America, Over Big Oil's Barrel
What's really driving up your gas prices? Oil companies say it's government regulators, foreign dictators, and those pesky polar bears.
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?"
Is there a relationship between the price of a barrel of oil and the price of a gallon of gas? What if the price of a barrel of oil goes to somewhere between $160 or $200 by the end of the year, as has been mentioned in the news recently, what might the price of a gallon of gas be? I have seen an equation showing "price of a gallon of gas being the price of a barrel of oil divided by 27.50". If that's so, the the price of a gallon of gas could be between $5.80 and $7.30. Wow!
Let's not lease any more of OUR land to big oil. Why should we trust them with it? They've already proven themselves deceitful. This land is OURS. These resources belong to US. Let's hire big oil to drill for us and if we don't like the results we'll get someone else.
It has taken 25 years for Big Oil to close 176 Refineries to create a false demand and limit refinery capacity.
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!!!!!
More tiring, banal obfuscation (confusion) from the left. How about checking out the World Bank and IMF and their relationship to international oil markets? FOLLOW THE MONEY!!!
The real reason gas prices are high is because of the weak dollar caused by borrowing money for the war in Iraq and speculation that we will go to war with Iran.
If our oil companies are screwing us, the solution is simple: buy refined products direct from the foreign nationalized oil companies, and let our domestic oil companies sell their product on the open market to foreigners for whatever price the market will bear. That way we'd be sure to get a fair price, and so would our oil companies. I'm sure someone like George Soros could start up an arrangement like this.
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.
oh... ok, but then should the oil companies take a lower profit then to offset the rest of America's oil cost problem? Record profits and this line of reasoning don't really add up to the answer we are looking for.
How does unoriginal uninformed garbage get elected president?
No hes not.The planet continues to produce its own oil over time.That dinosaur story might be a lie.
Dear Jim,stop lying please.Everyone knows
how the voting in congress works by now.
Thank you.They most certainly are and I am glad others see it as well.Price is manipulated by these hedge funds dumping
millions into the market.They are of course in bed with the oil companies.
I see you Americans have the same problem as we do in the UK - left wingers swearing blind that oil will last for centuries. You have our sympathy! The simple fact is the New World of socialism is threatened completely by Peak Oil (and Climate Change) and the poor little spoilt brats hate to be proved wrong. They want a world where everybody has a detached home, two cars and an unproductive (government) job. Peak oil and climate change make that unattainable. Hence the tears and falsehoods from the left on both sides of the Atlantic.
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.
how much does it coast for someone for your oil co to come to a school.
when in N.Y. in late 60s early 70s I used to read a very nice paper "Greenwich Village". afterwards I was receiving the electronic G.V. by e-mail.On year ago or so I ubsuscribed.I do suspect those guys of the New York Times have taken over.
SALUD. L. Hernandez
The #1 reason for high prices is our weak dollar. Were the dollar as strong today as it was 7 years ago, $130 would buy closer to 2 barrels.
Oil (energy) is POWER. ... And where there is POWER there will be the Politicians. Democrats , Republicans ... they all feed at the same trough and darn few of them worth a "plug" nickel.
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.
What most don't understand is we have more oil that we know what to do with, I know we have hit huge oil wells in Gull Island Alaska in 1971, in which they capped them immediately, they said that they had hit one so large that the Unites States wouldn't have to buy another drop of foreign oil for 250 years, but they had a thirty year plan to control the world with oil, they wanted oil to be a hundred dollars a barrel, and five dollars a gallon at the pump then they would pump this oil, what is holding them back.
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.
Fossil fuels are leading causes of cancer and respiratory disease. The next generation should at least have clean, cheap energy. Companies are out there now producing clean energy and this disinformation by multinationals has got to stop. Yes it will take wind, solar, biomass, geo-thermal, efficiency in autos and efficiency in buildings but it can be done.
Do Americans realize that since McCain has decided to side with the oil companies to allow off shore drilling that he is in the pocket of Big Oil. He is continuing the unscupulous tactics of George Bush and Karl Rove. This means McCain will attempt to win at any cost. It also means he has no regard for Americans. But do they realize it?
It's well past the time for the Democrats and Republicans to grow a spine and win back our respect. They can be much more persuasive with honesty, rather than deception. A ban on offshore drilling is not a significant explanation for high gas prices.
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.
Never see $2.50 again? -- Huge evil corporate conspirators -- Oil is running out? What a bunch of goofball comments. What a bunch of goofballs.
To repel public hostility
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."
The influence of the special interests is outrageous. Oil prices have gone through the roof and then precipitously back down, and wreaked havoc on the economy along the way. The only beneficiary seems to be the rise in oil rig jobs and the oil industry overall. Very disturbing.
