Quote of the Day: US Energy Policy

"This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks."

Thomas Friedman


Dumb as We Wanna Be
NYT,  April 30, 2008

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  1. VennData commented on May 26

    … so the Saudi’s can invest in Chinese companies.

    This is how a lot like that game they made us play when I was a kid in my school’s anti-drug program, the ‘drug dealer’ game. They should update it, call it the “Cheney’s Energy Tribunals” game.

  2. DownSouth commented on May 26

    The swashbuckling Boone Pickens said pretty much the same thing the other day (I believe the link to his interview was posted here on Big Picture). He’s really very much like a modern day Rhett Butler. The majority clings to its past glory and its pollyanish beliefs, but he seizes upon reality. And while the United States (and the South) may fall, he nevertheless, in the most mercenary of ways, secures his fortune.

    Daniel Yankelovich has observed, from the experiences gained through a lifetime dedicated to polling and consciousness raising, that it is “clear that a minority among us is capable of foresight. What is surprising is that the majority do not seem to be. Rarely do we act on potential threats. Unless disaster strikes, we seem incapable of farsighted preventive action…”

    You have to admire a guy like Pickens. While the majority diddles its time away on useless schemes in an effort to preserve a way of life that is unsustainable, he mercilessly takes their money away and uses it to build wind farms.

  3. larster commented on May 26

    Conservation programs are not the solution but they are the only way to impact consumption immediately, while we hash out an energy policy. Not only are we having virtually no debate on a comprehensive energy policy, there are no moves being made towards using less oil. I guess we expect so little of Bush/Cheney that this is not an issue, but it borders on the criminal. Can’t the gov mandate a reduction in gov spending on energy- i.e van pools, less trtavel, etc? When the only overt action is begging the Saudi’s, you know we are lost in the wilderness.

  4. Chief Tomahawk commented on May 26

    And who’s taking their cut via the futures market? I’ve heard commentary the rise since $80 is all speculation and not fundamental demand.

  5. HarDHar commented on May 26

    Why does everyone say we “depend” on the Saudi’s when we only get a fraction of our total imports from them?

    Nevertheless, the mechanism as I understand it, the money we “send” to the Saudi’s never leaves New York so the BANKSTERS are, yet again, the culprits behind idiot policies because it benefits them.

    Smedley Butler was right.

  6. constantnormal commented on May 26

    Interesting that while Friedman’s rant runs as “opinion” on the op-ed pages, Ben Stein’s runs in the business section.

    Aside from Stein’s refusal to accept that we need to wean ourselves from oil (he apparently believes the Big Oil party line that we must remain dependent on oil/coal as our mainline energy source for as far as the eye can see, we only need to find more), the two are really sending pretty much identical messages.

  7. esb commented on May 26

    Not to mention the Bush family cut(s) from its “special relationship” with our “good friends” the Saudis.


    I still say our army should have turned left rather than right in March, 2003.

  8. kstoaks commented on May 26

    Reminds me of the Foreign Aid racket. They’re supposed to spend a substantial portion of the aid with American companies, so of course, they buy guns, knives and bombs, and pretend their social order will now improve. We should know better by now, but we need the Exports.

    Why must an occasionally criminal enterprise (such as modern banking) injure the masses before anyone accepts they’ve been a willing abetter of a rackeering outfit for the last couple of decades?

    Simple. We’re busy as hell. You know, doing three jobs (like Barry) because its impossibly expensive for employers to do otherwise.

    Less cynically, we’re busy fighting the TiVo, Wii, and Internet for 15 minutes of fame with our kids, keeping the lawn from becoming a wildlife preserve, washing the car, and fixing the dripping faucets, and discerning which talking head is talking nonsense.

    For those of us for which finance is not a career, we also have to spend time reading blogs — comments and all, to find out what sort of craziness we’ll have to flee next to avoid living the sort of lifestyle that involves mud huts.

    Tipping sacred cows is something we must depend on the BRs (and Friedman’s) of this world to help us with, or we’d never get ANYTHING done.

    And now, it seems, no one is minding the store, so we’re going to have to add THAT to our ToDo List, too. Its no wonder that we let some things go.


