Pissed off about high gas?

[Melidan]

http://forums.wsj.com/viewtopic.php?t=2717

Gasoline prices are through the roof and Americans are angry. Someone must be to blame and the obvious villain is "Big Oil" with its alleged ability to gouge consumers and achieve unconscionable, "windfall" profits. Congress is in a vile mood, and has dragged oil industry executives before its committees for show trials, issuing predictable threats of punishment, e.g. a "windfall profits tax."

But if there is a villain in all of this, it is Congress itself. That venerable body has made it impossible for U.S. producers of crude oil to tap significant domestic reserves of oil and gas, and it has foreclosed economically viable alternative sources of energy in favor of unfeasible alternatives such as wind and solar. In addition, Congress has slapped substantial taxes on gasoline. Indeed, as oil industry executives reiterated in their appearance before the Senate Judiciary Committee on May 21, 15% of the cost of gasoline at the pump goes for taxes, while only 4% represents oil company profits.

To understand the depth of congressional complicity in the high price of gasoline, one must understand that crude oil prices explain 97% of the variation in the pretax price of gasoline. That price, which has risen to record levels, is set by the intersection of supply and demand. On the one hand, world-wide demand has accelerated mainly due to the rapid growth of China and India.

On the other hand, supply has been curtailed by the cartel-like behavior of foreign national oil companies, which control nearly 80% of world petroleum reserves. Faced with little competition in the production of crude oil, the members of this cartel benefit from keeping the commodity in the ground, confident that increasing demand will make it more valuable in the future. Despite its pious denunciations of the behavior of U.S. investor-owned oil companies (IOCs), Congress by its actions over the years has ensured the economic viability of the national oil company cartel.

It has done so by preventing the exploitation by IOCs of reserves available in nonpark federal lands in the West, Alaska and under the waters off our coasts. These areas hold an estimated 635 trillion cubic feet of recoverable natural gas – enough to meet the needs of the 60 million American homes fueled by natural gas for over a century. They also hold an estimated 112 billion barrels of recoverable oil – enough to produce gasoline for 60 million cars and fuel oil for 25 million homes for 60 years.

This doesn't even include substantial oil shale resources economically recoverable at oil prices substantially lower than those prevailing today. In an exchange between Sen. Orin Hatch (R., Utah) and John Hofmeister, president of Shell Oil Company during the May 21 Senate Judiciary Committee hearing, the point was made that anywhere from 800 million to two trillion barrels of oil are available from oil shale in Colorado, Utah and Wyoming.

If Congress really cared about the economic well-being of American citizens, it would stop fulminating against IOCs and reverse current policies that discourage, indeed prohibit, the production of domestic oil and natural gas. Even the announcement that Congress was opening the way for domestic production would lead to downward pressure on oil prices.

There is an historical precedent for such a step: Ronald Reagan's deregulation of domestic crude oil prices at the beginning of his first term. At the time, thanks to the decision by the Organization of Petroleum Exporting Countries (OPEC) to curtail output, the price of oil was at a level that in real terms is only now being matched. Domestic price controls ensured that the OPEC cartel would face little or no competition in the production of oil.

Price controls were exacerbated by other wrongheaded policies stimulated by the two "energy crises" of the 1970s. One of the most egregious was the infamous "windfall profits" tax, designed to punish oil companies for alleged profiteering. But since it applied to even newly discovered oil, its main impact was to discourage the exploration and drilling that would have increased oil supplies.

Although the energy problems of the 1970s were traceable to government policies, Reagan's decision to deregulate oil prices was ridiculed by policy makers, especially those who had served in the previous administration. For instance, Frank Zarb, who had been Jimmy Carter's "energy czar," predicted that decontrolling the price of crude oil would lead to gasoline prices of $10 a gallon. Instead, the world price of oil plummeted, helping to fuel the extraordinary economic growth of the 1980s.

Reagan's deregulation of crude oil prices created incentives for domestic producers to invest in exploration and to increase production. The threat of increased output by non-OPEC producers destroyed the discipline among OPEC members necessary to restrict production to maintain high prices. Facing the likelihood that an increase in supply would lead to lower future prices, OPEC producers increased output in the hopes of maximizing profits before prices fell. The cascading effect caused oil prices to tumble.

As in the 1970s, U.S. energy policies have essentially restricted the exploitation of domestic sources of energy. Curtailed supplies have combined with rapid, world-wide energy demand to increase the price of oil and other sources of energy. This provides leverage to foreign producers and threatens U.S. energy security. Freeing up domestic energy resources will do today what President Reagan's decision to deregulate oil prices in 1981 did then: cause oil prices to fall, thereby enhancing U.S. energy security.

Mr. Owens is a professor at the Naval War College in Newport, R.I., and editor of Orbis, the journal of the Foreign Policy Research Institute in Philadelphia.

