Sunday, June 24, 2018

Unwinding Obamacare


AJC 6/20/18 page A1 article “New health rule cuts coverage cost” reports that on 9/1/18, businesses will be able to establish “association health plans” that can offer “rescue and repair” basic major medical insurance plans at lower costs.

Congress failed to repeal Obamacare, but Trump has used Executive Orders to eliminate the tax imposed on individuals for not enrolling in it. Now the ability to get lower cost coverage will be available in 2019. When this happens, corporations and individuals will be able to cut their healthcare insurance costs dramatically.

Norb Leahy, Dunwoody GA Tea Party Leader


End Welfare Immigrants


“You can have a welfare system or you can have open borders, but you can’t have both.” – Milton Friedman

Illegal immigrants, indigent immigrants and Muslim refugees flood into the US to become Welfare Immigrants. If we repeal welfare for non-citizens, illegal immigrants, indigent immigrants and refugees, welfare immigration will stop.

Norb Leahy, Dunwoody GA Tea Party Leader

Lock Them Up


FORMER SECRET SERVICE AGENT FILES RICO LAWSUIT AGAINST MAJOR LEFTIES, byJUNE 22, 2018

Former Secret Service agent Gary J Byrne has filed a major RICO (Racketeer Influenced and Corrupt Organizations Act) lawsuit against several major liberal politicians and donors as well as a couple of organizations.

They include: The Clinton Foundation, Clinton-Giustra Enterprise Partnership, Media Matters For America, Correct the Record, American Bridge 21st Century, Shareblue, David Brock, George Soros, John Podesta, Bill and Hillary Clinton, and Jonathan Wackrow (fellow veteran Secret Service Agent and CNN Law Enforcement Analyst).

From The Daily Caller  -  As of Wednesday, electronic  summons had been issued to all named defendants and Byrne had filed a certificate of disclosure titled “Corporate Affiliations and Financial Interests.”

Among the many charges that appear in the at times almost incoherent filing is the charge that a criminal syndicate involving the Clintons, David Brock, Donna Brazile and George Soros murdered Seth Rich.

Byrne is reportedly seeking damages of $1 billion and refused to provide an address because he feared assassination. Byrne threatened to file suit against several of the defendants in 2016 following the release of his tell-all book, “Crisis of Character.”

Media Matters and David Brock had referred to Byrne at the time as a “smear merchant,” and he responded during an interview with Breitbart’s Alex Marlow, “Everything in the book is true. I want to set the record straight. And since I can’t get on mainstream media to set the record straight, I’m going to have to do it in court.”

What is RICO? - RICO was enacted by section 901(a) of the Organized Crime Control Act of 1970 (Pub.L. 91–452, 84 Stat. 922, enacted October 15, 1970) and is codified at 18 U.S.C. ch. 96 as 18 U.S.C. §§ 19611968

G. Robert Blakey, an adviser to the United States Senate Government Operations Committee, drafted the law under the close supervision of the committee’s chairman, Senator John Little McClellan.

It was enacted as Title IX of the Organized Crime Control Act of 1970, and signed into law by Richard M. Nixon. While its original use in the 1970s was to prosecute the Mafia as well as others who were actively engaged in organized crime, its later application has been more widespread.

This could be interesting, especially if he can prove all of the allegations in his book.


Norb Leahy, Dunwoody GA Tea Party Leader


Draining the Swamp


The plan to “drain the swamp” aims at a broad target. The first steps will address fixes for “broken systems” like Veterans Health, Immigration Control, Healthcare Costs, Trade Deficits, Unproductive Foreign Policies and other broken systems.

Improving systems involve transferring functions between departments and agencies and will include the elimination of duplication, automation of processes, elimination of bureaucratic delays, increases in throughput, increasing efficiency and lowering costs.  This will require capital improvements and will result in headcount reductions in departments, agencies and programs.

Returning to the “rule of law” and ending corrupt practices that cause fraud, abuse, waste, graft, bribes and lack of accountability is the obvious task.  It enlists voters to replace their elected representatives to attack priorities.

Norb Leahy, Dunwoody GA Tea Party Leader


Internet Sales Tax


The Supreme Court voted in favor of internet sales taxes, but wants Congress to take this hot potato and pass new law, but Congress will let this mess twist in the wind, further demonstrating their ineptitude. Congress never gets excited about fixing things.

Supreme Court Clears Way to Collect Sales Tax From Online Retailers, By Adam Liptak, 6/21/18

A Wayfair distribution center in Cranbury, N.J. State officials in South Dakota sued three online retailers for violating a law that required merchants to collect sales tax. Credit. - John Taggart for The New York Times.

WASHINGTON — Internet retailers can be required to collect sales taxes in states where they have no physical presence, the Supreme Court ruled on Thursday.
Brick-and-mortar businesses have long complained that they are disadvantaged by having to charge sales taxes while many of their online competitors do not. States have said that they are missing out on tens of billions of dollars in annual revenue under a 1992 Supreme Court ruling that helped spur the rise of internet shopping.

