http://money.cnn.com/2008/04/01/news/companies/oil_hearing/index.htm?cnn=yes

Quote :

""Last year these companies alone made over $123 billion in profit," said Markey. "What is the oil industry doing with all this profit? Unfortunately, it goes as much to financial engineering as to renewable engineering." "

Quote :

"Stephen Simon, Senior Vice President, Exxon Mobil Corp. reiterated that point. "Imposing punitive taxes on American companies will discourage the investments needed to safeguard our energy security. The pursuit of alternative fuels must not detract from investments in oil and gas," he said."

Quote :

"Exxon has long said it is in the business of oil, and that it prefers to leave renewable energy up to the renewable energy companies. Although the company has received some praise - even from its critics - for its investments in cutting-edge battery technology."

Quote :

"Markey concluded the hearing with what sounded like warning - urging the oil companies to invest in renewables and do something to lower the price of gas before what he promised would be several more congressional hearings."

So the question is, do oil companies have a moral obligation to invest in renewable energy? They clearly haven't jumped on the renewable bandwagon, and are more interested in investing in new oil fields than development of alternative fuels.

I'm sure that Congress would love to force these companies to invest the majority of their profits into r&d of alternative energy sources, but barring some kind of crazy court order I don't see that ever happening. Taxing these companies further, or cancelling tax breaks for these companies, will only make gas more expensive.

So what is the point of this congressional hearing? To browbeat oil companies into lowering their prices? Do they not realize that the only way to lower prices is by increasing supplies or cutting demand? I could have sworn that all oil pricing from the big 5 US oil suppliers is based on trading in the open market, and that oil companies have very little say in the price beyond increasing or decreasing supply.

I know that big corporations are an easy target, but this just seems more like grandstanding and scoring political points than an actual attempt to solve our energy problems.

4/1/2008 4:25:57 PM

From a business sense, I certainly think that they would be wise to invest in alternative energy just to diversify their market share. However, I don't think that they're morally obligated by any means.

I'm actually comfortable with them sticking to oil as it leaves exploitation of alternative energy up to other companies and individuals and prevents big oil from creating a monopoly on energy

4/1/2008 4:41:00 PM

oil companies investing in green technologies leaves me a little uneasy. seems like a conflict of interest, really. and they could easily slow progress to a crawl just so that they could rake in more oil profits. maybe i'm just being a pessimist though.

4/1/2008 4:49:27 PM

How is it a conflict of interest? The money from one technology is just as green as another, isn't it? The question is simply which is more profitable.

Meanwhile, so what if they drag their heels on their own investment? This does not prevent another player from being more successful in an alternative energy venture, so some oil company dragging their feet on their own research is simply shooting themselves in the foot.

4/1/2008 4:58:39 PM

actually they could just as easily wait for a reliable energy source to present itself via the efforts of another company and then buy it up and halt its use until they are finished up using all the oil they care to produce. keep those profits up, and don't waste money on RandD.

4/1/2008 5:02:52 PM

Quote :

"om a business sense, I certainly think that they would be wise to invest in alternative energy just to diversify their market share."

I agree with this, but clearly many of the oil executives don't.

The Democrat plan proposed last year was to reverse the tax incentives passed by Bush and a Republican-led congress to fund domestic exploration and production of oil, and use the revenues to fund incentives for solar, wind and other alternative power. A version of this bill will likely get passed next year when Bush is out of office, since he threatened to veto the legislation.

Democrats want to go a step further and raise taxes on companies drilling in federal waters, increase royalties on existing oil fields, and generally try to cut into the oil industry's profits any way they can. They also refuse to consider new offshore oil rigs or ANWR drilling. The problem with these measures is that they negatively impact domestic oil exploration and production, thereby increasing both the cost of oil and our dependence on foreign sources. And most alternative energy sources are a long way from being profitable, even with incentives.

4/1/2008 5:13:34 PM

Quote :

"The problem with these measures is that they negatively impact domestic oil exploration and production, thereby increasing both the cost of oil and our dependence on foreign sources."

