|
 Today’s Boston
Globe features further proof that we
are now officially living in a Petrocracy...
Under the energy bill, which
President Bush is scheduled to sign next week,
energy
companies
based
in Texas
will
be
eligible for
billions in tax benefits to encourage exploration and drilling for
new sources of oil, both on federal lands and offshore. More tax breaks
are
available for corporations — including oil companies — that invest
in natural gas pipelines, and still other tax incentives could encourage
the expansion of oil refineries.
The benefits include the ability to write off some of
the costs of exploring for oil — a provision that will cost taxpayers
$974 million over two years
— as well as another $406 million in tax write-offs to expand refineries.
Industry officials say the tax incentives are needed to look for oil in places
where it may be hard to reach or of uncertain quantity.
Stop right there for a minute. Imagine all of the
BILLIONS of gallons of oil and petroleum by-products that are sold
every day,
around the world. The cumulative total of the entire planet’s energy
consumption must produce a pretty hefty profit, eh?
Well,
double it, because that’s what has happened to the price of a barrel
of oil since Bush came into office. Actually, with
the latest run up, its closer to tripling that vast fortune. Every
day. This huge global tribute is being paid by every member of
humanity, according to their degree of addiction. An American,
the heaviest users ever, go through about 120 gallons a day for every
man, woman and child. A peasant in Guatemala might only use a gallon
or two. But everybody pays.
Where is this huge daily shakedown going? The contracts
that give the international oil companies the right to extract and sell
the oil were signed decades ago, and so the base cost of the oil in the ground is not going up. The
cost of extracting and refining may be creeping up due to market factors,
maybe even as fast as the rise in the cost of a good education, but no
way close to tripling. No, this huge, historic windfall is going directly
to the oil companies and their vassals, families like the Bushes, al
Sauds and Bin Ladens.
And on top of this they have the supreme gall to
ask for handouts from the federal government at a time when we are
at war,
spending innocent young lives to defend their right to rip off the rest
of the world! Incredible! Only Texans, of all your egomaniacal sects,
tribes or manipulative minorities, could have conceived of a plan so
bare-faced diabolical. Trust us on this one, we have lived among them,
and numerous other cutthroat cultures.
”The president is from Texas. The vice president lived
in Texas until he changed his residence — and he was CEO of Halliburton," a
company based in Texas, said Representative Edward J. Markey, Democrat
of Malden and a negotiator on the energy bill. ”The majority leader
is from Texas; the chairman of the Energy and Commerce Committee is from
Texas, and the chairman of the energy subcommittee is from Texas. No
one is lonesome in the Lone Star State when it comes to energy policy."
As a sugar cane-growing state, Texas is one of four states eligible
for a provision to spend $36 million in loan subsidies to use
cane sugar
to make ethanol, a gasoline additive. And the Research Partnership
to Secure
Energy for America, a not-for-profit facility based in DeLay’s
hometown of Sugar Land, Texas, is a leading contender to distribute
$1.5 billion
in government money to oil companies for deep-water offshore
oil drilling.
They’ve got us coming and going. Maybe it’s time for the rest of the world to sheepishly open our eyes and admit we’ve been royally bamboozled by a bunch of shit-kicking rednecks who are laughing thier asses off at our ivy-educated gullibility….
from the Boston
Globe
|
While I am no fan of current administration, you need to read up on peak oil and what is happening in the industry. Key problem here is not base price going up or extraction costs rising, it is present yields are declining and majors have been more concerned with maximizing quarterly profits than investing in new capacity. Read up on problems Royal Dutch has had over last few years where they have announced several times their reserves are not what they expected. Some leading analysts also estimate Saudi’s do not have capacity to make up shortfall — which is especially problematic in face of rising demand from Asia and other emerging economies. Iraq is also not delivering and our friend Hugo down south is not all that reliable.
Supply – demand — presume you have heard of that. This is not to suggest these tax breaks etc. are a good thing, do not know enough about them, but need to find some way to get these companies to start digging the holes and cranking up the production. Even so, higher prices are before us given that oil is an increasingly scarce commodity.
Also, this is not to suggest a love for Lone Star state as well. While do like their music — Bob Wills is still the King — and Waylon, Willie and Kinky are still super cool — it is my least favorite state of the union.
