As Ronald Reagan once said, “Well, there he goes again!” President Obama is incredibly adept and shifting blame to those evil demons who run big corporations in America. During the health care debate it was those nasty insurance companies. When he was trying to negotiate a deal giving the auto companies to the UAW the President blamed those un-American hedge fund operators and those opposing his financial reform bills were greedy bankers.
Now that gas prices are approaching $5.00 per gallon the President is finally going to address the issue of rising gas prices, by demonizing people in the oil industry. Yesterday at a town hall he placed the blame for high prices squarely on the backs of big oil:
Now, there are some things that we can do right now. Last month I asked my Attorney General to look into any cases of price gouging so we can make sure nobody is being taken advantage of at the pump. Today, I’m going to go a step further. The Attorney General is putting together a team whose job it is to root out any cases of fraud or manipulation in the oil markets that might affect gas prices, and that includes the role of traders and speculators. We’re going to make sure that nobody is taking advantage of American consumers for their own short-term gain.
And while we’re at it, if we’re looking for places to save money that we can then use to invest in clean energy projects like Electra Therm, let’s start with the $4 billion in taxpayer subsidies that right now are going to big oil companies even though they are making billions of dollars a year as it is because of these high oil prices. (Applause.) Four billion dollars a year are going to companies that are making record profits — even during the recession they were making big profits.
The big five oil companies over the last five years, the least they’ve made in profits is $75 billion. The most they’ve made is $125 billion. They are doing fine. And we are encouraging production. We are working to make sure that there are safe and secure ways for us to drill for more oil, develop more natural gas. We are all for production in a safe way. But these folks don’t need further incentives by getting a better deal than the mom-and-pop shop down the street are getting when it comes to their taxes. They shouldn’t get special tax breaks worth $4 billion that we could invest someplace else. That doesn’t make sense. It’s got to stop.
The President’s description of Big Oil profits was all spin. The bigger the company, the bigger the profits, and the oil companies are all big companies. The real way to see if they are taking advantage of the situation is profit margin. Big oil’s profit margins are nothing spectacular.
Between 2007 and 2009, profit margins at ExxonMobil and Royal Dutch Shell ranged from a high of 10.0 percent to a low of 4.4 percent. Dominion, a regulated utility company, had an 11.5 percent profit margin in 2008 and an 8.7 percent margin in 2009. Norfolk Southern, one of the nation’s largest railroads, had a profit margin between 13 percent and 16.1 percent each of the three years. Altria, the nation’s largest tobacco company had a profit margin of 52.4 percent in 2007. It’s margin was 25.5 percent in 2008 and 13.6 percent in 2009.
But to admit that big oil is not greedy would leave the President no choice but to take some of the blame upon himself, so in the spirit of his economic policy, when in doubt set up a commission.
“If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action,” Attorney General Eric Holder said in a statement today.”
If all this sounds familiar it should, the Obama actions are reminiscent of the final scene of Casablanca where Capt. Renault gives the order to “Round up all of the usual suspects.”
The real reason for the Oil the spike is the refusal of the Obama administration as well as previous administrations to exploit the vast fossil fuel resources of the United States.
A report released last month by the Congressional
Research Service reports that the US has far more recoverable reserves in oil and natural gas than previously thought:
U.S. proved reserves of oil total 19.1 billion barrels, reserves of natural gas total 244.7 trillion cubic feet, and natural gas liquids reserves of 9.3 billion barrels. Undiscovered technically recoverable oil in the United States is 145.5 billion barrels, and undiscovered technically recoverable natural gas is 1,162.7 trillion cubic feet. The demonstrated reserve base for coal is 488 billion short tons, of which 261 billion short tons are considered technically recoverable. …
Proved reserves are those amounts of oil, natural gas, or coal that have been discovered and defined, typically by drilling wells or other exploratory measures, and which can be economically recovered. In the United States, proved reserves are typically measured by private companies, who report their findings to the Securities and Exchange Commission because they are considered capital assets. In addition to the volumes of proved reserves are deposits of oil and gas that have not yet been discovered, which are called undiscovered resources. The term has a specific meaning: undiscovered resources are amounts of oil and gas estimated to exist in unexplored areas. If they are considered to be recoverable using existing production technologies, they are referred to as undiscovered technically recoverable resources (UTRR).
According to the report there is an additional 123.64 billion barrels of oil UTRR, and another 1,176.11 trillion cubit feet of natural gas.
The bottom line is that our President doesn’t want to drill, it is only through the increase in oil prices do his “green energy” solutions become economically viable. His strategy of bullying the oil industry is simply an attempt to deflect the political ramifications of $5.00 gas prices away from his refusal to drill, and on to others.