August 06, 2008 01:21 AM UTC

McCain on Energy: Liar or Fool?

• 0 Comments
• by: Danny the Red (hair)

Liar or Fool is a question I used to ask in the investment business.  When the investment bankers would bring around the CEOs and CFOs to get money from the buy side they would try to pump us up with lofty claims, crazy business models and fudged numbers we would wonder-liar or fool.  Contrary to initial suspicion, just because the person flogging an idea is a bit foolish in their belief, doesn’t mean their deal is without merit-maybe just not as good as they believe.  With the right pricing and your own analysis you can invest with a fool.

On the other hand, a liar you can never trust, not for long anyway.

McCain is saying we can drill our way out of this energy mess.  Huh?  Does he believe this or is he lying?

The US use 20 million barrels of oil a day, or 7 billion a year.  According to the Department of Energy the US has about 22 billion in proven oil reserves.

http://www.eia.doe.gov/pub/oil…

All proven reserves can not be extracted, but assuming they could, if we could wave a magic wand and extract every proven reserve we would exhaust ALL of our proven reserves in 3 YEARS.  What does that do to our strategic position, John McCain?  Is it a good idea to be completely dependant on foreign oil in 3 years?  Do you believe we can completely restructure our society to a new energy use pattern in 3 years?  Is McCain a liar or fool?

Now before we break out in a cold sweat thinking about McCain’s drain America first plan let’s think about the logistics of drilling.  Shallow offshore rigs take a year to source, deep offshore rigs take about 3 year.  Since oil crested $60 a barrel oil service companies have been churning out rigs as fast as they can make them.  Granting new leases will do NOTHING to speed up the logistics chain.  Does McCain understand this?  Is McCain a liar or fool?

Now some will point to PROBABLE reserves, which are fundamentally different than PROVEN reserves.  Probable reserves are the domain of pink sheet stock manipulators.  According to the SEC probable reserves are not assets because they are notoriously unreliable.  Does McCain understand this?  Is he the guy being defrauded (fool) or the guy doing the fraud (liar)?

I have seen estimates as high as 60 billion barrels of Provable reserves.  Call it 70 billion.  If every stock tout, optimistic wildcatter and friend of Dick Cheney is correct, we will be out of domestic oil in 13 years.  Even the fantasy is grim.  Does McCain understand this? Where is the straight talk?  Liar or fool?

On the other hand McCain takes Obama out of context on the issue of conservation.  Look at what Time says.

But who’s really out of touch? The Bush Administration estimates that expanded offshore drilling could increase oil production by 200,000 bbl. per day by 2030. We use about 20 million bbl. per day, so that would meet about 1% of our demand two decades from now. Meanwhile, efficiency experts say that keeping tires inflated can improve gas mileage 3%, and regular maintenance can add another 4%. Many drivers already follow their advice, but if everyone did, we could immediately reduce demand several percentage points. In other words: Obama is right.

http://www.time.com/time/polit…

They say more-they basically call McCain a liar without calling him a liar, damn that media bias.

But wait there is more Andrea Mitchell (Greenspan’s wife) says, no McCain is a fool (basically).

So which is it John:  Liar or fool?