RUSH: Here’s Larry in Ferndale, Michigan — I have not applied. I’m not a rejected applicant. Larry, welcome to the program. Nice to have you with us.
CALLER: Why, thank you. First of all I’m a retired environmental engineer that worked for the auto industry, but in one of the more current editions of Scientific American, there is an article on how farming, which started thousands of years ago, led to global warming.
CALLER: It started when man started to farm. I can’t believe it. I’m about ready to cancel my subscription to Scientific American.
RUSH: I wouldn’t blame you if you did that. If I had a subscription to Scientific American not only would I cancel the subscription, I’d burn past issues and contribute to global warming.
RUSH: No, seriously, it’s nothing more than a political movement, folks. All this global warming business, it’s gotten to the point now that it’s absurd. It was just, what, six weeks ago some story came out, a new group over in Great Britain, “It’s too late, there’s nothing we can do. Even if we started today we can’t stop global warming!” Okay. Well, the obvious question is, “If we can’t stop it, how the hell can we cause it?” The presumption is that we cause it by virtue of what we’re doing, and so we’ve got to stop doing what we’re doing which causes it, that will decrease the incidence, “Oh, no, no, no, there’s nothing we can do, it’s too late.” Well, then we can’t be causing it. Now this. We’ve done such an bang up good job of cleaning up the atmosphere, the atmosphere is cleaner than ever, the air up there more transparent than ever – that’s going to lead to global warming. Now, up till this time it was pollution in the atmosphere that was going to cause global warming. So what this to me represents is utter panic because I don’t think these people are having the success they wanted to have or believe they needed to have. It must be their fund-raising is declining, it must mean donations are down, something. I mean, it’s got to the point now where it’s patently absurd. Mike, Lockport, New York. You’re next, and welcome to the program. Open Line Friday rolling on. Hello.
CALLER: How you doing, Rush?
RUSH: Good, thank you.
CALLER: Hey, one fact you didn’t mention on the causes of global warming, which I think is probably the biggest one, is deforestation and that’s not something that happens in this country, it’s mostly Third World slash-and-burn kind of farming. You talked about exporting capitalism, and I think that’s going to make the problem worse because the real pressure on oil prices is new markets in India and China. And I also wanted to ask you about the energy bill, because the way I understand —
RUSH: Wait, wait, wait, hold it a minute. We’ve got to discuss these things as you roll them by.
RUSH: What I just heard you say is we cannot export capitalism because it will improve people’s lives and they’ll have cars and they will then put pressure on oil, the demand for oil will go up, the price will go up, we’ll be polluting the skies more and so forth and that’s bad for global warming. So what I hear you saying is some people just have to sit there and wallow in garbage?
CALLER: No, I didn’t say that. I think we should export capitalism but it’s going to have effects, and the big effect is going to be tighter energy supply and prices of oil are going to go up with new markets.
RUSH: I disagree. I think we’re going to find all kinds of oil deposits all over the planet, and —
CALLER: Yeah, but we can’t keep up with demand now. That is why the prices are going up. We can’t pump it fast enough.
RUSH: Yes, we can. You know something? What you ought to do, this is an interesting thing, folks, go look at the government’s report on inflation, the consumer price statistics — it’s the index, it’s a whole report, though, where they report — do you know what the price of oil that the government is paying for, in this country, do you know what the price per barrel is? The actual price per barrel for oil right now as listed in the latest government report on inflation in this country is 37 bucks a barrel. Now, how many of you people have heard that it’s 50, 55, 49, 48, coming down? Let me tell you what’s going on. That’s the futures market, that’s the future price for oil, people are speculating in it. The future price. Now, oil is going up in price, there’s no question. But the price — it’s no different than when — something that really bugs me, as an investor, you have all these Wall Street analysts. At the end of every quarter company A or company B will not meet its projected earnings. Some analyst will go on TV, “This is really a bad sign, I recommend a massive sell,” blah, blah, blah, blah, and you have all of this economic and market activity based on the words and actions of speculators.
