America, Over Big Oil's Barrel
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As the energy crisis deepens, oil companies also hope to gain entrée to domestic lands that have previously been closed to drilling. But when Rep. Waters asked Shell's Hofmeister to guarantee that prices at the pump will go down if companies are allowed to drill where they please, he replied, "I can guarantee to the American people because of the inaction of the United States Congress...$5 [a gallon] will look like a very low price in the years to come if we are prohibited from finding new reserves, new opportunities to increase supplies."
But giving the oil industry rights to exploit more of the public domain would likely have no impact on gas prices. Oil companies already have huge swaths of federally owned territory available to them, and on much of it, they are doing nothing. As the New York Times pointed out last week in an editorial on the "fiction" that "huge deposits of oil and gas on federal land have been closed off " to drilling, four-fifths of the oil thought to lie offshore in Alaska and Gulf of Mexico are already available for development, along with two-thirds of the oil reserves on federal lands, according to the Interior Department's Mineral Management Service. Of the 90 million acres of public lands under lease to oil companies, about three-quarters—68 million acres—are not being used to produce energy.
A strong case can be made that speculative trading, not slackened supply, is a major force in the continued rise of oil prices. In May, during the same week that Goldman Sachs (the leading commodities trader in oil) predicted that oil prices could rise to $200 a barrel over the next six months to two years, crude oil prices went up to $123.90 a barrel. Every increase in price enriches speculators who are betting that the price of oil will go up. In May, Sen. Carl Levin estimated that speculation had added as much as $35 to the price of a barrel of crude. "This is not a supply and demand issue," he said.
The history of oil is the story of an industry bent on avoiding surplus, not shortage. An oil glut, which could drive down prices, is what spells ruin for Big Oil, and from the very beginnings of the industry, John D. Rockefeller's Standard Oil Co. fought to control the deluge of oil, primarily through ownership of pipelines. In this sense, the idea of peak oil—that we will reach a maximum level of oil production, after which there will be a declining supply—serves industry well, since it encourages tolerance of higher prices. And of course, while some may see the peak-oil scenario as a reason to support alternative energy, it can just as easily be employed to support the push for more drilling and less regulation.
During the last energy crisis, in the 1970s, the energy industry warned that federal regulation of natural gas prices at the wellhead would lead to a shortage of that fuel. Holding down prices, so the argument went, would deprive the oil and gas producers any incentive to search for and tap gas in difficult terrain. Under a ferocious industry assault, Jimmy Carter opened the way for deregulating oil and natural gas prices, a process that would be completed by Ronald Reagan. As soon as that happened, the threat of a gas shortage miraculously disappeared. In 1977, congressional investigations led by John Moss, a Democratic congressman from California, alleged that energy companies were deliberately withholding supplies of gas from the market to force prices up.
Public Citizen's Tyson Slocum believes that today, as well, there are instances where the industry is driving up prices by controlling the supply. He cited a 2001 investigation by the Federal Trade Commission into a spike in the price of gas in the Midwest, which identified some suppliers who "withheld or delayed shipping additional supply" for the sake of preserving profits. "An executive of [one] company made clear that he would rather sell less gasoline and earn a higher margin on each gallon sold than sell more gasoline and earn a lower margin," according to the investigation. "Another employee of this firm raised concerns about oversupplying the market and thereby reducing the high market prices." There may be many other instances of this, but they are seldom investigated since weak anti-trust laws make most of these practices perfectly legal, even in a time of crisis.
With a setup like this, it's no wonder Big Oil has shown so little genuine interest in renewable fuels—despite considerable efforts to market themselves as green. In congressional hearings, the oil company executives have touted their investments in alternative energy, with Shell's John Hofmeister declaring, "Like most energy companies, we are engaged in the race to develop these technologies and fuels and make them commercially viable." But Rep. Jay Inslee (D-Wash.) cited the real numbers on the companies' investments—Exxon, for example, spends less than half a percent of its gross revenues on research and development of "clean energy"—calling their efforts "pathetically small." Inslee then asked the executives how they thought alternatives could be developed if the country's biggest energy companies refused to invest in them: "Is it going to come from the oil fairy?"
James Ridgeway is Mother Jones' senior Washington correspondent.
The situation will never get any better until this nation learns to conserve or rely on alternate energy sources. I can guarantee that we will never see $2.50 for a gallon of gas ever again.
As my dad would say it....leave 'em (big oil) holdin' their dicks in their hands.
