Asks What Wells Do They Drill?
SW News Herald ^ | 5-8-06 | DANIEL JOHN SOBIESKI
If anyone wonders why gasoline prices have soared above $3 a gallon at the pump, consider the fact that on the same day that the House of Representatives passed a bill that would allow the Federal Trade Commission to investigate and punish oil companies that conspire to keep prices up, it failed to pass a measure to promote expansion of U.S. oil-refining capacity.
Consider as well that those to whom the basic laws of supply and demand are a complete mystery are themselves conspiring to keep oil priced high by preventing oil development in a tiny portion of the Arctic National Wildlife Refuge and in areas of the Outer Continental Shelf. But instead of looking in the mirror, they blame oil companies and gas station owners for “price-gouging” as demand rises but supply does not.
Those calling for a return of the tax on “windfall profits” ignore the fact that, according to a new report from the Tax Foundation, the biggest profiteers from oil aren’t the companies that produce it and deliver it to our gas tanks, but the federal and state governments that tax it.
Between 1977 and 2004, total federal and state taxes on gasoline sales totaled $1.34 trillion, thanks to average taxes at the pump of about 40 cents a gallon, or more than double the $640 billion of oil company profits. And that doesn’t include the taxes the oil companies paid on their profits.
Together, the Big Three oil companies, Exxon, ConocoPhillips and Chevron, last quarter earned 8 cents on every dollar of sales. In contrast, Google, Yahoo and eBay made 19 cents on every dollar of sales and no one is accusing them of gouging their customers.
Government taxes take more than four times as much out of our pockets than Exxon’s first quarter profit of $8 billion which occurred largely due to growing worldwide demand, particularly in China and India. Fully 75 percent of Exxon’s sales come from outside the United States.
The way to exert downward pressure on gasoline prices is to increase supply. If President Bill Clinton hadn’t rejected the idea of drilling in ANWR in 1995, we would today have another million barrels of domestic oil per day filling our tanks, creating jobs, and lowering prices, two-thirds of what we now import from Saudi Arabia.
According to a recent National Petroleum Council Study, the portions of the Outer Continental Shel (OCS) off the 48 contiguous states could provide enough gasoline for 116 million cars for 47 years, enough winter heating oil for 47 million homes for over that same period, and enough natural gas to maintain current levels of production for the next seven decades.
The study also found that keeping these areas off limits, as most environmentalists and Democrats want to do, will cost American consumers more than $300 billion in increased energy costs. Democrat Sen. Bill Nelson of Florida has introduced legislation that would extend the current OCS moratorium until 2020.
The irony here that under a 1977 agreement engineered by Jimmy Carter, Communist Cuba is allowed to drill in the Gulf of Mexico north from the western tip of Cuba virtually to Key West, Florida and is being helped in that effort by China and India.
The U.S. Geological Survey estimates that there may be as many as 9 billion barrels of oil in the North Cuba Basin. The Gulf of Mexico may be one of the world’s greatest oil resources but, under current policy, we won’t know until others find it.
We import some 1.75 million barrels of oil a day from Mexico. Much of that oil comes from the Cantarell oil field off the Yucatan peninsula. Mexico has just discovered a second giant oil field, Noxol, not far from Cantarell, estimated to contain as much as 10 billion barrels of oil.
The next time you fill up at the pump, ponder the prospect of Chinese oil rigs pumping oil for Castro’s Cuba 50 miles off the Florida coast.
