely been battling for political ideology within the Republican Party. Since then, it has been interesting to examine how the movement has transformed across the nation, especially within the Republican Party.

While the Establishment will never admit this, if not for the Tea Party movement and the historical wave election in 2010 (in both federal and local elections) the GOP would be in a much weaker position today.

The 2010 elections broke records for Republicans for state legislatures, local elections, and near record levels of holding 29 of the 50 state governors (expanded to 30 by 2012).

What this allowed is political "life" for the Republican party for at least ten years, until the year 2020. After the 2010 Census, all house seats must be redistricted. This process is largely held by the states and gerrymandering ran wild. Take Pennsylvania for example.

As of May, 2014, Democrats hold nearly 50% of all registered voters and outnumber Republicans by over a million voters in Pennsylvania. Yet, Pennsylvania holds safe majorities in the two tiers of the state legislator and in terms of Congressional Districts, the GOP holds a massive 13-5 advantage with only 3 or 4 seats that are competitive in a worst case scenario election year for Republicans along the lines of 2006 (Note: the GOP was actually able to gain a seat in 2012 thanks to redistricting when Democrats coat-tailed Obama statewide). This means Republicans will hold at least half of the congressional seats (9) until 2022 in a state where they are the clear minority.

This occurred across the nation after the 2010 elections. In 2012, Republicans lost by nearly 1.5 million votes in congressional district elections nationwide, yet easily and safely held the House of Representatives under the weak Speakership of John Boehner. Republicans will hold the House of Representatives until probably the year 2022.

Thus, if the GOP is not careful, the political infighting since 2010 could be catastrophic for them if it's not fixed by the 2020 elections. Recent primaries and elections show just how bad it has become. In 2013, the Republican National Committee refused to help the conservative nominee, Ken Cuccinelli, in the Virginia Gubernatorial election. If the RNC had helped, they could have won that election and given him at least a 2 point bump.

More recently this year in Mississippi, the Establishment had to recruit Democrats and launch racist campaign advertisements (that were false) against conservative candidate Chris McDaniel in order for Senator Thad Cochran to win the runoff. Essentially, the more liberal wing of the Republican party would rather have Democrats win elections than have members affiliated with the Tea Party win as a Republican. To be fair though, since 2010, it appears Tea Party candidates are only winning in more conservative states such as Texas where they crushed the Establishment in nearly all positions for the party in the 2014 primary, but the Tea Party appears to be failing in swing state elections.

The final example is what happened to Virginia in 2014 to the House Majority Leader Eric Cantor. Candidate Dave Brat ran such a cash-strapped campaign, Eric Cantor's campaign spent more money on STEAK DINNERS than the entire Brat campaign. Before this year, the "majority leader" position never lost in the primary. Brat may arguably even be the more liberal candidate over Cantor on certain issues, but party members have become so sick of the Establishment that they have the "throw the bums out" mentality. The closest poll had this primary with a 9 point advanatge for Cantor. Even Brat admitted the day before of the primary on the Glenn Beck Program that he needed a mini-miracle and that it appeared the race was finally within single digits (as only that one poll suggested). The Establishment panicked as it was rumored Cantor was going to become the next Speaker in 2015 yet failed to listen to the message. Now the fairly liberal California Representative, Kevin McCarthy, is the new Majority Leader.

The party will collapse if this infighting continues because numbers going into the future look bleak for the party. As the Hispanic population rapidly grows, if they continue to vote over 60% for the Democrat Party, it will become nearly impossible for Republicans to win another national election. George W. Bush was the best candidate in the GOP's history with Hispanics voting around 40% for him. In 2012, even if Mitt Romney somehow did way better than that number (when he actually did way worse) and captured over 50% of the Hispanic vote, he still would have lost the election.

A unified Republican party between the establishment and the more conservative wing is still going to have a hard time competing in Presidential, swing states, and border states in the years to come. A divided Republican Party can only mean one of two scenarios: The Democrats solely dominating government for the next thirty years or a legitimate third party emerging and collapsing the GOP; thus restoring the two-party system.

Both events occurred in our political history. Between 1815-1825 (although one could argue this continued until Andrew Jackson won in 1828) is known as the "Era of Good Feelings" (which is a terrible title) as it emphasizes the collapse of the Federalists, leaving only one party in charge while the eventual post-Federalist "Whigs" were just the minority.

