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Getting drilled on oil, gas prices

POSTED: September 4, 2012 4:00 p.m.

I am all for “drill here and drill now,” assuming that state-of-the-art technology is incorporated to ensure, as best we can, the protection of our fragile environment.

The battle cry of the drill-here-and-drill-now group is based on the promise of cheap gas. I am all for that — cheap being something around 200 percent above what we were paying a couple of years ago. My only question is, how do we ensure that all of this “new” oil goes to the American market? Do we nationalize the oil industry in the USA? I don’t think so. How do we prevent those frantic guys on the floor of the stock market in New York — the ones who take subway trains to work — from selling every drop of it to China or whomever bids the highest?

Drill here, sell there. Sounds like a plan.

I know the argument that it’s actually pension funds and such that really own the oil and participate in the profits.

I was complaining out loud at a dinner party one night about the cost of a gallon of gas, and the guy sitting next to me said, “Buy stock.” Oh, OK. Just how much stock do I have to buy in a mutual fund that participates with a percentage of its portfolio in oil stocks that will give me a return of the several hundreds of dollars a month my transportation costs have increased during the past three years? More than I have to invest, I’m sure, and totally beyond reach for the masses who still have to get to work every day and literally are spending around 15 percent of their net income every week on gas. Talk about a hidden tax.

Of course, the industry provides about 80,000 direct jobs, etc. Each and every one of those employees also has to pay a premium for a gallon of gas to get to work.

Exxon-Mobile stock was selling for a little more than $50 a share in 2005. It’s close to $90 a share now. That’s an 80 percent increase in the value of the stock, and it correlates to the unreasonable, inexplicable increase in the cost of gas. By the way, we taxpayers subsidize “energy research.”

One oil tanker among the thousands on the globe gets in trouble, and the price of a gallon goes up 10 cents. A hollow threat by Iran to interrupt shipping in the Middle East and the price of a gallon of gas goes up. A hurricane hits, and up goes the price of gas. What the heck, rumors of a hurricane when it’s a tropical depression in the Lesser Antilles and up goes the price.

The oil companies apparently never gave a thought to the possibility of hurricanes when they built a large percentage of oil refineries and storage facilities in hurricane-prone areas. What happened to reserve supplies? Stick a few billion gallons in middle Georgia to be used to weather the storm, imagined or otherwise. We have yet to have a hurricane in middle Georgia.

The oil industry loses a few days of full production, and it’s end of the world as we know it. Who is kidding who? We are being hustled from start to finish. I found it amusing that the government announced an unpredicted jump in consumer spending occurred during the month of July. No one could say why. I don’t suppose it had anything to do with the fact that gas, inexplicably, dropped about 50 cents a gallon. People suddenly had an extra $50-plus bucks in their pockets. I paid $2.99 a gallon at the bottom of that slide. That still is about 90 percent higher than I was paying not too long ago, but then that also was before companies like Exxon-Mobile began making obscene net profits on the backs of American consumers.

I have another question: According to the oil companies, the price of gas goes up because of an accident at a refinery, or they have to shut down an oil refinery for maintenance and there is not enough refinery capacity to take up the slack, so up goes the price, never to come down again. Well, what happens to the increased supply of oil we are going to have with the “drill here and drill now” marching song? If we can’t refine it and store it, I guess we just will have to unload it on other markets. I don’t know. I’m just asking.

I am all for “drill here and drill now” if you add “refine it here and sell it here” and “stop allowing greed and global interests to damage our economy.”

Hubbard, a Richmond Hill resident, is a former Green Beret who writes an occasional column.

 

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