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?