In 1848, a small third-party was formed initially called the Free Soil Party. It was a single issue policy party that wanted the abolition of slavery. It mainly consisted of former Whig Party members but some Democrats joined as well. This new party was "so radical" and "so divisive" that one its members, Charles Sumner, was beaten within inches of his own life by the cane of another Senator on the Senate floor. Within just one decade, this "small" and "radical" party completely abolished the Whigs and the Free Soil Party renamed itself too...The Republican Party.

If the GOP is not careful, at the very least the Tea Party could form itself as a formal party and perhaps cause the collapse and relevancy of the GOP just like the party famously did to the Whigs, or it will collapse like the Federalists and become a permanent minority Whig-like party.

Republicans must do a better job at projecting their image and spread their message of empowering the individual and granting them more rights that can help everyone, not just helping the rich. They must campaign more heavily in the urban areas. They must convince and show urban voters that the historically Democratic run cities of Chicago, Philadelphia, Detroit, Los Angeles, etc. is only falling behind compared to the rest of nation in terms of education levels, violence, and standard of living. In just a few short years, Mayor Giuliani was able to completely flip New York City.

Believe me when I say that I have never met someone my age, working their first legitimate paid job, be "happy" over how much of their paycheck goes to taxes. Yet, very few even know that money they lose from their paycheck will not be there for them when they eventually retire from the workforce. If Republicans cannot spread this message and remain unified, Democrats will dominate at least the national (and most likely the statewide) political landscape for the next 30 years.

The Mysterious Case of Bowe Bergdahl

Source: AP/U.S. Army

This past week it was announced that the United States agreed to a Prisoner of War swap for America's only POW in either the Iraq or Afghanistan War, Sgt. Bower Bergdahl, in exchange for five senior Taliban leaders that were detained in Guantanamo Bay. It's great news that we were able to secure one of our captured soldiers who is actually coming to San Antonio (presumably Lackland Air Force Base in the southwestern part of the town) to begin recovering from being held captive by the enemies for approximately five years. One of our armed forces motto is "never leave a man behind" and it is clear we have never forgotten Sgt. Bowe Bergdahl.

With Bergdahl coming home, some serious questions must be answered about this entire case. The first question is what events caused Bergdahl to be captured? The first allegation is that he actually deserted his post to actually search/possibly join the Taliban. One of his last emails home was "I am ashamed to be an American. And the title of US soldier is just the lie of fools...I am sorry for everything. The horror that is America is disgusting.” After that email, apparently all he took with him as he left his base was a knife, camera, a journal, and a compass. This could very possibly be a terrible case of PTSD, however, unconfirmed reports from other soldiers who served with Bergdahl indicate something much more nefarious.

The timeline of @CodyFNfootball on twitter (who served with Bergdahl) even if only partially true is very disturbing. He is convinced Bergdahl deserted because one of his comments was he was going to go into the mountains to get to the Chinese border and all of his military equipment went missing. Prior to deployment, Cody claims Bergdahl always wanted to train with an AK-47 instead of the US military issued M-16 (or civilian version AR-15). Once they noticed Bergdahl went missing, they immediately began a search and rescue operation and local kids reported "an American crawling in bushes" as they were looking for him. Once they got to the next town, people reported an American "wanted to meet with the Taliban" and later radio traffic indicates terrorists finally picked up Bergdahl. As the rescue mission lasted for weeks, many Americans died trying to find Bergdahl as ambushes and IED attacks skyrocketed.

In one of the videos after Bergdahl's capture, he claims he got lost from his patrol and hence became a POW once the terrorists found him. This story is quite the opposite of Cody's account. Another soldier, Nathan Bradley Bethea gave his account which is very similar to Cody's timeline. An investigation must happen in order to finally determine if Bergdahl did desert his post.

What is even more disturbing is the twitter timeline of Sgt. Bergdahl's father. Bob Bergdahl made this (and later deleted) tweet:



Other tweets are just as disturbing as well such as:

@daqeqa Agree! "Democracy" is a cult in the West. I think most of afgs see law in terms of sharia not secular democracy, man centric laws
— Robert Bergdahl (@bobbergdahl) March 29, 2014

Glancing at @daqeqa's timeline clearly shows he is not a friend of the west. Now, I cannot imagine what the past five years have been for the Bergdahl family, however, these trends are clearly disturbing.

The next few questions pertain to the release of Bergdahl. Why are five senior and notorious Taliban leaders being released from Guantanamo Bay and have all ready been sent to Qatar when it was the Haqqani Network who always held Sgt. Bergdahl? While the Haqqani Network may be similar to the Taliban or Al Qaida, these are different organizations and we have Haqqani members at Guantanamo Bay.

