By Brian Johnson
29 December, 2010
Gas prices in the U.S. are the highest in December -ever. Before you jump on "the oil companies suck" bandwagon, let's look at a few things first:
Refineries:
The United States has not built a new refinery since 1976. In 1981 there were 324 operational refineries in the United States. Since that time, gas consumption has increased by over 25%. As of 2008, we have only 149 operational refineries, or 45% of the number of refineries in 1981, which are operating at maximum capacity to meet record demand. We actually import 10% of our refined gasoline from overseas. Loss of even one refinery puts us in a shortage situation. Companies find it nearly impossible to ease this problem though, due to huge costs in getting through all the legal roadblocks thrown up by left-wing environmental groups just to get permits. Oil companies aren't the only victims in this game though. Some of the pressure could be relieved by building more nuclear power plants, which do not use oil, and which do not emit pollutants into the air. But the same roadblocks are put up by these same environmentalists and the EPA to make building cost prohibitive. This despite that, next to coal, nuclear energy cost is the cheapest to produce - at 7.5 cents per kilowatt hour and which emits no carbon. Increasing the number of nuclear plants would drive down cost even more. Instead, the environmental wackos at the government are pushing for wind and solar power, which are less efficient and more expensive than nuclear, to solve the nation's power problems.
Oil Exploration in The U.S.:
Oil companies have been hampered in the exploration and drilling of oil by government mandates fueled by environmentalists hysteria over "end of the world" scenarios. The Santa Barbara spill and the Exxon Valdez were supposed to destroy the eco-system for centuries according to them. Didn't happen. It's funny, but for those who are so "in tune" with the environment, it is amazing how little credit they give it for its self-healing powers. The California, Alaska, and yes, even the Gulf coasts will be fine. Yet, we have the federal government pushing drilling farther and farther off-shore, making the recovery of oil much more difficult and dangerous. The BP oil spill in the gulf could have been much less damaging if it had happened in shallower conditions. Capping a well at 500 feet versus 5000 feet is much less challenging, and it's doubtful that it would have taken months to accomplish. Not allowing drilling also has other implications. In Santa Barbara, the site of a spill in the 70's, which caused a drilling moratorium there, still has oil in the water. It's not from the spill though. It is from natural seepage through fissures, created by pressure in the sea floor. It is estimated that 10,000 gallons of oil and 3.5 million cubic feet of natural gas seeps up every day. Every three years, the equivalent of an Exxon Valdez, plus the natural emission of hundreds of millions of cubic feet of methane, a global warming gas much more powerful than CO2, naturally seeps to the surface. All of this is easily recoverable. Yet our government continues to block drilling offshore, in ANWR, and in the Gulf, all the while placing blame for high prices on "Big Oil." This is unfathomable to me.
Big Oil:
We constantly hear politicians rail against "windfall profits". Big Oil is usually one of the industries on the receiving end of those attacks. How much profits do the oil companies actually make, though? We hear a lot of numbers thrown around from the likes of the President, or Hillary Clinton - figures like $150 Billion quarterly revenue. Politicians, looking to score political points, throw out gross revenue collected to convince the public of the greed of these companies. But is it accurate? As raw revenue collected, it is. But as a measure of profits, it is completely misleading. Oil company profits generally fall around 10%. This is only slightly higher than the S&P 500 average, and much less than for many other industries. In some instances, that profit margin is a low as 7.5%. Compare that to Google, a darling of the left, which posts profit margins of 25%. Why do we not hear the screaming from these same people of their obscene profits? Where are the calls for a special "windfall" profits tax? Don't hold your breath.
Environmentalist Agenda:
Back during the 2008 Presidential campaign, then-Candidate Barack Obama spoke of energy policies which would cause"electricity rates [to] necessarily skyrocket." The prices we are seeing, and those which are still to come, are a direct result of energy policies which have been followed for decades, driven by a blind allegiance to wrong-headed environmental movement beholden to an ideology whose sole purpose is the weakening of the United States, and redistributing wealth to underdeveloped countries around the world. In the minds of those on the left, you have too much money, therefore it is their duty to confiscate it from you to give to those whom you have "cheated" out of their fair share. The high prices, supply shortages, and "green" energy initiatives, which are all contributing to the place we now find ourselves, is being driven by an ideology which seeks to separate us from our wealth as a country. It is designed to lower our standard of living to the level of those countries whose citizens have been denied their freedoms and wealth by the likes of "leaders" like Hugo Chavez, Ghaddafi, Mugabi, and other dictators.
The federal government has created this problem through an agenda which is making us poorer, and more importantly, is making us more vulnerable from a national security standpoint.
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