American Elephants

Democrats Drive Up Gas Prices and Blame Oil Companies by The Elephant's Child
May 22, 2008, 10:18 pm
Filed under: Economy, Politics, Taxes | Tags: , , ,

Gas Taxes in Cents Per Gallon

Oh My! The Congressional Democrats are at it again. Today the Senate Judiciary Committee dragged in executives from the American petroleum industry for an imperial inquisition that Chairman Pat Leahy thought would be politically helpful. The price of gas has reached a new high, and Senator Leahy wants to be sure that you are blaming the right people.

They called on the executives to explain high oil prices, and attacked them for their profits and pay packages. ( I’m sure you have noticed the portion of the Constitution that allows Congress to determine how much profit is allowed and to set salaries for businessmen.)

The group from industry was a formidable bunch. John Hofmeister, President of Shell Oil Co., John Lowe, Executive Vice President of Conoco Philips Co., Steven Simon, Senior Vice President of Exxon Mobil Corp., Robert Malone, Chairman and President of BP America, Inc. and Peter Robertson, Vice Chairman of the Board of Chevron Corp. The petroleum executives quickly demonstrated that they were immeasurably better informed and far more public-spirited than their inquisitors.

Because foreign companies and foreign governments control the majority of the world’s oil, most of the price you pay at the pump is what the American oil company has to pay to buy crude oil from someone else. Exxon Mobil refined 2 million barrels per day in 2007. Ninety percent of that was purchased abroad. Exxon Mobil spends nearly $1 billion each day to maintain current operations and make needed capital investments.

On average, Federal and state government taxes account for 15 percent of the cost of gasoline at the pump (And likely much more if you live in Democrat-run state, and much less if you live in a Republican-run state), while oil companies’ profits amount to only 4 percent. So much, senators, for your supposed “price gouging”. Shell’s John Hofmeister explained clearly where the problem lies:

Meanwhile, in the United States, access to our own oil and gas resources has been limited for the last 30 years, prohibiting companies such as Shell from exploring and developing resources for the benefit of the American people.

Senator Sessions, I agree, it is not a free market.

According to the Department of the Interior, 62 percent of all on-shore federal lands are off limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. We have an outer continental shelf moratorium on the Atlantic Ocean, an outer continental shelf moratorium on the Pacific Ocean, an outer continental shelf moratorium on the eastern Gulf of Mexico, congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska, and even a congressional ban on doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific and eastern Gulf of Mexico.

The Argonne National Laboratory did a report in 2004 that identified 40 specific federal policy areas that halt, limit, delay or restrict natural gas projects. I urge you to review it. It is a long list….

The problem of access can be solved in this country by the same government that has prohibited it. Congress could have chosen to lift some or all of the current restrictions on exportation and production of oil and gas. Congress could provide national policy to reverse the persistent decline of domestically secure natural resource development.(emphasis added)

On Tuesday, the House of Representatives passed a bill that will allow the U.S. government to sue OPEC for conspiring to raise prices. If you think this is sensible, reverse the situation and assume that OPEC wanted to buy our timber, but was demanding that we drop the price and cut more trees. (h/t R. Rapier)

According to the U.S. Minerals Management Service, the outer continental shelf contains as much as 86 billion barrels of oil and 420 trillion cubic feet of gas, 10 times the oil and 20 times the natural gas we use each year. The oil shale formations across the Rocky Mountains and into Canada contain at least 1 trillion, or possibly as much as 2 trillion barrels of crude oil, more than 7 times the amount of crude oil reserves in Saudi Arabia and enough to meet current U.S. demand for over 250 years. Yet Congress prefers to put it off limits. The mud-flats in ANWR would add another 1 million barrels of oil a day.

Why? Well, environmental organizations show you pictures of cute baby animals and tell you that the Earth will die unless you send them money. They use the money to lobby Congress and to sue anyone asking to drill for oil. Or they use it to sue the EPA to demand that the cute animals are put on the endangered species list, to prevent any drilling. They oppose drilling, not for any environmental damage that oil might do, but to destroy our capitalist economy, for they don’t like capitalism.

If this stupidity makes you angry, don’t grumble at the gas station attendant. Call your representatives in Congress. Let them know that you’re mad as hell and you won’t take it any more.

