Let’s talk “Big Oil”

The nation is grumbling about fast-rising gas prices and Congress is trying to “solve” the issue via “solutions” that have proven in the past to only make matters worse.

I confess this isn’t my area of expertise, but I know a bad solution when I hear one and the 2008 version of the Carter policy on windfall profits is certainly that. I almost think that Democrats in Congress attempted this latest farce of a gas “policy” knowing it wouldn’t pass, in an effort to make Americans so miserable having to pay so much for gas that they’d be forced into buying hybrids or cars with exceptionally good gas mileage.

The Pittsburgh Tribune-Review’s Bill Steigerwald had an interesting piece today that discussed “Big Oil’s” answers to the recent grilling Congress gave them about their record profits. Among them:

= U.S. companies, while huge, are actually relatively small players in a gigantic global oil market. They can compete directly for only 7 percent of available reserves while large national companies like Petroleos de Venezuela own and control 75 percent of world supply.

= As Stephen Simon of ExxonMobil humbly pointed out, his hated behemoth — America’s largest oil and gas corporation — accounts for only 3 percent of global oil production and 6 percent of global refining capacity. It has only 1 percent of global petroleum reserves – 14th in the world.

He sums up:

Big Oil can take care of itself in Washington – and it always has. It has bought and paid for all the lobbyists and political patrons it needs. Big Oil is not perfect. And it doesn’t deserve a dime in government subsidies or special tax breaks.

But with worldwide oil demand up, oil harder to get at and oil prices at $130-plus a barrel, America needs Big Oil now more than ever — no matter what environmentalists and liberal senators think.

So instead of pandering to voters’ ignorance, maybe Washington politicians should try to do something useful — like helping Big Oil discover, extract and deliver the energy all earthlings need to make their lives better.

So, my dear readers, what is the real solution – if any – to the rising cost of gasoline in this country? Would simply allowing more drilling here in the US in so-called “protected areas” like ANWR go a long way towards resolving this? The floor is yours.

Update: By the way, to find the lowest gas prices for your area, click here.

13 Responses to "Let’s talk “Big Oil”"

benning says:

June 10, 2008 at 9:56 pm

With not a single Oil Refinery built in this country since the 1970s, all the oil in the world would help little. There’s no way to refine enough to meet the higher demand.

Demand the govenrment quit putting roadblocks in the way of new refineries. That will help more than begging the Saudis to drop their prices. The former will work, the latter does nothing.
sanity says:

June 10, 2008 at 11:40 pm

Agreed.

I have no problem with seeking solutions through alternatives to oil, but that is a LONG way in coming.

The US government is the one that is causing this crisis, by not allowing further exploration, more refineries, ect.

They blame the oil comanies for ‘windfall profits’ when they themselves (government) are the ones reaping the windfall profits in taxes of ‘big oil’.

Americans are starting to wake up and see it isn’t all ‘big oil’ fault. When you have an increase in demand and you put a cap on supply, what happens? Prices go up.

While other countries are scrambling to maximize on oil resources and exploration, the US is made it illegal for most exploration and drilling.

Now, when prices are extremely high, Democrats want ot push a tax on big oil profits(defeated by GOP), well guess what, who do you think will actually get hit with those taxes…it will be recovered in higher gas prices.

So, Democrats way of battling high gas prices is to tax the oil companies even more, which will then be translated into higher gas prices at the pump.

Unbelievable stupidity.
Great White Rat says:

June 11, 2008 at 12:08 am

Well, in 2006 the Democrats promised they’d do something about energy prices if they got control of Congress. You can’t say they didn’t keep their word.
Severian says:

June 11, 2008 at 7:44 am

Plus consider the fact that less than 2% of those obscene windfall profits go to the oil company execs in total. Where does the other 98++% go? Into evil things like pension funds, mutual funds, etc. that are owned by and provide retirement benefits for a majority of people in this country, including a whole lot of government employees. So, not only will their plan screw you at the pump, it’ll screw your retirement pension and investments as well. That’s one way to make sure you have to rely on Social Security.

