Last week the State Journal Register solicited a “Guest OP-ED” piece from the mouth piece for the Illinois Petroleum Council that in simple form says we must overcome our current energy crisis by, Conservation and
fuel economy (which he instantly discounts), Stronger energy-trading alliances with neighbors, Expand domestic resources, and Diversify supply. By diversify he means Nukes. You can read the rest of the slop at:
I know for a fact that many people have written to respond against most of his ideas because many environmentalists including Will Reynolds and Diane Lopez always do. I posting my letter here because I sent one and they did not publish it:
State Journal Register
One Copley Plaza
Springfield, IL 62701
Emailed – 07/015/08
Dave Sykuta recent guest editorial “Get Over It” (the title of an Eagles song) was nothing but one long environmental taunt. It had nothing to do with the irrationality we call the Oil Market.
Supply is not the overwhelming issue that he makes it out to be. The Iranians have 7 or 8 super tankers full of oil (depending on which report you listen to) parked in their main port because nobody is buying them. Why? Because the price is artificially elevated. Speculators beginning as far back as September of last year have bought up the cheap oil. We are now at a precipitous economic moment. An oil Mexican Standoff. The speculators can’t sell or the price will drop dramatically and hardly anyone is buying because they know the price is too high. Best guesstamates are that at least 40-50$$ of the current price of oil is due to speculators.
But the Drillers want to take advantage of this artificial shortage to get more Leases, because in their warped minds the leases that they hold are the leases the other guy don’t. The proof of this is the current 85 million acres that they lease that they won’t explore.
Really though nobody cares about the price of oil, what they car about is the prices of gasoline products. That price is being rigged as well. Refineries are at 85% of their capacity because if they ran the refineries at capacity they would lose money. In a perverse market flaw, the more they make the cheaper gas becomes and they lose money. Again the gasoline refiners are using the rigged higher oil prices to run up their profits by keeping refineries at the bare minimum it takes to run this country.
All the loud shouting at each other about the price we pay at the pump has obscured the realities on the ground. Oil production has been stuck on 85 million barrels a day now for sometime. Even though everybody has pledged to raise it. That may be the real limit on production and the world may have to learn live with it, discounting the fact that China is hording diesel in preparation for the Olympics.
Anyway, “if the drill here drill now” crowd had their way, what would they drill with? Brazil just bought or leased the 160 available rigs in the world to try to extract oil from their new alleged oil field off their southern coast.
When an oilman that I trust (there ain’t many – please see There Will Be Blood) T. Boone Pickens pledges to build a 1000 megawatt wind farm in Texas and then pays his own money for an TV advertisement to say why. (hint: we are running out of oil) Then I go with the wind farm guy every time.
I believe the Eagles said they would tour again when hell freezes over. Did I miss something?
948 e. adams st.
riverton, IL 62561
AND YET THEY RUN STORIES LIKE THIS IN THEIR Business Section in the newspaper and don’t even acknowledge that they did on their web site:
Big Oil steers record profits to investors
MONEY: Critics say too much is going into stock
buybacks and not enough into exploration.
HOUSTON – As giant oil companies like Exxon Mobil and ConocoPhillips get set to report what will probably be another round of eye-popping quarterly profits, just where is all that money going?The companies insist they’re trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.It’s good news for shareholders, including mutual funds and retirement plans for millions of Americans, but no help to drivers already making drastic cutbacks to offset the high cost of fuel. The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University’s James A. Baker III Institute for Public Policy.
The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.
The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits. ConocoPhillips is scheduled to kick off the latest round of Big Oil earnings reports Wednesday.
Oil prices are set on the open market, not by the oil industry. But that hasn’t stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.
In the first three months of this year, Exxon Mobil Corp., the world’s biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.
ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion — nine times what it spent on exploration.
Stock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company.
But some critics say Big Oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price.
And in focusing on buybacks and dividends over exploring for new oil, some critics say, oil companies jeopardize its already dwindling share of world supply.
“If you’re not spending your money finding and developing new oil, then there’s no new oil,” said Amy Myers Jaffe, an energy expert at Rice University who’s studied spending patterns of the major oil companies.
Investor-owned companies like Exxon Mobil and Chevron hold less than 10 percent of global oil and gas reserves, way down from past decades. And finding new oil has become harder and more expensive.
No one questions that Big Oil is rolling in cash. The cash the biggest oil companies bring in from running their businesses, or operating cash flow, is four times what it was in the early 1990s.
“It becomes a management decision,” said Howard Silverblatt, a senior index analyst at Standard & Poor’s. “It’s not like they’re going to the board and saying, ‘Well, I can do one or the other or the other.’ The balance sheets are flush with cash.”