Don't get me started on that. I stay pissed about it 24/7.

4/1/2008 5:17:40 PM

Ladies and gentlemen... I've traveled over half our state to be here tonight. I couldn't get away sooner because my new well was coming in at Coyote Hills and I had to see about it. That well is now flowing at two thousand barrels and it's paying me an income of five thousand dollars a week. I have two others drilling and I have sixteen producing at Antelope. So, ladies and gentlemen... if I say I'm an oil man you will agree. You have a great chance here, but bear in mind, you can lose it all if you're not careful. Out of all men that beg for a chance to drill your lots, maybe one in twenty will be oilmen; the rest will be speculators-men trying to get between you and the oilmen-to get some of the money that ought by rights come to you. Even if you find one that has money, and means to drill, he'll maybe known nothing about drilling and he'll have to hire out the job on contract, and then you're depending on a contractor that's trying to rush the job through so he can get another contract just as quick as he can. This is the way this works.


I do my own drilling and the men that work for me, work for me and they are men I know. I make it my business to be there and see to their work. I don't lose my tools in the hole and spend months fishing for them; I don't botch the cementing off and let water in the hole and ruin the whole lease. I'm a family man- I run a family business. This is my son and my partner, H.W. Plainview.

We offer you the bond of family that very few oilmen can understand. I'm fixed like no other company in this field and that's because my Coyote Hills well has just come in. I have a string of tools all ready to work. I can load a rig onto trucks and have them here in a week. I have business connections so I can get the lumber for the derrick; such things go by friendship in a rush like this. And this is why I can guarantee to start drilling and put up the cash to back my word. I assure you, whatever the others promise to do, when it comes to the showdown, they won't be there...

4/1/2008 5:21:21 PM

Quote :

"Democrats want to go a step further and raise taxes on companies drilling in federal waters, increase royalties on existing oil fields, and generally try to cut into the oil industry's profits any way they can."

Just another reason why dems are so dangerous. I really really think they believe that raising taxes on oil companies will somehow LOWER gas prices. Just another head scratcher.

4/1/2008 5:41:57 PM

Now, I daresay some of you might have heard some of the more extravagant rumors about what my plans are; I just thought you'd like to hear it from me. This is the face. There's no great mystery. I'm an oilman, ladies and gentlemen. I have numerous concerns spread across this state. I have many wells flowing at many thousand barrels per day. I like to think of myself as an oilman. As an oilman, I hope that you'll forgive just good old fashioned plain-speaking.

Now, this work that we do is very much a family enterprise- I work side by side with my wonderful son, H.W.- I think one or two of you might have met him already. And I encourage my men to bring their families, as well. Of course it makes for an ever so much more rewarding life for them. Family means children. Children means education. So wherever we set up camp, education is a necessity, and we're just so happy to take care of that. So let's build a wonderful school in Little Boston. These children are the future that we strive for and so they should have the very best of things.

Now something else, and please don't be insulted if I speak about this - bread. Let's talk about bread. Now to my mind, its an abomination to consider that any man, woman or child in this magnificent country of ours should have to look upon a loaf of bread as a luxury. We're going to dig water wells here. Water wells means irrigation, irrigation means cultivation. We're going to raise crops here where before it just simply was impossible. You're going to have more grain than you'll know what to do with. Bread will be coming right out of your ears, ma'am. New roads. Agriculture. Employment, education. These are just a few of the things we can offer you, and I assure you ladies and gentlemen, that if we do find oil here, and I think there's a very good chance that we will, this community of yours will not only survive, it will flourish.

4/1/2008 5:47:04 PM

Seriously, though. Can no one see that the oil companies are ass-raping the American consumer? Oil and gas prices are sky-high. The price of gas has doubled over two years because of "supply problems which drove costs up", and somehow, conveniently, the oil companies are raking money in hand over fist. I'm sorry, but if costs actually went up, then it seems to me that there shouldn't be record profits, no?

This is price-fixing, plain and simple.

4/4/2008 8:20:56 PM

^LOL, I hope you're joking.