Idiots, absolute idiots.
Great White Rat says:

June 11, 2008 at 8:23 am

Sev, economic illiteracy is a prerequisite for leftists. Their entire approach to anything in that domain, be it wages, prices or interest rates, is based entirely on emotion, not the realities of the marketplace. Their goal isn’t to solve the problem; it’s keeping themselves in power. That’s so much easier to do when they find a scapegoat and arouse jealousy than if they study the problem, analyze the impact of their policies, and select a rational plan.

Here’s a test: try discussing the law of supply and demand with your average Obama voter. You’ll get the same sort of disconnected sputtering you get – well, when Obama is missing his teleprompter. But take that same voter and say something negative about Big Oil, and watch the passion surface.
Severian says:

June 11, 2008 at 9:08 am

You’re right GWR, leftism appeals to and encourages the most debased and low human emotions. Jealousy, envy, hatred, and distrust of anyone better off then they are, unless it’s their own corrupt politicians, who get a pass because, like, you know, they care about me! It’s repulsive to me, and while I know this is how the average idiot out there thinks, I still can’t understand it.

If you look at the stats for the Myers/Briggs personality type tests, over half the people rate as F vs T, that is their primary method of dealing with the world is feeling rather than thinking, and man, does it show.

The worst part is, these people don’t want to learn the facts and find a rational, workable solution. They’d rather someone pander to their bitterness and hatred of corporations and evil rich folk, as it makes them feel better emotionally. Much easier and more satisfying than rationality, and learning and embracing the fact that a lot of their own problems are self induced.
Baklava says:

June 11, 2008 at 11:55 am

ST asks, “So, my dear readers, what is the real solution – if any – to the rising cost of gasoline in this country? Would simply allowing more drilling here in the US in so-called “protected areas” like ANWR go a long way towards resolving this? The floor is yours.

The real solution?

Depends on the perspective. Socialism is the government choosing who gets what resources. The socialism answers would include price controls which would strangle american oil companies into financial ruin – stock portfolio’s would plummet, and another socialism answer might be nationalizing the industry so that government workers run the system and taxpayers subsidize the industry. Why do I say subsidize? Because the government couldn’t run the gas industry as efficiently as the oil companies. Costs would sky rocket and taxpayers (READ the top 50% of income earners who pay 96% of the income taxes) would be picking up the cost. So in REALITY cost would increase with socialist ideas.

Capitalism = the people choosing who gets what resources. People could therefore use less gas by carpooling more, making their next vehicle purchase the 35 MPG or greater kind, etc. Faced with the choice, I know a few people who bought vehicles this year. One bought a 6 cylinder Volvo, another a Ford Expedition. Essentially, the PEOPLE are choosing who gets what resources all over the world. The natural state is capitalism. The natural state is people will be using more and more energy.

150 years ago the oil was only whale oil. Man wised up before whale extinction happened. Oil production was very minimal for 50 years until the car industry exploded. Because we are a prosperous nation we have been able to afford carbon based fuel resources such as oil. Carbon based fuel sources no matter what corn, trees, oil, diesel, coal, etc all turn to CO2 and other molecules.

There is a limited supply of the carbon based fuel sources – this is not leftism speak, this is reality. We are competing for the demand of such resources with other nations who are growing such as China, etc.

Given humanity’s VERY recent use of carbon based fuel sources in such great mass (ONLY 100 YEARS) we can see that it is only a BLIP on the timeline of human life that we started this style of living.

It has afforded us a different way of living from 100’s of years ago. Every building is refrigerated, most people commute longer, we all live farther and farther from friends and family than years ago.

We have more freedom and opportunity. We have been able to focus on computing, feed more people in the world, etc.

The solution is to have government get out of the way and allow for Nuclear plants so that we aren’t using Natural gas, coal, etc to heat/cool homes. The solution is to allow for big oil to have the profits so that they can reinvest into alternative ways of making energy including carbon based sources (synthetic or grown as in corn).