  9. ken commented on May 26

    Using coal and nuclear for electrical generation will free up enough gas and oil to allow for continued automobile usage at reasonable prices by the people dependent upon it.

    Futher saving can be made by improved mass transit in cities like Los Angeles, Houston, Phoenix, etc. Build the subways, trams and other fixed rail infrastructure and the populations will follow along with development.

    And finally the internet. Why drive to an office if your an attorney or accountant or salesman? These and many other jobs can be done right out of the home without driving anywhere.

    It will take a while for the adaptions to take place but the future remains bright for generations to come. We live in a global economy and the right way to look at it is to see that Saudia Arabian oil is no more foreign oil, to someone in Ohio, than is Texan oil.

  10. BobC commented on May 26

    LOL. Great quote. But I believe Canada is our largest oil importer. So maybe we should invade Canada?

    I am guilty of speculating on commodities, but not oil. It’s out of control. It feels like a massive bubble to me. But I suppose it may go way up before it pops.

    I know. I should invest everything I have in USO. That will surely pop the bubble. Us little guys always buy at the top, right?

  11. Bob A commented on May 26

    …and remember. we all have a god given right to drive around in an 8 mpg vehicle.
    till death do us part.

  12. Tom B commented on May 26

    “I still say our army should have turned left rather than right in March, 2003.”

    For sure. Iraq was secular when we invaded; SA was (and is) run by wahabi kooks.

  13. DonKei commented on May 26

    Freidman’s analysis is dead on, but he misses when complaining that we don’t have an energy policy, we do: Make the dollar worthless so oil will be unaffordable.

    It seems to be working.

  14. wtf commented on May 26

    Normally I love reading this guy…


    But his rant about ‘the greenies’ on this topic are inane. [2nd half of the post]

    While tickled with some 1/2 truths its like blaming your parents for grounded you after coming home drunk way past curfew. If only they would let me stay out partying all night long then I wouldn’t be in this mess…

  15. engineer al commented on May 26

    Once, we were a nation run by business people and engineers. Military people. Railroaders. Farmers. Seamen. Manufacturers. People who did things for a living and left the world a better place than they found it.

    Today, we’re run by economists like Friedman (Tom or Milt). Friedman has an opinion on everything. From politics to war to global trade to healthcare to social engineering.

    This is a mess you made, Tom. “The next six months” will prove critical in determining the outcome.

  16. ECONOMISTA NON GRATA commented on May 26


    A couple of funny headlines from The Onion……. ;-)

    Regarding inflation……

    ‘Wheel Of Fortune’ Contestants Hit Hard As Vowel Prices Skyrocket

    and regarding wealth disparity…….

    Nation’s Poorest 1% Now Controls Two-Thirds Of U.S. Soda Can Wealth

    Best regards,


  17. RobT commented on May 26

    Friedman and Stein are misinformed and headed for a huge shock. The world is about to get a lot rounder and worrying about supply is not the issue. We need to cut consumption and the US needs to deal with reality on a grand scale.
    Read Kunstler’s Monday morning logic.

  18. RobT commented on May 26

    Well Denninger is an idiot to think he is an expert on everything. It is quite dangerous how many people are drinking the kool-aid over at his cult forum.

  19. bsneath commented on May 26

    Real interest rates below zero. Not much else to invest in. Speculate in commodities. The next bubble.

  20. flubber commented on May 26

    Hey, I’m got bearish inclinations too, but Tom Friedman?


    Gotta be kidding me. There are few dumber people in the MSM op-ed real estate.

  21. freejack commented on May 26

    Is the ‘we’ who ‘borrow money from China’ (and will one day have to pay China back) the same ‘we’ who ‘ship it to Saudi Arabia’?

    Are those ‘we’ the same as the group of individuals who ‘take a little cut for ourselves’?

    And are the ‘we’ and ‘ourselves’ the ones who also get to see ‘it goes through our gas tanks’ (equally) or do gas tanks belong to a different bunch of people?

    Little Tommy Friedman, life is simple to a simpleton.

  22. Stuart commented on May 26

    Right, the masters have given their subjects the nod of approval. Epitome of arrogance.. nod this!

