Current Events & Politics

continued......

The industry lineup was formidable: Robert Malone, Chairman and President of BP America, Inc.; John Hofmeister, President, Shell Oil Company; Peter Robertson, Vice Chairman of the Board, Chevron Corporation; John Lowe, Executive Vice President, Conoco Philips Company; and Stephen Simon, Senior Vice President, Exxon Mobil Corporation. Not surprisingly, the petroleum executives stole the show, as they were far smarter, infinitely better informed, and much more public-spirited than the Senate Democrats.

One theme that emerged from the hearing was the surprisingly small role played by American oil companies in the global petroleum market. John Lowe pointed out:

I cannot overemphasize the access issue. Access to resources is severely restricted in the United States and abroad, and the American oil industry must compete with national oil companies who are often much larger and have the support of their governments.
We can only compete directly for 7 percent of the world's available reserves while about 75 percent is completely controlled by national oil companies and is not accessible.

Stephen Simon amplified:

Exxon Mobil is the largest U.S. oil and gas company, but we account for only 2 percent of global energy production, only 3 percent of global oil production, only 6 percent of global refining capacity, and only 1 percent of global petroleum reserves. With respect to petroleum reserves, we rank 14th. Government-owned national oil companies dominate the top spots. For an American company to succeed in this competitive landscape and go head to head with huge government-backed national oil companies, it needs financial strength and scale to execute massive complex energy projects requiring enormous long-term investments.
To simply maintain our current operations and make needed capital investments, Exxon Mobil spends nearly $1 billion each day.

Because foreign companies and governments control the overwhelming majority of the world's oil, most of the price you pay at the pump is the cost paid by the American oil company to acquire crude oil from someone else:

Last year, the average price in the United States of a gallon of regular unleaded gasoline was around $2.80. On average in 2007, approximately 58 percent of the price reflected the amount paid for crude oil. Consumers pay for that crude oil, and so do we.
Of the 2 million barrels per day Exxon Mobil refined in 2007 here in the United States, 90 percent were purchased from others.

Another theme of the day's testimony was that, if anyone is "gouging" consumers through the high price of gasoline, it is federal and state governments, not American oil companies. On the average, 15% percent of the cost of gasoline at the pump goes for taxes, while only 4% represents oil company profits. These figures were repeated several times, but, strangely, not a single Democratic Senator proposed relieving consumers' anxieties about gas prices by reducing taxes.

The last theme that was sounded repeatedly was Congress's responsibility for the fact that American companies have access to so little petroleum. Shell's John Hofmeister explained, eloquently:

While all oil-importing nations buy oil at global prices, some, notably India and China, subsidize the cost of oil products to their nation's consumers, feeding the demand for more oil despite record prices. They do this to speed economic growth and to ensure a competitive advantage relative to other nations.
Meanwhile, in the United States, access to our own oil and gas resources has been limited for the last 30 years, prohibiting companies such as Shell from exploring and developing resources for the benefit of the American people.

Senator Sessions, I agree, it is not a free market.

According to the Department of the Interior, 62 percent of all on-shore federal lands are off limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. We have an outer continental shelf moratorium on the Atlantic Ocean, an outer continental shelf moratorium on the Pacific Ocean, an outer continental shelf moratorium on the eastern Gulf of Mexico, congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska, and even a congressional ban on doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific and eastern Gulf of Mexico.

The Argonne National Laboratory did a report in 2004 that identified 40 specific federal policy areas that halt, limit, delay or restrict natural gas projects. I urge you to review it. It is a long list. If I may, I offer it today if you would like to include it in the record.

When many of these policies were implemented, oil was selling in the single digits, not the triple digits we see now. The cumulative effect of these policies has been to discourage U.S. investment and send U.S. companies outside the United States to produce new supplies.

As a result, U.S. production has declined so much that nearly 60 percent of daily consumption comes from foreign sources.

The problem of access can be solved in this country by the same government that has prohibited it. Congress could have chosen to lift some or all of the current restrictions on exportation and production of oil and gas. Congress could provide national policy to reverse the persistent decline of domestically secure natural resource development.

Later in the hearing, Senator Orrin Hatch walked Hofmeister through the Democrats' latest efforts to block energy independence:

HATCH: I want to get into that. In other words, we're talking about Utah, Colorado and Wyoming. It's fair to say that they're not considered part of America's $22 billion of proven reserves.
HOFMEISTER: Not at all.

HATCH: No, but experts agree that there's between 800 billion to almost 2 trillion barrels of oil that could be recoverable there, and that's good oil, isn't it?

HOFMEISTER: That's correct.

HATCH: It could be recovered at somewhere between $30 and $40 a barrel?

HOFMEISTER: I think those costs are probably a bit dated now, based upon what we've seen in the inflation...

HATCH: Well, somewhere in that area.

HOFMEISTER: I don't know what the exact cost would be, but, you know, if there is more supply, I think inflation in the oil industry would be cracked. And we are facing severe inflation because of the limited amount of supply against the demand.

HATCH: I guess what I'm saying, though, is that if we started to develop the oil shale in those three states we could do it within this framework of over $100 a barrel and make a profit.

HOFMEISTER: I believe we could.

HATCH: And we could help our country alleviate its oil pressures.

HOFMEISTER: Yes.

HATCH: But they're stopping us from doing that right here, as we sit here. We just had a hearing last week where Democrats had stopped the ability to do that, in at least Colorado.

