1. The biggest single component of retail gasoline prices is the cost of the raw material used to produce gasoline crude oil.

2. Components of gasoline price (at the pump):

A. Crude oil -70%.
B. Refining and retailing -17 %
C. Taxes – 13%

3. Who owns “big oil?” Well, since you asked…you do! IRA’s (14%), Pension Funds (27%), Mutual Funds (30%), and Individual Investors (23%) account for roughly 94% of the ownership of “big oil.” When politicians such as Barack Hussein Obama talk about a “windfall profits tax” he is talking about taxing you! According to Energy Information Administration (publicly available data on the top 27 energy companies tracked by the EIA), the total income tax paid by these companies almost doubled between 2004 and 2006 – they paid in over $90.4 billion dollars in 2006! Folks, the reality is that these companies simply pass those costs onto end users at the pump (see item C in #2 above… and add to that the internal tax component slapped on at the corporate level). Imposing additional taxes on the U.S. oil and natural gas industry will not help to increase supplies of energy for American consumers but will serve only to discourage investment. Instituting new taxes or repealing tax provisions designed to encourage investment in the United States will only reduce new domestic oil production and refinery investments, threaten American jobs, and make it less economic to produce domestic energy resources. The end result would be obvious a greater dependence on imported crude oil and gasoline.

5. Relative to sales, the net income of oil and natural gas companies is somewhere in the neighborhood of 7.4%. This is by no means out of the ordinary for industrial companies. In fact, they are basically in the middle of the pack. Pharmaceutical and Medicine runs about 26%, manufacturing companies in general run around 7.6%.

6. Oil companies invest literally billions of dollars for the right to explore on federal lands. If the company does not produce within the time frame of the lease agreement, the agreement is over and it reverts back to the federal government – this is a lease, not a sale. Oil companies have a huge (billion $) incentive to recapture their investment through production. To suggest they purposefully do not produce is utterly a lie and is totally false.

7. Oil companies actively develop leased lands, but not all leased areas contain oil or natural gas in sufficient quantities to make it economically feasible to extract. The timeline and cost to evaluate, explore, permit, lift and extract is long and complex.

8. The mere fact a lease exists does not necessarily mean there is oil or natural gas there – energy companies have to get the leases first, and then go about seismic sensing to determine if further exploration is even warranted. Bottom line, there are huge risks and challenges in searching and extracting.

9. Due to environmental and other studies, permits required, the installation of production equipment (on shore and off), neighboring landowner disputes and litigation, and other regulatory hoops the process of producing on potentially productive leased lands can be delayed significantly.

10. 85% of the continental outer shelf and almost 70% of onshore federal lands are off-limits or face significant restrictions to development – the amount of oil contained in these areas is UNKNOWN because they cannot be subjected to modern inventory studies.

11. Oil and gas companies move as quickly as they can to develop production on any leases with economic feasibility. But the real fact of the matter is that they must also pay rent to the government while they conduct development and exploration efforts, a process that takes time. Reducing the time companies have to develop a lease or increasing the costs imposed by government will not increase supply for American consumers. Nor will denying access to areas of oil and natural gas potential like the Atlantic and Pacific Outer Continental Shelf and ANWAR.

12. Every additional barrel of oil or cubic foot of natural gas that can be economically produced will help to either lower or, at worst, maintain the price of products derived from crude oil and natural gas. It is utter myth and misrepresentation to state that drilling and extracting more of any natural resource cannot affect its price.

13. Oil and gas companies are the ones taking all the risks! They pay out billions of dollars to obtain leases, they pay more to hold those leases, and then invest huge sums to determine feasibility and inventory potential. By levying more constraints and costs upon these companies you will only discourage the very activity we need the most to help alleviate our supply constraints.