    “Merrill sees U.S. giving nod for Gulf FX change
    Sunday, May 25, 2008; 9:27 AM

    DUBAI (Reuters) – Merrill Lynch & Co said the United States has effectively given Gulf Arab oil producers the go ahead for making changes to their dollar-pegged foreign exchange policies, by recognizing inflation as a problem.

    In a report entitled “U.S. Green Light for the GCC,” the U.S. investment bank said the United Arab Emirates and Qatar will probably move to a currency basket in the next few months, with their respective currencies appreciating 5 percent before the end of the year.

    Saudi Arabia is unlikely to follow until late next year, Merrill said in the report received on Sunday.

    Citing a U.S. Treasury report to Congress that for the first time mentioned currency and inflation issues in the six-member Gulf Cooperation Council, Merrill said the United States government had become more confident about the outlook for the dollar and therefore did not necessarily need Gulf support for its currency.

    “We believe the inclusion effectively gives the GCC countries the green light for change,” the bank said.”

  23. MarkD commented on May 26

    A little OT, but does anyone know what the actual spot price of oil is? Not the futures price that CNBC puts on the ticker, but what a refiner pays for it right now. I seem to remember that the last time we had a price shock the bobbleheads would say that the futures were way over the spot . . . now I don’t hear that

  24. Darkness commented on May 26

    Pulling a comment from an earlier, related thread:

    >- Boone Pickens also said the world would never produce more than 85 million barrels/day of oil. Well, he was not talking about strictly oil but of total liquids production and, sorry Boone, liquids production did surpass 85 million b/d end last year, rising to 87 (IEA) or 86 (EIA).

    U.S. ethanol production alone in 2007 was 140 million barrels. That required nearly an equal amount of oil to make, yet both got counted as “production” that helped boost numbers. All drilling on average last year required more energy as an input to production. Total production is a bad measure of the market situation as the days of poking a hole in the ground and having the oil spurt out are long gone. “Liquids for sale on the open market” is the measure you want, especially for those dreaming of drilling on the outer continental shelf, given how very energy expensive that will be.

  25. Simon commented on May 26

    Stuart, I believe Oil is in what is called contango where futures prices are higher than spot. That does not mean prices will not collapse but people are betting they will not collapse for long.

  26. epigraham commented on May 26

    Thomas Friedman is a buffoon. And this quote is typical of his pseudo-intellectual superficial insights to complicated issues.

    For starters, Americans don’t borrow money to buy gas. It was only recently that Americans began paying for fuel with credit (borrowed money). Had Friedman directed his comments towards big screen TVs, SUVs, or any number of other items, he may have a point. But then why doesn’t he point the finger at Japan or on of the other various groups we import goods from and said “This isn’t an economy, this is borrowing money from China to funnel it to Japan.”

    To be blunt, Friedman’s comment reveal that he’s even dumber that most people suspect (which is saying a lot). He writes things that sound intelligent when you scan them, but any in depth look reveals he has no clue what he’s talking about. His analysis about the situation in Iraq as requiring us to make lemons into lemonade (or some such thing) is another fantastic example.

    Please don’t ever post another comment from Friedman again unless it’s to make fun of him. The fact that an author who writes best-sellers about globalization can come out with a comment like this and not be lambasted as a moron shows the pathetic state of affairs in US news comentary.

  27. Todd commented on May 26

    It’s a terrific piece by Friedman. I was unaware that alternative energies will lose their tax incentives soon unless an agreement can be reached.

    How can you not have an overarching bearish stance on the US economy and the US Dollar given the brain dead policies of both parties in DC. Absent any real centrist policies soon, this country goes down the toilet sooner than people think possible.

  28. James Hogan commented on May 26

    Put a star by Epigraham’s name (above). Excellent commentary. Why the NYT (and many other newspapers) continues to give Tom Friedman this valuable space on its op-ed pages is beyond me. There are many others who have a much more lucid and cogent insight into today’s world than does Friedman.

    Apparently he was briefed early in the decade about how the “realists” were wrong and the Bushies were going to create their own reality. They created it alright. I think it’s called a nightmare. He evidently thought his job was to be the scribe for the self-created “lords of the universe”, hence the infamous “suck-on-this” quote. Arrogance personified.

