U.S. Risks Losing Remaining Oil Companies
In this morning's news is evidence that Exxon-Mobile may be moving toward going out of business in a few years, at http://articles.moneycentral.msn.com/Investing/JubaksJournal/IsExxonMobilsFutureRunningDry.aspx. . Why? And what would that mean for the U.S.?
It is routine for the U.S. Congress to haul in the CEOs of big U.S. oil companies, slap them around before the cameras, threaten them with even more regulation if they do not "behave" and blame half the troubles of the world on them. That usually happens in the spring, when gas prices always, always go up because of seasonal changes as our few remaining refineries change over to summer production. But this spring, with the soaring worldwide price of oil, it happened as never before.
Never mind that the U.S. oil "giants" are now mere bit players in the world. In the 1970s, they controlled 70% of the world's oil supply. Now the enormous oil companies of other countries - all government-owned - control 80%.
Meantime, Congress will not let go of U.S. oil companies as whipping boys. Haliburton became their chief whipping boy all through the Bush administration, because of its misfortune in having had Dick Chaney as its CEO, until he gave up all those bucks to be Bush's Vice President. After some years of that, Halliburton finally had enough. They moved out of the U.S., to Dubai. Can anyone blame them? Being a favorite whipping boy gets old.
Now there are signs that Exxon-Mobile may be planning to go out of business over the next few years.
What is the problem? What isn't! Not only is Exxon continually harassed by Congress, it is running out of places to drill. Old fields are producing less. And almost every new possibility in the U.S., or off its shores, is off limits. Then too, the costs of drilling are soaring, because more and more of new discoveries are in "extreme" places, like in frozen Artic tundra, or through a mile of water and a mile of salt. It costs a lot more to drill there! The highly-specialized equipment for such drilling is in short supply worldwide, with the price being constantly bid up. Neither are they allowed to build any new refineries in the U.S
Great going, Congress! Not only are we paying dearly for oil. But Congress is ensuring we could pay even more, by persecuting, limiting and threatening the only oil companies we still have left. Exxon - now only 18th biggest in the world - is our biggest, most capable oil company. Congress is doing everything it can to make it even smaller. A couple of them even threatened openly to nationalize them, in open hearings. ("Nationalize" means to confiscate a company without paying for it - like Hugo Chavez did in Venezuela.)
Instead, what Congress should be doing is trying to build up the U.S. oil industry. What is left of it, that is. They should be cherishing and helping the few oil giants we have left. Subsidies might be wise. They should be learning from them, not lecturing them in ways that show their appalling ignorance of energy problems. They should be talking subsidies, the removal of restrictions, asking them what they need in order to access more of the world's oil reserves.
Our oil companies have done admirably under decades of persecution. They have stayed in business. Their profits may look large in dollars, but they are necessary for the huge investments required. They must spend huge amounts on ever-more-expensive exploration and development, long before returns come in - if indeed they ever do. We are on the road to losing more and more of U.S. oil companies if we do not wake up on time. U.S. energy now has a tiny fraction of the world's oil supply. It will get smaller fast if we do not turn around quickly on how we treat our oil companies. Without them, we would be at the mercies of the mid East oil countries and Russia.
There is a tiny chance that Congress might decide to give US comsumers a tiny concession, by letting oil companies drill in the US. Who do they want to do our drilling anyhow - US companies? Or someone like Hugo Chavez or the Saudis or the Chinese? The way we are going, that might be our only option.
How dumb can Congress get?
It is routine for the U.S. Congress to haul in the CEOs of big U.S. oil companies, slap them around before the cameras, threaten them with even more regulation if they do not "behave" and blame half the troubles of the world on them. That usually happens in the spring, when gas prices always, always go up because of seasonal changes as our few remaining refineries change over to summer production. But this spring, with the soaring worldwide price of oil, it happened as never before.
Never mind that the U.S. oil "giants" are now mere bit players in the world. In the 1970s, they controlled 70% of the world's oil supply. Now the enormous oil companies of other countries - all government-owned - control 80%.
Meantime, Congress will not let go of U.S. oil companies as whipping boys. Haliburton became their chief whipping boy all through the Bush administration, because of its misfortune in having had Dick Chaney as its CEO, until he gave up all those bucks to be Bush's Vice President. After some years of that, Halliburton finally had enough. They moved out of the U.S., to Dubai. Can anyone blame them? Being a favorite whipping boy gets old.
Now there are signs that Exxon-Mobile may be planning to go out of business over the next few years.
What is the problem? What isn't! Not only is Exxon continually harassed by Congress, it is running out of places to drill. Old fields are producing less. And almost every new possibility in the U.S., or off its shores, is off limits. Then too, the costs of drilling are soaring, because more and more of new discoveries are in "extreme" places, like in frozen Artic tundra, or through a mile of water and a mile of salt. It costs a lot more to drill there! The highly-specialized equipment for such drilling is in short supply worldwide, with the price being constantly bid up. Neither are they allowed to build any new refineries in the U.S
Great going, Congress! Not only are we paying dearly for oil. But Congress is ensuring we could pay even more, by persecuting, limiting and threatening the only oil companies we still have left. Exxon - now only 18th biggest in the world - is our biggest, most capable oil company. Congress is doing everything it can to make it even smaller. A couple of them even threatened openly to nationalize them, in open hearings. ("Nationalize" means to confiscate a company without paying for it - like Hugo Chavez did in Venezuela.)
Instead, what Congress should be doing is trying to build up the U.S. oil industry. What is left of it, that is. They should be cherishing and helping the few oil giants we have left. Subsidies might be wise. They should be learning from them, not lecturing them in ways that show their appalling ignorance of energy problems. They should be talking subsidies, the removal of restrictions, asking them what they need in order to access more of the world's oil reserves.
Our oil companies have done admirably under decades of persecution. They have stayed in business. Their profits may look large in dollars, but they are necessary for the huge investments required. They must spend huge amounts on ever-more-expensive exploration and development, long before returns come in - if indeed they ever do. We are on the road to losing more and more of U.S. oil companies if we do not wake up on time. U.S. energy now has a tiny fraction of the world's oil supply. It will get smaller fast if we do not turn around quickly on how we treat our oil companies. Without them, we would be at the mercies of the mid East oil countries and Russia.
There is a tiny chance that Congress might decide to give US comsumers a tiny concession, by letting oil companies drill in the US. Who do they want to do our drilling anyhow - US companies? Or someone like Hugo Chavez or the Saudis or the Chinese? The way we are going, that might be our only option.
How dumb can Congress get?
posted by Old Neocon at 8:11 AM
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