Today’s comment is by David Newman, Market Analyst and Membership Director for The Sovereign Society. There are plenty of reasons why gas is still so expensive right now. First and foremost the cost of the raw material; oil has climbed steadily over the last eight years. As the cost of oil rockets higher, the cost of gasoline always dutifully follows. And follow it did – to an average high of US$4.10 per gallon. But following in a close second place is the fact that the United States just doesn't have enough oil refineries. The National Petrochemical and Refiners Association says the last new refinery built in the United States was Marathon Ashland's Grayville, La., plant. And this plant was completed in 1976. (Even with the recent pullback in oil prices, crude still hovered around US$111 as of this morning.) Yet whenever a new project is proposed…plenty of Americans are up in arms. They all scream: “Oil refineries? Not in my backyard!” New Secret South Dakota Refinery Squashed By a Few Farmers Let me give you an example – just reported: The plans were kept secret for months but residents of Union County, South Dakota just voted in favor of rezoning land for a US$10-billion refinery. Once completed, this new refinery will be capable of converting 400,000 barrels of Canadian oil into gasoline, diesel, and jet fuel per day. But while the county as a whole favored the project by a 58% majority on June 3, 2008, most rural voters who would actually be affected by the refinery’s location said “absolutely not!” "I'll keep fighting it," said farmer Dale Harkness, whose front yard could one day face the refinery, which would also need a pipeline built. He and his wife, Carol, vow to start a legal battle to prevent a project. They say the refinery project is speculative at best. At worst, it will pollute the land, creeks, and skies of this tiny town for generations to come. "They will never build here. 150 years from now someone will be enjoying that land and this land," Harkness said, pointing to the property around him. If No One Wants to Build One…That Makes Existing Refineries Priceless I lived in Houston, Texas for over 20 years and was a geologist for the eight of them. So I’ve been around refineries and I can tell you from firsthand experience, “they ain’t pretty.” They smell, they’re dangerous and I wouldn’t want one in my backyard either. So what’s the answer? Honestly, I can’t say. But I know those companies that own the existing refineries are sitting on some valuable assets, considering no one else wants to sacrifice the land to build one. Here’s a little known fact: Refineries actually LOSE money when oil prices rise. In that way, refineries really have an inverse relationship with oil prices. When one rises, the other falls and vice versa. So lately refineries have been bleeding assets while oil soared. But as soon as the price of their raw material pulls back from the stratosphere they could begin to start making real money again. And with the price of oil currently pulling back by 20%... refineries are worth taking a look at. DAVID NEWMAN, Market Analyst P.S. EDITOR’S NOTE: David just uncovered 2 ways to jump onboard this refinery trend so you can get in now while the market is hot. David reveals all – including exactly how to buy both plays – in the soon-to-be-published issue of The Sovereign Individual. If you’re a Sovereign Society member, please look for your next issue coming online next weekend. Not a Sovereign Society member? Sign up now so you don’t miss out on David’s dynamite strategy.

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Currencies:

Politics Can Outrank Economics in the Currency Markets While I’d never wish a war on anyone, it sure makes currency trading very interesting during battle. Take the Georgia/Russia skirmish I talked about in yesterday’s A-Letter. That five-day war knocked the Russian ruble down by 4% in less than a week! (That’s a huge leap in the currency markets.) If you keep in mind where the money will be likely running to during these times…then you can seize the moment and make some serious gains when it happens. Currency trading is all about seizing opportunities from economic booms and busts. But you can’t forget that currencies are also influenced by politics. When one of these politicians boldly declares war, look out below! (Or better yet, short that country’s currency.) Then trade it against (or buy) the currency or currencies that you feel will benefit from the conflict. It’s worth checking out how “politically stable” an economy is when you’re doing some economic homework on a country. If a country does NOT have a good historical track record for political stability, then you should invest a smaller portion of your portfolio in that currency – and only as a speculation. For example, Thailand is known for its political instability. Its currency, the Thai bhat, can (and has) moved extremely fast in value when the country was under duress. So the upside to investing in these politically unstable countries is you can make a lot of money in a very short time. However, do to their natural volatility, you need to be more careful and pay attention when tensions are rising in these countries. All in all, these currencies are a great place for investment most of the time. This 5 day war was one of the exceptions to that rule. However, you’ll find that every 5-10 years, these things happen over and over again. So watch out! SEAN HYMAN, Currency Analyst  EDITOR’S NOTE: Our colleague, Jack Crooks has a masterful strategy to play these highly speculative, politically charged currencies. You’ll hear all about it this fall at FX University. Jack will be traveling around the U.S. with five other currency experts to give you all his currency knowledge – from slow moving currency investments to big-time winners in the Forex market – in special one-day seminars. The first seminar is September 15, so time is running out to sign up. Find out when we’re coming to your hometown.

Privacy & Rights:

Could We See a New E-PATRIOT Act in the Years to Come? If you've ever wondered how Congress could possible enact legislation as complex as the USA PATRIOT Act less than 30 days after the events of Sept. 11, 2001, you're not alone. The answer, though, isn't that mysterious. The proposals that eventually became the PATRIOT Act weren't new. They had been previously introduced numerous times, but never enacted. Congress only acted after the tragic events of 9/11.  And that's what leads me to make a prediction: Within a few years, perhaps much sooner, there will be an information security "meltdown" event that is too big to ignore. Perhaps terrorists will steal launch codes to nuclear missiles and initiate an attack on Israel. Maybe hackers will infiltrate NSA computers and shut down its network of more than 50 surveillance satellites. Whatever the event, whatever administration is in power – Democrat or Republican – will demand an immediate congressional response: a PATRIOT Act for the Internet.   What's more, much of such an E-PATRIOT Act already exists. According to Stanford University law professor Larry Lessig, who founded the university's Center for Internet and Society, the Justice Department is waiting for an Internet security meltdown before introducing a cyber equivalent of the PATRIOT Act. What will the E-PATRIOT Act include? The Justice Department isn't talking, but it's safe to assume that it will include provisions previously introduced, but rejected due to civil liberties concerns. These include: Mandatory disclosure of encryption keys and passphrases after a court order or some lesser legal process Prohibition of anonymous email accounts Mandatory retention of email logs and Web surfing logs by Internet Service Providers Mandatory use of "Internet ID cards" to access the Internet And that's just for starters. The Justice Department no doubt has many other initiatives in mind, waiting for an expedient time for introduction.  As bad as an E-PATRIOT Act would be, it's not the end of the world. You always can communicate in other ways. For example, "snail mail," can't be routinely monitored as easily as email.  While the timing of the E-PATRIOT Act is unknown, its eventual arrival is a near-certain. Be prepared! MARK NESTMANN, Privacy Expert & President of The Nestmann Group www.nestmann.com

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