RUSH: When we go to the phones, some people want to talk about the subject we’ve been discussing recently, which is oil and gasoline prices and so forth, the energy costs that we all face right now. I want to get even a little bit more cynical. In addition to the natural cynicism I have that… Well, this is not cynicism; this is something I know. I can’t prove this, but I just know it. I know it in my gut and you do, too. There are people, elected officials, who expect to benefit from all the suffering — if you don’t like the word ‘suffering,’ the challenges — that people are facing, the anger and the decisions they’re having to make here in how they change the way they live because of the price of food and the price of gasoline. We haven’t even talked about the trucking industry yet, but all this stuff is linked. I just saw… I was in the top-of-the-hour break. I was watching CNBC. The trucker companies all had a meeting in Washington today, and they’re beside themselves. It takes $1,800 in diesel to fill up the tanks of an 18-wheeler is what the graphic on CNBC said.
Well, that’s got a breaking point, too. At some point if these guys are going to pay $1,800 every time they fill up an 18-wheeler, they’re going to have to raise what they charge to transport things. But they can only raise their price what people are willing to pay, and if you’ve got smaller companies who can get by, by paying $1,800 a fill-up with less pain than others, all this stuff works together, and it’s getting near a breaking point — and all of this, for lack of a better word, suffering. I really believe that there are people who expect to benefit from this greatly, and not just people who get votes. For example, I’ve about had it with people who say, ‘We need to put solar panels on the roof. We all need to be driving the light rail. We all need to be in mass transit. We need to alter the way we drive and the way we travel around.’ What happens if all the airlines just get put out of business? What happens? I’ll guarantee you what will happen. We’ll have a national airline like Amtrak. That’s what will happen, in the interests of ‘making sure that mode of transportation survives,’ the government will come along and subsidize some airline, it will be run by them, and it’s going to be a mess.
Everybody is worried about that. We’re getting to the point now. Would you pay, if you lived here in Florida, a thousand or 1,500 bucks to fly coach to New York, or $2,000 to fly coach? Most people can’t and wouldn’t, and what happens then? Well, if the market were left alone, the price would come down to where people could or these places would just go out of business, one of the two; and something would be there to pick up the slack because, despite what the madcap environmentalists want, people are going to fly. The economy requires it. Economic growth requires expansion in all of these areas that we’re talking about. For people to have increased opportunity, increased salaries and wages and so forth, there has to be growth — and if we start contracting in some of these businesses, that’s not going to happen, and there are people who want that. Because that then makes more and more people dependent, and that then convinces more and more people, ‘Okay, we need to start changing our lightbulbs and unplugging our toasters when we’re not using them, and don’t use the cell phones as much.’
All that garbage that has nothing to do with anything will be said to be a cure-all for this — and the little socialist nannies who want control over as much of your daily life as they can get, are going to have a wide open door to come in and do it, because they’ll be the only solution you have. So it’s a crucial thing. But see, internal optimist I am, based on intelligence guided by experience, these are bubbles; and this bubble’s going to burst at some point because markets work. Now, again, I don’t know how cheap oil’s going to drop, and I don’t know how cheap gasoline’s going to drop. But there’s going to be a point where the price, whatever it gets up to, cannot be supported by the market. By that I mean everybody in it, and when that happens, one of two things has to happen and the one thing that’s going to happen is the price is going to come down, and supply is going to go up. There’s not a shortage, despite what anybody tells you, there isn’t a shortage. Can I give you an example?
The United Arab Emirates airlines or some such thing just bought 30 or 40 giant jumbo jets over the next 30 or 40 years. If you look at people planning their businesses and making these purchases of major equipment that is a major user of fossil fuel, people are buying. They’re upgrading. If there wasn’t going to be any fossil fuel 30 or 40 years from now, do you think people would be buying these airplanes? Do you think manufacturers would be designing new ones? Gulfstream, which manufactures corporate aircraft, a month ago announced the new G650. And it’s going to be the biggest corporate airplane out there, aside from the Boeing business jet, which is a 737. But it’s going to be bigger. It’s going to be a little bit more fuel efficient. They sold, in the first week… They had deposits were I think a half million dollars, 600 deposits the first day; 600 orders. They’ve had to build two… They were going to build one factory, one plant to manufacture this new airplane. It won’t roll off the assembly line ’til 2012. You can’t even see one except a computer mock-up.
