Epiphanyblog

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Oil Supply & Demand

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I am so angry with Congress that I could spit. The issue of oil supply and demand and the extraordinarily high cost of gasoline is just another another issue in which the two parties are playing partisan politics rather taking care of the American people. Perhaps, too, I’m a wee bit suspicious of anyone who states that oil companies need more than they already have. I’m forced to remember that in the 1950s the US overthrew a democratically elected government, replacing it with an unpopular dictator, in Iran at the behest of British oil concerns.

But let’s deal with the realities of this oil conundrum.

1- Existing oil supplies from Alaska are being shipped to Japan and East Asia. So, how is opening Anwar going to change that pattern of sales? In the last 20 years or so that the Alaskan pipeline opened, Alaskan oil supplies are being shipped to countries other than the U.S.

As an oil industry analyst stated on C-SPAN, Americans have to think of all world oil supplies being dumped into one big barrel. Then from that barrel, oil is distributed throughout the world. That was his response when asked about why Alaskan oil was being shipped to Asia, rather than just to the U.S. So, even though the U.S. owned and only leased those Alaskan oil reserves, oil companies found it better in their corporate financial self-interest to sell to Asia.

2- If the cost of oil is a product of supply and demand, then it behooves oil companies to keep the supply lower than the demand. In this way, oil company profits are much higher, providing greater dividends to shareholders and creating huge incomes for management. What reason is there, then, to increase supply, thus lower the cost?

For the past twenty-some years, oil companies have continuously stated that it is too expensive for them to drill more or increase refinery capacity. They said the cost of oil was so low that they just didn’t have the capital for those expenses. Now oil companies are making record corporate profits. So, what’s their excuse now? According to the oil industry, they don’t have the equipment to drill on the leases they already have. Never mind that ExxonMobil, which has raked in gigantically enormous profits, has spent millions of dollars buying back their stock rather than putting that money into buying equipment and exploring the leases they already hold.

Any good executive knows that the best marketing objective they can accomplish is to cause an imbalance in the supply and demand equation. The lesser the supply and the higher the demand causes the greatest corporate profits.

3- Oil companies already own leases on over 14 million acres of land and sea on which to drill for oil. It’s land that is thought to be oil and gas rich. These leases have been held for years with no drilling. Yet, the President Bush and Republican Party state that we need hand over even more leases for off shore, continental shelf drilling on both coasts as well as open Anwar. So, okay, if oil prime lands, as we all know, are needed, then why are not more of the existing 14 million acres being explored and drilled?

Granted that not all leased and undersea lands will produce oil, but how much of the current enormous oil company profits is actually being spent on exploration of existing leases? Again, the oil industry says they don’t have the equipment to explore those leases. If that’s the case, then why do they need to own more leases when they don’t have the equipment to explore the leases they already hold?

As for Anwar, there seems to be an enormous push to drill on land that is turning to mush and, according to scientists, has relatively little oil. I have to wonder who plans to get rich on it. As they say in Mystery novels, follow the money. So, who figures on getting the money?

As we all know, the Alaskan tundra is melting. It’s rapidly becoming a peat bog as a result of Global warming. Companies the world over are competing over rights to shipping lanes through previously frozen and now melted sea lanes above Canada. Columbus’ idea of sailing west to encounter the East is rapidly becoming a reality.

But something that no one is discussing is what will happen to those proposed Anwar pipelines. As the tundra continues to melt, the solid land surface erodes, causing pipelines and other hard structures to sink. What is the result? Anyone can figure out that result: the pipeline sinks…causing an enormous environmental disaster that undoubtedly U.S. taxpayers will be asked to pay for.

But is there some other purpose in the minds of the oil company executives of which we are not aware? In the late 1800’s, railroad companies bought millions on adjacent land leases betting on the ability to sell those leases to farmers and ranchers and new townships for a significant profit. Their bet paid off. Railroad companies made an enormous fortune, and railroad men like Commodore Vanderbuilt became, in today’s economy, billionaires. Is Anwar the next land lease scheme towards billions of company profits?

I’m not one who subscribes to conspiracy theories, but I do have to wonder what is going on. I know there is more to this oil story than is being published. Again, I must emphasize: follow the money.

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Written by Valerie Curl

June 24, 2008 at 2:12 AM

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