Now, the price of oil is certainly high, but the futures market is what’s causing the volatility in price. Yeah, there is some depression on supply. We also have a refining problem in this country as well. We really couldn’t refine any more if we were able to import more, even if we were able to produce more. We’re going to have to do something about that, either that or have it refined in other countries and import that, which — as gasoline which is not the host desirable thing but need may require that to happen. We just had stories last week, Mike, there is more oil being discovered in the Gulf of Mexico, it’s down deep, we have so far, we’re down 10,000 — we’ve got an oil rig that’s dug down 10,000 feet. When it becomes profitable to bring oil up from those depths we’ve got more oil than we know what to do with throughout the world. Capitalism will not cause problems, capitalism will only increase living chances, opportunities, lifestyles for all kinds of people.
Two e-mails here, both from subscribers at RushLimbaugh.com. The first one is from Adam Fellmeister. “Hey, the spot price of oil is over $50, people buying it for under 40 is because of futures they bought in the past when futures were that cheap. What you’re saying is totally wrong.” I’m just giving you the price that the government says contributed to the latest inflation right and the latest CPI report, whatever it is. The price of oil is 37 bucks per barrel. I’m not saying that that’s what the current price of oil is at the moment. My basic point is that the futures market is dictating this wild swing in prices, not a wild swing in supply. The supply is not being affected as rapidly as this price per barrel is going up and down. That is the futures market doing it and all I’m trying to tell people is keep a sharp eye. The second e-mail. “Rush, you’re right. Recent high prices are the result of big money funds going long in oil futures and OTC futures which relates to futures. Pitty that the liberal politicians dishonestly try to paint another picture in an attempt to misinform the public to advance their own agenda. Thanks, Paul Rogers, a professional oil trader.” So, a professional oil trader backs me up, says I’m right. Recent high prices are the result of big money funds going long on oil in the futures market and the OTC futures, which relates to futures. That’s all I’m saying. It’s all I’m saying is that the futures market which is basically people speculating what the price is going to be in the future, they’re bidding it up thinking it’s going to be higher or lower, whatever, so they can go longer or short in it, hoping to make a buck on it. And it’s affecting the price at least as much, if not more so, than the daily supply is.
All right, now this last caller that we had, Mike in Lockport, New York, and don’t misunderstand, he was a nice guy, but he was reacting to something I said earlier on the program about spreading capitalism as a means– it all got started in this global warming talk today if you’re just joining us. Some bunch in Science magazine, two researchers say that we’ve done such a damn good job of cleaning up pollution in the atmosphere that the air is more transparent, for those of you in Rio Linda, that means it it’s clearer than its been in 20 years. We’ve done such a bang up job. Have you heard this before? Have you heard anybody say that we’re really making headway in pollution? I know we are, but do the environmentalist wackos say it? No, it sets their cause back. Just like Jesse Jackson saying, yep, we’re making progress in race relations. He’ll never say it. Set his cause back, same thing with the environmentalist wackos. All of this is political, and all of it is agenda oriented. Now, here come these two guys, say, hey, guess what, we’ve done such a bang up good job of cleaning up the sky, cleaning up the air, that global warming is going to get worse because the atmosphere has less refraction, less deflection, and so the sun’s rays are piercing and it’s going to cause global warming. We can’t win, it’s ridiculous.
So I was basically talking about the fact that in capitalist societies we are the ones that are cleaning up our messes, we have the resources. Compared to us, you go to a Third World country or lesser developed part of the world and you’ll see real pollution, everywhere, on the ground, in the water, in the sky. You see much less here, particularly per capita. So I said the problem here not resources in the world, we don’t have an unequal distribution of resources, we have an unequal distribution of capitalism. So Mike from Lockport called and said, well, you’ve got a problem if you start distributing capitalism around there that means more people are going to end up with automobiles and needing gasoline and oil and you’re going to put pressure on the oil supply and the price is going to go up. And I said that’s not how it happens. When you spread capitalism around, the price of goods and services comes down. That led to a discussion of how there’s more oil out there than anybody can probably figure right now. There was a story just this week, yesterday in fact, from the Salt Lake Tribune.