You can go up to Savannah where they’re going to make it and you can sit in a mock-up of the interior, but you can’t see the actual airplane; it’s not even been built yet. It’s just on a computer. They might have a mock-up of one full size, but it’s not the actual airplane. It won’t roll off ’til 2012. People are lining up to buy these things left and right. Now, I would bet that 75% of the orders are from overseas, but they’re still being ordered. Now, would you buy an airplane if you didn’t think that there’s going to be fuel for it? Would you make a new airplane if you didn’t think there was going to be fuel for them to fly? Of course not. So all of the real-life indications are that there’s plenty of energy out there, and the bet is of the people in this business, it’s going to be plentiful, and it’s going to be affordably priced — all things being equal and relative — otherwise these kind of expansions wouldn’t be taking place. Against all this, we have the real-world circumstances of the price of diesel, the price of gasoline — and, let’s face it, most people don’t fly corporate airplanes. They don’t have the budgets that big corporations have to fly these things around have.
But against all this, is the news that we’re going to hell in a handbasket and it’s getting worse and there’s no end in sight for it, when in fact there is. Everything here is just cyclical. This does not ameliorate the fact that at this moment in time, it is bad news on the energy front and on the food front in a lot of places. It’s all going to bubble out. It’s all going to come around. The question is: ‘Are some businesses going to have to go out of business before that happens? Will some airlines just give up?’ Look at this. Who did Delta just merge with? They announced a merger with Northwest, right? Both of these companies are losing money, it’s incredible, and yet they’re merging. Okay, why? Why are they doing this? Efficiencies. They’re combining their assets. They’re adding to their fleet. The more airplanes you have and the more you can fill ’em up, the more you can put in the air. The more you can reduce your debt load. But what are they going to need to do that? They’re gonna need fuel.
They must be banking on the fact that there’s going to be plenty of fuel and they gotta be banking on the fact it’s going to be affordable at some point, otherwise the merger doesn’t make sense. If you look at real-life circumstances, you see that people whose job it is to factor years in the future are making bets on the positive side — while the Drive-By Media is telling everybody how worse it’s going to get, how rotten it is, how terrible it is. And, of course, it’s Bush’s fault, or Cheney’s fault, or the war in Iraq’s fault, or what have you, and trying to turn it into a political issue. Or it’s the speculators’ fault. It’s somebody’s fault. There’s some cabal of people that want you to suffer and they’re sitting there manipulating the price above and beyond the market. That isn’t the case, but there are people that want you to suffer. There are people that want you to be challenged. There are people that want you to be mad about this, and there are people that want you blaming people and companies, industries, for this, ’cause they will benefit. Nine out of ten times these are the same people who also try to convince you that they stand for you — ‘The Little Guy,’ the average American — that you can count on them to make sure this kind of stuff doesn’t happen to you, and when it does, they’re the ones in private going, ‘We got ’em right where we want ’em!’
RUSH: I need to make a little asterisk point, when I mentioned that the price of jet fuel at LaGuardia at the private jet terminal is $8.08, that’s way above average. I’ve seen it as high as $7.52 in Palm Springs. But it probably would average between five and six bucks right now. The point about LaGuardia is they don’t want private jets going in there because it’s so crowded with commercial traffic. The landing fees for private aircraft at LaGuardia are just prohibitively high. They just don’t want you going there. They’ll let you in there, they have to if you want to go, but you have to get a slot. You have to pay exorbitant landing fees. I don’t know what it is now. It’s exorbitant. And the fuel price, it’s all combined to keep you outta there, if you’re a corporate plane. But a lot of people like it because it’s so damn close to the city, just come across the Triborough Bridge and you’re in.
At any rate, Chris, in Jacksonville Florida. We’ll start with you on the phones. Hello, and welcome to the EIB Network, sir. Hello.
CALLER: Hey, happy cigar smoking conservative dittos.
RUSH: Thank you, sir, very much.
