Posted by: Sanity Rules | May 21, 2008

Big Oil defends profits before Senate panel

Patrick Leahy and the usual pack of publicity seeking whores confronted Executives from “Big Oil” today regarding their “windfall profits”.   It seems that every few months or so, this same group of hypocritical senators are pulling the same publicity stunt.  The last time they did this was on April 1st.  This was a good date because their intention was to play an April Fools joke on the gullable American Public by trying to point the finger of blame at the oil companies and thus distract the people from the truth.  Today’s charade was just an Encore performance by the same group of clowns.

Why Oil and Gas Prices are rising:

1. The United States will not tap it’s own reserves because the environmentalists will not allow drilling.  This however doesn’t stop the hypocrites like Leahy and Schumer from calling for the Saudis to drill for more oil!

2. The budget deficit and current economic problems are causing the value of the dollar to decline.  This decline in purchasing power means that more dollars are charged per barrel.  Cut some of the extra spending and earmarks, and amazingly the dollar would strengthen and the cost of oil would moderate. 

The Democrats don’t want to consider cutting the budget in any real terms, because this would mean a loss of the power of government that they crave.  Unfortunately, the Republicans who were supposed to be an alternative party and the party of limited government have been spending like Democrats.

3. Oil is a speculative market.  Speculators are currently pushing up the cost of oil, but these speculators are beyond the control of U.S. Legislators and should the legislators be successful in taxing these speculators, they would either sell their oil to a buyer who would charge them less in taxes or would simply charge more to cover the costs.  Morons like Leahy forget that since the U.S. is reliant on foriegn oil, they have limited control over the eventual cost to consumers.  

In the short term, the speculative bubble will probably burst.  The reason that I say this is because this is what the Saudi’s anticipate, and it is one of their main reasons for not increasing production.  They have no interest in flooding the market with oil that will drive down national revenues.

4.  Oil is fairly shelf stable.  A barrel of oil leaving the Middle East will contain a barrel of oil when it arrives in New York, Tampa, Los Angeles etc.  However Gasoline is not stable.  It has a shelf life and the volume changes according to temperature and evaporation.  This is why most of the gasoline used in the U.S. is refined here.  It is refined pretty much as needed, but the refineries are running almost at capacity.  If more gas was on the market, this would help moderate the cost, but of course the Democrats don’t want to build any more refineries due to Ecological concerns. 

In regards to “Windfall Profits” the oil companies actually make less on their product as a percentage than do most other companies.  Exploring for oil is not only risky for investors, it is a very expensive process.  Even if oil is found, there is no guarantee they can drill for it (especially in the U.S.) and can be very costly to extract.

For the most part, gasoline is actually quite inexpensive in the U.S. as compared to other nations of the world.  Some people ignorantly point to Mexico and say, “It’s only $2.50 a gallon down there”  but they forget that unlike the U.S., Mexico actually drills for their own oil and instead of taxing the locals, subsidizes the market slightly.   Again, blame the ecologists and their Democratic party whores.

It’s too bad that the oil company execs are too timid to simply speak plainly, but they do not want to risk the wrath of congress and so they go along with the charade for the most part.

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