  29. VJ commented on May 27


    I’ll see your quote, and raise with one of my own favorites:

    Let us rid ourselves of the fiction that low oil prices are somehow good for the United States.

    Rep. Dick Cheney (R-Wyoming)
    October 1996

  30. Mawson Tajso commented on May 27

    Was reading mil.rag, overseas military base expenditures, including one tiny atoll with no significant defense purpose, other than to snoop on the region’s electronic traffic, probably done easier on Google this century.

    Their diesel power plant for 500 military folks on the atoll uses 465,000 gallons of diesel a month, not counting the absurdly high cost of bunker fuel and JP-5 to barge and fly fresh food to these folks, where the diesel fuel bill to keep just one house trailer cooled with AC is *$9,240 a year!*

    Our entire family with three cars, two commutes and an old gas lawn mower, uses just $3,120 in gasoline a year.

    The single greatest guzzler of oil and gas *on the planet* is the US military command, and it’s all charged to the poor taxpayer.

    Just sayin…

  31. Patrick commented on May 27

    I try to listen to Rush on the radio on my way to lunch. Not because I like the guy (my personal politics are actually too far to the left for the Democrats, so Rush and I aren’t exactly friends) but because I’m fascinated at what he pushes.

    Current Rush meme: oil prices are high because politicians won’t develop the oil resources that we already have.

    I know, inane, right? But the guy has been running the same line for weeks now. Combine that with Congress yapping about this “Tax Holiday” and the evil “speculators” and suspending purchases for the Reserve and “foreign oil” (not mentioning Canada and Mexico, of course), I can only think that we’re not even close to a top in energy/oil prices yet.

    People are too irrational still for a top to have formed–there are no cracks, just obstinance.

    (to the previous comment about the US military being the biggest consumer of oil… well, yeah. tanks weigh quite a bit. but remember that with a $400-$600 billion a year budget, they’re not exactly shy about spending a lot on alternative energy in order to keep their tanks running and they have several programs running now to do just that. after all, if it can work for a tank, it can work for a car, right?)

  32. Patrick commented on May 27


    I’ll see your quote, and raise with one of my own favorites:

    “Let us rid ourselves of the fiction that low oil prices are somehow good for the United States.”

    Rep. Dick Cheney (R-Wyoming)
    October 1996

    This is probably true.

    We control the currency and we have the army. As long as the military is intact there will be a point where the currency cannot be depreciated further and all the holders of dollars will have no choice but to bid the price back up. The depreciation will be only temporary and the price meaningless in the long-term.

    Besides, everyone knows where Canada, Mexico, and Saudi put their dollars. Price of oil goes up, money flows to them, they re-invest in Treasuries. The Treasury $$$ goes back out at a higher rate and everyone is happy. If they get particularly clever they loan the money out at rates pegged to the LIBOR, then a few years later, due to the high inflation, blame the Arabs, jack up the interest rate, and suck all the money back in.


  33. Patrick commented on May 27

    P.S. My favorite quote is actually made up and it’s kind of a fable.

    “See, once there was this Strong country on the verge of collapse. They couldn’t pay for their imports and they couldn’t control their currency. So one day the country gave in and printed so much money that they were able to go out and buy all the bridge building companies in the world before anyone knew better.

    The next day they proceeded to blow up every bridge in the world.

    Problem solved.”

  34. VJ commented on May 27


    The depreciation will be only temporary and the price meaningless in the long-term. Besides, everyone knows where Canada, Mexico, and Saudi put their dollars. Price of oil goes up, money flows to them, they re-invest in Treasuries. The Treasury $$$ goes back out at a higher rate and everyone is happy.

    And what if some of the oil-producing states tire of the “depreciation” and decide to switch to Euros ?

  35. Greg commented on May 27

    “And what if some of the oil-producing states tire of the “depreciation” and decide to switch to Euros?”

    I think our leaders’ probable course of action is abundantly clear. Or are you just being sarcastic?

  36. VJ commented on May 28


    I think our leaders’ probable course of action is abundantly clear.

    What, after Sydney Pollack died, you went out and rented ‘Three Days of the Condor’ ?

    Or are you just being sarcastic?

    Not at all. If the dollar keeps declining, I expect countries to move to the Euro. If it’s good enough for Buffet…

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