14. Lastly….for now…. while it is true that we have not build a new refinery here in the U.S. in the last 30 years this does not mean we have not expanded and to one degree or another modernized the facilities we have. Moreover, the economics of making gasoline (only one of a myriad of products made from crude oil) favor refining as close as possible to the point of lifting. So, it makes more sense, financially, to lift and refine then ship. If we had more domestic production of crude we would, by necessity, invest far more in refining capacity as well.

h/t dontreadonme @ Shame on Fox News!

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This was the best 1:15 of the debate as far as I’m concerned.

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While campaigning for the 2012 Presidential Election…

President Barack Obama says the Justice Department is assembling a team to investigate fraud or manipulation in the oil markets.

Obama discussed gas prices and mentioned Attorney General Eric Holder’s the new task force during a town hall in Reno, Nev., on Thursday. He said he wants to make sure that consumers aren’t being taken advantage of in the short term.

There are two pieces to my response to this rediculous reaction by Obama. First, the degree of inanity at work here is stunning. An investigation into the price of a world-wide commodity? All Obama needs to do is to have one of his Barry-lovin staffers go dig up the report from the EIA that dealt with this way back in 2003! The report was specific to California, but the principles it outlines a basically correct.. Here ya go.. Geez!!

Secondly, if Obama is worried about the price of oil what about Gold, Silver, Copper, Corn, etc? If he were truly concerned about the price rise of a commodity he would be putting together a task force to investigate the rise in the price of any one of these commodities. And you know what, he would discover that they all have a common thread that ends with the true definition of inflation: the increase in the volume of all forms of the currency in which all these commodities are denominated world-wide: the U.S. dollar. He would also learn that it is magnified, price rise-wise, by the degree and premise of insane government interventionism…

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Obama spoke today about his vision to cut the nation’s dependency on oil by a third over the next fourteen years. In other words we are to deny ourselves plentiful resources like coal and untapped oil fields, while pursuing the fantasy of switch grass, wind, solar, and even cow manure. In essence the plan calls for starving the economy even further in hopes that alternative energy can produce kilowatts past known physical law.

This line of idiocy would believe that the invention of the automobile to be dependent upon banning horses for the purpose of travel. Or the stimulus for developing the computer would be to destroy chalk boards and chopping off fingers and toes.

In his speech, Obama stated that oil companies are intentionally holding back on drilling and exploration. The complete lack of economic understanding by the floppy-eared one never ceases to astound me. What economic laws state that creation is a function of denial and profit maximization occurs by not producing?

Ideas of an Idiot

Stupidity does not need to be acknowledged. It is time for the states and their citizens to ignore the musings and laws of an idiot

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‘. . . A gallon of gasoline contains 124,262 British Thermal Units (BTUs) of energy, and the weight of carbon dioxide produced by burning a gallon of gasoline is 19.56 pounds. A gallon of ethanol biofuel contains 76,000 BTUs, only 61% of the energy of gasoline, and the weight of carbon dioxide produced by burning a gallon of ethanol biofuel is 12.57 pounds. If ethanol biofuel is used to travel a distance requiring 124,262 BTUs of energy, the same distance a gallon of gasoline would travel, it would require 1.64 gallons of ethanol biofuel, with 20.55 pounds of carbon dioxide emitted into the air. Thus, using ethanol biofuel instead of a gallon of gasoline will emit about a pound more of carbon dioxide into the air.’

Seldon B. Graham, Jr.
Legion of Honor Member of the Society of Petroleum Engineers

From: A question of quantities by Mr. Seldon B. Graham posted out at the SPPI blog

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The United States largest chicken producer, Pilgrim’s Pride, also filed for Chapter 11 bankruptcy on December 1st, citing the major reason was the higher cost of feed stemming from federal subsidies and mandates that diverted corn into ethanol production. As a result of the misguided U.S. ethanol policy, we have raised the cost of producing food, and now we face the possibility of a smaller food supply and much higher food prices.

U.S. corn-based ethanol production is so inefficient that U.S. ethanol, with only 66 percent of the energy per gallon of gasoline, costs more per gallon than gasoline. Mixing ethanol with gasoline reduces fuel mileage and increases the pump cost of fuel.

