21 June 2008


As you take respite from reading the latest conspiracy theory about the cause of high gasoline prices, you might consider these facts:
1. The U.S. is still the third-largest oil producer in the world. The U.S, or rather the private oil companies operating within the territory of the U.S., produces 8.37 million barrels per day. For comparison, Saudi Arabia, the top producer, pumps 10.72 mb/d. (Russia is between the two.)

2. Gasoline prices in the U.S. are still about one-third lower than Canada's (at $6) and less than half Europe's (at up to $11).

3. An "American" oil company sells oil--a highly fungible commodity--on the world market at WORLD PRICES.

4. Global demand for oil is accelerating with the overheated economic growth of especially China and India and other emerging economies. This puts upward pressure on oil supplies (and prices).

5. We are in an era of "post-easy" oil. Much of the remaining reserves lie in technologically demanding fields. In addition, national oil companies around the world are holding the easy fields for themselves, increasingly pushing private companies into the technically challenging fields. Other factors coming into play are that the private companies are having to work in more off-shore fields and in politically and environmentally difficult areas. And another factor: More of the oil is heavier crude, which is more expensive to refine. In short, most of the remaining reserves will be expensive to produce.

Observations: 1. I do not understand the reasoning by some people who say that oil from Alaska would undercut and thus lower oil prices in the U.S. This is not a situation of two corner grocery stores competing to undercut the price of each other's salami sandwiches. Again, oil is a fungible GLOBAL commodity sold on a GLOBAL market. Unless American oil companies are nationalized (like in Mexico and Venezuela and other countries), then it is not "American" oil and the oil companies decide for themselves what to do with it. Which means the oil is marketed to the highest bidder at the highest price.

2. Americans are still ignoring that we are as profligate as a teen at the local mall with $20 in his pocket. Or, perhaps more relatedly: As profligate as a DC pimp after the oil corporation lobbyists have convened.

What do you drive? What is your diet?

Fact: Raising the average mile-per-gallon of the American fleet by 10 mpg would save 4 million barrels per day. That's almost one half of current U.S. production. Observation: It would not be difficult to do, if we stop looking for scapegoats and push our politicians into passing the requisite legislation. For example, within a fairly short time, say two years, we could have every new automobile sold in America running a hybrid engine. Subsidy programs could take the older autos off the streets. We could conserve a huge heap of oil.

Ladies and gentlemen: If you are truly interested in actually solving an extremely serious problem (that relates to several important others), let's ignore the side issues and lower our energy consumption. Fuel efficiency is one of the big answers. We CAN do it. Not just on an individual level, but as a SOCIETY, with our citizens leading the way to require PUBLIC POLICIES (yes, this means political action) that are rational.

Save the goat and contact a politician.

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