My next questions are why was the law broken in this swap and did President Obama's recent trip to Afghanistan finalize this swap? Congress must be notified at least thirty days in advance before any detainees leave Guantanamo Bay. Congress was never notified about the "Taliban Five" being transferred to Qatar in advance for the trade to receive Bergdahl. Once again, the Obama Administration selectively chooses which laws it will follow. Negotiations should be held in secrecy instead of being open to the public, yet the law is the law and the administration could have told Congress about this deal and waited thirty days before sending these terrorists to Qatar.

My last question is as a nation, should we negotiate with terrorists? One popular misconception is America began fighting the War on Terror in the late 20th or 21st century when this statement is inaccurate. The first abroad conflict the United States was ever involved in was against Islamic terrorists known as the Barbary Wars in the early 1800s. The conflict helped build our navy and is referenced in the Marine hymn "From the halls of Montezuma to the shores of Tripoli." The United States refused to negotiate with terrorists over American merchants and that has been our policy for the past 200+ years. The reason is simple. It gives terrorist more leverage in the future. Now American soldiers and civilians abroad are potentially in more danger as their capture can be used as bargaining chips to release even more terrorists. Bergdahl's swap undermines a once firm policy by western governments.

I am glad Sgt. Bergdahl is coming home. Serious questions remain though and they must be answered. This could be a terrible case of PTSD which caused him to leave his base (and Stockholm Syndrome for his father), but it could also be a case as to where he is sympathetic toward the enemy's side of this battle. Five years is a long time and if they kept him alive, he must  have at least appeared to convince the Haqqani Network that he was sympathetic toward their viewpoints. And if that is true, the television show Homeland on Showtime just became a reality.

Healthcare Scandals: The problems are just the beginning

Healthcare is the "capstone" of President Obama's Administration, although the legacy of his policies will be history's to judge. Without some massive reforms, it may become a doomed legacy. The recent news of the VA scandal is a tragedy, but not surprising. The VA's healthcare system has always lagged behind the private healthcare market, and our veterans should be getting the best healthcare available because they risked their lives to defend this country. Veterans "with serious heart conditions, gangrene, and even brain tumors waited months for care at the Albuquerque VA hospital" (Siegel, 2014). This is unacceptable, yet its government run healthcare within the United States. 
While these issues are in the Department of Veterans Affairs, it does not mean the healthcare industry across this country is immune to the same problems.

Healthcare is an issue that is personal to me and I have taken an active role about it in the political sphere since the summer of 2007. In 1999, I was diagnosed with a rare form of cancer and experienced first hand the benefits and the flaws of the U.S. healthcare system. While there are problems, if not for us having the best healthcare in the world, I probably wouldn't be here writing this article today.

Reforms must occur in the healthcare sector, however, the Affordable Care Act is taking the country mostly down the wrong path. The "mandate" that everyone must have insurance may actually create more uninsured than before once businesses (over 50 employees) must pay the fine as well. It is much cheaper for an individual or business to simply pay the "fine" instead of the much more costly option of making sure everyone has insurance under the new guidelines. Millions of people last year received cancelation notices which violated President Obama's "if you like your plan, you can keep it" promise.

Young people are also not signing up in the numbers needed to make the Affordable Care Act work. Earlier this year, Health and Human Services reported that just 24% of all the people who signed up on a Healthcare.gov exchange (note, this does not mean each one has a policy, they just registered for an account on the website) are in the 18-34 demographic when that number needs to be closer to 40% in order for rates not to rise (Marte, 2014). The cost of premiums has also skyrocketed for young adults across the entire nation (with the exception of four states) as shown in the chart below.
 If anything, it appears the ACA was written in a way to make it nearly impossible for the private health insurance companies to succeed, eventually forcing a single payer system. In fact, this week bureaucrats are starting to create a plan (under Sections 1341-1342 of the law) to bailout the insurance companies should they report a loss (Levey, 2014; NRO, 2014). This is "legal" as long as it's managed by the Secretary of Health and Human Services. That is perhaps the scariest part of the Affordable Care Act. So much of it can literally be created "out of thin air" by executive orders or by orders via the Secretary of Health and Human Services. This is why mandates and parts of law have been changing constantly. These actions also bypass the legislative branch.