However, once most Americans understand that oil is a limited resource, conservation seems to be the best solution, if you do not have 'short term' goals in mind. Keeping oil in teh ground makes sense just like keeping money in the bank makes sense ... for a rainy day.
And the whole thing with the environment is 'short term' profit & monetary goals versus 'long term' changes to the energy systems. Republicans rely on 'short term' thinking for almost everything related to this. Instant gratification, immediate this, immediate that.
The argument for a 'long term' approach is hard to make in the United States, where the population has been conditioned to simple, quick solutions. But I think most people will understand it eventually...in fact mother nature will MAKE them understand it.
Well, they have been itching for M.E. oil for sometime. www.motherjones.com/news/feature/2003/03/ma_273_01.html
And of one reads the Wolfowitz doctrine [basically Empire] any country that ha large oil reserves could become a threat to said empire.
The Rockefellers have long been involved in oil and politics, they are social Darwinists [even though they often claim to be Christians] in the business world they say its only natural to exploit their position of power.
I find it interesting those that have been cheerleaders for free-market are now realising that they are getting screwed and are growing angry. BTW Mexico has price controls and gas is about 2 bucks a gallon.
Its estimated that 60% of the high cost of fuel is related to investment banks putting huge sums of subprime bailout money into oil. As well these futures contracts and swaps are highly leveraged and as with the subprime is creating a bubble that will eventually burst when the predators move to the next bubble [hopefully]
2. All oil regions peak.
3. It took 500 million years to make the oil on the planet. We cant simply make more.
4. Most countries have already peaked starting with the US in 1971 and likely ending with Saudi Arabia in 2005 or 2006. Saudi Arabia suddenly and mysteriously became very secretive about their oil reserves starting in 1986 to hide the fact that they were about to peak.
6. Saudi Arabia has traditionally been the "swing producer," increasing or decreasing production to adjust oil prices. Since 2005, they have been unable to do this. Several signs point to the fact that they are operating at full capacity.
7. The biggest oil fields are often those found first. All remaining undiscovered oilfields are likely very small and very deep.
8. When a new deposit is discovered, the "sweet light" oil - the highest quality portion - is at the top, while the heavier "sour crude" which requires more processing is at the bottom.
9. Even in the rosiest scenario, there is very little undiscovered oil.
10. All of the alternative energy sources we have thought of thus far - wind, solar, hydrogen, wave, natural gas, coal - all require extensive metallurgy processing and energy investment - they are in fact subsidized by petroleum.
Murdoch praises Blair's 'courage'
* Julia Day
* The Guardian,
* Wednesday February 12, 2003
http://www.guardian.co.uk/politics/2003/feb/12/uk.iraqandthemedia
Murdoch:
.... "The greatest thing to come out of this for the world economy, if you could put it that way, would be $20 a barrel for oil. That's bigger than any tax cut in any country."
Maybe you should ask Murdoch what can be done about $ 140 a barrell. He might
have the solution to it, just waiting to be called in.
You are joking right?
Simplified, it's a classic case of an abuser and a victim. But in this case the abuser is doing it with full knowledge of what's being done. But they are sick just the same. They believe their money can insulate them from any affect caused by their greed. It's worked well so far.
It's "Democratic" or Democratically-controlled" in your context. Always has been.
Why perpetuate GOP spin?
It's easy to create food, plant a seed, add some ferilizer and then water. Viola, you've got corn. To produce oil you have to invest between $1 billion and $5 billion to build an offshore drilling rig. Tow it out to sea and anchor it in water that maybe as deep as 5000 feet. Then send your drilling equipment through that water and into the seabed below for several thousand more feet. If you're lucky you find oil and gas.
Last year Exxon made a profit of $40 billion, that's an incredibly large amount of money. However in order to make it they had to sell $412 billion worth of petroleum products, that's less than 10 cents on the dollar. What's the problem with that? Exploring, producing and bringing to market petroleum produts is a very difficult thing to do but yet American oil technology does it with flying colors. When hurricane Katrina blew through the Gulf of Mexico 167 oil rigs were partially or completely destroyed yet there was no crude oil released into the environment, that's pretty impressive.
Enough about the oil industry, how about your writers direct their attention to the real culprits, the US Congress. For the last 35 years, ever since the Arab oil embargo, our govenment has totally failed the American people by failing repeatedly to create a comprehensive national energy policy. Both political parties are to blame for the enormous problem our society faces today. Nixon's answer was to impose wage and price freeze controls and Jimmy Carter told us to put on a sweater, turn down the thermostat and drive 55. Wow, I'm overwhelmed with such courageous leadership, NOT.