CALLER: I’m just curious, I’ve got a two-part question. One, if supply is relatively flat or constant throughout the world, why would — I’m really nervous — but why would, on a given day, the futures traders speculate, which would drive up the price of oil? Case in point, when the simian from Iran sends his little minions out in their little bug-smashing boats, there’s no way that that should have, you know, caused hostility on the market —
RUSH: You know, this is an excellent point. I, unfortunately, am not sufficiently informed and educated on the workings of these futures markets, the commodities market, to answer your question. All I can do is share with you the perplexity. Okay, so Ahmadinejad, Iran — do you know Iran has the largest oil refinery in the world? If Ahmadinejad wants the price of oil up, all he’s gotta do is threaten to blow up Israel, and the speculators, oh, no, oh, no, the price of oil goes up, markets roiled. If Ahmadinejad wants to raise the price of oil again all he’s gotta do, the great Satan, the United States, if we’re attacked, we’re nuking somebody, oh, no, speculators go nuts. And not just the speculators market. Do you not get a little tired of every time some single economic report comes out on the supply of chickens, and the stock market, oh, go, no — the stock market, sell off — the way this stuff is explained defies common sense to me, the way the stock market works, all the futures market. I do have a little blurb here that just cleared the Wall Street Journal wire. ‘The surge in food and energy prices is being driven by constrained supply and growing demand in developing countries, rather than an investment bubble, according to the majority of economists in the latest Wall Street Journal forecasting survey.’ They’re basically absolving from blame the speculators.
The Journal survey says that most economists say food and energy prices and the surge in those prices is not due to speculators, but rather the old standbys of supply and demand. Supply, that’s an interesting thing. You know, the supply can be defined any number of ways. Look at the supply of oil we have that we’re not getting. So there’s all kinds of oil in all kinds of places that some people say still the price isn’t high enough to get it and make a profit, others say you can’t go get it because of environmental and federal government regulations and prohibitions, moratoriums, blah, blah, blah. So you deal with the supply that’s actually being brought out of the ground every day and the supply that’s being refined. And in that case there’s no question there’s an increasing demand for it as these poor countries start getting richer and people in them get rid of the rickshaws and get rid of the bicycles, they want to drive cars, they need gasoline, and you’re talking about gazillions of people in China and India who might be experiencing increased economic circumstances.
Jim in Santa Rosa, California, glad you called. Welcome to the program, sir.
CALLER: Hi, Rush. Mega dittos from wine country.
RUSH: Thank you, sir.
CALLER: Hey, I heard something, it’s just a question regarding hedge funds. What I had heard is that when the normally buy futures, commodities, whatever, they’re required to put up a 50% collateral, or financial collateral, but when they buy oil futures, they’re only required to put up 5%. You know, does that sound right?
RUSH: No. But again, you know, I hate to say this, but I have to — I don’t really know how the commodities and futures markets work on that basis. I don’t know what the reason for that would be. I would only speculate, and I couldn’t possibly.
CALLER: I would just think that this would enable them to invest a lot more money in oil futures to really drive it up.
RUSH: It would require them to. Your theory is if they had to put 50% down they wouldn’t be speculating as high?
RUSH: And so the price wouldn’t be going up as high? Yeah, you know, the speculators are getting their share of blame here, but as I said, the Wall Street Journal just issued this survey of economists. The Wall Street Journal just said, survey of a lot of economists, the speculators, the commodities market has nothing to do with these price increases, strictly a function of supply and demand. Well, I don’t know. I’m getting suspicious of all these surveys of economists because every damn time we get an economic report, these people are surprised. Unemployment claims go down, unexpected. First quarter economic growth, 0.6%, total shock, economists expecting recession. So a survey of economists, hell’s bells, folks, everything’s so damn political now anyway. Science has become politicized. Economics clearly is. So without knowing who these people are and what their agenda is, yeah, it’s tough to put a lot of weight on it.
Bob in Charleston, South Carolina, nice to have you, sir. Hello.
RUSH: Hello, sir.
CALLER: Thank you for taking my call.
RUSH: You bet.
CALLER: Yeah, I want to talk about the sales tax.
