OpEdNews » The terrible lie of "Drill, drill, drill."

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Tag(s): Debate; Manipulation; Oil; Speculation
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June 12, 2008 at 21:22:54

Headlined on 6/12/08:
The terrible lie of "Drill, drill, drill."

by Ed Tubbs Page 1 of 2 page(s)

www.opednews.com

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How much of the rocket fueled escalation in oil prices is due to an upside-down supply-demand dynamic, how much is due to OPEC price manipulation, how much is due to Big Oil supply manipulation, how much is due to Enron (black hole) Loophole speculation, and how much is due to whatever else anyone cares to introduce into the mix of likely suspects is open to honest debate.

All are playing some part. But it’s a lot like trying to determine how much marijuana is in the batch of brownies, without being able to lab-test the brownies. You can see the results, but just how much . . .?

A great many will tell you it’s strictly a problem that can be resolved via “Drill, drill, drill.” Indeed, that’s the highly simplistic answer claimed by George Bush. (And you know how credible anything he says is.) It’s also the answer claimed by a majority of Republicans in the Senate and House. They’ve even invented a most recent tactical, knee-jerk response: include with every statement they issue on the current crisis the phrase, “the Pelosi premium.”

(Kind of reminds me of the shameless tactics the GOP and the administration used to discredit whatever questions were raised concerning the legitimacy of invading Iraq, and whatever remarks were later made in opposition to what would become the greatest travesty voluntarily engaged by the United States through its history: “Support the Troops,” “Let our troops finish the mission,” “You’re for our troops or you’re for the terrorists,” and other similar intimidating excrement.

Of course, the overriding problem in America is that, given the general level of knowledge of the electorate, and the interest manifested in all manner of truly important issues by the electorate, such terrible, simplifying tactics frequently work. Now, that is a truly effective definition of terrorism.)

So what is the truth? Or, at least a legitimate component of it?

In an interview yesterday, and on the floor of the House today, I gathered from Representatives Peter DeFazio (Oregon’s 4th District) and David Wu (Oregon’s 1st District), respectively, some startling facts.

To rev the commentary up to a higher level, I’d like to introduce into the discussion a question, the answer to which, when I heard it, virtually threw me against the wall. Who would you guess is the largest owner of oil contracts in the United States?

Exxon-Mobil? Valero? British Petroleum? Some other oil company perhaps?

No, the answer is Morgan-Stanley, the international investment banking and financial services giant, headquartered in New York City.

Interesting, is it not? Care to “speculate” on how that came to be?

Currently the oil companies have thousands of oil drilling rights and leases on more than 30 million acres of federal lands. The companies are even drilling on many of them. But once they drill, if oil is struck, the wells are being capped. Since the 80’s and 90’s, the oil companies have been capping oil producing wells in California, Colorado, Oklahoma and Texas, and to varying extents in other states as well.

Since the 80s, the companies have been shutting down refineries, rather than investing in new ones. Some reasons are for highly legitimate business reasons: they’ve become obsolete, inefficient. Certainly there may also seem to be less legitimate reasons also.

Why would they do that? Even more pertinent, with all the potential they have now, why would the companies be pushing so hard for rights elsewhere; in Alaska, off the Florida and California coasts?

To be fair, the per barrel price of extracting American crude in the 80s and 90s, relative to the lower prices overseas, made capping a wholly legitimate business decision. However, the per barrel price today — What was it last? $135, or so? It just is no longer possible to keep completely current. — makes drawing from those wells a profitable enterprise? Again, why aren’t the companies drawing out that American oil?

One, if the companies can earn profits that the human imagination cannot compute by doing nothing, why should they do anything?

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4 comments

American Expat in Asia
pftAmerican Expat in Asia

Hoax

Control the oil and you control nations. Keep supplies tight and prices high works well for Big Oil and their partners in crime, Big Banking. Both of which are instruments of the ruling elite.

Big Oil makes more money on imported oil. They have oil producing nations over a barrel. It's one thing to have oil. It's another to get the oil, refine it and trasport it. Big Oil controls the equipment, parts and tankers to do all of that. Exxon does not pay market price for the oil they import. Big Oil uses tankers that are registered in tax havens for a reason, this is where the bulk of the profits are skimmed off the top. The oil that gets to the US is bought by a US entity at market price. This is why refinery profit margins are not very high, so they pay little tax.

http://www.counterpunch.org/schaefer03252004.html

"David Rockefeller arranged for me to meet one afternoon with Jack Bennett, the treasurer of Standard Oil of New Jersey (the old Esso before it changed its name to Exxon). "The profits are made right here in the Treasurer's office," he explained, "wherever I decide." He showed me the broad leeway a vertically organized global conglomerate enjoyed in being able to assign "transfer prices" do as to report the overall profit at whatever point taxes were lowest on oil's statistically labyrinthine journey from wellhead to gas station.