What is it about "the oil companies don't set the prices" that you don't understand?

Quote :

""supply problems which drove costs up""

I don't think you understood your own quote. Costs went up because supply was not able to meet demand, not because it cost significantly more to produce the oil.

You should have learned this in Econ 101, but here's a graph illustrating how costs can go up when supply decreases.



The graph isn't quite accurate because demand and supply are both relatively inelastic, and thusly small changes in supply or demand cause big changes in price.

[Edited on April 4, 2008 at 8:32 PM. Reason : 2]

4/4/2008 8:25:19 PM

ummm. if the people who sell the oil (oil company, durr) doesn't set the price, then who the fuck does

4/4/2008 8:28:44 PM

In the western world, oil traders buy and sell oil on the open market. These independent oil traders can buy oil from any number of sources, including the big 5 US oil companies. They sell to the highest bidder, and the average price is reflected in indexes such as the NYMEX oil futures Index. Exxon has no control over the price of a barrel of oil beyond increasing or decreasing supply. They are ALWAYS trying to increase supply, because they are competing for market share and the more they oil they sell, the more money they make.

The only people who can really manipulate the price of oil are speculators. Speculators can artificially inflate the price of oil by betting that it will continue to increase in the future. This causes a bubble, in which the price significantly outweighs the value of the good. Now if someone were to find a link between speculators and the big 5 US oil companies, you might have a case. But generally the people speculating on oil prices are independent investors, just trying to make a quick buck while prices are still rising.

You should have learned about the open market in college.


[Edited on April 4, 2008 at 8:52 PM. Reason : 2]

4/4/2008 8:35:11 PM

Before we lost all of the posts for the past three days, I had posted in here saying that the oil companies were price-gouging us. But I need to retract that statement now.

The oil supply is tight as it is, primarily because we're now at peak oil or close to it. While the supply will continue to increase, the rate at which it increases, ie the rate of production, will not, and will in fact will now start getting smaller. While this is a problem, it is not THE problem that we are facing right now. The main problem is that nothing has happened to curb demand. The demand for oil is still going up, I would imagine in large part due to the growth spurt of the India/China power house. Whatever the cause, demand continues to skyrocket while supply continues to dwindle (or rather, continues to replenish itself at ever decreasing rates). It is therefore no huge surprise that Big Oil is making off like a bandit; large demand + small supply = high prices.

I was originally quick to point the finger at the oil companies, and while I'm sure that they're interested in looking out only for themselves, the recent surges in oil prices isn't really their fault.

4/5/2008 4:42:41 PM

^I'm glad you came to that conclusion. Curbing demand and increasing supply are the only realistic ways of stabilizing prices. Focusing on oil profits distracts from the solution.

Clinton and Obama are picking an easy and predictable target:

http://www.cnn.com/2008/POLITICS/04/01/dems.oil/index.html

Quote :

"Obama, meanwhile, said Monday a crackdown is needed on oil companies. "[We] need a president who can stand up to Big Oil and big energy companies and say enough is enough," Obama said Monday."

Sounds good, but what does it mean? Eliminating subsidies for new oil and gas exploration? That will likely only make oil prices increase. Forcing oil companies to invest their profits in clean energy sources the way tobacco companies have to pay for anti-smoking ads? I could see him trying, but I doubt the courts would uphold something like that.

Here's the text of his latest ad:

Quote :

"Since the gas lines of the ’70’s, Democrats and Republicans have talked about energy independence, but nothing’s changed — except now Exxon’s making $40 billion a year, and we’re paying $3.50 for gas. I’m Barack Obama. I don’t take money from oil companies or Washington lobbyists, and I won’t let them block change anymore. They’ll pay a penalty on windfall profits. We’ll invest in alternative energy, create jobs and free ourselves from foreign oil. I approve this message because it’s time that Washington worked for you. Not them. "

Nice populist message there. The people versus the corporations. Us versus them. Too bad penalizang those corporations will only make prices increase.

4/6/2008 5:49:29 PM