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Ten Truths About Oil

Discussion in 'Political Zone' started by PosterChild, Jun 5, 2008.

  1. PosterChild

    PosterChild New Member

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    By Alan Caruba

    Having written about the energy industry and issues now for a long time, I hope I can be forgiven for being enraged by the comments by Sen. Charles Schumer (D-NY) in response to President Bush’s recent press conference. There is simply no way to describe them other than false. The Democrat Party has long made “Big Oil” their favorite punching bag, confident that the public has no idea what influences the price and supply of oil. Saying anything favorable to Big Oil is immediately deemed evidence that one is in their pay and whatever facts are offered are therefore invalid.
    There are, however, some simple truths about Big Oil that cannot and should not be ignored. To do so leaves everyone at the mercy of energy policies that have created the situation in which the United States finds itself today.
    Fact #1. The combined ownership of oil reserves by the independent, investor-owned oil companies such as ExxonMobil, Conoco-Phillips, BP, Chevron and others is barely 4% of the total known oil reserves in the world. By itself, ExxonMobil’s share is 1.08%.
    Fact #2. Oil is a global commodity sold on mercantile exchanges for whatever price it can command. Speculation in oil prices is the primary reason they have been driven to utterly insane costs per barrel. It has nothing to do with actual supply and demand.
    Fact #3. No nation on Earth is or can be “energy independent.” The geopolitics of oil is complex, but as nations such as China and India have seen their economies grow, their need for oil grows with it and thus they compete with long established industrialized nations for existing oil supplies. This competition has an impact on prices.
    Fact #4. The OPEC nations, those in the Middle East and including Venezuela, control 77% of the world’s known oil reserves. Like Russia and Mexico, where the oil industry is controlled by the state, it is generally poorly managed. Several Big Oil companies that were induced to undertake exploration and development in Russia and Venezuela actually had their assets nationalized or stolen at prices well below their investment and value.
    Fact #5. Energy is the master resource. All nations with any hope of growing their economies require it, mostly in the form of electricity, but also for oil’s role in transportation. The failure to have a national long-range energy policy that is based in reality can severely impact energy prices.
    Fact #6. The United States has, for years, pursued an energy policy based on environmental myths such as “biofuels” in which corn is turned into ethanol to reduce the import of oil, but it costs as much to produce ethanol as to refine oil and it provides less mileage per gallon, thus negating any reason for this additive. Likewise, suggesting that wind or solar energy can generate anything more than its current 1% of the nation’s electricity needs ignores their unreliability and the fact they are heavily subsidized, a form of hidden consumer tax.
    Fact #7. It costs billions to explore, discover, extract and transport oil. It takes lots of lead-time as well. The United States Congress has, for decades, refused to permit the extraction of vast oil reserves in ANWR despite the fact it would have little or no impact on the Alaskan wildlife reserve. In addition, Congress has declared 85% percent of the nation’s coastal, offshore areas off-limits to any exploration for oil or natural gas.
    Fact #8. The U.S. Environmental Protection Agency, under the mandate of Congress, requires Big Oil to refine oil into some seventeen different formulations in the name of clean air. With three grades of gasoline, that means that refiners must produce some 45 different blends. The quality of air in America is excellent, but the cost of gasoline at the pump continues to rise as the result of these mandates.
    Fact #9. America imports two-thirds of the oil it uses. All of its transportation runs on oil. The population continues to grow. Failure to encourage the construction of a single new refinery since the 1970s puts a further strain on the ability of Big Oil to provide the nation’s oil and diesel fuel needs.
    Fact #10. Democrats continue to demand that Big Oil’s profits be confiscated in some fashion and some of the inducements offered to explore for more oil be ended. Because the costs of exploration, extraction, refining, and transporting of oil represents billions, the actual profit margin of a company like ExxonMobil is about 10%, well below what industries such as pharmaceuticals and banking enjoy.
    For these and many other reasons, Americans are being impoverished at the gas pump because Congress has dithered and failed in one of its most important responsibilities.




    http://www.acuf.org/issues/issue108/080525gov.asp



    If you liked the last article you'll love this one...bold added by your humble poster cause I'm like that
  2. zrinkill

    zrinkill Diamond surrounded by trash

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    BP is gonna attack this in a rage.
  3. PosterChild

    PosterChild New Member

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    He doesn't care for facts?
  4. zrinkill

    zrinkill Diamond surrounded by trash

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    He hates Big Oil with a passion.
  5. PosterChild

    PosterChild New Member

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    Well, here is a great pdf file (beware of more facts) which discusses that bogeyman. Sources EIA- Energy Information Adm (definitive govt resource on all things energy)

    Here's a oil/gas primer...lots of fun to boot. I can imagine the joy that will ensue shortly.

    http://www.energytomorrow.org/energy_issues/truth_about_oil_gasoline_primer.pdf
  6. DFWJC

    DFWJC Well-Known Member Zone Supporter

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    Here are some more facts to trip over...

    In "a single gallon of California gas," which costs $4.09, 66 cents go to taxes, 19 cents to refineries (down from 48 cents in late March), and just a nickel to distributors. That leaves about $3.19 for the price of crude oil, and Exxon doesn't set that price; traders do.