The solution lies in government getting out of the way and people making good decisions. For the interim the price will hurt at the pump until we get people to realize that socialism/liberalism IS the problem and capitalism IS the answer.

Allowing capital to flow towards the answer is the most efficient way of the market place rectifying a problem….. Because politicians simply aren’t smart enough. Period.
Severian says:

June 11, 2008 at 1:08 pm

The solution is to have government get out of the way and allow for Nuclear plants so that we aren’t using Natural gas, coal, etc to heat/cool homes. The solution is to allow for big oil to have the profits so that they can reinvest into alternative ways of making energy including carbon based sources (synthetic or grown as in corn).

While those are true, particularly nuclear, the supply of oil is artificially kept low thru the complete idiocy of preventing our own resources from being used. This falls into the categories of both failure to drill and use our own oil, including oil shale and sands that have incredible amounts of oil, and the kow towing to environmental zealots who keep refineries from being built and expanded (hint: extra oil isn’t much of a benefit if you don’t have the refining capacity to process it).

If people were smart, they’d realize what the Dems and Greenies have wrought and rise up and crucify them. Instead, they seem to prefer to bitch about evil Big Oil and other class warfare jealousies.

There are absolutely NO good reasons, environmental, technological, or financial to not drill and exploit our own national resources.
alchemist says:

June 11, 2008 at 1:21 pm

As the only lib to weigh in here thus far, I just don’t think ANWAR will make that big of a difference either way. I agree that old refineries are a big part of the problem.

Another part is the dreaded fear of (whether rational or irrational) peak oil. I have heard it mentioned that the Arab 5 are not increasing oil production because they can’t; (they still have plenty of oil but the rate at which they can access it is declining). Which leaves either 1)finding new sources or 2)utilizing more expensive ores that are already known.

Then there’s the budding demand in India & china.

And finally, Salon has done a series of small pieces in “how the world works” talking about speculation markets, and how they allow large stockholders in oil fields and petroleum companies to speculate above the demand for oil. That creates shortage fears, which rises the price, and then the speculators profit off the value of their stocks. I’m probably not doing the whole thing justice, but worth reading through.
Baklava says:

June 11, 2008 at 4:21 pm

Alchemist wrote, “Another part is the dreaded fear of (whether rational or irrational) peak oil.”

Whether it’s peaked output or not – there is a limit to carbon based fuels. The world is at an all time high in usage. Peak oil theory has the theory that production (supply) to meet demand has also peaked and can’t increase and will diminish as supplies are exhausted. This technically isn’t true unless liberals get their way with their limits in a) drilling b) coal to oil transformation c) allowing nuclear plants to subplant natural gas and coal plants, etc. Production/supply could be increased is my point – with the realization that carbon based fuels may last 100-500 years longer unless transfered to renewable carbon based fuels from corn or whatever.

As to your first point. US Production of oil has decreased by half during a period of decades when usage has increased.

Why alchemist do liberals insist on THAT path? Decreased production/drilling?

ANWR would make a difference in that we wouldn’t be relying on the other countries as much whether by a 6% amount or whatever….
forest hunter says:

June 11, 2008 at 6:33 pm

I’m still curious what the intelligent folks in here think about the Lindsey link I posted.

In it Lindsey points out the unreported size of what lies beneath ANWR and it aint hay!
Severian says:

June 11, 2008 at 7:13 pm

I thought it was interesting Forest. I have no idea if he’s right or not, but what he says sounds plausible to me. I think the reserves are probably bigger than reported, if for no other reason than I’ve known mining and oil folks, and their tendency is not to overestimate (that can have serious legal ramifications when you get sued by investors who feel defrauded). Plus, as the technology improves, more and more of what’s down there is recoverable.

I just love the Dems “it won’t help for years so it’s not worth doing” mantra. By that logic, why send a kid to school? I mean, it’s not like they will know how to read and write and such immediately, so why bother? Not that with the kind of liberal union teachers and school admins we have they’ll be able to read and right in 12 years either.
forest hunter says:

June 11, 2008 at 7:59 pm

Looks like we’re still on the same page then Sev.

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