Ten Simple Truths about Oil
 

Ten Simple Truths about Oil

By Alan Caruba May 1, 2008


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.

( The reason the Saudis are dramatically increasing their production to 9 million bbls so suddenly is to flush the commodity speculators out of the market.)

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 17 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.

Fred
You should be ashamed at adding "facts" to this discussion. :rolleyes: This is a thread in the LOUNGE where mis-information and unfounded finger pointing normally rule.

Funny when I think of the old days when we were so "un-green"...

We bought soda in glass bottles that were returned and washed then re-used.

We burned most of our trash at the burn pile and only left a small bag of glass and cans for trash pickup.

Milk came in paper cartons or returnable glass bottles.

Now everything is plastic (made from oil) and little of this is recycled.

The only problem with $4 gal. gas is people don't have enough money left over after the taxes and overpriced houses and cars...

Gas was $1 a gallon int 1982 and a new car was about $8k, a house was $70k.

All we've done for the last 30yrs is drive manufacturing out of the country and this is the real result of agencies like the EPA, NRC and of course idiot "flower children".

Fair Trade Act II

OPEC sells oil for $136.00 a barrel.
OPEC nations buy U.S. grain at $7.00 a bushel.
Solution: Sell grain for $136.00 a bushel to OPEC nations.

Can't buy it? Tough! Eat your oil!
Ought to go well with a nice thick grilled filet of camel a$$!!!

:rolleyes:

Warren,

You just got through chastising Fred for adding facts to this discussion and now you come along and add logic. Gee, is there no low that you two won't stoop to in order to make your point? :LOL: :LOL:

Ron :D

Damn Straight!

Why are we even selling grain to them?

Hmmm...that article is dated February 13, 2008 and they stated the information would be released in 30 days.

So, what was the outcome? When are they going to start drilling? I'm all for it. Where is our 500 billion barrels and why are we still paying over $4.00/gal? Just the finding of the oil alone would have driven down the price of oil by a huge amount.

Got an updated article?

We had a band-aid! It was called "Iraq".

Hell, I'm still waiting for this...


Bush In 2000: U.S. Simply Needs To Tell OPEC To "Open The Spigots." "I would hope the [Clinton] administration would convince our friends in OPEC to open the spigots." [Los Angeles Times, 6/22/00]

Bush in 2000: U.S. Needs To "Jawbone" OPEC Members. "What I think the president ought to do [when gas prices spike] is he ought to get on the phone with the OPEC cartel and say we expect you to open your spigots...And the president of the United States must jawbone OPEC members to lower the price." [President Bush, 1/26/00]

If the reason for Iraq was oil, were is this oil? Seriously, Iraq has some oil but where are the tankers that are carrying the oil back, where is it? Answer that one simple question. We have effectively controlled the country for a couple of years now, and we could easily go in and take the oil but no such move has ever been made. Everyone who makes this argument makes Bush out to be such a villain. How many villains suddenly give up there plan, just because somebody figured out what they are doing?

Second question, why did gas prices stay low until after congress became a democrat controlled congress? Why is OPEC now saying they are increasing production to stabilize prices? Sounds like he knew what he was talking about and Congress tied his hands.

Iraq was not about oil. I have my own opinions, but they are just that..My opinions. That does not mean that I pretend to know all the facts, nor do any of us here on CC. I would hope our National Security would be a tad tighter than that. We only know what the White House wants us to know.

I do believe we need to become "more" energy efficient. The days of driving a huge SUV to Starbucks to pay $8.50 for a cup of coffee is over. That does not mean I believe we can become independent overnight. That would be a foolish statement. But we have got to start doing something. OPEC has had the US and the world over a "Barrel" long enough. They will continue as long as, We The People, let them.

Ahead of the Bell: Oil Inventory Report
AP
Posted: 2008-06-25 08:31:02
WASHINGTON (AP) - Government data scheduled for release Wednesday is expected to show that crude-oil inventories fell last week for the sixth straight period.

The Energy Department's forecasting arm, the Energy Information Administration, publishes petroleum inventory data for the week ended June 20 at 10:35 a.m. EDT.

Analysts expect oil stockpiles fell last week by 1.7 million barrels, according to a survey by Platts, the energy research arm of McGraw-Hill Cos. For the week ended June 13, crude-oil inventories fell by 1.2 million barrels, or 0.4 percent, to 301 million barrels. That was14.2 percent below year-ago levels.