Yep. Futures speculators have some effect on the price... The real blame lies with our elected leaders for dragging their feet for decades.

Also..

[media]http://youtube.com/watch?v=WIjyT5_2N_I[/media]

Also, also...

You think $4 a gallon is a lot? Wait till this shit gets passed;

"Next week, the Senate will vote on the Lieberman-Warner cap-and-trade climate control bill. The proposed statute is a nightmare that would devastate our economy. The Wall Street Journal calls it "the most extensive government reorganization of the American economy since the 1930s."

[Arcadian Empire]

This same thing is going on in Australia. Here the term is called:

Kevin Rudd

His "Fuelwatch" scheme is gonna save us 2c a litre...or around 8c a gallon. Fantastic job Kevin. I voted you for nothing =P

[Lmcfalcon12]

Originally Posted by Melidan

http://forums.wsj.com/viewtopic.php?t=2717



Yep. Futures speculators have some effect on the price... The real blame lies with our elected leaders for dragging their feet for decades.

Also..

[media]http://youtube.com/watch?v=WIjyT5_2N_I[/media]

Also, also...

You think $4 a gallon is a lot? Wait till this shit gets passed;

"Next week, the Senate will vote on the Lieberman-Warner cap-and-trade climate control bill. The proposed statute is a nightmare that would devastate our economy. The Wall Street Journal calls it "the most extensive government reorganization of the American economy since the 1930s."

No worries, I'll be 52 by the time the really big stuff comes around in 2030...lol. But seriously, this is a way for the government to make money by letting ignorant voters take a chance and vote on something they refuse to take the time to learn about.

[Villalba]

Gasoline prices are through the roof and Americans are angry. Someone must be to blame and the obvious villain is "Big Oil" with its alleged ability to gouge consumers and achieve unconscionable, "windfall" profits.

Big oil is not to blame on this. Big oil has been controlling some of our reserves for a long time. Is funny at how Democrats came into Congress, and suddenly messed up everything. And at the same time they dare to blame it all on the president's policy.

Freeing up domestic energy resources will do today what President Reagan's decision to deregulate oil prices in 1981 did then: cause oil prices to fall, thereby enhancing U.S. energy security.

Deffinetly.

[Imperial]

Still misleading, just because the US has oil reserves does not mean that they are of the same quality or extraction ease that the Middle East possesses. While the US does have oil reserves, it is saturated within rocks. It doesn't freely flow & spurt out of the top of oil derricks like Saudi oil or former Texas oil. The cost of extraction puts the price on par with foreign oil. It will take more energy to extract the oil than the oil will produce. We've been going down this road for years, oil will run out.

http://en.wikipedia.org/wiki/Peak_oil We're at peak production, it can only begin to fall & prices will only continue to rise.

[The Corporal]

Oil shales are economically viable even if gas prices weren't $4+ a gallon. The technology exists but Congress is holding back domestic oil production. And Hubbert never considered (or even knew of) oil shales, oil sands, gas hydrates, and other non-traditional petroleum reserves when he wrote that theory. Peak oil, while a decent theory, does not apply to our current situation unless you only consider conventional reserves.

[Imperial]

Originally Posted by The Corporal

Oil shales are economically viable even if gas prices weren't $4+ a gallon. The technology exists but Congress is holding back domestic oil production. And Hubbert never considered (or even knew of) oil shales, oil sands, gas hydrates, and other non-traditional petroleum reserves when he wrote that theory. Peak oil, while a decent theory, does not apply to our current situation unless you only consider conventional reserves.

This has turned into a political argument and won't go anywhere.

Blaming Congress, that's always the solution

[ShadowPhoenix]

Originally Posted by Imperial

This has turned into a political argument and won't go anywhere.

Blaming Congress, that's always the solution

Congress is actually responsible for most of the crap people blame the President for. Here's the thing, he's a figurehead. He can only approve/deny bills that have already passed through Congress. He can only deploy troops, but only Congress can DoW. You get the idea.

[The Corporal]

It's not just Congress, it's a host of factors. Inflation caused by the measures taken by the Fed to stop the bleeding from the housing crisis, lack of refining capacity, ass-a-holism by OPEC, ever-increasing use of plastics, state regulations, speculation on oil futures, increasing demand, etc. However, Congress could take a big step towards negating some of these other factors but fails to do so. They could do so much, but won't because they are too stubborn, too ignorant, or too shortsighted to act before this problem gets any worse.

[Assarax]

I do like how in the video he says that Brazil is now independent of OPEC and that we can be too if we just drill in Alaska, the Pacific, Eastern Gulf, etc. We may be independent... for now. What happens when the oil disappears again, as we all know it will? Back to OPEC I guess, hat in hand.