Tuesday, April 1, 2008

Think about it - Update

"While Democrats hammered the executives for their profits and demanded they do more to develop alternative energy sources such as wind, solar and biofuels, Republican lawmakers called for opening more areas for drilling to boost domestic production of oil and gas."

Demos think that increasing costs... and that is what a tax is....and preventing new drilling....which will continue to reduce supply....will decrease price. Huh? That is just so totally stupid that I can't believe the Demos actually believe it.

Fact is, the Millionaires Club that the Demo Senate is, just doesn't give a damn. They think they can mouth words about alternative energy, etc., and no one will notice that it is costing them $70.00 to fill up.

Hey Dummies!!!! Alternative "fuels" cost more than crude oil! And the only way you can increase supplies of crude is:

1. Use alternative fuels.

2. Explore and bring new supplies on line.

The former does nothing to reduce prices because the alternative replacement is just, if not more, as expensive as what it is replacing. And with corn expected to reach $7.50 a bushel and soy beans $12.00, ethanol is not coming down. And even if you could replace 10% of ALL gasoline in the US with ethanol, the net effect would be just a 10% increase in crude oil... more or less. I make that distinction because the amount of gasoline than can be produced from any volume of crude depends on several factors. But if the 10% is mostly accurate, how much would a drop in demand of 10% affect price, given that the producers.... OPEC..... can just shut down production to meet the lower demand. It is called a monopoly.

And the only way you can break a monopoly is through force of government.

The truth of the matter is this. The oil companies have no reason to want to spend money on exploration as long as there is a ready supply of oil they can purchase. The only real variable is the price of crude. As of now they have fixed costs for transportation, refining and distributing. All they have to do is decide how much profit they want, tack it on and wait for the money to roll in.

In fact, if Congress suddenly told the oil companies to start drilling in the US they would squeal like a pig under the gate for the right to export the oil to the country they could obtain the highest price from.

Does anyone know how much gasoline and diesel is currently being exported?

UPDATE: The surge in diesel prices follows a move by the U.S. Environmental Protection Agency mandating a cleaner form of the fuel which is more costly to produce and which is also more readily exportable to the European market and other diesel-hungry regions.

Before the cleaner diesel mandate, much of the diesel produced in the United States fell far short of European fuel specifications, which meant the fuel tended to stay in the United States, keeping stockpiles full and prices low.

Link to fuel exports.

The question has never been a question of cost. The question has been, how much could the oil companies, and their partners in OPEC, charge without destroying the economy or falling prey themselves to government action. They watched very carefully how the market responded to the price increases that took effect during and after Katrina and came to the conclusion that prices could be increased substantially.

"Our earnings, although high in absolute terms, need to be viewed in the context of the scale and cyclical, long-term nature of our industry as well as the huge investment requirements," said J.S. Simon, senior vice president of Exxon Mobil Corp. (XOM), which made a record $40 billion last year.

You see the results at the pump.


The face of Global Cooling revealed

Newsweek and Harper's have nothing on Tall Cotton. This is from one of our many far flung intrepid correspondent's..

Note the victory cigar. Undoubtedly it was received from The Big Guy in recognition of its chilling effect on Pope Algore's many minions.

My thanks to Dave T.