HOFMEISTER: Well, as I said in my opening statement, I think the public policy constraints on the supply side in this country are a disservice to the American consumer.

The committee's Democrats attempted no response. They know that they are largely responsible for the current high price of gasoline, and they want the price to rise even further. Consequently, they have no intention of permitting the development of domestic oil and gas reserves that would both increase this country's energy independence and give consumers a break from constantly increasing energy costs.

Every once in a while, Congressional hearings turn out to be informative.

Drill baby drill! Do it now and do it in an environmentally friendly way using all the modern oil technology available. While we are at it, lets start a lotto for the states that would welcome new refineries the most and then start to construct some new ones. Who is suffering the most---Michigan? Louisiana? West Virginia? Lets see who would offer up the most incentives to have more jobs in their states and then convince the oil companies that it is in their and our best economic advantage to build there.

I know I mentioned this elsewhere but if we can get to Mars and send back great pictures...how hard can energy independence be for cryin' out loud??

Damn Quest......what a novel ideal....wonder why some AH politicians in DC havent thought of that.....maybe we ought to share that with them with our votes next time.....

Big Oil is not the problem.......Big Politics is......just saying.....

Thanks for your reply.....glad someone else gets it.....

SHARKEY

How about neither but use alternative energy instead?

Sounds like a solution....could you please share more than the words......
Alternative Energy....like a plan that you think would actually work.....would love to hear it.....it surely isnt ethanol.....and just what do you suggest we do in the interim while any of those plans are being implemented.......seems to me that the DC power brokers have forestalled every plan put out there....even the drilling domestically.....

SHARKEY

since most oil in this country is used for transportation wouldn't the electric car make sense?? Think "Who Killed the Electric car?". Could we get a decent return to rails for supplies transportation? If we did drill more or use shale oil ( which I don't know if it is considered drilled) what percentage of our energy usage would it cover, for how long AND would it be U.S. oil OR sold on the world market?

The railroads are setting records in moving freight, and expanding their capacity. The details are beyonf the scope of this thread, but freight is being moved to rails.

Battery powered electric cars are impractical for three reasons:

1) Batteries. There is a theoretical limit to the efficiency of batteries, and we are already very close to it. Batteries are heavy, and contain toxic chemicals.

2) Batteries are not really a power source. They are storage devices only, and the electricity has to be generated somewhere. Fossil Fuels, nuclear, wind and solar can all be used, but what do YOU think would be used? We would need a huge increase in capacity.

3) Range. Electric cars are okay for commuting short distances in urban areas, but they are not as flexible as liquid fueled vehicles.

I like Hydrogen fuel cells myself. There are essentially electric cars, with the generators carried on board. The only emission is water vapor. Glen Beck has been running a series on these this week. He drove a GM fuel cell SUV on yesterdays show, and tonight he talked about the problem of building tens of thousands of fueling stations.

As to the original question, I say drill!

GAS MY ASS
WHERE TO BUY AMERICAN GASOLINE THIS IS VERY IMPORTANT TO KNOW READ THE FOLLOWING.

Gas rationing in the 70's worked even though we grumbled about it. It might even have been good for us!

Are you aware that the Saudis are boycotting American products?
Shouldn't we return the favor? Can't we take control of our own destiny and let these giant oil importers know who REALLY generates their profits, their livings? How about leaving American Dollars in America and reduce the import/export deficit?

An appealing remedy might be to boycott their GAS. Every time you fill up your car you can avoid putting more money into the coffers of Saudi Arabia. Just purchase gas from companies that don't import their oil from the Saudis.

Nothing is more frustrating than the feeling that every time I fill up my tank, I'm sending my money to people who I get the impression want me, my family and my friends dead. Don't you think it might be of interest to know which oil companies import Middle Eastern oil and which do not?

These companies import Middle Eastern oil:

Shell................................... 205,742,000 barrels
Chevron/Texaco.................. 144,332,000 barrels
Exxon /Mobil....................... 130,082,000 barrels
Marathon/Speedway............ 117,740,000 barrels
Amoco................................ 62,231,000 barrels

And CITGO is imported from Venezula by Dictator Hugo Chavez who hates America and openly avows our economic destruction! (We pay Chavez's regime nearly $10 Billion per year in oil revenues!)
The U.S. currently imports 5,517,000 barrels of crude oil per day from OPEC. If you do the math at $95 per barrel, that's over $524 million PER DAY ($191 BILLION per year!) handed over to OPEC, many of whose members are our confirmed enemies!

Here are some large companies that do not import Middle Eastern oil:
Sunoco...................... 0 barrels**
Conoco...................... 0 barrels
Sinclair...................... 0 barrels
BP / Phillips................0 barrels**
Hess. ........................ 0 barrels**
ARC0........................ 0 barrels**
Maverick.....................0 barrels
Flying J. .....................0 barrels
Valero.........................0 barrels **
I AM GOING TO ADD THE FOLLOWING:
Murphy Oil USA sold at Wal-Mart is from South Arkansas and owned by a US corporation!
Not only that they give scholarships to all children in their town who finish high school and are legal US citizens.

All of this information is available from the U.S. Department of Energy and each company is required to state where they get their oil and how much they are importing.

BigEd......

Where do you think we are going to back fill those 5.5 million barrels a day from.....if you read the article I posted above, we cannot drill for it here. Take that amount of oil off the market and this economy will come to a screaching halt......I am all for being basically independent from foreign oil imports but you gotta have domestic production to do that......just saying.....

SHARKEY