We have a 'market' economy and even pension funds are piling into the high profit oil/commodity speculation. I've heard of estimates of about $35 per barrell. Howewver, that still leaves oil at $105 ... and climbing.
Yet future's buyers understand that oil IS getting rarer. They have not really understood it until recently. So the future's market finally figured out a basic fact.
Speculation, or ... just factual anticipation? If you disagree, why don't you buy some airline stock then?
It have found it interesting and profitable to see how Wall Street has finally overcome their denial of the fact pointed out years ago by Dr. Steven Leeb that oil prices have had a huge contrary effect on the stock prices for many years.
Two years ago I attended a meeting heavily attended by North slope petroleum engineers who were highly skeptical of the speaker, Dr. Ken Deffeyes and his analysis of Peak Oil and its probable repercussions, and while polite, they treated him as a snake oil salesman. In the interim they have surely become believers.
We face chaos and a massive depression if we do not find amongst ourselves a leader who can grasp what needs to be done and has the will to pursue a interim strategy of oil and gas development as a stopgap measure while we immediately implement stringent and mandatory conservation measures, and also mount a scope of alternative energy development similar to the allied buildup of WWII or Rosevelt's "New Deal".
Without this type of effort and we are screwed, in the terms of Dr. Deffeyes and Dr. Leeb, and famine, wars, and chaos will result, as our economy dissolves to a survival mode that we are ill-equipped to survive.
If the Congress showed sincerity to drill for oil off shore, the speculators would drop the price the next day because the risk of their oil futures would be in jeopardy.
I think Mother Jones should get real when it comes to Capitalism rather than the mantra of big government.
No world wide gap between what's available and new demand caused a 3 fold price increase in a YEAR. It's all BS. Deliberate increase in ME tensions caused by this administration sets off the speculation.
American economic growth over the past century. To abandon their use prematurely would be a massive mistake, weakening America just as it needs to be at its strongest. America has weathered energy crises in the past, and will do so again. As long as U.S.
policy makers maintain an open and competitive economy, we can continue to meet energy challenges well into the future.
And let's face it, while it is OK for them to profit, it's the margin and scale of the profit that is the problem. And all those people who think it's in-line with other corporations, guess again. In economic downturns, while many companies see a decline in profits, 2 industries come out on top, the health 'care' industry and oil companies. Why? 'Cause everyone needs them. What's interesting is how useless these two 'industries' really are. Most research in heathcare is done by universities and the NIH, while healthcare providers pay themselves massive salaries as part of a useless bureaucracy and acquire free research from the government and universities anyway. What a wonderful market based system we have that rewards merit! Not.
Now as far as oil companies are concerned, they are the ardently opposed to changes and are similarly USELESS. Nationalize ‘em and gas prices would drop and the people running oil extraction would get paid a civil servant’s salary, which is more than fair considering how much work they put in. Oil companies need to be closely regulated, monitored and their profits taxed and redirected away from bloated CEO and financial officer salaries and into alternative energy. These bloated monstrosities aren't even happy with last year's windfalls but have INCREASEING profit margins and for what? Are they providing a better service? Did we suddenly double our population and number of vehicles? Get real. They raise prices as they see fit. Their massive profits and salaries are NOT justified and this has nothing to do with a free market since this country doesn't really have one or believe in one anyway. Everything is subsidized by the government through taxes from the masses. Always has been and always will be. So if they can so readily take from consumers, I see no reason consumers can't ask for some of that hardly earned cash back. Of course, if we have McCain in office, expect things to get worse. Hell, Obama too for that matter, BUT I’m hoping he’ll be willing to raise taxes on ‘em at the very least.
However, what we can do to lower the price of oil is to yes, drill.
Conservative estimates put the total amount of recoverable oil in conventional deposits at about 39 billion barrels within the United States. Offshore, we have another 89 billion barrels or so. In ANWR, 10 billion barrels await drilling.
In oil shale deposits, we have more than 1 trillion barrels of oil. In perspective, that's about four times the total reserves of Saudi Arabia. And if estimates of shale reserves as high as 2 trillion barrels prove true, we'll have about a 300-YEAR supply of oil just from shale. The best way to get off foreign oil is to drill at home. Nuff said.