CALLER: Yes. On that, being a truck driver, our trucks get like six, top seven, miles per gallon.
CALLER: And we put on, minimum, 2,500 miles, you know, some of these over the road drivers and some of them are probably smiling now, calling me a slacker. Point being, if somebody puts in 2,500 miles per week, okay, and you multiply that out, a driver is getting $50 more in his pocket per week, $200 per month, $600 per summer, another stimulus package for a truck driver, and there’s a lot of trucks out there. Now, you take it a step further —
RUSH: Yeah. This is because the diesel price has risen far faster than the gasoline price has. And these guys, you know, 1,800 bucks a fill-up, it would make a huge difference, the gas tax holiday, there’s no question.
RUSH: Houston, Texas, this is Bill. Superb to have you with us, sir. Hello.
CALLER: Hey. Good to hear, Rush. Hey, just thinking about it, you know, and I’ve been thinking about this for a long time, and as I watch the gas pump go up, and I watch all these energy commodities around me such as our electric bill, you look at what Enron did not too long ago, and I thought we learned our lesson with Enron, but I think we’re seeing the same thing, the exact same thing when it comes to paying our energy bills, you know, why is it half as much per kilowatt hour in a city like San Antonio where it’s twice the price in Houston? Same electricity, same power plant, but my goodness, something’s wrong here. There’s one person winning here, and it’s the traders, and it’s the trade managers, because every time they change their job, they up their salary 30%, they do that probably every six months, and they snatch ’em up. So those people are winning, and all we’re doing is paying the bill when it comes to electricity, when it comes to gas. And gas traders are making their 30% salary increase every six months. And we’re just getting sick and tired of it down here in Texas.
RUSH: Well, I wouldn’t call this synonymous with Enron. I mean, Enron was an accounting disaster. Enron was selling stuff that didn’t exist.
CALLER: But that’s what the traders are doing. The traders are literally creating something that doesn’t exist, which is a panic. That’s exactly what they’re doing.
RUSH: Well, the panic exists, no, the panic exists. You know, all of these attitudes are real. They exist. They’ve been created.
CALLER: Well, the global warming thing as well. I mean, we’re supposedly in this energy crisis, and what’s amazing is we have the technology, America’s a great country, we not only have the technology —
RUSH: We don’t — see, look, if you want to draw a parallel here, you gotta go back to the seventies when OPEC was keeping oil off the market, and we all thought we had a shortage. Even back in the seventies I can remember there were these wacko scientists telling us we only have 30 years of oil left. Guess what? It’s been 30 years.
RUSH: We got all kinds of oil out there. There is no shortage. What there is a shortage of is producing it. We’ve got more oil under the ground in all parts of this planet than what we know what to do with. There is an environmental wacko movement that exists to keep it in the ground for obvious reasons, which mostly are political, disguised by their so-called concerns for the planet and pollution and all of that sort of stuff, but these people graduating away with attacks on capitalism. Again, I don’t live in Texas, I can’t address specifically the differences in price between Houston and San Antonio per kilowatt hour. I would just be making a wild guess on that and you don’t even want to do that.
CALLER: But it’s interesting, because the free market, deregulation when it came to power producing was supposed to reduce the cost of our electric bills and ever since these companies started, you know, deregulating, getting away from the regulated market, which was the municipalities regulating the energy — and I’m not saying this Democratic policy of regulation is a good thing, but it seemed like there’s a lot more people lining their pockets since deregulation has happened. And Enron was basically the seed child to start that process. I think what’s happened is some of these traders that were in the power generation market have moved over to the oil industry and said, oh, here’s another energy market that we can rape and pillage.
RUSH: I have to step in here. There’s a singular problem here. You are blaming the businesses involved, and this is something that you’ve been conditioned to do, and now you’re blaming deregulation, which is something you’ve been conditioned to do, and who’s conditioning you to blame business and deregulation? Well, the people who are antibusiness and for regulation. I ask you, who are those people? They are currently embodied en masse in what is called the Democrat Party. Take a look their enemies list. Who are they going to get even with? Big Retail, Wal-Mart; Big Pharmaceutical, Big Drug; Big Oil. They’re going to get Big Food. That’s who they’re going to destroy. Those people are making too much money. You sit around and you think all these executives are making all this money while your electric rates are going up, and you hear what the Democrats say, amplified and echoed by the Drive-By Media, and you are convinced that every business is an Enron, and every business is not an Enron. Very few businesses are Enron. If most businesses were Enron, the CEOs would be in jail. This gets frustrating because there are bad actors in every walk of life.
