Daily Archives: June 19, 2008

Oil Prices

I was watching Fox this morning and Bernie Sanders (I-VT) said that the oil companies are making obscene profits and they are paying their CEO’s too much and they aren’t investing in sustainable energy. Later on he said that the oil companies are buying back their stock raise dividends and not use the money for oil exploration.

When you use only the dollar amounts of profit to discuss the oil companies’ profits it sure sounds obscene. $5 Billion dollars sounds like a lot of money. $5 thousand, not so much. But both those numbers can represent 10% profits. The small business with only $5 thousand in profits has, of course, a much smaller revenue stream.

Congress may set minimum wages in law, but what makes them think that they can set maximum wages?

What gives Congress the right to tell any company what they should be investing in? And on that note, why is it the oil industry’s responsibility to develop alternative fuels and energy? Why not offer incentives for anyone to come up with viable alternates? Solar and wind are good, but they can’t run my car. Hydrogen fuel cells sound great, but they need to be more reliable and the price needs to come down.

Congress wants to improve CAFE standards. That’s all well and good, but it only affects new vehicles, those built to meet those new standards. Changing the CAFE standards doesn’t magically make all the current vehicles more fuel efficient. The older vehicles are still on the road, not as efficient as the newer models. Will the government do something to get all the older vehicles off the road? Will the government buy everyone a newer, more fuel efficient vehicle?

Passenger vehicles that are more fuel efficient don’t do much to reduce the need for petroleum based fuels in this country. Trucks and trains need those fuels too. Trucks and trains transport just about everything we buy, to include the gasoline at the gas station.

Mr. Sanders also doesn’t seem to realize that the oil companies are publicly owned companies. Paying dividends therefore, is putting money in their investors’ pockets. Investors that include many “average Joes” who have money in 401(k)s and other investments. Mr. Sanders, dividends are not only for the rich or the company honchos.

There are those who say we can’t drill our way out of this. They say drilling won’t bear fruit for years.

If we had started drilling years ago, we would have the oil availability now.

The solutions they are throwing out; solar, wind, bio diesels, hydrogen – to become real solutions, these will also take years.

There is no magic button that will solve our need for oil in the short term. We do have to look at long term solutions, but we can’t have tunnel vision and look only at everything but oil.

In order to lessen our dependence on foreign oil, we need to keep all our options open. Exploit our own resources. If we can lessen our dependence on oil, foreign and domestic, then we can sell our domestic oil to others in the world.