14 Comments so far
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There have been many new advances in solar energy and many US cities are discovering the value of mass transit. I do believe that in the long run we should drill some of our own oil but we should do it responsibly and not encourage wasteful consumption.


Comment by mccainman

There are, of course, other reasons for the rise in oil prices. China, for example, subsidizes the price of gas for the Chinese people, as do many other countries. Speculators, right now, are a big part of it as they bid up future contracts on oil.

BUT — CO2 is not a pollutant. It is what you breathe out, and as necessary for life on earth as oxygen, and so far, no one is trying to restrict our use of that. CO2 is also only a trace gas in the atmosphere, and increases in CO2 follow increases in warming by as much as 1000 years, so those increases cannot be a cause for warming.

There is no peer-reviewed scientific paper that shows ‘global warming’ to be anything other than normal variation. We do not have a shortage of oil, we have a shortage of the will to drill.

A solar-power piece in the Fort Worth Star-Telegram enviro-blog suggests that solar plants situated in West Texas could supply 148,000 MW, enough to power the entire state. It would take only a 30 mile by 30 mile array of solar panels. That’s covering whole counties solidly with solar panels! Solar panels work for small applications, but it’s just not ready for prime time. If it were, it wouldn’t need massive renewable-energy mandates and subsidies.

Nobody is saying don’t investigate alternative energy, but we’re a long way yet from any practical application. The big problem is that those who oppose drilling lie about their reasons and try to make people think that we must do away with oil to save the planet. Just ain’t so.


Comment by The Elephant's Child

Oh my God, you’re nuts.


Comment by jurnei

No, just informed. You should try it.


Comment by American Elephant

I agree with American Elephant. Between the high groceries, gas, and home heating, I may have to quit college. We have enough problems in my family with money anyway, but this does the final blow. I care about the enviorment too, but I care about our economy first. I dont take vacations, and dont eat out. But I do want to have a damn life! Most people in our country are actually lower middle and lower class. Most of people I know are just miserable anymore. We work, we go home, and most of us just sit in the house all day. Cant go anywhere, cant buy anything, just buy the nessesities and survive. Personally, I think most people deserve better than plain survival. Anyone that would ague with me either doesnt really do much in life, or their financial situation is good enough that they dont mind cutting back. But when you are helping to support your family because of illness in the family, then of course that wipes out the last of the money for anything a person wants to do in their life.

People need to get a brain and stop thinking like sheep. We can worry about the ecology, but lets fix the economy first before I become an old man and die.


Comment by Couger

Yesterday (5/29) it was reported in one place that I saw that OPEC was going to increase pumping. They thought the price of oil was getting too high. Since this would be a fairly big deal, I was waiting to see if it was reported elsewhere….

There are violent protests in England and Europe, and with Congress announcing that they are going to sue OPEC perhaps the Saudis have opted for a “don’t blame me” position. We’ll see.


Comment by The Elephant's Child

You’d think the party that asks you to vote for them because they’re for the “people” and the “little guy”, would do everything it takes to help us keep more of our hard-earned money. Instead, they’d rather raise the taxes on the oil companies, hide behind “global warming’s” skirt, sit back, and wait for the money to come in to line the government’s pocket. Hey, they need more avenues of income to fund their pet projects and wasteful spending. In the meantime, the “little guy” is forced to walk to the market, only to find out he can’t afford to buy the ground beef for the spaghetti
dinner, or the milk for his baby and the loaf of bread for his son’s school lunch. Why?Because the trucking company who transports the food went out of business due to the high gas prices, and the farm who used to grow wheat is subsidized to grow corn for bio-fuels like ethanol. And you think more taxes on those businesses who are trying to get us these goods will keep costs down? We’re always the ones getting screwed! Geez, these politicians don’t know anything about economics–it’s simple supply and demand. Unfortunately, they’ve restricted supply, and we continue our demand–Hell, we just want to live!!! Is that too much to demand? The only people who are happy are the environmentalists and the vegans! Because now we’re forced to walk and not eat meat. Sounds crazy, doesn’t it? But how far from the truth is that? They don’t want us to be dependent on foreign oil, yet, they don’t let us drill, not even look at our own resources here in our country. Rather, they’d have us beg Saudi Arabia and every other foreign country to increase their production. That very action tells me they do believe that more supply brings down prices. I guess they prefer to give the Saudis and OPEC more of our money and control of our economy. Just as long as the big bad US oil companies don’t get the money, they’re ok with it. Or, until they find a way to regulate or takeover their companies, right? Because they’re for the “little guy.”