    By the way, it is not just liberals who bash oil companies. Bill O'Reilly (who claims to be independent but seems more to the right) is fairly clueless too on the topic. Even after he did a Fox news poll asking who was responsible and only about 13% said oil companies, he still thinks otherwise.
  7. PosterChild

    PosterChild New Member

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    I happen to dislike and distrust big anything but I'm also practical. Mom and Pop cannot explore, drill, refine, transport, market and distribute commodities such as oil.

    I damn sure don't trust govts to manage it efficiently.

    So that leaves big business. Just because I accept it doesn't mean I call it good.

    I wonder if ppl would feel better about chopping up Exxon into 5 different companies, thereby dividing the same profit (8-10% margin) 5 ways. LOL
  8. BrAinPaiNt

    BrAinPaiNt Brotherhood of the Beard Staff Member

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    I hate OIL and Big Oil is only part of it.

    If we completely use our own oil out of anwar, if we completely refine oil in the us. If we do not ship any of our oil to other nations. I still see about the same prices we are currently paying.

    The only good thing about it would be that would have no further "hidden" reasons to go to war with some countries or try to nation build. And that in itself is actually a good reason.

    But to try and tell the consumer that if we drill in anwar, off our coasts, if we open a butt load of new refineries...we would not see high prices at the pump anymore is nothing more than a fallacy.

    We would still be paying about the same prices and what we would also end up doing is making Big Oil even more powerful.

    I am sorry others refuse to see it.

    In the 70's carter said we need to ween ourselves off oil. It is nearly 2010 a good 40 years later and we are still using and greatly depending on OIL.

    As long as we do not put serious, unfettered, effort into other means...we will never ween ourselves off oil.

    Why do you think there are the subsidies on Wind, Solar and possibly hydro power? Could the government just take a look at those and make changes to them to make them more feasible on a grand scale...sure they could.

    There are other means out there but sadly the government, no matter how much they say otherwise, do not want changes. Too many pockets are lined, too much business runs the government and those to get elected into the government.

    The other problem is sacrifice. We no longer are willing to sacrifice some things for a long range goal unless it is human life.

    Sorry...I just can not believe that if the US wanted to bad enough we could not find alternative means to ween ourselves off oil after a period of time. Problem is it requires sacrafice, loss of money from big business and people willing to stand up and say enough is enough.

    Once again, I would be willing to bet that if we had all the oil areas in alaska and off our coasts opened up, if we had hundreds of new refineries, if we kept all of our domestic oil to ourselves...we would not see a dramatic change in the prices we pay at the pump.

    Look at what happened in Iraq alone. They were getting gas a pennies per gallon. Look it up and see what percentage of a price jump the oil went to after the US took out Saddam and had Iraq install it's own government. Now they went from pennies a gallon to a large jump within that country.

    Let me ask this. Who in here realistically believes that we would drop to $2.00 a gallon or less per gallon if we opened up the areas I talked about, added the US refineries I talked about and did not ship any of our oil to other countries? Does anyone really think our price per gallon will EVER be $2.00 or lower again?
    Does anyone think it would cut the price per gallon in half if we had our own oil, own refineries and were totally independent from foreign oil? Answer honestly and I think you will see...it will not be us consumers at the pumps who are getting a break.
  9. PosterChild

    PosterChild New Member

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    Well, I won't address all of that but a couple of important points

    No, gas probably won't ever be $2/gal again, just my guess.
    Best we can hope for is to stabilize the price somewhat, maybe lower to 2.5-/gal by expanding production and refinery capacity, conserving, lowering taxes... Otherwise we will see prices continue to climb and particularly if we see climate tax legislation imposed--then lookout!

    Alternative sources are a part of the diversified energy source mix, but only nominally so... truly viable alternative energy sources are 25-30 years away. Possibly more.

    Our adjustment to the realities of the energy market will likely be painful one for the next 25 years. And lifestyle changes will be required.

    If govt were to nationalize (seize) BIG OIL companies prices would escalate. I guarantee it. You cannot keep prices low in an artificial mrkt place for long due to global mkt forces.

    We buy 5% of oil from Iraq, by far the most from Canada. None from Iran. The link I posted further up has wonderful charts and such, and dispels many myths I commonly see in public discussions on this subject.
  10. burmafrd

    burmafrd Well-Known Member

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    If we drilled in ANWAR and all the places that other countries are DRILLING RIGHT NOW OFF OUR COASTS we would probably add around 5 million barrels of oil a day at full production. That is around HALF of what we import. And you claim that would make no real difference in the price of gas.
    Add to that if we stopped this INSANE BLEND bs that would make it so much easier to move supply around to meet demand.
    Those two factors would probably cut the price of gas around 1.50 a gallon.
    And you claim that is not worth it.
  11. burmafrd

    burmafrd Well-Known Member

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    One other thing. If we were able to cut down our need for foreign oil that low I bet we could make a deal with Canada to buy all oil they produce at say 10% below OPEC cost= (Canada is NOT a member). Can you imagine what impact THAT would have?

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