America, Over Big Oil's Barrel
Commentary: What's really driving up your gas prices? Oil companies say it's government regulators, foreign dictators, and those pesky polar bears.
June 25, 2008
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As Americans struggle to fill their tanks for a summer trip to Disneyworld or the Grand Canyon (or just to get to work), oil companies, in a bid to fend off government intrusion, have been busy trying to convince consumers and elected officials that skyrocketing gas prices are out of their hands. Though the prospect of Americans scaling back vacations and trading in their SUVs, even while Big Oil rakes in record profits, should put the industry in a tight spot, the oil companies are trying their best to turn a PR nightmare into a possible growth opportunity. While the Democrat-led Congress, which held its latest hearing on escalating gas prices on Wednesday, has failed to reign in Big Oil, the companies themselves are using the price spike to advance a long-standing agenda: drilling for oil in environmentally protected areas, from the Rocky Mountains to the outer continental shelf to Alaska's Artic National Wildlife Refuge. And public desperation may finally make it possible to do so: Already there have been calls—from the president and GOP nominee John McCain, among others—to lift a decades-long ban an offshore drilling.
In April and May, House and Senate committees called industry executives on the carpet for hearings, and earlier this month Congress took another run at imposing a windfall profits tax on the five major US oil companies, which together made a record $36 billion in the first quarter of 2008.
But the windfall profits bill—which also included measures to rescind some $17 billion in industry tax breaks—died a swift death in the Senate, garnering 51 votes, but not enough to overcome a filibuster. (The president also vowed to veto it.) And the hearings themselves amounted to little more than political theater, allowing members of Congress to talk tough on behalf of their suffering constituents without demanding anything that would make the lineup of oil execs—from Exxon, BP, Chevron, ConocoPhillips, and Shell—break a sweat.
To repel public hostility and government action, meanwhile, the American Petroleum Institute, the main oil and gas lobbying group, has launched a multimillion dollar media blitz. The campaign, according to the Washington Post, is aimed at convincing "voters—who, in turn, will make the case to their members of Congress—that rising energy prices are not the producers' fault and that government efforts to punish the industry, especially with higher taxes, would only make pricing problems worse."
Oil companies are trying their best to promote the highly counterintuitive idea that what's good for Big Oil is good for America. As Peter Robertson, vice chairman of Chevron, told the Senate Judiciary Committee in May, "Americans need companies that can effectively compete for access to new resources. Punitive measures that weakened us in the face of international competition are the wrong measures."
In denying responsibility for high fuel prices, the oil execs also evoked the ultimate mantra of the free market. "The fundamental laws of supply and demand are at work," said Shell president John Hofmeister—meaning, there's less oil and more people want it so the price has to go up. The law of supply and demand, however, is not a natural, immutable law, like the laws of physics. It is simply a way of describing the relationship between buyers and sellers in the marketplace. That is, sellers of an in-demand product can charge higher prices for it, but they don't have to do so; they could choose, instead, to trim their own profits—or at least pay their fair share of taxes. Before the judiciary committee, ExxonMobil VP J. Stephen Simon insisted that "it's not our profitability in this business that is driving the higher prices that consumers pay." This despite the fact that ExxonMobil alone reported $10.9 billion in earnings for the first three months of the year, up 17 percent over 2007, while BP's profits rose 60 percent, Shell's 25 percent, ConocoPhillips's 17 percent, and Chevron's 10 percent.
In fact, there's plenty that could be done to ease the burden on consumers. A proposal from the Center for American Progress, to name just one, calculated that simply by closing several tax loopholes and collecting royalties it is due on oil and gas extracted from public lands, the government would have enough to fund a substantial fuel price "reliefbate" for low- and middle-income Americans. (The Center's plan doesn't even include a windfall profits tax, which, if instituted, could be used to exponentially increase the government's investment in renewable energy.)
Nonetheless, Big Oil seems to have had some success in framing the debate over who is responsible for high gas prices, advancing not only the laws of the marketplace, but the bogeyman of the big nationalized foreign oil companies. "Government-owned national oil companies dominate the top spots," Exxon's Simon told the judiciary committee. The argument, now popular on both sides of the aisle, is that state-owned outfits control most of the supply and have their comparatively puny American counterparts over a barrel. (Only California's Maxine Waters dared, at a House hearing, to suggest that the United States might try nationalizing its own oil industry.)
It's been Big Oil's long-standing contention that the rapacious state-owned Middle Eastern, African, Asian, and Latin American oil companies are responsible for the price gouging. But this is a dubious argument. The United States is currently the third largest oil supplier in the world, following Saudi Arabia and Russia, as well as the single largest consumer. Tyson Slocum, the director of Public Citizen's energy program, says that on any given day ExxonMobil alone produces as much petroleum as the kingdom of Kuwait. US oil companies, of course, all have a hand in exploitation within many of the very state enterprises they decry, through outright contracts, service contracts, production agreements, and joint ventures. Currently, ExxonMobil, Chevron, and Shell, among other oil companies, are zeroing in on service contracts that will open the way for them to begin producing oil in Iraq.
Next page: "As the energy crisis deepens..."
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.