You’ve got cheaters in professional sports. You’ve got cheaters in business. You have cheaters in prison. You have cheaters in the school playground. You’ve got little wheeler-dealer 12-year-olds that are ripping off their friends. These people are everywhere. But to say they define an institution such as America’s corporate industry is a mistake, and it’s not going to help you at all because you’re never going to be open to the truthful explanation which is always going to be found in economics as to why prices go up and down. Economics will explain this 99% of the time and in the end it always will be because the people you’re talking about end up getting caught one way or another. May not happen as quickly as you like. What is lining their pockets? What businesses are more people lining their pockets? What does that mean? Profit has always existed, thank God. Profit is the motive! Now, some people think that a utility ought not be profit-oriented because it’s there to serve the community, and so it ought not cost you and the community any more than it costs the utility to produce the power, the electricity, whatever they’re providing you on a monthly basis. Can’t happen, folks, people have to work at that utility. That utility has to compete for power with other utility companies. They have to be business people. Business people get tarred and feathered routinely in this country.
Look at the Democrats’ energy plan. The Democrats’ energy plan that they announced yesterday is anything but an energy plan. It is a punishment, and it’s designed to appeal to people who think everybody in the world’s lining up to screw them. Remember, it wasn’t long ago I did a monologue and I asked you to think back 30 years ago, what about America were you proud of? We were proud of the auto industry, 30, 40, 50 years ago, you name it. We were proud of our airline industry. It was a big thrill to fly on TWA or American. We were proud. We got dressed up. We put on coats and ties to go on airplane trips. We were proud of the auto industry. We were proud of the institutions and traditions that have made the country great. Now, after 30 to 40 years of dominance in the media by liberals and people that don’t particularly like this country, the way it’s constituted, guess what? You hate Big Oil now. You despise ’em. They’re trying to talk you into hating Wal-Mart. Tough sell. You hate the insurance companies. You just know they exist to screw you. You hate the health care industry, ’cause you know they don’t care about your well-being. You have been told to hate the US auto industry ’cause they’re making junk, they’re purposely making junk, they want you to buy junk, and they’re charging through the roof for it because they don’t care about you.
You are being told that some companies actually want to kill their customers! You have been told to hate Big Tobacco, because Big Tobacco exists to destroy its customer base. Big Tobacco exists to make sure as many people as possible get cancer. Right? Of course, the more their customers die, what do they buy? What’s a dead person buy? When’s the last time you saw a cadaver walk into the 7-Eleven and say, ‘I want a carton of Luckys?’ Okay, I know, so Big Tobacco, they have diversified and now they own Big Cookie like Oreo and Nabisco. So now they’re killing you with sugar and trans fat. So Big Oil, Big Tobacco, they’re all trying to kill us. This is what people think. They’re all trying to screw us and we hate our country, and we despise it, or are being taught to, when in fact none of these industries has that as an objective at all. These industries have obstacles to doing business at an affordable price each and every day, and in large part you can find them sitting in the United States Senate. The US House with their various oversight committees and bringing these people in and saying, ‘Why are you killing your customers and why are you lying to us?’ And, meanwhile, the very people in the House and Senate and these committees who are interrogating these people who take risks that you and I can’t understand and would never take ourselves, in order to bring products to the market at an affordable price, these people sit in judgment of them, and they couldn’t produce a drop of gasoline for your car if their life depended on it.