On Thursday, the court overruled that ruling, Quill Corporation v. North Dakota, which had said that the Constitution bars states from requiring businesses to collect sales taxes unless they have a substantial connection to the state.

Shares in Amazon were down just 1 percent in morning trading after the ruling, at $1,731.59. But other e-commerce companies suffered far tougher blows: Shares in Etsy, the marketplace for artisanal crafts, fell 4.5 percent, to $42.21, while those in Wayfair, a popular home goods seller, were down 3.2 percent, at $112.42.

Writing for the majority in the 5-to-4 ruling, Justice Anthony M. Kennedy said the Quill decision had distorted the nation’s economy and had caused states to lose annual tax revenues between $8 billion and $33 billion.

“Quill puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers,” he wrote. “Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own.”

Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch joined the majority opinion.
In dissent, Chief Justice John G. Roberts Jr. agreed that the court’s rulings in this area had been “wrongly decided.” But he said there were insufficient reasons to overrule the precedents and that Congress should have been left to address the matter.

“E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule,” the chief justice wrote. “Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.” Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan joined the dissent.

In the years since 1992, three members of the Supreme Court had indicated that they might be ready to reconsider the Quill decision.

In a 2015 concurring opinion, for instance, Justice Anthony M. Kennedy seemed to call for a fresh challenge to the decision. “It is unwise to delay any longer a reconsideration of the court’s holding in Quill,” he wrote. “A case questionable even when decided, Quill now harms states to a degree far greater than could have been anticipated earlier.”

South Dakota responded to Justice Kennedy’s invitation by enacting a law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state. State officials sued three large online retailers — Wayfair, Overstock.com and Newegg — for violating the law.

Justice Kennedy singled out Wayfair, an online retailer of home goods and furniture. “Its advertising seeks to create an image of beautiful, peaceful homes, but it also says that ‘one of the best things about buying through Wayfair is that we do not have to charge sales tax,’ ” he wrote. “What Wayfair ignores in its subtle offer to assist in tax evasion is that creating a dream home assumes solvent state and local governments.” Lower courts ruled for the online retailers in the South Dakota case, citing the Quill decision.

On Thursday, Justice Kennedy wrote that world has changed since 1992, when mail-order sales totaled $180 million. “Last year,” he wrote, “e-commerce retail sales alone were estimated at $453.5 billion. Combined with traditional remote sellers, the total exceeds half a trillion dollars.”

Justice Kennedy said the decision left open the possibility that some transactions were so small and scattered that no taxes should be collected. The court also did not decide whether states may seek sales taxes retroactively.

“These issues are not before the court in the instant case; but their potential to arise in some later case cannot justify retaining this artificial, anachronistic rule that deprives states of vast revenues from major businesses,” Justice Kennedy wrote.

President Trump has criticized Amazon for its tax and shipping practices. Amazon, which is not involved in the case before the Supreme Court, collects sales taxes for goods that it sells directly, but not for merchandise sold by third parties. Some analysts have said Mr. Trump’s critique was motivated by his displeasure with reporting from The Washington Post, which is owned by Amazon’s founder, Jeff Bezos.

Chief Justice Roberts addressed Amazon in his dissent.
“Some companies, including the online behemoth Amazon,” he wrote, “now voluntarily collect and remit sales tax in every state that assesses one — even those in which they have no physical presence.”

He added that small businesses will face new burdens in trying to comply with a tangle of tax laws, giving examples.
“Texas taxes sales of plain deodorant at 6.25 percent but imposes no tax on deodorant with antiperspirant,” Chief Justice Roberts wrote. “Illinois categorizes Twix and Snickers bars — chocolate-and-caramel confections usually displayed side-by-side in the candy aisle — as food and candy, respectively (Twix have flour; Snickers don’t), and taxes them differently.”

“One vitalizing effect of the internet has been connecting small, even ‘micro’ businesses to potential buyers across the nation,” he wrote. “People starting a business selling their embroidered pillowcases or carved decoys can offer their wares throughout the country — but probably not if they have to figure out the tax due on every sale.”


Comments

I prefer to use brick and mortar stores to buy groceries and lawn tools, but repair parts are easier to get on line and impossible to get at stores, because they don’t carry the inventory.

I understand that State and local taxes pay for government services that benefit the brick and mortar stores and on-line retailers do not benefit from these government services.
I will chalk this up to another mistake by the Supreme Court that will have “unintended consequences’

It would make sense for Congress to recognize that internet sales companies benefit very little from local government services like police, fire, etc. Brick and mortar companies do benefit from these expensive services.

