10 Meaningless Facts About Oil

Today I received an email from a dear high school classmate titled “10 Simple Truths About Oil”. The email contained 10 supposed “facts” about oil that were prefaced with the following.

Ten Simple Truths about Oil
Alan Caruba
Having written about the energy industry and issues now for a long
time, I hope I can be forgiven for being enraged by the comments by
Sen. Charles Schumer (D-NY) in response to President Bush’s press
conference Tuesday morning.
There is simply no way to describe them other than false.
The Democrat Party has long made “Big Oil” their favorite punching
bag, confident that the public has no idea what influences the price
and supply of oil. Saying anything favorable to Big Oil is immediately
deemed evidence that one is in their pay and whatever facts are
offered are therefore invalid.
There are, however, some simple truths about Big Oil that cannot and
should not be ignored. To do so leaves everyone at the mercy of energy
policies that have created the situation in which the United States
finds itself today.

I did not hear the comment by Sen. Schumer and so can not comment on them, but I sure can comment on Mr. Caruba’s article.  Below are each of the 10 “facts” of Mr. Caruba and following each is my response to each inane and meaningless fact.  I have never read his work before or even heard of him, but based on his high regard for big oil and his inability to frame meaningful arguments and solutions, I can only assume that somehow, someway, he is just another mouthpiece for big oil.

Meaningless Fact #1. The combined ownership of oil reserves by the independent, investor-owned oil companies such as Exxon Mobil, Conoco-Phillips, BP, Chevron and others is barely 4% of the total known oil reserves in the world. By itself, Exxon Mobil’s share is 1.08%.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. The size of their reserves has nothing to do with the profit criticisms.

Meaningless Fact #2. Oil is a global commodity sold on mercantile exchanges for whatever price it can command. Speculation in oil prices is the primary reason they have been driven to utterly insane costs per barrel. It has nothing to do with actual supply and demand.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. In fact every time the price of a barrel of oil increased these companies have spawned even greater profits.  So these companies are hardly interested in lower oil prices.

Meaningless Fact #3. No nation on Earth is or can be “energy independent.” The geopolitics of oil is complex, but as nations such as China and India have seen their economies grow, their need for oil grows with it and thus they compete with long established industrialized nations for existing oil supplies. This competition has an impact on prices.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. The reason we are not becoming more energy independent is that these companies will see reduced profit in lower energy costs.

Meaningless Fact #4. The OPEC nations, those in the Middle East and including Venezuela, control 77% of the world’s known oil reserves. Like Russia and Mexico, where the oil industry is controlled by the state, it is generally poorly managed. Several Big Oil companies that were induced to undertake exploration and development in Russia and Venezuela actually had their assets nationalized or stolen at prices well below their investment and value.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. This “fact” is meaningless and a distortion to the actual complaints of the American public. With poorly managed foreign companies and countries there is no competition and so America’s big oil can charge whatever they want and continue to rack up enormous profits.

Meaningless Fact #5. Energy is the master resource. All nations with any hope of growing their economies require it, mostly in the form of electricity, but also for oil’s role in transportation. The failure to have a national long-range energy policy that is based in reality can severely impact energy prices.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. The current energy policy of America was planned and developed in a secret meeting with big oil at the White House early in George Bush’s first term. They made the plan that today is working so well for them and so poorly for the American public.

Meaningless Fact #6. The United States has, for years, pursued an energy policy based on environmental myths such as “biofuels” in which corn is turned into ethanol to reduce the import of oil, but it costs as much to produce ethanol as to refine oil and it provides less mileage per gallon, thus negating any reason for this additive. Likewise, suggesting that wind or solar energy can generate anything more than its current 1% of the nation’s electricity needs ignores their unreliability and the fact they are heavily subsidized, a form of hidden consumer tax.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. This is nothing more than a continuation of the energy policy excuse already debunked above.

Meaningless Fact #7. It costs billions to explore, discover, extract and transport oil. It takes lots of lead-time as well. The United States Congress has, for decades, refused to permit the extraction of vast oil reserves in ANWR despite the fact it would have little or no impact on the Alaskan wildlife reserve. In addition, Congress has declared 85% percent of the nation’s coastal, offshore areas off-limits to any exploration for oil or natural gas.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public.  I rarely congratulate Congress, but I do in this instance. They should be commended for keeping big oil from destroying more of our planet in the name of even more corporate and executive profit.

Meaningless Fact #8. The U.S. Environmental Protection Agency, under the mandate of Congress, requires Big Oil to refine oil into some 17 different formulations in the name of clean air. With three grades of gasoline, that means that refiners must produce some 45 different blends. The quality of air in America is excellent, but the cost of gasoline at the pump continues to rise as the result of these mandates.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public.  This can’t be true, in meaningless fact #2 he explained that speculation in oil prices is why pump prices are so high.  Geeze, he can’t even remember his own meaningless facts.

Meaningless Fact #9. America imports two-thirds of the oil it uses. All of its transportation runs on oil. The population continues to grow. Failure to encourage the construction of a single new refinery since the 1970s puts a further strain on the ability of Big Oil to provide the nation’s oil and diesel fuel needs.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public.  By “failure to encourage” he means that big oil was not given substantial hand outs in the form of tax breaks. Geeze, he not only wants enormous profits, but also wants the average American to foot the bill for new construction. He can only be a mouthpiece for them.

Meaningless Fact #10. Democrats continue to demand that Big Oil’s profits be confiscated in some fashion and some of the inducements offered to explore for more oil be ended. Because the costs of exploration, extraction, refining, and transporting of oil represents billions, the actual profit margin of a company like Exxon Mobil is about 10%, well below what industries such as pharmaceuticals and banking enjoy.

Undistorted Fact: The complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. Unless you are an executive at big oil you must be paying substantially more at the pump. I seriously doubt big oil has figured out how to determine our political view when we stick the pump hose in the gas tank of our cars.  All of my friends, family, neighbors have complained about the price they are paying and I can assure you they are not all Democrat.

Lastly, let me remind Mr. Caruba and big oil that the complaints are about the enormous corporate profits and the huge income of the profiteering executives, all being made at the expense of the American public. Much of this criticism would not be present had they kept pump prices at a level that would provide them a reasonable profit rather than gouging the American public, Republicans, Independents and Democrats alike to fill their corporate and executive coffers.

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One Response to “10 Meaningless Facts About Oil”

  1. risa b Says:

    Nice job of catching him out on fact 2 vs. fact 8. When concern trolls are out to getcha they bring multiple arguments that contradict each other, because the arguments are intended to confuse, rather than bring verifiable data to the table.

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