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13 years ago
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PEAK OIL - DEEP OIL By Jon Christian Ryter November 16, 2005 Called to explain to Congress why, when the consumers are being gouged by high gasoline prices, they are experiencing record profits, Lee Raymond, CEO of Exxon-Mobil (the largest of the Seven Sisters and tutorial head of the John D. Rockefeller Standard Oil dynasty), David O'Reilly of Chevron, James Mulva of ConocoPhillips, John Browne of BP-Amoco and Jeroen van der Veer of Royal Dutch Shell, the European oil giant owned by the Rothschild interests, blamed their good fortune on Hurricanes Katrina and Rita and on the Islamic global oil cartel as they pleaded innocent to allegations of price fixing, claiming that gasoline shortages simply increased demand beyond the limited capacity of the oil giants to produce enough gasoline when Katrina and Rita slammed into the Gulf Coast. The oil magnates, who were not sworn in at the insistence of Sen. Ted Stevens [R-AK], chairman of the Senate Commerce Committee, argued that their business was cyclic and that their profits were modest at best compared to their investments in searching for alternative fuels for the day when the oil wells dry up. James Mulva, CEO of ConocoPhillips said his company's $3.8 billion third quarter earnings represented a profit margin of only 7.7%—a number in line with other industries if you ignore the dollars. Raymond, the head of Exxon-Mobil agreed with Mulva, stating that the oil industry is " line with the average of all US industry. [Their] numbers are huge because the scale of [their] industry is huge...We," he concluded, "invest to run our global operations, to develop future supply, to advance energy-producing and saving technologies, and to meet our obligations to millions of our shareholders." In less polite layman's language what Raymond, who became testy when he was hammered by Senator Barbara Boxer [D-CA] and Sen. Byron Dorgan [D-ND] who were demanding simple yes or no answers, was really telling the Senators—without speaking the words—was that Exxon-Mobil and the other major oil giants are no longer wholly American companies who are obligated to answer to the whims of the American consumer. Exxon's primary concern, Raymond evidenced, is to their shareholders who want to see larger dividend checks that comes only from higher prices at the gas pumps. On the other side of the Congress, House Speaker Dennis Hastert called for the oil companies to reinvest their windfall profits into the oil industry infrastructure, in new wells and in new refineries. The Bush Administration echoed that demand. The Democrats demanded that Congress penalize the oil industry with a windfall profits tax. Sen. Frank Lautenberg [D-NJ], one of those demanding the tax, justified his position by saying "...I think [the oil companies] feel relatively immune from criticism." Sen. Ron Wyden [D-OR] said the attitude of the oil executives means the Democrats need to implement a windfall profits tax—and rescind the new refinery incentives as well. This would provide the oil companies—who do not want to see any more refineries built—with all the reasons they need not to build any more—and the names of those where they could lay the blame come election day. The Democrats, who correctly argued during the hearing that the oil companies deliberately cut back on their refinery capacity in order to increase profits, should be able to see the stupidity of their threats. But seldom do the Democrats use intelligence when they vote, since they vote their special interests just as the Republicans do. Seldom, if ever, does either side vote the interests of the people who lack the funds to fill their campaign coffers with six-digit offerings that theoretically have no strings attached. I believe Congress should slap the Seven Sisters with a massive windfall profits tax. However, my view of what to do with the windfall profit taxes assessed to the oil barons would differ considerably from the views of the Democrats who want to give those proceeds to the poor in the form of heating subsidies or commuting subsidies in order to keep the poor shackled to the Democratic voting booth. Six days before Hurricane Katrina, OPEC announced that it was considering solutions to the soaring prices of gasoline which they said, was completely unjustified. Sheik Ahmed Fahd Al Sabah, the Kuwaiti energy minister told the Gulf Daily News of Bahrain that "...[w]e are becoming increasingly concerned at the continuing high level of oil prices, which does not properly reflect the underlying fundamentals of the market. Oil resources are plentiful and supplies are plentiful. OPEC has been producing more than its agreed output by 1.5 million barrels per day in the three quarters of 2005." The oil minister said the world inventory of crude oil exceeded their 7-year average, and that the additional capacity OPEC agreed to pump early next year meant there would be enough oil in the market to meet all demands. The sheik insisted there was no shortage, and that there was more than enough oil in the pipeline to meet demands throughout the winter and into 2006. The Arabs appeared to be at a loss why, when they opened the spigot to free up enough oil to cover the demands of the world throughout the entire winter of 2006-07, that prices continued to soar. In their mind, supply adequately covered demand—and, on top of everything else, the global demand for oil had fallen. Reduced consumer demand worldwide caused by increased prices at the pumps, cut gasoline consumption dramatically and should have caused the price of crude to drop below the $60 threshold. It did not. It did not, simply because the price of gasoline has nothing to do with the volume of oil being pumped from the ground (unless there simply isn't enough oil being farmed and the storage tanks at the refineries around the world are empty). In the world today there is no shortage. There is

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