Meanwhile, gasoline inventories fell by 1.2 million barrels, or 0.6 percent, to 208.9 million barrels. That was 2.6 percent above year-ago levels. Analysts expect stockpiles of the motor fuel grew by 750,000 barrels last week.

Demand for gasoline over the four weeks ended June 13 was 1.8 percent lower than a year earlier, averaging more than 9.3 million barrels a day.

At the same time, U.S. refineries ran at 89.3 percent of total capacity on average, a gain of 0.7 percentage point from the prior week. Analysts expect capacity rose by 0.4 percentage point last week.

Inventories of distillate fuel, which include diesel and heating oil, rose by 2.6 million barrels to 116.6 million barrels for the week ended June 13. Analysts expect distillate stocks rose by 1.7 million barrels last week.

At the pump, gas prices dipped less than a penny overnight to remain at a national average of $4.07 a gallon Wednesday. They are well above the year-ago average of about $2.98 a gallon, according to AAA and the Oil Price Information Service.

Light, sweet crude for August delivery rose 26 cents to settle at $137 on the New York Mercantile Exchange Tuesday.


Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.
06/25/08 08:28 EDT

The oil is here....given to other countries at our expense. This is just a random article I picked out. For more information, do a Google search. Hundreds will appear.

http://www.worthynews.com/news/money...oil-index-htm/

That is a very old article to just happened to pick out.

Here is a recent one...

http://www.cbsnews.com/stories/2008/...r=HOME_4194038

(AP) Iraq is close to signing oil service deals with several major Western oil companies in an effort to boost its output capacity, the country's oil ministry said Thursday - the first major Iraqi contracts with big Western companies since the 2003 U.S.-led invasion.

The deals, once signed, are something of a stopgap measure to help Iraq begin to increase production until the country is able to approve a new national oil law - now held up by political squabbles among Sunnis, Shiites and Kurds.

But they also could mark the beginning of an important long-term toehold by big Western companies into Iraq's potentially lucrative oil industry, by giving the companies a bidding advantage over other companies in the future.......

Forgive me for being ignorant, but I still do not see where we went in and took the oil. I see companies that specialize in oil (western, eastern, and mid eastern) putting bids in and getting counter bids back. Yes American oil companies will make money on it, but so will the Iraqis. We are not going in and claiming it as ours, but entering in a contract to get the oil that they have when they do not have a way to get it. They are entertaining offers from everyone. Not the same thing.

Let me revise my question. If Iraq was about oil, were are the tankers of oil that we have taken (and supposedly given to other countries)? I saw an article about China getting contracts to extract the oil and the US companies not laying down, but going after those same contracts. The Chinese contracts are with Iraq not the US.

One more point, if the US went in to take over the oil fields, why would we let, yes let, China get to make money extracting the oil for their own use? That is counter productive. We would declare the fields US property and sell to China.

Joe..exactly :)

yeah, drill here and sell our oil overseas, our dollar sucks. oil companies make more money, gov thinks they are doing something great, people feel good because gov thinks they are doing something great. we make great sheep.

You missed my point. My point was why, since we already were in Iraq, get the oil? One of the first things we did when entering the country was set-up soldiers to guard the oil fields so Saddam wouldn't burn them. Now we are sitting back while our soldiers are dying and letting Iraq make deals with China and other countries to extract the oil.

If the US would have wanted (to steal) the oil we would have taken it, simple as that!

The western companies are doing just what all other countries are doing. The Iraqis do not have the means or the ability to recover and or transport the exports at this time. That does not mean they should roll over and give it away, and no one is asking them to.

If you were in business for yourself and you have a board of directors and stockholders to answer to, you do what you need to do to turn a profit. Any company has the opportunity to bid of the extraction of Iraqi oil. The Iraqis are negotiating for the best deal for their country.... just as they should be.

So what!

Exactly my point. The soldiers were put there to prevent the oil burning as that would have immediately impacted the price of oil worldwide. The commanders knew that they would have been blamed for it by A) not protecting it and B) doing it themselves. In the end the Oil is Iraqs oil, and therefore it is up to Iraq to decide what is in the best interest of Iraq to do with it. Will they make the right decision? Only time will tell.


Edit:
Just so this does not turn into an argument and remains a discussion, let me go ahead and not assume. I may have misread your previous and or this post, but I took it as you were saying we went into Iraq for Oil and I took this post as saying since we are there, why don't we take it? Too me that seems opposite, can you please clarify what you meant, because I thought I understood and now am confused.

the get a horse crowd will probably change their tune when they have to start shoveling the manure
I also think Newt is about 99% spot on