Who and what is the inspiration behind the speculation and the speculators? I thinks it might be more than individual investor greed,hedge fund managers,commodities traders,Wall St..or the finite resources for global energy consumption and the oil companies,nationalized centralized powers or their respective executives.It is unadulterated power of a nature probably not understood by the majority of the global govt officials,oil executives or the voting populace.The "facts" are fragmented illusory deflections, reflections,conjectures of a greater truth behind the historical causalities,the economic dualities of supply and demand,the World Bank,the International Monetary Fund,American policy-formation,wars,terrorism.Social Darwinistic concepts of natural selection might be a more apt metaphor to explain the existential whys regarding the current oil crisis or non-crisis??? The evolutionary changes are the results of the desire to survive,to not become an adaptation or worse yet extinct.We want life,we want influence and we want fundamentally "deterministic" power to control the global "organism".This is a simple truth yet so very hard to conceive through the machinations and mechanisms of "facts","truths" and contextual realities.
Until we embrace a "global consciousness" of assistance,collaboration and mutual survival we will "intuitively" cling to the perception that only the "strong" will survive.
While you try to imply the latter fact refutes the former fact, both points are true. The U.S. is one of the largest producers of oil. However, it produces only about 10% of world production.
This market minipulation has won Big Oil world record profits.
Well gusee what ? We can have those profits back. We file Antitrust Violations with the Federal Trade Commission and thenwe request the Justice Department investigate the Collusion between Big OIl under RICO.
Senator Ron Wyden has called for an FTC investigation and he could use our support right now. We need the House Judiciary Committee to requset a GAO Government Accounting Office invetigation with Judiciary oversight over the Justice Department and The FTC.
First we need to get the refinery closures into the American spotlight.
Contact your Rep and request FTC, DOJ and Judiciary Oversight.
We can beat Big Oil if we unite!!!!!Start with contacting your Rep and tell them to contact SEN RON WYDEN FOR BETTER INFO!!!!!
On the other hand, if we forced the oil companies to sell domestic oil to Americans for below world market prices, many of us could make a very nice living buying that cheap oil/gasoline and selling it overseas at a profit -- but the greedy oil companies won't let us. If the government made them, they'd probably sell the oil they're already pumping until it runs out, but refuse to invest in new technologies for finding more oil.
So maybe our best bet is to stop worrying about what the oil companies are doing, and try to find a way to live without oil. Then we can let the oil companies drink their oil.
how the voting in congress works by now.
millions into the market.They are of course in bed with the oil companies.
Thank heavens for us practical conservatives and the Right who see the truth behind Peak Oil and Climate Change and are taking steps NOW to avoid the consequences.
Socialism lost, get used to it.
http://leysiner.blogspot.com/
SALUD. L. Hernandez
With support assured for a bill to allow limited off-shore drilling Pelotrotski adjourned Congress before a vote. McCain had been against off-shore drilling but had changed. Now (funny timing) ... so has Obama (gave him a chance to change his opinion and go on record supporting off-shore drilling before the bill was passed). I believe I heard somewhere that the ban expires in September anyway and I'm not sure that the delay will have much practical effect.
Oil leases ... use it or loose it, I say! Oil companies should not be able to just sit on them.
I realize this is not public knowledge, but this is all a game to make billions of dollars.
I heard that the oil in Prudo Bay Alaska was so full of sulphur that they had to send it to Japan to have it refined, I know better, that is some of the best crude oil in the world, any refinery in the USA could refine it.
People are getting wise to what has been going on, senior Bush was heard a while back saying if the people knew what we were doing to them, they would chase us down the street and hang us.
People are not being fooled any more we are getting wise to all the skullduggery that has been going on for many years.
They think we listen to the news and that is where we get our information, you don't get the truth from the news. You get what the government wants you to hear, and that isn't always the truth.
I agree that we should get away from oil completely, if the government would release all the technology they have gotten over the years, we wouldn't need any oil, they have technology
that would supply all our electrical needs for free, but of coarse they can't get rich on free electric, or cars that don't need oil.
Look into it and you will see what I tell you is the truth.
The top reasons for high gas prices:
1. Lack of competition translates into paying more at the pump.(Exxon merges with Mobil, ChevronTexaco, BPArco, etc )
2. Were the diplomatic skills of this administration up to par, oil prices would be far more stable. Invading Iraq has only brought instability. Angering Russia by placing our military and our missiles at their doorstep only brings more instability.
3. If the dollar was as strong today as it was when Bush took office, $140 would fetch closer to 2 barrels of oil.
4. CAFE standards are too weak. Future technology is promising, but fuel efficiency could double using yesterdays technology.
It seems like our President wants high oil prices. But that would make him an oil man...inconceivable!
WE NEED ATTACK DOGS BRAVE ENOUGH TO STAND UP TO BIG OIL! Instead we get politicians too eager to roll over.