The politics of oil, part II Posted by: mcq
on Friday, April 28, 2006
As an example of the politics of high gas prices, we have Nancy Pelosi decrying them while making a statement about her opposition to the Republican bill on lobbying reform:
At a time of record, historic, obscene profits, these companies are paying enormous fees to their CEOs. The CEO of Exxon is getting a retirement package of $400 million - record profits, high subsidies from the taxpayer, and high prices at the pump. It's a very raw deal for the American people, and all of it born from the culture of corruption in the House of Representatives.
Now most of us recognize the huge stretch Pelosi had to make to a) include this in a statement about a lobbying reform bill and b) somehow tie it all in with the "culture of corruption" canard the Democrats seem so intent upon using.
But there it is. Democrats smell political blood in the water and they are bound and determined to capitalize on it no matter how far they have to stretch.
Sen. Charles E. Grassley (R-Iowa) wants to look at Big Oil's tax returns "to make sure [they] aren't taking a speed pass by the tax man." Sen. Charles E. Schumer (D-N.Y.) proposed breaking up the industry altogether. And state officials want their piece of the witch hunt too. On Tuesday, Gov. Arnold Schwarzenegger announced that he had sicced the California Energy Commission on the case. In Arkansas, a candidate for attorney general also pledged to investigate oil companies, even though that state's anti-gouging law only applies during emergencies.
An author was once lamenting the impact of the "dime novels" of the 19th century on the history of the west and how they badly distorted the true history through exaggeration and outright fabrication. He said it was a result of people being taught to read but not being taught to question. It seems nothing has changed in 21st century.
And our memories aren't so great either. In the great 1996 hunt for oil price gougers (under similar circumstances), Charles Krauthammer wrote the following:
American demand is up because we've lived in a fool's paradise since the mid-1980s. Until then, beginning with the oil shocks in 1973, Americans had changed appliances and cars and habits and achieved astonishing energy conservation. Energy use per dollar of GDP was cut by 30 percent in little over a decade. Oil prices collapsed to about $10 a barrel.
Then amnesia set in, MPG ratings disappeared from TV ads and we became ``a country of a million Walter Mittys driving 75 mph in their gas-guzzling Bushwhack-Safari sport-utility roadsters with a moose head on the hood, a country whose crude oil production has dropped 32 percent in the last 25 years but which will not drill for oil in the Arctic National Wildlife Refuge for fear of disturbing the mating habits of caribou."
Sound familiar? And, of course, the '96 probe found no "price gougers" among the oil companies on which to lay the blame.
Krauthammer has a stunningly simple thesis about the root of today's problem: "supply is down, demand is up". Result? Rising prices at the pump. Problems we identified in the '70s remain completely unaddressed 40 years later.
But it's the greedy oil companies who are at fault.
That's certainly the attempted political spin. However, if those who can read would also question, they'd soon understand that the decision to remain essentially static for 40 years - while the worldwide demand for oil has gone through the roof - wasn't made by the oil companies. It was, instead, made by people like Nancy Pelosi, who now have the temerity to blame it on others.
Politics: the art of shameless blameshifting for political advantage. And we wonder why government is so ineffective when it wanders outside the realm of the "night watchman" role.
Well more than likely the 2006 investigation WILL DISCOVER THE SAME THING(S). I’m a little miffed at some of the things Dubya is pandering about this silly season, BUT "something must be done" and if the minimum that will satisfy this "need" is that we "investigate Big Oil" and grump at Exxon’s retirment package, then so be it.
SO FAR, a windfall profits tax is meeting Executive Branch opposition and I don’t think anyone SERIOUSLY considers "busting up Big Oil".
I said it yesterday I’ll say it today, "Welcome to politics, Libertarians." My advice; echo calls for an investigation and prepare your position papers demonstrating that from 1986-2006 Bill Gates and Microsoft have had higher profit RATES and rates of return on investment. Already a State Retirment System has responded to a Governor’s call for "Caps on Oil Profits"-Gov. Granholm I believe- by pointing out that the State Retirement System owns several hundred million dollars worth of oil stock and that such an act would damage the solvency of the retirement system...Sanity will return, with a few nudges and good Press releases, stop complaining aobut the silliness and get to researching and writing, let the system work and do its job.
I agree with your point 100%, McQ. However, my advice is carpe diem. The oil companies are the recipients of enormous subsidies of a variety of different kinds. Let’s utilize this temporary attention to start movement in the direction of removing the subsidies. At least that would be a tiny start towards putting market discipline on gas consumption.
It will take a lot more before we remove the primary subsidies: the Federal-Aid Highway Act and its successors. But, hey, baby steps.
Spread the $400 million out over every gallon of gasoline that Exxon sells in a given month (hint: they pump twice as much as Kuwait), and you get how much savings for the American consumer?
Let’s see, they pump 4.1 million barrels of oil a day. A barrel of oil yields 19.4 gallons of gasoline.
30 days times 4.1 million barrels/day times 19.4 gallons/barrel = 2,386.2 million gallons of gasoline per week.
So if the CEO of Exxon donated his entire retirement package to lowering the cost of gasoline at the pump, he’d save us 1.8 cents a gallon for a month (just on Exxon’s gas, mind you).
Not that I needed to illustrate just how ridicuous these political games are, to anyone who’s been paying attention.
Now here are some folks that know that denial is a river in Africa.
Along the coast of Nantucket, Mass. — the only sufficiently shallow spot on the New England coast — a coalition of anti-wind groups and summer homeowners, among them the Kennedy family, also seems set to block Cape Wind, a planned offshore wind farm.
And these guys get the prize of the day for striking while the iron is hot.
Shell unveils plans for ’biggest refinery in US’. A shortage of refining capacity worldwide has been identified as one of the reasons behind the recent surge in crude oil prices. Oil companies have been accused of failing to invest adequately in new facilities.