Taxes were lowest (in fact, non-existent) in Panama and Liberia, where the oil industry's tankers duly registered their flags of convenience. Standard Oil priced its crude oil low to these shipping affiliates, and sold it at a high, nearly retail price to refineries and marketing outlets in the industrial oil-consuming nations.

SS:How can someone use the statistics to trace what is happening?

MH:It is not easy to find transactions with these flag-of-convenience countries in the U.S. balance-of-payments statistics. Instead of being listed as bona fide countries in Africa or Latin America, they appear under a rather obscure column heading called "international." Cursory viewers tend to overlook it, as it does not indicate a specific country or region. Some people may imagine that it even refers to venerable international organizations such as the United Nations, IMF or World Bank. But what "international" means is, quite simply, "international shipping" registered under flags of convenience. Quite properly, it doesn't really belong to a foreign nation's economy at all, because it is a legal fiction that U.S. companies simply make use of to produce tax filings on an unrealistic "as if" basis."

In addition to this, they get free oil protection service from the Pentagon.

http://tomdispatch.com/post/174943/michael_klare_the_pentagon_as_energy_insecurity_inc_

"the U.S. military has come to serve as a global oil protection service, guarding pipelines, refineries, and loading facilities in the Middle East and elsewhere. According to one estimate, provided by the conservative National Defense Council Foundation, the "protection" of Persian Gulf oil alone costs the U.S. Treasury $138 billion per year -- up from $49 billion just before the invasion of Iraq. "

by pft (0 articles, 0 quicklinks, 0 diaries, 466 comments) on Friday, June 13, 2008 at 2:14:38 AM

Mike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics.

The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, restaurateur, U.S. Navy veteran, heavy equipment operator, taxi cab driver, fishing guide, horse packer and few jobs too embarrassing to mention, writes from experience and plain common sense.

Mike’s humorous systems of “Mikeronomics” ...

to see more of bio, click on member name
Mike FolkerthMike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics.

The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, restaurateur, U.S. Navy veteran, heavy equipment operator, taxi cab driver, fishing guide, horse packer and few jobs too embarrassing to mention, writes from experience and plain common sense.

Mike’s humorous systems of “Mikeronomics” ...

to see more of bio, click on member name

I worked on the Alaska Pipeline from start to finish and taping into ANWR with a feeder line to the Aleyeska Pipeline could be done fairly quickly, not anything like 20 years. Dealing with permafrost, housing, the elements etc. has long ago been conquered. But these aren't the issues.

The real issue is that the total oil in ANWR would last the world about 4.5 months. The total output of the Alaska Pipeline in it's 31 year history would fuel the U.S. for only two years. We use 20 MILLION barrels per day in the U.S. alone! This is unsustainable regardless of where we drill. Even oil people like T. Boone Pickens agree with that.

The U.S. is 75% dependent on foreign oil and our 4.8% of population consumes 25% of all oil produced on earth. This is also unsustainable.

Whether the Democrats take the profits away from the American public who holds oil stocks or the Republicans drill a hole in Old Faithful to last us one more day...the whole damn mess is unsustainable and always was. And we have known that for more than 50 years.

by Mike Folkerth (120 articles, 0 quicklinks, 2 diaries, 566 comments) on Friday, June 13, 2008 at 3:20:36 PM

An "Old Army Vet" and liberal, qua liberal, with a passion for open inquiry in a neverending quest for truth unpoisoned by religious superstitions. Per Voltaire: "He who can lead you to believe an absurdity can lead you to commit an atrocity."
Ed TubbsAn "Old Army Vet" and liberal, qua liberal, with a passion for open inquiry in a neverending quest for truth unpoisoned by religious superstitions. Per Voltaire: "He who can lead you to believe an absurdity can lead you to commit an atrocity."

The Joy.

Mike,

Let me explain the title of the subject matter. Very few things in life bring me greater genuine pleasure, more joy than encountering thoughts, comments, perspectives from someone who has something to say that is founded in experience and knowledge of what they're talking about. I gladly accept your corrections, and appreciate your thoughts.

Thank you

Ed Tubbs

by Ed Tubbs (159 articles, 1 quicklinks, 22 diaries, 54 comments) on Friday, June 13, 2008 at 4:49:27 PM

I very much agree with your bio-statement. The likes of Jim Jones aren't in short supply and are a dangerous element who can convince large blocks of people of total untruths. Voltaire knew of what he spoke huh?

Here's one of my own. "The perceiver becomes the believer and to the believer it is truth."

One of my best friends is a wildcatter and has been in the oil and gas business all of his life and he also employs an excellent geophysicist. My former partner is an engineer for Aleyeska Pipeline working at Valdez Terminal. And one of my oldest friends is a supervisor at Kuparuk on the input end of the pipeline. I was a supervisor with RCA for the communications and controls for the entire project.

I do my very best to dig down to the real facts from real people that are doing real jobs.

Thanks for your return comments. These types of articles are what it takes to get at reality.

by Mike Folkerth (120 articles, 0 quicklinks, 2 diaries, 566 comments) on Friday, June 13, 2008 at 6:46:06 PM