Friday, May 25, 2007

Big Oil

Got an E-Mail from my nephew urging me to support legislation against price gouging from big oil.
Can you face another summer where a day trip to the lake or the beach costs you an arm and a leg? It's shaping up to be just that if we don't ask Congress to stand up to Big Oil now.

But there is a bill in the House this week that could make gas price gouging a federal crime, so we don't pay more while the oil companies rake in record profits. I signed a petition to urge my representative to pass this bill this week -- can you join me at the link below?
The state of financial and economic education in this country is abysmal, in most high schools it’s not even taught. Instead they have environment classes. So for all those ignorant of basic supply and demand let me explain why such socialist legislation is a big mistake.

The biggest reason gas is so high is that America refineries are going all out, 100%, yet can’t meet demand. We have to import gas from refineries overseas that are not as efficient making the blends that regulations demand be sold in the US. In order for those refineries to be persuaded to make US blends the price has to be bid up. If that is not allowed to happen then, yes the price will stay static but you will also have shortages. This would be similar to what is happening at the grocery stores in Venezuela. Also those refineries are breaking down because they are being run so hard, each time that happens the price will spike up.

It is only going to get worse. We are not increasing refining capacity fast enough to keep up with increasing demand. Each year sees a greater percentage of our fuel coming from foreign sources. Iran and Venezuela are using their petro dollars to fund terrorist organizations and a welfare state respectively. Not only are they not reinvesting to find new sources and increased efficiencies they aren’t even maintaining existing facilities and production is falling. All of the state owned oil companies are way behind our big oil and to make matters worse big oil has a smaller and smaller chunk of the free world in which to drill and explore. That doesn’t even take into consideration the shaky ground Chavez is on in his relation to the oil workers whose strikes have significantly driven up prices in the past. Iran is a powder keg that if blown could mean the closure of the Straits of Hormuz where two-fifths of all world traded oil moves. My advice to everyone is prepare for really high prices because no amount of finger pointing and punishing big oil will help.

The E-Mail was originally from My nephew is not dumb; he is a Doctor for crying out loud. We’ll see how he likes Hillary care after a few years. What I can’t understand about the public’s gullibility on the evil big oil issue, economic knowledge aside, is the idea that in a world with Hugo Chavez, Ahmadinejad, Putin, and the House of Saud, high prices are Chevron’s or Exxon’s fault. If the oil companies are making such record profits, which we are always given some figure in the billions but not as a rate of return on your dollar invested, then go buy some damn stock and get rich too. But they won’t do that because then they would also be subjected to the risk of investing. They would rather the government steal that money in the form of a tax or price fixing and pass that on to them in the form of cheap gas. Most people are ok with that, steal from the rich and give to the poor, although only in the industrialized world do the poor have cars. Problem is stockholders today aren’t the big fat capitalist lighting their cigars with hundred dollar bills. Allot of us are pensioners or 401K holders. The left wont let anyone fix Social Security so it won’t be around for me yet they want to steal from my retirement fund.


Harry said...

But Rancher, it's so much easier to blame the oil companies. After all, oil executives are wealthy and wear nice suits. Those are all the facts most people need.

During the last price spike, I wrote an email to my congressional representative suggesting that instead of pressing for meaningless "price-gouging" legislation, we build more refineries and open up more land to domestic oil production. His answer (or his staffer's answer) was that, if we did open up more drilling, we wouldn't see the effect for 10 years.

So not only is there a lack of historical knowledge, and a lack of economic knowledge, there is also a lack of forward thinking. There is only "now" and "now" is only as long as the current election cycle.

jennifer said...

My goodness...EXCELLENT POST. I cannot say that loud enough!

I love coming over here because you write so clear, and refreshing in times of such political (BS) crap.

Great Job!

Jungle Mom said...

I agree with Jennifer! I have been reading you for about 6 months. I enjoy the straight forward, no nonsense style you use! Keep it up!

Sherry said...

I agree with Jenn and Rita! You do a great job! Keep up the good work. BTW, already been done by thousands of people writing to congressional leaders here.

Jungle Mom said...

Rancher, Long time, no see! Trust you are are missing out on all the fun we are having down here in Venezuela!