Nowhere in any of the news articles around the country do I find that ethanol is already subsidized to the tune of 50 cents a gallon. Even with that subsidy, you will be hearing about many ethanol producers simply closing up shop. But like all the other things government gets involved with, look for the call of bailout of the ethanol industry. There is nothing that government intrudes into that doesn’t have unintended consequences with it. Just wait till they intrude into the energy sector 4 fold of what they already are. Wait till they intrude into your private health care decisions. Wait till they intrude into your constitutional right to defend yourself. Wait till they tell you what is acceptable to think.

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RANDOLPH —

Gulf Oil CEO Joe Petrowski said on Wednesday that the price of oil could sink to $20 per barrel, and there is a chance gasoline prices could drop as low as $1 per gallon by early next year.

See Gulf Oil CEO says gas could hit $1 next year

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OPEC on Tuesday cut its world oil demand growth forecast for 2008 to 1.02 percent from 1.17 percent previously, in the face of falling demand already occurring in the United States, the world’s biggest consumer of energy.

The price of crude oil has now plunged by almost 40 percent since striking record highs above 147 dollars per barrel in July.

See the rest.

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Companies themselves could decide how to manage under those restrictions, either by switching fuels or developing new processes that emitted less sulfur. They also had the option to buy pollution allowances from other companies whose emissions were below the regulated cap. The cap placed on each company was lowered over time. As the caps were lowered, the allowances became more and more expensive. This created a strong new market and further enticed companies to switch to less polluting processes and energy sources.

This cap and trade program achieved 100% compliance in reducing sulfur dioxide emissions and was enforced in two phases. Phase I began in 1995 and 445 electricity plants reduced emissions by almost 40% below the required cap. Phase II, which began in 2000, had even more stringent policies. Overall, the companies that have participated in the program have reduced dioxide emissions 22% below the mandated levels. That’s pretty remarkable.

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Every barrel of oil that the environmentalists have succeeded in getting the U.S. government not to allow to be produced, every ton of coal that they have prevented from being mined, every atomic power plant whose construction they have stopped, has served to make oil scarcer and more expensive and subsequently to enrich OPEC and increase the funds available for the support of terrorism.

George Reisman at Mises

- Every new barrel of oil produced in America is a barrel NOT purchased from OPEC;

- Every new barrel of oil produced in America is a barrel that can be sold on the world market;

- Every new barrel of American oil sold on the world market represents an addition to American GDP;

- Every new barrel of American oil sold on the world market represents an increase in global oil supply vs. demand;

- Every new barrel of American oil sold on the world market represents further reduction in revenues to OPEC, via both downward pressure on oil prices and by drawing international customers away from the OPEC cartel;

- Every new barrel of American oil sold on the world market represents more jobs and income for Americans;

- Every new barrel of American oil sold on the world market represents a powerful shot in the arm of the world economy, with the potential to spur another long-term economic boom cycle;

- History has shown that worldwide economic recession is a catalyst for war, while worldwide economic prosperity is a powerful catalyst for peace – therefore every new barrel of American oil is a brick in a new foundation of world peace.

The facts are is that coal and atomic energy technology is 20 times safer and cleaner than it was in the 60′s and early 70′s.  In fact I’ve even heard about reactors not having ANY spent rods after they are done using them.  There won’t be a need to bury them anywhere.  Additionally, coal plants have reduced their environmental output 20 fold.  Today wind power accounts for .66 of 1 percent of today electricity.  If it was practical and feasible,  the markets would have capitalised on it and that number would be 20 fold higher.  Solar is even more dismal.

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“No universal law holds that power and logic will improve faster at the top of the energy pyramid than resources recede at the bottom . But energy-capturing technologies are improving across the board, and faster today than ever before. The logic of the fuel-retrieving machines has advanced much faster than the fuels have retreated-we keep getting closer to the receding horizon. Environmental concerns are a separate matter, important in their own right. But the issue of exhaustion is resolved. Energy supplies are-for all practical purposes-infinite.”

