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Obama - Big Oil Truths and Elisions

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On March 29th, President Obama engaged in some of the most honest discussion of the realities of oil and oil corporations I have heard from a politician. He also engaged in some big lies of omission (elisions). So let's start with the "truths."

(I have included the video of President Obama's speech on 3/29/2012, and my transcript of same, at the end of this article so that readers can get the the points in context.)

The purpose of the speech was to encourage the Congress to stop the subsidies for big oil. This was a lost cause as the Democratic measure was blocked by Republican Senators (CNN, 3/29/12). This is not surprising given that "Individuals and political action committees affiliated with oil and gas companies have donated $238.7 million to candidates and parties since the 1990 election cycle, 75 percent of which has gone to Republicans"  - though Obama received $884,000 in 2008 (OpenSecrets.org).

In the course of the speech, Obama tells some truths that I don't believe any other President has told.

The "truths" that were in this speech

Point: The big oil companies get billions of dollars a year in subsidies, and they have gotten these subsidies for almost a century. This conveniently leaves out the almost free "leases" of our commons to the corporations ($1.50 to $10 per acre Who Owns the West? Oil and Gas Leases) and the amazingly low "royalties" (roughly 8% after all associated "production" costs American Petroleum Institute). In fact according to API, in 2007 MMS collected about $9.4 billion in oil and gas royalties, $815 million in bonus bids, and $10.2 billion in leases. This comes to a total of $20.42 billion. To put this in context, it is generally estimated that oil and gas companies receive about $24 billion in subsidies a year with  high estimate of $37 billion a year (Common Peoples Source for News). So Big Oil gets somewhere between $3.6 billion to $16 billion more per year than they pay in leases and royalties.

Point: Obama detailed the record profits being made by the oil companies - particularly the top three. He even points out that every one cent increase in the cost of gasoline adds about 200 million in quarterly profits; last year the 3 largest US oil companies had more than $80 billion in profits; and that Exxon earned about $4.7 million an hour last year. However, in spite of all of that, Obama has opened up massive amounts of public land (and coast line) to these rapacious corporations - something he takes credit for.

Despite the significance of the truths above, perhaps the most significant was the following (emphases are mine):

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Point(s): "And keep in mind we can't just drill our way out of this problem. As I said, oil production here in the United States is doing very well. And it's been doing well even as gas prices are going up. Well the reason is because we use more than 20% of the world's oil, but we only have 2% of the world's known oil reserves. That means we could drill every drop of American oil tomorrow, but we'd still have to buy oil from other countries to make up the difference. We'd still have to depend on other countries to meet our energy needs. And because it's a world market, the fact that we're doing more here in the United States, doesn't necessarily help us because even US oil companies are selling that oil on a world-wide market. They're not keeping it just for us. And that means if there is rising demand from around the world then the prices are going to go up."

One of those issues tied into the cost of gasoline is an area of dead silence most of the time. Namely, the issue of refineries. This from FactCheck.org:

Though oil refinery productivity in the United States has been improving, the number of operating refineries has been dropping steadily. In 1982, the earliest year for which the Energy Information Administration has data, there were 301 operable refineries in the U.S., and they produced about 17.9 million barrels of oil per day. Today there are only 149 refineries, but they're producing 17.4 million barrels - less than in 1982, but more than any year since then. The increase in efficiency is impressive, but it's not enough to meet demand: U.S. oil consumption is 20.7 million barrels per day. Refinery capacity isn't the only factor in the price of gasoline, and according to the EIA it's not the most important one either (that would be the cost of crude oil), but it's certainly a contributor.

Regardless of why refining capacity is not keeping up with demand, the current situation guarantees that prices are going to stay high -and profits for refiners (such as the Koch brothers) remain high as well. A related issue that should breed concern is the aging of those refineries, and the growing risk they pose to the communities in which they reside. Their failure would also dramatic economic and structural impacts on the nation.

Point: Obama was also at least semi-honest about his energy strategy. He stated that his strategy is "all of the above" - meaning everything is on the table. However, his delineation of that strategy left a number of questionable (and contentious) energy sources out. Namely, he did not mention fracking (and the problems it is causing), nor coal (and his duplicitous "clean coal" which also overlooks the massive destruction coal entails); nor tar sands (and the massive environmental and public health problems attached); nor nuclear power (and the significant issues entailed particularly post Fukushima).

He also conveniently avoids the entire issue of peak oil (Post Carbon Institute), and while encouraging fracking across the country, overlooks the issue of global warming. After all, methane is a more potent green house gas than CO2 - 21 times (EarthSave) to 25 times (Wikipedia) worse in fact. Not to mention the issue of water supplies lost and contaminated (Goodell, 3/15/2012, page 3), or the increasing earthquakes in regions being fracked (Texas - State Impact, 3/30/2012; Ohio - Chesapeake Bay Journal). But then there is  the even bigger issue that it appears that the wonders of the "massive" amounts of natural gas to be fracked may be more hype than reality. As stated by Jeff Goodell in his investigation of fracking The Big Fracking Bubble: The Scam Behind the Gas Boom, "It's not only toxic - it's driven by a right wing billionaire who profits more from flipping the land than drilling for gas." That billionaire, and the focus of the article, is Aubrey McClendon. McClendon's Chesapeake Energy is very big in natural gas. The Koch brothers (underwriters of the Tea Party and owners of several governors including Scott Walker of Wisconsin) control the nation's pipelines and refineries. Isn't it a bit troubling that these folks have a strangle hold on much of the nation's energy supply, and that they are getting both richer and subsidized by us? Well it troubles me!

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Sometimes what is not said is more significant than what is said. As I listened to Obama I was struck that he was saying things that few other politicians are saying. I was also struck by the elisions than were so apparent you could drive an oil tanker through them.


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Rowan Wolf is an activist and sociologist living in Oregon. She is the founder and principle author of Uncommon Thought Journal, and Editor in Chief of Cyrano's Journal Today.


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