Lots of things we can pin onto them and the oil industry but you need a better understanding of the dynamics of the industry.
While I am no fan of current administration, you need to read up on peak oil and what is happening in the industry. Key problem here is not base price going up or extraction costs rising, it is present yields are declining and majors have been more concerned with maximizing quarterly profits than investing in new capacity. Read up on problems Royal Dutch has had over last few years where they have announced several times their reserves are not what they expected. Some leading analysts also estimate Saudi’s do not have capacity to make up shortfall — which is especially problematic in face of rising demand from Asia and other emerging economies. Iraq is also not delivering and our friend Hugo down south is not all that reliable.
Supply – demand — presume you have heard of that. This is not to suggest these tax breaks etc. are a good thing, do not know enough about them, but need to find some way to get these companies to start digging the holes and cranking up the production. Even so, higher prices are before us given that oil is an increasingly scarce commodity.
Also, this is not to suggest a love for Lone Star state as well. While do like their music — Bob Wills is still the King — and Waylon, Willie and Kinky are still super cool — it is my least favorite state of the union.
Lots of things we can pin onto them and the oil industry but you need a better understanding of the dynamics of the industry.
Bamboozled some of us so much we even voted for them — eh, Mr. Dowbrigade — and please do not come back with that astrological/shamanistic malarky you speak of — we reap what we sow. If some of us had acted differently then we would not have this energy package now, would we?
Dowbrigade, don’t have much to say about this though a shortage of oil was a big problem for us during the big one. Thanks though for putting the Fuhrers picture up there. Who is that other guy?
AOE – While my degree is not in Economics I do understand a little about supply and demand. However, the oil companies are operating at capacity, and are selling every barrel they can pump as soon as they can get it in the pipeline, so the extra 200% price bump is almost pure profit.
In fact, one even wonders if they have economic incentive to increase production, as the resulting decline in price would cost them money – the decline in their profit per barrel would not be compensated by the increase in barrels sold. Plus, it would eat into precious proven reserves all that much faster. So despite their public and political pronouncements to the contrary, they may like the present perpetual shortage just fine. The facile economic explanation is not always the whole story….
Guess this is just made up
Exxon disappoints with slashed profits
http://news.bbc.co.uk/1/hi/business/2166399.stm
Shell plan disappoints investors
http://www.tiscali.co.uk/news/newswire.php/news/ reuters/2004/09/23/business/shellplandisappointsinvestors.html
Exxon Mobil, the world’s largest publicly traded oil company, announced a huge 32 percent boost in second-quarter profits, the third-largest increase in company history.
http://www.nashuatelegraph.com/apps/pbcs.dll/article?AID=/20050804/OPINION04/108040088/-1/opinion
One more, from today;s NYTimes:
But the company’s shareholders have had little to complain about, given the company’s staggering profits, record dividends and stock performance. Last year, Exxon Mobil posted $25 billion in profits with sales of $291 billion – a sum larger than the gross domestic product of countries like Austria or Saudi Arabia. This year, the company is on track for even better performance….http://www.nytimes.com/2005/08/05/business/05exxon.html?ex=1280894400&en=7d29540b1f5bcb4d&ei=5088&partner=rssnyt&emc=rss
Oil companies may be making money and they are trying to maximize profits – so what else is new. Isn’t that what business is about? But they do not create shortage and your assumption they are simply jacking up margins from decade old contracts highly doubtful. Things have changed a bit since OPEC came on the scene. See Matthew Simmons presentation on peak oil: http://www.simmonsco-intl.com/files/AAPL%20Talk%20Banff%20-%20July%201.pdf . Key question which you do not begin to address is what to do about it. Tax breaks seek to create incentives to raise supply, which you note above they may be adverse to. Perhaps faulty but what do you suggest as a policy response? Nationalize oil companies? Mandatory Conservation? Rationing Supplies? Government-set price levels? Prohibitions on exports to developing companies? Issuing every American an extra sweater? Perhaps government funded research and subsidies for you pointy heads up in Cambridge to develop clean energy and other alternatives? Not sufficient to just point at big companies and whine.