Huber and Mills, The Bottomless Well (p.181)

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The “greenhouse effect” refers to the natural phenomenon that keeps the Earth in a temperature range that allows life to flourish. The sun’s enormous energy warms the Earth’s surface and its atmosphere. As this energy radiates back toward space as heat, a portion is absorbed by a delicate balance of heat-trapping gases in the atmosphere—among them carbon dioxide and methane—which creates an insulating layer. With the temperature control of the greenhouse effect, the Earth has an average surface temperature of 59°F (15°C). Without it, the average surface temperature would be 0°F (-18°C),—

Scientists have concluded that human activities are contributing to global warming by adding large amounts of heat-trapping gases to the atmosphere.—we release carbon dioxide and other heat-trapping gases into the air.

Now read the same thing described more honestly:

The “greenhouse effect” refers to the natural phenomenon that keeps the Earth in a temperature range that allows life to flourish. The sun’s enormous energy warms the Earth’s surface and its atmosphere. As this energy radiates back toward space as heat, a portion is absorbed by a delicate balance of heat-trapping gases in the atmosphere—among them carbon dioxide and methane—which constitute only about 0.05% of the atmosphere. When combined with the other 99.95% of the atmosphere (mostly nitrogen and oxygen), the total creates an insulating layer. With the temperature control of the greenhouse effect, the Earth has an average surface temperature of 59°F (15°C). Without it, the average surface temperature would be 0°F (-18°C),—

Scientists have concluded that human activities are contributing to global warming by adding large amounts of heat-trapping gases to the atmosphere.—we release carbon dioxide and other heat-trapping gases into the air.

They pulled a switcharoo in their description. It is the total atmosphere which heats the planet 59°F (33°C), while they say a “delicate balance of heat-trapping gases in the atmosphere—among them carbon dioxide and methane—which creates an insulating layer.”

Not being said by the propagandists is that conduction and convection are involved in the “greenhouse effect,” while carbon dioxide is about radiation only. Another misrepresentation is omitting water vapor, which is similar to CO2 in its absorption characteristics, and it is often a hundred times more prevalent.

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Nor are Wikipedia’s ideological biases limited to global warming. As an environmentalist I find myself with allies and adversaries on both sides of the aisle, Left and Right. But there is no doubt where Wikipedia stands: firmly on the Left. Try out Wikipedia’s entries on say, Roe v. Wade or Intelligent Design, and you will see that Wikipedia is the people’s encyclopedia only if those people are not conservatives.

Lawrence Solomon – A self-proclaimed conservationist.

This is no different than our local environmentalist and propagandist Playboy Roy Sojberg pushing his spew upon our local community via our local school board and other elitists organizations that will have it. How much of YOUR tax dollars are spent towards this propaganda?

See Wikipropaganda On Global Warming

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The hosts on Fox News Saturday morning show were interviewing some nitwit congressman from the New York area who once again made the outrageous comment that allowing oil companies to drill offshore and/or in ANWAR is unnecessary because these very same oil companies are not taking full advantage of the oil leases they currently have – this cat actually said that the reason they don’t drill these leases is to prop up the price and soak the consumer. The congressman then suggested that legislation should be introduced and passed that forced oil companies to drill on all of these leased lands OR ELSE THEY WOULD LOSE THEIR LEASE AND IT WOULD BE GIVEN TO SOME OTHER COMPANY WHO WOULD AGREE TO DRILL. None of the hosts had a clue as to the facts, and consequently were incapable of asking any hard questions of this so-called representative of the people…

The following information MUST get out.. here are some facts everyone needs to understand, internalize, and then stick in the face of any other nitwits who spew such falsities.

1. The biggest single component of retail gasoline prices is the cost of the raw material used to produce gasoline – crude oil.

