Oil

Oil recently hit $130 per barrel, paused briefly, and now is continuing its seemingly irresistible rise. At the gas pumps we see the prices rapidly approaching $4 or more a gallon, with no sign of leveling off anytime soon. There seems to be a lot of weeping and wailing among the owners of the big gas guzzling vehicles when the cost of a fill-up can exceed a hundred dollars, while I whimper and whine a lot when it costs fifty dollars or more to fill my little (almost thirty mile-per-gallon) car. If you really want to see people suffer, hang around a truck stop and see what it costs to fill one of those big tractor-trailers! Or just try to fill your home heating oil tank. Common road oil costs well over $2 a gallon today, and road oil is just about a waste product at the very bottom of the oil refining chain. As I understand things, there are a good many communities in this country that are about ready to forget paving (or repairing already paved) streets, and are seriously considering a return to gravel roads! Here in Grangeville our streets desperately need resurfacing, but with the current price of oil, just where is the city council supposed to find the money to do that? If nothing else, graveled city streets ought to slow our local “speed demons” down quite a bit.

For short term relief (and "short term" will probably be considered the next few decades), we’re told that part of the solution for consumers is going to be a greatly increased supply of crude oil. Unfortunately a steady supply of Iraqi oil depends on al-Qaeda, the Saudis already said "no way" when President Bush asked them to increase production, and Iranian oil is out of the question due to international politics. If we were to ask Mr. Chavez to please boost Venezuelan production he’d likely laugh in our faces and jump the price even higher. Mexico is in a nasty shooting war with the narcotics cartels, so the fact that they’re pumping any oil at all is probably some sort of a miracle. The North Sea production has already peaked, and that supply is earmarked for the European market. I suppose we might ask China and India to cut back on their rapidly increasing petroleum demands, but somehow I don’t see much chance of that happening either.

But really, is the problem a lack of oil? After all, we’ve got hundreds or even thousands of producing wells in this country that are capped off. Our refineries are working at around 60% capacity, even after hurricane Katrina supposedly flattened so many refineries on the gulf coast. We’ve got super tankers anchored off our coasts that are loaded with oil, and are acting as temporary floating storage tanks! Ahh… OK, what’s wrong with this picture?

There are also the claims that the uncertainty of oil production, brought on by the war in Iraq, the Iranians, or the volatile political situation in Venezuela, or maybe the pirates off the Somalia coast, are to blame. After all, if the investors can’t get a fair return on their money, they aren’t going to buy even more stock in big oil companies. We’ve all heard tales about the price of gasoline in most oil producing nations being in the fifteen to forty cents per gallon range, and I really don’t have any reason to misbelieve such claims, considering that those wells are in close proximity to the refineries, so close in fact that the “investors” and “big oil” can’t weasel their way into the production chain. Another explanation for these high prices is that the oil companies must show a good profit, or they won’t be able to afford exploration and drilling new wells. Yet even when the president of Exxon Mobile announced a 43 billion profit for the yearm he also told his stockholders that Exxon has no intent of drilling for more oil, as they already have more product available than they can use!

Exxon Mobil Chairman and Chief Executive Officer Rex Tillerson later told the Wall Street Journal this week that he found it "astonishing" for President Bush to ask Saudi Arabia to pump more oil, rather than working harder to clear the way for more oil production at home. After all, we do have more proven oil reserves in this country than we know what to do with. Certainly American crude isn’t quite as easy to reach as the oil of the mid east, but we’ve got it. In a report prepared for the U.S. Department of Energy in 2006, technical analysts at Advanced Research International said "undeveloped domestic oil resources still in the ground total of 1.1 trillion barrels" and "the U.S. still has 400 billion barrels of undeveloped technically recoverable oil." Environmentalists of course tell us that the U.S. has only 21 billion barrels of "proven oil reserves", and in the meantime Saudi Arabia says it has 260 billion barrels of proven reserves available. What this tells me is that the United States has about four times as much oil in the ground as the Saudi’s do… and we’re still buying Saudi oil??? Again, what’s wrong with this picture?

The federal government has cooperated with those states that want to ban offshore oil production, primarily California, Florida and New Jersey. The federal government has also happily cooperated with the environmentalists who demand that oil under the Alaskan National Wildlife Refuge also remain off limits. Drilling opponents consistently argue that the environmental damage caused by more domestic oil recovery will not be worth the small amount of oil that will be gained. So why is it then that China can drill for oil off Florida and the US can’t? Why do Californians pay $5 per gallon for gas while millions of barrels of crude lie under the Pacific a short distance from shore? Why are folks in New Jersey paying through the nose for gas when a steady supply of oil is within sight of the New Jersey Turnpike? The public outrage over high fuel prices hides the extreme profits enjoyed by oil executives, in several cases people who admit they have no idea of just how much they get paid per year, other than it’s “in the millions”.

For years environmentalists have insisted that pristine views, uncluttered by dirty old oil wells, are ever so much more important than availability of the oil which could be easing our lives (and the strain on our wallets) today. The New York Times calls oil production in ANWR "Drilling in the Cathedral", thus raising miles of frozen tundra to the status of Yosemite National Park. They’ve decreed that drilling for oil would not be worth spoiling someone's kayaking trip, or disturbing their eco-tourism experience. And Congress, despite being elected to serve the public good, consistently goes along with the environmentalist’s wishes, while the rest of us suffer mightily.

Sure do wish I also made so much money per year that I couldn’t count it…