So, you hate "big oil" and the soaring gasoline prices they are forcing on you? You've bought into the Democrats and Republicrats rhetoric about greed and "unjustified" profits, and you can't wait for someone to be elected president and get even with those evil corporate robber barons that are profiting at your expense.
Well before you get all excited about tearing down the energy industry, stop and think for a moment about what makes your comfortable life possible. Your heat and most of your electricity are provided through the burning of oil and natural gas. The thousands of plastic items in your home, car and office are all made from crude oil. Much of your clothing is woven of fibers made from petroleum.
Without the hard work and ingenuity of the men and women who work for the energy companies, we would be living in the 17th century - no electricity, running water, cars, trucks, airplanes, ships, factories, waterproof clothing, soda bottles, safety glass, sterile food and medical containers, air conditioners, televisions, microwave ovens, X-Boxes, I-Pods, or any of the millions of other products made using power generated from the burning of fossil fuels.
You would have to grow your own food, or ride your donkey to a nearby market, where there would be no refrigerators or electric lights. You'd have to kill and clean your own meat and cook it over an open fire. You'd have to chop down the trees for your home, and provide your own light by making candles from the fat of animals. Every single thing in your modern life is utterly and completely dependent upon a steady supply of oil. Without it, the entire Western world would collapse completely in a matter of weeks; tens of millions would perish from starvation, exposure, and disease.
Exxon-Mobil, the world's largest energy company, provides jobs directly to nearly 84,000 people and indirectly to tens of thousands of others in industries from merchant shipping to retail shops. Their record profits in 2006 returned more than $111 Billion in equity to their millions of stockholders, which likely include yourself if you receive pension benefits or have a 401k, IRA, or other investment account. Do you still want them to make less money? They and the other oil companies spend hundreds of millions of dollars of their evil profits exploring for new supplies of oil and gas to keep us alive and comfortable; scouting and drilling under difficult and often dangerous conditions on six continents.
Perhaps you agree with Hillary Clinton, who said that there is "...no basis for the huge profits..." of the oil companies because they are "...not inventing anything." While you're nodding your head in agreement, sitting in your comfortable house, warmed, cooled, clothed, entertained, and fed by the burning and remanufacturing of petroleum, take a moment to think what it takes to invent a method to extract crude oil from five thousand feet below the floor of the North Sea, which itself is more than two miles under stormy, frigid water, bring it to the US, turn it into gasoline, and deliver it to your corner convenience store. How much does it cost? How can it even be done?
Oil prices are determined the same way stock prices are; by supply and demand, and the information available about future market conditions. Exxon-Mobil, British Petroleum, Chevron, and the rest only produce and sometimes refine the oil, the price is set on the open commodities market where traders, ranging from individual investors to brokerage firms, buy and sell contracts on barrels of oil at particular prices. When the supply decreases or demand increases, the prices rise and the oil companies consequently make more money. They do not control the supply or the demand - they simply produce the product.
All three presidential candidates have endorsed confiscation of the income of the energy companies to one degree or another. Having your government steal the profits of the oil companies is not going to make the price of gasoline fall. What do you think Mr. Obama or Mr. McCain are going to do with their plunder? Give it back to you to offset your gasoline costs? Reduce your taxes by the amount they steal from the energy companies? Use it to find new sources of oil? Of course not. The money will go to the general fund that congress will squander as they always have and always will. In the meantime, the government will continue to rake in billions of dollars in taxes from you for every gallon of gas you buy. If the federal and state governments would stop taking their unfair profits from oil, the price of gasoline would drop forty cents per gallon today. Ms. Clinton has said that the profits of the oil companies should have a "baseline" over which the government would take the rest. Before you endorse the idea of government confiscation of what John McCain calls "obscene profits", remember that if they can set a ceiling on how much money a corporation is allowed to make, then they can one day set a limit on how much you are permitted to make.
Blame for the high cost of gasoline and diesel lies squarely with the United States Congress and the legislatures of the several states. Congress has denied the energy companies access to the hundreds of billions of barrels of oil available right here in America - off the coast of California, in the Arctic National Wildlife Refuge, and elsewhere. Their environmental regulations have prevented the construction of even a single new refinery in this nation for three decades, and have made the construction of nuclear power plants virtually impossible. Thus they have vastly reduced oil supplies, choked off the supply of refined gasoline, and prevented nuclear power from alleviating the demand for fuel oil.
State government regulations require refineries to produce more than a dozen different types of gasoline for various regions of the country - raising costs and meaning that a shortage in one area cannot be compensated for by shipping gas from another state. The Clean Air Act Amendments of 1990 require refineries to produce "Reformulated Gasoline" that contains either Ethanol or the carcinogenic* MTBE. These regulations forced the refining industry to spend more than $44 billion between 1989 and 1998 to comply with congress. Thousands of other crushing regulations on the production, refining, transportation, and storage of oil and gas impose tremendous burdens and increase the cost of fuel.
These same politicians who have deliberately caused the high fuel prices now look you straight in the eye and say that they feel your pain and are going to help. They believe you're stupid enough to not realize that they have caused the high oil prices, or will be placated by the looting of the oil companies' profits. They intend to distract you by blaming the oil companies and pointing to the high salaries of their CEOs, while they continue to pick your pocket with fuel taxes and do nothing to solve the problem.
Ms. Clinton says, "We need a president who's a fighter, who will take on the oil companies." What we need is a president who will take on the US Congress and get them to stop strangling both the American public and energy companies with taxes and regulations; a president who will call congressional leaders of both parties on the carpet, publicly expose their hypocrisy, and demand that they take immediate action to repeal the smothering burdens they have shackled all of us with and which have caused skyrocketing oil prices. Unfortunately, no such candidate exists.
So the next time you feel like blaming the oil companies for the price of gas, why don't you call your congressman instead; or go out and try to produce some oil yourself - if you can't, I suggest that you get down on your knees and thank God for the brilliant minds of oil company engineers, geologists, chemists, and executives who - in spite of the US Congress - have the creativity and courage to provide the energy that keeps all of us alive and enjoying our modern way of life.
*Reader Keith Robertson, an environmental geologist, writes:
The results of lab tests on rats and mice do show some carcinogenicity, but at tremendously high doses. There is no human data. Given the low odor and taste threshold of MTBE on the human palate, it is highly unlikely that any human would ingest a sufficient amount of MTBE for it to be a carcinogenic threat.