February 8, 2006 ~ Vol. 8, No. 6

You’re Under Surveillance

In the midst of all the hypocritical and self-righteous talk about the fact that the National Security Agency actually listens to calls from known or suspected terrorists talking to someone in the United States or vice versa, is the fact that every single American is under surveillance these days. It begins with the Social Security number that is issued to newborn infants!

There is hardly a purchase you make that isn’t monitored for the purpose of selling more of the same or identifying you as a potential customer for something else. As Robert O’Harrow, Jr., a Washington Post reporter and author of "No Place to Hide", says, "Almost every aspect of our lives is being recorded by someone, somewhere."

Is it time to get very paranoid or is this just the way business conducts marketing research these days? The answer is the latter. This is particularly true when it comes to your credit rating and credit card activity.

Like a lot of Americans, I pay a company to constantly monitor my credit status and report back to me if anything odd occurs with one of my cards. Why pay attention to that? Well, identity theft is almost ridiculously easy and not too long ago more than forty million credit card numbers were hacked from MasterCard International Inc. and Bank of America lost the financial information data for 1.2 million federal workers.

Not a day goes by when I don’t receive emails from fictitious Ebay, PayPal, banking and credit card operations "phishing" for my credit card and financial information.

However, when it’s the government that’s taking an interest in these otherwise mundane activities, then the opportunity to cross the line becomes a potential invasion of privacy if a warrant has not been issued. That should be a cause of legitimate concern.

As it is, the government asks for and voluntarily receives tons of personal information every time you interact with any aspect of it. And what they don’t have, they can get from a company such as Acxiom, described by Harrow as "a billion-dollar player in the data industry with details about nearly every adult in the United States." It is now working closely with Homeland Security officials.

I love the "CSI: Crime Scene Investigators" television series. What fun to see its characters run a computer check on some victim or suspect and watch as all kinds of information becomes almost instantly available. Where do you think that information comes from? Do you have a driver’s license? Have you ever received a speeding or parking ticket? Do you work for the government or a branch of its military services?

Why Americans would get exercised over government surveillance at this point is a bit surprising, given the fact that a whole bunch of government agencies, from the Federal Bureau of Investigation to various intelligence agencies, have routinely been keeping an eye on all kinds of criminals and, thankfully, on our enemies.

Anyone who works for a corporation is under surveillance. A recent report based on a survey by the ePolicy Institute in cooperation with the American Management Association revealed that nine out of ten companies engage in workplace surveillance; primarily monitoring computer use. Two-thirds wanted to know what websites employees visit while on the job. Just over half of the 500 U.S. employers reported that they monitor phone calls and about one-in-five taped calls. More than half reported using video monitors.

There are some very good reasons for this because corporations can be held accountable for the misbehavior of employees when they are on the job and, perhaps, uploading nude pictures of children to their favorite pedophile website. They need to fend off sexual harassment, hostile work-environment, and claims of wrongful termination lawsuits. Just as important, companies need to detect any source of leaks about their products or services to competitors, about sensitive merger talks, and even unfounded rumors.

Video surveillance is so commonplace these days that you are being watched in supermarkets, department stores, and countless other places.

Is it wrong for the government to tap your phone or read your mail without a warrant? Yes. It has always been wrong, but the current NSA flap is about listening to traffic from outside the U.S. to people inside who may be planning to kill a lot of us. Since this occurs at the speed of sound, the need to get a warrant has been overtaken by modern technology.

Key members of Congress knew about the NSA program and were briefed on a regular basis. Did any one of them complain before The New York Times, after sitting on the story for over a year and being personally requested by the President to keep it secret, chose to reveal it just before one of its reporters published a book on the topic? In my view, The Times, the reporter, and probably the publisher of his book should be indicted for sedition. If the public’s "right to know" supercedes the need to protect that same public against a declared enemy, this nation is in deep trouble.

My feeling is that most Americans understand what is at stake, know that the nation is at war with a merciless, deranged enemy, and know that, if they aren’t breaking the law in some fashion, such surveillance is a vital element of the war on terrorism.

Exxon Mobil Comes Clean!

I’m shocked! Shocked! Apparently, Exxon Mobil is making a profit on the sale of oil. Moreover, this energy company is telling anyone who’s interested all about it. In fact, on January 31, news of their profits was the big story of the day. I did notice, however, there was no mention of the billions federal and state governments received in tax revenue on gasoline.

