Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

30 May 2008

Oil Executives Finally Faced Down Democrats

Usually, American oil company executives when called before Congressional committees for the ritual browbeating by Democrats whenever oil and gasoline prices shoot up, take the beating that is dished out fairly meekly. Perhaps with gasoline prices as high as they are now, they were afraid the Democrats would not stop at a tongue-lashing and would actually take draconian action against the oil companies. Usually, the Democrats take their cheaply earned points with the public and do nothing more about it, because they know that any action they take will be a disaster. That's right, they are self-aware demagogues! They usually know better than to put their pet popular theories to the test. They know they will fail. After all, they are bright enough to get elected. They are bright enough to fool most of the people most of the time.

On 21 May 2008, Chairman Pat Leahy of the Senate Judiciary Committee called a number of oil company executives before the committee for a grilling. This time, these oil company executives did the grilling with their testimony.

John Lowe, Executive Vice President of Conoco Philips Company said: "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, Senior Vice President of Exxon Mobil Corporation: "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."

"Of the 2 million barrels per day Exxon Mobil refined in 2007 here in the United States, 90 percent were purchased from others."

Now, the Democrats want Americans to believe that these small-time companies in the world oil and gas market are manipulating the world-wide cost of oil, which in 2007 accounted for 58% of the cost of gasoline sold in the United States. They are accused of price gouging by the Democrats. But, as they pointed out, only 4% of the price of gasoline goes to oil company profits, while government taxes average 15%. If a 4% profit is gouging than government is beating them in the gouging arena by a factor of 3.75!

John Hofmeister, President of Shell Oil Company, told the committee that for 30 years companies have been prohibited from exploring and developing oil and gas resources in the United States. The Department of the Interior says 62% of all on-shore federal lands are off limits to oil and gas developments and restrictions apply to 92% of all federal lands. Outer continental shelf moratoriums apply to the Atlantic Ocean, the Pacific Ocean, and the eastern Gulf of Mexico. There are also congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska and bans on even doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific, and eastern Gulf of Mexico.

Do you suppose the bans on analysis of the reserves that may be present in these restricted locations in the U. S. are motivated by fear that Americans would be angry at Congress for the high price of gasoline if they knew how much oil Congress was making unavailable?

Hofmeister continues: The Argonne National Laboratory reported in 2004 that 40 specific federal policy areas halt, limit, delay, or restrict natural gas projects. He offered to make a copy available for the report on the day's proceedings. "As a result, U. S. production has declined so much that nearly 60% of daily consumption comes from foreign sources."

Senator Orrin Hatch, Republican, pointed out that large proven reserves of oil exist in Utah, Colorado, and Wyoming. He noted that experts say there are between 800 billion and 2 trillion barrels of oil that can be recovered there for much less than $100 per barrel. He noted that just last week, the Democrats stopped an effort to recover shale oil in Colorado.

Clearly, the Democrats really want oil to become very expensive, so that oil and gasoline consumption will drop. Partly this is for the nonsensical idea that we need to reduce carbon dioxide to prevent global warming. This is a case where Democrats have enough understanding of supply and demand to know that if they cut off the oil supply, the price of gasoline will rise. Partly, it is just that the Democrat elite think there is something romantic about a primitive lifestyle, even though few of them are prepared to live that primitive lifestyle themselves. But, they think it would be better if the rest of us did.

How is it that Americans have managed to send so many strange people to Congress to rule us all with their wrongheaded ideas?

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