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Obama: “When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said. “They aren’t smart. And we need to end them.”
One of the biggest oil companies, Exxon Mobil — which reported Thursday that its profit rose 69 percent to $10.65 billion during the first three months of the year -- shot back this week: “We understand that it’s simply too irresistible for many politicians in times of high oil prices and high earnings — they feel they have to demonize our industry,” Exxon Mobil’s vice president for public and global affairs, Kenneth Cohen, said on the conference call with analysts. He added that there has been “predictable political positioning but no action to actually help bring down energy prices.”
What do you guys think about this problem? Obviously, if there is legislation that can be done to lower the price at the pumps, I would be in favor of it. However, the GOP argues that there would be jobs lost. Should we revisit the idea of using our energy reserves, or even ANWR?
I also would be all for new legislation that lowers prices at the pump. Gas prices have skyrocketed over the last month. I do not see any reason as to why these companies are still receiving subsidies when their profits are so high.
ReplyDeleteThen again, there is a toss up here. If the government steps in to lower prices, jobs may be lost, but we wouldn't be stuck paying outrageous prices for gas. I know it's more of an ideal situation, but I believe this just shows how much people and automobile companies need to start investing in greener cars. Rising oil prices have continued to be a problem for years, and I do not see a viable solution for lowing prices coming forth in the near future.
The oil companies have been on the receiving end of beneficial political policies for some time now (the Bush administration). And, it is disheartening to see that these big oil conglomerates are reaping greater profits in light of the state of our current economy.
ReplyDeleteI looked into ANWR a little bit, and it does not seem to be a major solution. It is projected that the coastal fields will supply less than 5% of USA's annual oil consumption.
On the other hand, high oil prices could force us to find new solutions to our dependency on oil.
Without gasoline subsidies, it may be easier to balance our budget, but what would be the longish term repercussions? Will it bring down the price of fuel? Gasoline is nationalized in Ecuador and gas is super inexpensive.
ReplyDeleteYeah, ANWR is only a short-term solution, and it comes with a host of pretty serious externalities. I hate high gas prices as much as everyone else, but I think that the only way people are going to move away from using oil, is if the price is high enough to force them to.
ReplyDeleteNo president, no congress, or business will ever want to be the one to make the transition, because they'll take the heat in the short run.
We will be using oil until it dries up.
Good comments everyone. I think we all care about this topic because we can see how it effects our lives each day. This topic gets me thinking like Jennifer was last week, What can we do as individuals to change the problem? Probably not much, unless we each change our lifestyles in such a way that collectively we reduce the supply/demand for oil. That would be nice.
ReplyDeleteI think the two villains that we think of here are the speculators that try to manipulate the crude prices, and the big oil companies (we don't like it when they make big profits and we have to pay more).
I think this article is very relevant:
ReplyDeleteQuestion One: How much of the cost of a gallon of gas is the price of crude oil?
Roughly 70 cents of every dollar we pay for gasoline is for crude oil. When the price of crude oil jumped from $68 a barrel last year to $115 this year, gasoline prices spiked accordingly.
Question Two: How much do motorists pay in state and local fuel taxes?
Between 13 and 15 cents of each dollar we pay at the pump is for state and federal gas taxes. Because state gas taxes vary, the tax burden differs depending on where you fill up.
Question Three: What accounts for the other 15 cents?
Refining, processing, transportation, marketing, distribution and retailing costs make up most of the remainder.
Question Four: With the profits the oil companies make, isn't there some price gouging?
If there is, investigators haven't found it. The U.S. Federal Trade Commission, other federal agencies and state attorneys general have investigated the causes of price spikes for decades and have consistently found that price increases are due to normal market forces.
Final question: Why is the cost of crude escalating?
That's an easy one: the law of supply and demand.
The unrest in Libya and Egypt, coupled with strikes by oil workers in Yemen, Oman, Gabon and Ivory Coast, has cut production. Less supply means higher prices.
If our elected officials want to point fingers at who is causing high gas prices, they might want to look in the mirror.
