ConocoPhillips (COP) Pleas on High Taxes, Warns on Low Flow

As with most things the government enters into when it attempts to extract capital from productive companies, there are always unintended consequences, and that's the case when Alaska imposed higher taxes on ConocoPhillips (NYSE:COP) under "Alaska's Clear and Equitable System", or ACES, which was put in place under then-Governor Sarah Palin at the time.

According to ConocoPhillips CEO Jim Mulva, because of its 'escalator' mechanism, that increases rates as oil prices rise, Alaska has the highest oil-production taxes among all OECD nations.

"As a result, Alaska is not attracting as much investment as it should during periods of high oil prices. And that's unfortunate. In fact, it's downright sad," Mulva added. "No other state's production has declined more than Alaska's."

Also noted by Mulva was the consequences of lower oil flow through the Trans Alaska Pipeline System because of lower production from too-high taxes.

Oil flow through the aging line is now under a third of the peak levels of 2 million barrels a day in 1988 and falling at a rate of about 6 percent a year, meaning the remaining oil flow could soon diminish to a point where the system can no longer function, according to Mulva.

"TAPS faces new challenges with less oil flowing through the pipeline," Mulva said. "When it starts getting down to 300,000 and 400,000 (barrels per day), there are serious technical issues of its ability to flow. We're reaching that in the next several years."

ConocoPhillips closed Thursday at $80.40, falling $0.03, or 0.04 percent.

Sarah Palin Tells Bernanke "Cease and Desist" from QE2

Citing the hyperinflation experienced by Germany in the early part of the 20th century, Sarah Palin took aim at Ben Bernanke and the Federal Reserve, saying "maybe it's time for Chairman Bernanke to cease and desist," from printing more money and inflating the money supply through acquiring more government debt, "When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again," she said.

Palin rightly noted there's no certainty the printing of money will work, and I would add more strongly: it won't work. What about the abysmal failure of the first round of quantitative easing doesn't Bernanke or the Federal Reserve understand?

"We don't want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings," concluded Palin speaking to the Specialty Tools and Fasteners Distributors Association.

Again, last time the so-called stimulus failed to do anything, but the debt is still owed, and no jobs created.

That is proven by the fact when the gimmicks and money that actually went into the economy ended, the economy reverted back to what it really was: a disaster.

Or, it simply revealed itself for being as weak and anemic as it had always been. And even with the hundreds of billions spent, no jobs were created whatsoever, other than the, for the most part, temporary government jobs.

The Federal Reserve is under increasing pressure as Americans slowly but surely understand the devastating and unchecked institution this is, and how they control the quality of their financial lives.

The genie is out of the bottle, and there's no putting it back. Slowly we'll see this out-of-control institution weakened, and hopefully, ended.

Until then, chiseling away at the edges by people like Sarah Palin is a good way to keep in front of the American people the carnage the Fed creates through its actions.

Gold prices will continue to benefit from the horrid policies of the Fed, which seem to be committed to printing money until by what they consider the power of their actions can push the economy into growth.

When the economy recovers, we all need to know it's not from the Federal Reserve, but in spite of it.