“A tiny oil company from Michigan has struck oil in central Utah, but it may be years before anyone knows whether the discovery produces another ‘one field wonder’ or results in a series of major finds that could help reduce the nation’s dependency on foreign crude.” The speculation is that this field in Utah may have over a billion barrels of oil. Over a billion barrels! There’s more oil under the Gulf of Mexico than we’re able to get now, but we will be able to get it as our technological advances enable us to go get the oil at cheaper prices so that a profit can be made once the oil is brought up and sold. But this whole argument about more people and more capitalism and more resources results in scarcity, that argument’s already been had, it’s already been made, it’s already been wagered, and the guy who made the argument that increased capitalism, increased resources, leads to scarcity lost. His name was Paul Ehrlich. He’s the author of The Population Bomb, he hasn’t been right about anything. He wrote a book in the seventies, The Population Bomb, that said if population trends continued, that we’d all be dying of starvation by now. And it’s the just the exact opposite. So in 1980 the economist Julian Simon, who is now deceased and Paul Ehrlich decided to put their money where their predictions were. Ehrlich had been predicting massive shortages in various natural resources for decades. Julian Simon claimed that natural resources were infinite.
So Simon offered Ehrlich a bet centered on the market price of metals. Ehrlich would pick a quantity of any five metals he liked, which were worth a thousand dollars in 1980. If the 1990 price of the metals after adjusting for inflation was more than a thousand dollars, Ehrlich would win. If, however, the value of the metals after inflation was less than $1,000, Julian Simon would win. The loser would mail the winner a check for the change in price. Ehrlich agreed to the bet, he chose copper, chrome, nickel, tin, and tungsten. His theory is that more people using these finite resources will cause a reduction in these resources, natural resources, cause a reduction, and when the supply goes down, what happens? The price goes up because there’s more demand, there’s more people wanting access. And Simon said this is bunk. So, the ten years went by. And by 1990, all five metals were below their inflation-adjusted price in 1980. Ehrlich lost the bet and sent Julian Simon a check for $576.07. Prices of the metals that Ehrlich chose fell so much that Simon would have won the bet even if the prices hadn’t been adjusted for inflation. And I have a little chart here how each of the metals performed from 1980 to 1990, and what happened basically to the price. The price of copper was 200 bucks in 1980. It fell to 163 bucks in 1990. Chrome, 200 bucks. This is for 51 pounds. And the amount here differs, but I’m not going to confuse you with a bunch of numbers because the individual weight of each metal here is irrelevant to this because they agreed on a fixed price per amount. So $200 was the price just for calculation of the chart. So copper, 1980 price, 200 bucks, 1990 price, 163. Chrome, 1980 price, 200 bucks, 1990 price, 120. Nickel, 1980 price, 200. 1990 price, 193. Tin, 1980 price 200, 1990 price $56. Tungsten, 1980 price, 200. 1990 price $86, a decrease of 57% and 72% respectively in those last two categories. Ehrlich’s reaction to the outcome was typical of his habit of ignoring his failed predictions in general. He maintained he really didn’t want to make the bet and regardless the outcome was meaningless, he said.
Anyway, Simon got the inspiration to offer the bet from Ehrlich who famously wrote, “If I were a gambler I would take a even money that England will not exist in the year 2000.” Many people who have taken Simon to task for assigning too much importance to his bet with Ehrlich seem to ignore Ehrlich’s penchant for such wild statements. More importantly, in the 1980s Ehrlich not only thought his bet was easy money but he thought Simon to be dead wrong in thinking metal prices would go anywhere but upward. He said Simon is wrong about the economics of mineral resources. The trough-like pattern, long predicted for mineral resources prices, has now shown up, as Cook points out, for all industrial metals except lead and aluminum. This includes copper, blah, blah. He was the totally wrong about everything. He hasn’t been right about anything. He’s a doom-and-gloomer. He’s the same kind of guy like people out there predicting global warming and all Julian Simon — these are natural resources, you know, they occur naturally, nobody’s out there manufacturing them, and yet with population growth and an enhancement in everybody’s lifestyle for the most part around the world, what happened to these prices? They went down. You spread capitalism around the world and the same thing is going to happen. We will find the oil necessary to fuel the engine of freedom and capitalism as it spreads. It’s only the doom-and-gloomers like those in the Democratic Party, America’s liberals, always pessimistic, always fatalistic. We’re always on our last legs, we can’t do this, we’ve seen our best days, blah, blah, blah. BS. Our best days are ahead of us. Tomorrow is going to be a better day than today. Today is a better day than yesterday. As long as the real engine of all this continues unabated, and that’s freedom.
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