Comment by BabyElphie

The Cap-and-Trade scheme in the bill currently before the Senate would be a disaster. You are absolutely correct that Democrats don’t understand economics at all.

That said, it really isn’t very clear to what extent politicians actually believe that ‘global warming’ is a problem. Even if you don’t follow the science, it should be a little bit of a stretch to get excited over less than one degree F. of warming over one hundred years.

For those who follow the science, the realization that CO2 is NOT the cause of any warming, and that it stopped warming 10 years ago, ought to suggest that stopping emissions of CO2 should not be a national priority.

It should certainly not be a priority if you understand that CO2 is NOT a pollutant, and benefits us all for it makes plants grow more and better survive adverse conditions.


Comment by The Elephant's Child

I remember taking chemistry and biology in high school, and correct me if I’m wrong-don’t the plants and trees absorb the Carbon in the CO2; they in turn, release the O2 (oxygen) into the atmosphere for us to breathe? Uh, isn’t that a good thing? So, if these people want to limit CO2 emissions and our “carbon footprint”, what are they advocating? Oxygen depletion? Suffocation?!


Comment by BabyElphie

You’ve got it! Carbon dioxide is necessary to life. In the early 1990s the evidence from the first ice cores at Vostok in 1985 measuring temperature and CO2 going back thousands of years suggested that CO2 must be the cause of warming. But correlation is not causation, and anyway the data points were a thousand years apart. The idea that CO2 was a problem passed from the scientific arena to the political arena.

The fact that we were getting tremendously excited over less than a degree C. in a hundred years, that the only source of predictions of catastrophe came from computer programs, and that our most experienced and skilled meteorologists can’t predict the weather with any accuracy for next weekend should have provided a very large note of caution.

Enter Al Gore who, needing something to compensate for a lost election, decided to save the world. Environmental groups, joined after the fall of the Berlin wall by Marxist greenies saw a great opportunity to restrain the US economy and cripple Capitalism which they hated. But the US looked at Kyoto and what it would do to our economy and said “no way”. Now they’re back again with a plan for government take-over of a vast part of the economy.

It’s hard to tell, but the current push may be because they know evidence that CO2 is detrimental is vanishing. The earth has not warmed for a decade, and is in fact cooling. Oops! It has cooled enough to wipe out the warming of the last century. The earth is always warming and cooling — it is natural, and complicated. CO2 is NOT a cause of warming, but increases in CO2 follow warming. And the most important factor in warming and cooling seems to be the actions of the sun.

The idea that Congress can control nature and fix the climate is something that should occur only to a Democrat. So far they’ve managed to raise the price of gas, the cost of food and cause food riots all over the world. Now they’re attempting to ruin the economy and threaten famine across the developing world.

Google cap-and-trade, and study up.


Comment by The Elephant's Child

It is time we empeach the ones in congress who are holding us back and get rid of them how can we get this stgarted / \???


Comment by John Swansey

The best way is by donating, volunteering, and voting for their opponents in the upcoming election. There is also a petition you can sign that aims to put political pressure on Democrats to stop blocking drilling.


Comment by American Elephant

Drilling in the U.S. will not help. The problem is the U.S. has 3% of the world’ oil reserves, but consumes 25% of them. The EIA (Energy Information Administration, don’t worry they aren’t a bunch of liberals) released a report in 2007 about the potential impacts of drilling in the Outer Continental Shelf (OCS) on gas prices.

“Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher—2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case (Figure 20). Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”

I am all for using our natural resources, but we should be looking elsewhere, this ain’t a short-term solution… unless you call “insignificant” effects on prices in 2030 a short-term solution.

Read the whole report below:


Comment by Bill

Well, yes, nobody knows how much oil is there because it hasn’t been explored, only guessed at. Granted, probably informed guesses. One of the major offshore drilling firms said they could be drilling within 3 years. The idea that we should not drill or explore because there might not be enough oil to completely meet our needs seems like fairly goofy thinking to me.

I am not an expert, only opinionated. Some sources say that there is currently a ‘bubble’ caused by vast speculation. Other sources say that there is no significant speculation and only a mismatch of supply and demand. I do not know the answer, but bringing on some of our own resources as rapidly as we can seems sensible to me.


Comment by The Elephant's Child

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