According to Kiplinger Magazine, the United States has enough oil reserves to power the nation for 300 years - without the Organization of the Petroleum Exporting Countries (OPEC). But much of those untapped reserves are located in places that have been put off limits by the government or are too costly to develop.
Read more: http://www.seattlepi.com/default/article/Gas-price-point-to-tapping-oil-reserves-at-home-1360948.php#ixzz1L9cc0uNX
Well I will take a little different approach here...
ReplyDeleteLegislation changes to lower oil prices would only cause temporary relief and artificially lower prices as gas prices will continue to rise as it becomes harder and harder to pump oil. I would like to see more attention and money put toward alternative energy and finding an efficient source of energy other than oil.
Lets see some legislation and subsidization changes that make R and D for these sources more affordable.
I just wanted to point out that typically crude oil is a composite of gasoline, diesel fuel, heating oil, jet fuel, waxes and polishes, and residual fuel. The price of crude oil has affected the gasoline situation primarily through transportation uses of fuel. I agree with Mark and Dane that we will continue to use up oil reserves but research on possible alternatives should be fostered as well. The recent high gas prices have had me wishing I had a newer more fuel efficient car/SUV. I hope gas and crude oil prices stabilize but I am a bit weary of the future with everything that is going on in Libya, the Ivory Coast, and throughout Africa. I am skeptical of oil companies "untapping" the Earth for new sources of oil. I don't think the environment or the economy could take another oil spill or disaster (BP oil spill and the earthquake in Japan). The global economy seems to be at its weakest state with the European Commission/Union having to deal with their own crises.
ReplyDeleteThis discussion is sure interesting. I think perhaps our best hope is to start using electric vehicles which are powered through alternative energy sources but I know most of our power in Southeastern Michigan comes from a nuclear power plant downriver.
ReplyDeleteNuclear energy in my opinion would be very efficient to use as it would provide a lot of energy for the amount of material exploited and it would help us use all the byproducts of our Cold War missile days. I think that a lot of work has to be done in the US though to improve our knowledge of nuclear technology as we are still in primitive use and knowledge of it so far. We also need to create a spot to store it all when it is spent or finds way of re using spent fuel which is pretty viable.
I also think that work into renewable energy sources like wind and water and solar power would be awesome but I guess the problem is to making it more viable as an option is how to store the energy that is made? I think more funding should go into that side of the problem because once it is resolved then we could use whichever source is practical in our area. You wouldn't want to use solar in West Michigan because of all the clouds but wind energy is making a strong stand.
One other thing to consider is, with all the research into alternative energy how is this affecting the oil prices? Could it possibly make them rise?
An alternative?
ReplyDeleteApparently, the United States has natural gas reserves that equal 2x the size of oil reserves in the OPEC nations. I do not know how efficient the combustion process of natural gas is, but it seems to be a viable alternative.
Natural gas and oil exploration companies are resorting to different methods to reach wells that were once thought impossible to reach. Fracking has become a popular method in recent years and this technology can extract oil and natural gas from difficult areas, but what are the costs? These tough areas are shale rock formations. Within the shale rock there are pockets of natural gas. Fracking involves the pumping of water combined with "fracking fluid" to break up shale rock formations, allowing oil and natural gas to be released and pumped to the surface. But, there are many environmental problems that come along with this method.
-Earthquakes
-Aquifer contamination
-Runoff contamination
-Noise Pollution
It just goes to show that companies are increasingly using questionable methods for the extraction of natural resources.
60 Minutes on Fracking (13 minute video)
http://www.youtube.com/watch?v=iNl6sx059bE
ANWR is only a short term solution, and that is not what we need to be concerned about... we need to focus on the long run because that poses a huge threat. We think gas prices are high now, just wait and see what they're like a couple years down the road. As Dane mentioned, we will continue to use oil the way we do today until the price literally drives us towards an alternative solution. Right now, however the alternative solutions are so new and not yet developed that they fair outweigh current gas prices.. which is why we will continue to use oil in the near future. This is a totally different topic, but the environmental impacts of the worlds use of oil is extremely scary.. innovation in the form of renewable energy/fuel needs to happen NOW!
ReplyDelete