Throwing more money at the problem is not going to fix it. Last month, Oregon decided to completely shutdown its state's exchange website after being granted over $300 million for a website that never allowed residents to sign up for coverage in one sitting. The Department of Veterans Affairs is one of the largest funded agencies in our government and its costs have tripled since the year 2000. While two wars surely factor (and justify) and rise in the VA's budget, the Health and Human Services budget is now nearly doubled the budget of the Department of Defense (Edwards, 2014).

Virtually all CBO projections about the Affordable Care Act are coming up well short of the needed numbers in order for the law to have a chance of succeeding. The problems this legislation is creating is unfortunately just the beginning. Problems in the VA system have existed for a long time and our veterans are not getting the proper care they need. Unless there are massive changes or a repeal to the Affordable Care Act (with other options used such as opening up insurance options across state lines), the care our Veterans are receiving will be coming to a hospital or specialist near you and me. Hopefully we will not wish for the days and coverage that existed before the Affordable Care Act.   

Sources:
Levey, Noam N. Critics Call Obama Funding Plan for Health Insurer Losses a 'Bailout'. 21 May 2014. http://www.latimes.com/nation/la-na-insurance-bailout-20140521-story.html#page=1. 

Edwards, Chris. "Veterans Affairs in the Federal Budget." CATO Institute. 27 May 2014. Web. 27 May 2014. http://www.cato.org/blog/veterans-affairs-federal-budget. 

NRO. "Insurance-Company Bailouts." National Review Online. 14 Jan. 2014. Web. 27 May 2014. <http://www.nationalreview.com/article/368364/insurance-company-bailouts-editors.

Marte, Jonnelle. "Not Enough Young People Bought Obamacare." The Wall Street Journal. 14 Jan. 2014. Web. 27 May 2014. http://www.marketwatch.com/story/not-enough-young-people-are-buying-obamacare-2014-01-14.

Siegel, Jacob. "Exclusive: VA Scandal Hits New Hospital." The Daily Beast. 18 May 2014. Web. 27 May 2014. http://www.thedailybeast.com/articles/2014/05/18/exclusive-v-a-scandal-hits-new-hospital.html.

Vietnam: It's Time for the U.S. to Improve Relations

This month, tensions between Vietnam and China are rising due to a territorial dispute in the resource rich South China Sea. Recently, China placed an oil rig within 120 nautical miles off the coast of Vietnam. To make matters worse, China rammed a Vietnamese vessel as it was patrolling near the newly placed rig and fired their water cannons at the vessel as well (see the video below). Protests have since sparked in cities across Vietnam over the incident. Over 15 foreign owned factories were sent ablaze in response to China's oil rig.



China and Vietnam are communist governments with both of their economies recently attempting to become more capitalistic. Yet, they are not allies. It is not always the case where communist governments are allied to each other. During the Cold War, Yugoslavia was not an ally of the Soviet of the Union.

For China, it unfortunately clear as to why it is picking on its weaker neighbor. With China's recent military buildup and expansion of their Air Defense Identification Zone (ADIZ), they are now optimist about carrying a "big stick" and becoming the a regional superpower (and soon to be a world superpower) while attempting to gather resources within their realm. Other nations near the South China Sea such as the Philippines and Taiwan (along with Japan and South Korea further away) all have treaties with the United States with many regarding to defense of the nation's territory. Therefore, China can afford to become aggressive with Vietnam without any significant repercussions, and if it were to somehow go to the United Nation's Security Council, China could veto any action there.

It's been 39 years since the fall of Saigon and while the stigma remains for both countries over the Vietnam War, the United States and Vietnam can mutually benefit with an alliance. As the United States shifts focus toward Asia, Vietnam owns Cam Ranh Bay, a deep-water bay and perhaps the most strategically important port in Southeast Asia. The last major navy to use the port was Russia, which was over a decade ago. It's been nearly 20 years since the United States and Vietnam began normalizing relations since the war and then Defense Secretary Robert Gates visited Vietnam in 2010 with Leon Panetta visiting Cam Ranh Bay in the summer of 2012.

Cam Ranh Bay is the optimal place for the United States to have military forces particularly the navy, in the hopes of containing China's aggressive expansion. While Vietnamese-U.S. relations have been slowly improving, it is time to speed up the process. Each country needs to realize they can help the other both economically and militarily. If Vietnam leased Cam Ranh Bay, both sides can finally move on from the Vietnam War and in return, the United States can protect Vietnamese sovereignty.