The Tax Foundation studied this profit-versus-taxes situation and concluded that, over the last 27 years, gasoline taxes took $1.34 trillion out of the pockets of consumers, noting that this is more than twice the total profit of all oil companies during the same period.

Recently, ExxonMobil published a "backgrounder on oil company earnings and prices." They sent it to the media in what was probably a vain attempt to insert some reality into the reporting.

I received the backgrounder because I write about energy topics. According to the report, "The oil and gas industry earned 8.2 cents for each dollar of sales in the third quarter of 2005, which is slightly more than the average of 6.8 cents per dollar for U.S. industry. ExxonMobil earned nearly 10 cents per dollar."

The nerve of these people, earning 10 cents per dollar! Oh, wait. It turns out that pharmaceutical companies earned 18.5 cents per dollar of revenue; banks earned 18.0 cents on the dollar, and household and personal products earned 11.4 cents.

What’s wrong with this picture? I thought ExxonMobil and all the rest of the "Big Oil" companies were supposed to be gauging John Q. Consumer and making great pots of money.

It turns out that it costs a lot of money to get that oil from a big hole in the ground or deep under the ocean to your car’s gas tank. "The cost of crude oil makes up about half the cost of every gallon of gasoline," notes the backgrounder, adding, "That money goes to those who supply it; mainly governments of oil producing countries."

That’s true, but left unsaid is the fact that ExxonMobil and other oil companies must deal with some of the world’s most infamous dictators, starting with the Saudi Royal Family. Most places where oil is to be found also come complete with some of the nastiest people on planet Earth. There’s Muammar al-Qaddafi in Libya, Omar al-Bashir in the Sudan, Hugo Chavez in Venezuela, and who-knows-who in Nigeria. Let’s not forget Seyed Ali Khamane’I, the ayatollah running Iran and the Russians aren’t exactly choirboys either.

Frankly, I don’t give much thought to these people when I pull into my local gas station and grandly say, "fill’er up!" Today in the U.S., there are some 165,000 service stations and ExxonMobil owns and operates less than 1,000 of them. Even if it wanted to, it could not control the market price of gasoline.

Before ExxonMobil gets to total up its profits, it must first pay state and federal taxes that account for 46 cents per gallon. To put it another way, as of January 2006, governments took 20% of the current price. Then there’s the 20-30% ExxonMobil must spend for refining, transportation, and marketing.

ExxonMobil isn’t the only oil company grappling with what is currently seen as a point at which most of the world’s oil reserves have been tapped and any new ones are going to be more costly to extract. Royal Dutch Shell also just announced record profits. On January 25, Jeroen Van der Veer, its chief executive, was published in London’s Financial Times asking, "But where are we going to find this energy? My view is that ‘easy’ oil has probably passed its peak. In unconventional oil and gas—resources that are harder to tap—there are plenty of reserves." Hey! That’s good news, isn’t it?

Well, yes and no. According to Edward G. Galente, an ExxonMobil senior vice president, "Today, world energy use from all fuel sources is the equivalent of 230 million barrels of oil every day. " Of that, ExxonMobil’s share "is only about 4 million equivalent barrels." That’s still a lot of oil, but "it represents just about 1.8 percent" of the world’s appetite.

Oil is going to cost more in the years ahead. It doesn’t matter who you buy it from. Hurricane Katrina and Rita drove up the price briefly when it knocked refineries in Texas and Louisiana offline and impacted oil rigs in the Gulf of Mexico. It’s called supply and demand.

If you have a really good crystal ball, consider scenarios that lead to a Middle Eastern conflict with, oh say, Iran? Then there’s that fellow, Hugo Chavez, the president of Venezuela who hates the United States. And, well, just a whole lot of problems everywhere can drive up the price.

There’s the real world and then there’s the Hollywood version or even the mainstream news media version. Oil companies are always the villains in the latter versions. These are the "progressive" folks who need villains to blame for the ills of the world, but they rarely give that much thought when they fill up their gas tank, heat their homes and offices, and benefit from the work of energy company people who make it happen.

The world is not running out of oil. It is running out of oil that is easy to access and extract. The U.S. uses a huge amount of energy, but it is not taking the steps necessary to grant access to oil reserves in Alaska and offshore. The shale oil deposits we have are going to cost a lot of money to access and refine. You better hope that ExxonMobil and all the others in the energy business make enough money to do that.

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