Friday, June 20, 2008

There Will Be Blood

Tucson, Arizona. Both GOP presidential candidate John McCain as well as Bush have called for an end to legislation on the books for over a quarter of a century banning off shore drilling for oil. They argue that lifting such a ban will result in exploration and oil extraction that will help alleviate demand for oil and result in price relief for oil consumers. Only blind followers of such characters or individuals favoring the oil industry will buy into the inane and severely flawed thinking behind such an approach.

First of all, the quantities involved as well as the timing associated with any result from off shore drilling render it irrelevant to today's situation. Second (further details coming) and even more significant is the fact that leasing property to oil corporations and granting them the right to drill for oil does not result in oil production. As noted by Rep. Gabrielle Giffords (D-AZ), oil corporations already sit on 68 million acres of public land currently sitting entirely dormant. The corporations do not drill on land once granted the rights. They hoard it in accordance with self-serving calculations that have nothing to do with the welfare of the American consumer (or any consumer world wide) and conduct their affairs entirely in service of what they perceive to be their own best interests. No one loves the oil companies like themselves, and the industry is rich with a tradition of corruption, blood lust, betrayal, and financial rape. They don't even restrict themselves to the tactics of producing and selling oil. Think Enron and electricity in California. Think the suppression of scientific research on global warming. Think death threats and a myriad of efforts including sabotage to develop alternate energy sources. Make no mistake, the oil industry has blood all over it.

If humanity as a whole has heroin, nothing would come closer to pure cash than oil itself, and across the globe we don't manage the consumption of oil with any policies remotely approaching rationality. The laws of supply and demand have been prostituted in the service of the powerful and connected. I don't shed one microscope drop of moisture regarding the price of gasoline for all but a few of the less fortunate gouged because they lack the sophistication to steer clear of the trap. Throughout the globe, more in some countries than others, the consumption of oil is subsidized. While slightly dated, the following represent the price of a gallon of gas in various countries:

Sierra Leone $18.43 ----------Norway $10.37-----------------Turkey $10.14
Netherlands $10.11 -----------Germany $9.20-----------------Finland $8.90
Italy $8.78 ---------------------Portugal $8.78----------------Sweden $8.71
Monaco $8.33------------------Iceland $8.06-----------------France $8.06
Israel $7.95---------------------Poland $7.80------------------Hungary $7.51
South Korea, Guatamala, Greece, and Croatia---$7.38
Spain, Switzerland, Slovenia, Cyprus, Romania---$7.00 to $7.30

The countries below all pay over $6.00 for a gallon of gasoline:
Ukraine, India, Canada, Sri Lanka, Australia, Japan, Brazil, Singapore, Uruguay, Estonia.

The countries that pay less than $5 for a gallon of gas do so because it is heavily subsidized by their governments, and even India, at $5.15, would pay well over $7 were in not for a government subsidy that is currently causing its oil companies (and government) to bleed profusely. Those who discuss oil without some degree of understanding of the subsidization permeating the system and the brutality of the industry's history have no clue about the forces they discuss. In particular, any discussion that does not fully involve China and India, both subsidizing oil consumption at levels highly problematic for both each nation and the planet, might as well discuss something of which they are entirely ignorant, but with a more impressive title like Diffeomorphisms between semi-Riemannian surfaces of non-negative curvature.

One has to start somewhere, and I was impressed by Congresswoman Giffords call for legislation that tells oil companies to "use or lose" the vast oil reserves they currently hold hostage from the rest of the world.

Returning to subsidies, China and India are poor as hell, so the prices they pay, $2.80 and $5.15 respectively, are a steep bill for their populations to bear. They subsidize oil consumption to fuel the growth of their economies. Those in China and India will state that without the subsidies, the price would spiral to double digit or close (in dollars) and cripple their ability to consume any.

Without turning the post into a book, I'll just declare the honeymoon over regarding cheap oil and assert the solution is alternatives, not struggling to find the next fix. I've already voiced support for nuclear power, unprecedented investment in solar power, wind energy, and massive efforts in "going green" regarding efficiency. No matter how we proceed, there will be blood and it will get ugly.

Moves that further butcher the planet, like lifting the ban on offshore drilling, represent steps in exactly the WRONG direction.


Anonymous Anonymous said...

My straw reaches across the room, and starts to drink your milkshake, I DRINK YOUR MILKSHAKE!!



6/20/2008 5:44 PM  
Blogger The Navigator said...

Nice to hear from you. You've slowed down ever since your trip to California.

I will assume you have your reasons for waiting to mention the no bid deals now being made for the sweet Iraqi crude that had nothing to do with our invasion of Iraq.

Mission soon to be accomplished!!


6/20/2008 5:50 PM  
Anonymous Dustin said...

I've been ready for gas to be this high for a long time. Sadly gasoline is the least of it. Diesel is the biggie. Food production and shipping is something that effects us all, especially in our home here in the desert.

My personal experience is that rising food prices hurt more than the gas. It costs me an extra 40-60 dollars a week for the same grocery load.

6/20/2008 8:32 PM  

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