2. Components of gasoline price (at the pump):

A. Crude oil -70%.
B. Refining and retailing -17 %
C. Taxes – 13%

3. Who owns “big oil?” Well, since you asked…you do! IRA’s (14%), Pension Funds (27%), Mutual Funds (30%), and Individual Investors (23%) account for roughly 94% of the ownership of “big oil.” When politicians such as Barack Hussein Obama talk about a “windfall profits tax” he is talking about taxing you! According to Energy Information Administration (publicly available data on the top 27 energy companies tracked by the EIA), the total income tax paid by these companies almost doubled between 2004 and 2006 – they paid in over $90.4 billion dollars in 2006! Folks, the reality is that these companies simply pass those costs onto end users at the pump (see item C in #2 above… and add to that the internal tax component slapped on at the corporate level). Imposing additional taxes on the U.S. oil and natural gas industry will not help to increase supplies of energy for American consumers but will serve only to discourage investment. Instituting new taxes or repealing tax provisions designed to encourage investment in the United States will only reduce new domestic oil production and refinery investments, threaten American jobs, and make it less economic to produce domestic energy resources. The end result would be obvious – a greater dependence on imported crude oil and gasoline.

5. Relative to sales, the net income of oil and natural gas companies is somewhere in the neighborhood of 7.4%. This is by no means out of the ordinary for industrial companies. In fact, they are basically in the middle of the pack. Pharmaceutical and Medicine runs about 26%, manufacturing companies in general run around 7.6%.

6. Oil companies invest literally billions of dollars for the right to explore on federal lands. If the company does not produce within the time frame of the lease agreement, the agreement is over and it reverts back to the federal government – this is a lease, not a sale. Oil companies have a huge (billion $) incentive to recapture their investment through production. To suggest they purposefully do not produce is utterly a lie and is totally false.

7. Oil companies actively develop leased lands, but not all leased areas contain oil or natural gas in sufficient quantities to make it economically feasible to extract. The timeline and cost to evaluate, explore, permit, lift and extract is long and complex.

8. The mere fact a lease exists does not necessarily mean there is oil or natural gas there – energy companies have to get the leases first, and then go about seismic sensing to determine if further exploration is even warranted. Bottom line, there are huge risks and challenges in searching and extracting.

9. Due to environmental and other studies, permits required, the installation of production equipment (on shore and off), neighboring landowner disputes and litigation, and other regulatory hoops the process of producing on potentially productive leased lands can be delayed significantly.

10. 85% of the continental outer shelf and almost 70% of onshore federal lands are off-limits or face significant restrictions to development – the amount of oil contained in these areas is UNKNOWN because they cannot be subjected to modern inventory studies.

11. Oil and gas companies move as quickly as they can to develop production on any leases with economic feasibility. But the real fact of the matter is that they must also pay rent to the government while they conduct development and exploration efforts, a process that takes time. Reducing the time companies have to develop a lease or increasing the costs imposed by government will not increase supply for American consumers. Nor will denying access to areas of oil and natural gas potential like the Atlantic and Pacific Outer Continental Shelf and ANWAR.

12. Every additional barrel of oil or cubic foot of natural gas that can be economically produced will help to either lower or, at worst, maintain the price of products derived from crude oil and natural gas. It is utter myth and misrepresentation to state that drilling and extracting more of any natural resource cannot affect its price.

13. Oil and gas companies are the ones taking all the risks! They pay out billions of dollars to obtain leases, they pay more to hold those leases, and then invest huge sums to determine feasibility and inventory potential. By levying more constraints and costs upon these companies you will only discourage the very activity we need the most to help alleviate our supply constraints.

14. Lastly….for now…. while it is true that we have not build a new refinery here in the U.S. in the last 30 years this does not mean we have not expanded and to one degree or another modernized the facilities we have. Moreover, the economics of making gasoline (only one of a myriad of products made from crude oil) favor refining as close as possible to the point of lifting. So, it makes more sense, financially, to lift and refine then ship. If we had more domestic production of crude we would, by necessity, invest far more in refining capacity as well.

Sources:
American Petroleum Institute

Oil and Natural Gas Primer

No related posts.