Congress could limit state internet sales tax to a flat 1% or 2%, but that would limit the “unintended consequences” this court ruling would create.  Congress needs to avoid enacting a federal sales tax because it grows into a 25% VAT.

Congress did not push back on “separation of church and state, legalized abortion, gay marriage, anchor babies or any other court initiated helter-skelter opinions.  Congress did not define “Life” beginning at conception or “Born” to exclude foreign citizens’ children.

Congress has a history of not responded to Supreme Court errors and the Supreme Court should know this, especially when their campaign contributors prefer the chaos.

Norb Leahy, Dunwoody GA Tea Party Leader


US Oil Reserve Sales


The United States maintains a Strategic Petroleum Reserve at four sites on the Gulf of Mexico, with a total capacity of 727 million barrels (115.6×106 m3) of crude oil. The maximum total withdrawal capability from the United States Strategic Petroleum Reserve is 4.4 million barrels (700,000 m3) per day.

U.S. mandates biggest non-emergency strategic oil sell-off, by Tsvetana Paraskova, Oilprice.com.  2/13/18

President Donald Trump unveiled a $4.4 trillion budget for next year that heralds an era of $1 trillion-plus federal deficits and unlike the plan he released last year never comes close to promising a balanced ledger even after 10 years time

The budget deal that the U.S. Congress passed and President Donald Trump signed into law last Friday calls for selling 100 million barrels of the Strategic Petroleum Reserve (SPR) by 2027 to help fund the government.
The sale of 100 million barrels of crude oil in the next decade would represent the largest non-emergency sell-off of strategic oil reserves and would equate to some 15% of the current stockpiles in the SPR.

The mandate for the SPR sale has drawn criticism because, some experts say, it would blunt the purpose of the strategic reserve to mitigate major global oil supply disruptions or price shocks. Other critics have said that tapping the emergency oil reserve for non-energy needs of the government is short-sighted and that the SPR should not be used as a “government ATM.”

The Bipartisan Budget Act of 2018 mandates the Secretary of Energy to draw down and sell from the SPR a total of 30 million barrels of crude oil between fiscal years 2022 and 2025; another 35 million barrels during fiscal year 2026; and an additional 35 million barrels in fiscal year 2027.

In addition, under a budget deal from 2015, the Secretary of Energy is authorized to draw down up to $350 million worth of crude oil from the SPR in the 2018 fiscal year to use for modernization of the reserve.

The budget deal also reduces the minimum required level in the reserve under which no drawdowns can be made, to 350 million barrels from 450 million barrels.


According to the Congressional Budget Office, the sale of the 100 million barrels from the SPR would generate $6.36 billion between 2018 and 2027.

As of February 2, 2018, the SPR held a total of 665.1 million barrels of crude oil, while the current storage capacity is 713.5 million barrels, according to the Department of Energy. The average price paid for oil in the Reserve is $29.70 per barrel. 

After the sale authorized last week will be completed by 2027, the SPR would hold 406 million barrels of oil, equal to around 56% of its capacity, according to DoE estimates quoted by Platts.

Kevin Book, managing director at ClearView Energy Partners, told Platts that the 100-million-barrel sale was “a resounding declaration of lawmakers’ new perspective on energy security.”

But Book also told Bloomberg that “This is nothing short of liquidation of a safety net.” Current and past energy officials also criticized the proposal for the largest non-emergency strategic oil sale in U.S. history. According to the Washington Post, the White House reportedly has unveiled plans to cut off the station’s funding by 2024. Buzz60
Energy Undersecretary Mark Menezes told Bloomberg in an interview that the SPR was not designed to serve as “a government ATM.”

“My own view is that SPR was put in place as an energy security mechanism to ensure that we had supply,” Menezes noted.

Bob McNally, president of consultancy Rapidan Energy Group and a former senior energy official at the White House under President George W. Bush, told Bloomberg that “Selling the SPR to cover non-energy budget expenses is deeply short-sighted and unwise.”

“In 1996 and 1997 we sold SPR barrels to pay for unrelated budget expenses and I was in the White House when we put those barrels back at higher prices starting about five years later, after 9/11,” McNally said.

“Geopolitical risk is alive and well in the oil market, and the SPR is America’s only formal short-term line of defense against oil supply disruptions and price spikes,” Robbie Diamond, president of Securing America’s Future Energy, told Bloomberg.

While the proposed sale of 100 million barrels of the SPR may be a bet on America’s energy independence and security in the next decade, it is also raising concern that it could diminish the U.S. ability to respond to sudden major outages of oil supply as geopolitical woes are back on the oil market.

Oilprice.com is a USA TODAY content partner offering energy industry news and commentary. Its content is produced independently of USA TODAY.


Comments

If oil prices remain high, we will be selling these reserves for more than we paid for them.  We will also be creating space for replenishing the reserves, hopefully at prices that continue to result in a profit. The idea is to buy low and sell high.  If we can continue to build the pipelines we need, we will be in good shape.