They couldn’t design an airplane to get off the ground and build it and hire people to do it if their life depended on it. These people wouldn’t know how to come up with a drug to help you with the flu or the common cold or penicillin that you need for an infection. They couldn’t do any of this, and yet they sit there as experts in all of this and tell these people who have risked everything, in a lot of cases, how to do what they do? And then the Democrats in this energy crunch come up with an energy bill, Harry Reid presents it to the Senate yesterday, and all it is is a massive tax increase on energy companies. It doesn’t produce a drop of oil. It doesn’t produce a drop of gasoline. It doesn’t create one lightbulb, even a compact fluorescent. It doesn’t produce one automobile. It doesn’t produce a battery. It doesn’t come up with any so-called alternative. It just taxes. Windfall profits tax on Big Oil. However, Big Oil can avoid the windfall profits tax if it puts the profit into alternative fuels. I’m sorry. If Big Oil puts the profit into alternative fuels, guess what they can’t do? Drill and explore for more oil. Guess what else is going to happen? Windfall profits tax on Big Oil, they’re just going to stop producing oil in the United States, subject to the tax. And so our production will fall even more.
People will always avoid taxation when they can, and the oil business is a worldwide business. The oil executives, like any other executive in the world, is going to go wherever he can to lower his cost of doing business as low as it can be, which is why the truckers are upset, because they have to have diesel. They have to have it. They can’t lower their cost of doing business. They have to try to pass on those increased costs, and sometimes they can’t pass ’em all on, and they take the hit. And yet you’ve been told to hate Big Truck, too, because Big Truck pollutes and Big Truck is dangerous and Big Truck drives the hybrid off the highway, plus Big Truck generally is conservative, you can’t trust them. This business of hating deregulation, hating big business, avoid the programmed effort and technique to make that happen to you, because the people who are against deregulation are the regulators. Those are people in bureaucracy; those are people in government, Republican, Democrat, I don’t care. And when they regulate without any legislation, when they’re given power to regulate our lives, sitting in some bureaucracy, what that means is, they have the power to reduce and restrict our freedom. Regulations are simply chains on freedom disguised as the government caring for us. It’s a crock!
RUSH: Here’s another thing, ladies and gentlemen. While you’re being told to hate Big Pharmaceutical and Big Oil and Big Tobacco and Big Retail and big everything else, who are you being told to love? Who are you being conditioned to think is the only institution, what is the only institution that’s going to protect you from all these predators that are trying to screw you? Government. You’re being told to love government. They care for you! They care about you. You’re being told to love candidates who care for you, while they’re out destroying the producers. By the way, I was in error a moment ago. I said that these businesses do not line their pockets, that the profit motive is the profit motive. I was mistaken. There is a ‘business,’ quote, unquote, that exists for many reasons; among them to line the pockets of the people in it — and it’s called US politics. You explain to me how some schlub who doesn’t have a dime gets elected to the House of Representatives, earns whatever he earns in there — 140 grand — and ten years later has a net worth of two or three million!
Explain to me how that happens if somebody’s pockets are not being ‘lined.’ I would simply ask those of you who have all of this venom aimed at private sector business people who are producing, taking risks, avoiding the obstacles, fighting the obstacles placed in front of them. Reserve some of that venom for the people actually doing what you think is happening out there. We had the caller from Houston who wanted to talk about the ‘deregulated’ market. Would somebody explain to me where the energy market is deregulated? I don’t see it. Let me explain this, folks. We can’t drill. We can’t refine. We can’t transport without government involvement through regulations and taxes. The permit process can take years to get permission to displace one flamingo. The market extends well beyond the US, as I have said. We’re hamstringing ourselves. What deregulated market? Somebody show me where it is.
You want to influence the global market in a more significant way, then we have to participate in that market in a more significant way. We need to become net producers. I talked to a guy who just got back from Qatar the other day, Dubai. He couldn’t believe what’s going on up over there, all the construction, everything gone wild. He said, ‘You know what? They don’t have to deal with the environmentalists. They just build and they do it right, and they take care of the environmental concerns because they want what they’re building to last and they want people to buy the stuff and live in it.’ We have tried it the liberal way, folks. We’re trying the liberal way right now. They have stopped us from drilling; they have stopped us from refining. We’ve been doing this for four decades. The Democrat energy policy has been in place for four decades. They have trashed the oil companies; they have trashed the American consumer for four decades. We are where we are. They don’t want to take the blame for this. They want to blame Big Oil. The restrictions, regulations, obstacles are in our way thanks to liberalism.