Crude oil prices have risen from $64 bbl. in March 2018 to $75 bbl. in June 2018.

Norb Leahy, Dunwoody GA Tea Party Leader


Oil Price Drivers


The Truth Behind Oil’s Recent Price Spike, by Kent Moors, 3/25/18,
 
As I’m writing this, the West Texas Intermediate (WTI) has surged almost 3 percent for the day, over 5 percent since the close on Monday, and is up 6.5 percent in a week – their highest levels since the beginning of February.

Meanwhile, Brent has registered equivalent gains of 2.9 percent, 4.6 percent, and 6.5 percent, respectively. Now, there are two essential reasons why the price improvement is taking place, and both bode quite well for investment returns in the sector.

Oil’s “Usual Suspects” - The first reason goes to the “usual” suspects…U.S. production levels; Geopolitics; Demand; And currency exchange rates. These are familiar, traditional, and market-based considerations.

American extraction came in much lower than expected for the week. Estimates from the Energy Information Administration (EIA) showed a decline of 2.6 million barrels. However, analysts had expected a 2.5 million increase.
Now, a variance like this is hardly news.

In fact, the EIA and analyst expectations tend to move in different directions over 60 percent of the time. Somewhat unusually this time around, however, was the convergence between the EIA and analysts on the two-other major weekly figures – gasoline and distillates (diesel and low-sulfur heating oil). Only crude oil showed a marked disparity.

Now, geopolitics can once again be used to explain all manner of events in the energy sector.
This time, we can point to concerns over…
• Rising instability in the Persian Gulf as the Saudi Crown Prince visiting D.C. as Trump considers ending the Iranian Nuclear Accord;
• Washington considering sanctions against an imploding Venezuela;
• The intensifying Libyan conflict;
• Chinese saber-rattling in the South China Sea;
• And ongoing Nigerian domestic problems, to name a few of the more compelling,

I often note that geopolitics are no longer an outlier when considering the energy markets. Rather, the uncertainty resulting from cross-border and global unrest is an ongoing staple element. Nonetheless, pundits often use it as a catchall for anything they have difficulty explaining.

Geopolitics may influence how one regards the potential future oil availability, but until the oil flow is actually impacted, its influence is more apparent than real.

The Misunderstood “Yardstick” - Demand remains one of the most misunderstood yardsticks to measure oil. Yes, the balance between supply and demand certainly does influence price, but the real importance is the effect it has on the amount of excess supply.

Oil requires available volume beyond what the market needs at any time to narrow the pricing range. Of course, too much excess volume will prompt prices lower, while the opposite will drive prices higher.

When we speak of a “balance,” it always assumes the availability of excess volume beyond immediate requirements. That balance is rapidly emerging and, in some regions, may have already arrived.

Finally, currency exchange rates speak about the foreign exchange rate for the dollar. The vast majority of all international oil trade is denominated in dollars. When the value of the dollar declines against other currencies (especially the euro), the dollar value of a barrel of oil increases. And recently, the weakening dollar has resulted in that upward pressure on crude.

Oil’s Perceived Price - Remember, the one common thread permeating all of this is how the forward price of oil is perceived by the trader. Here, as I have noted, traders will peg the price in a future contract to the expected cost of the next available barrel of crude.

Options – and more exotic derivatives – are then applied as insurance against movements in either direction. Throughout all of this, the perceived direction of prices becomes the driving engine in traders’ actions.

If that perceived trend is moving up, traders will compensate by setting future prices based upon the expected most expensive next available barrel. The opposite, as in the least expensive barrel, governs the mindset if the trend is moving lower.

Keeping this in mind, therefore, the most direct way of concluding which way it will move is rather straightforward.
It involves the number of short versus long contracts being exercised.

A short is run if the trader expects the price of any underlying commodity or equity is going to decline. Conversely, a long contract anticipates the underling will rise in price.
Until last week, shorts held considerable sway.
That changed abruptly on Thursday with long contracts taking over.

The New “Head Honcho” - Longs are now driving the market. Another result of this transition is the need for holders of shorts to liquidate positions, requiring that they go back into the market and purchase contracts. That serves as another upward pressure on prices.

All of this evens out at some point into a new equilibrium. After all, that is what trading markets always seek. But the important point to remember is this:
It’s not the ceiling, but rather the floor of the pricing range that actually determines the direction of movement. Once the dust settles, if the floor is rising, so are the pricing expectations. That is what we have at the moment. And that’s all we need to make money with targeted moves.


Comments

This article explains how oil prices climbed from below $40 /bbl in 2016 to over $50 /bbl in 2017.  The current rise from $50/ bbl in 2017 to $70 /bbl in 2018 is due to inadequate pipeline capacity in the US.

Norb Leahy, Dunwoody GA Tea Party Leader