Truth for Oil

As truth is my muse, those oil pundits make me mad. Now, I’ve heard two different ones complain about environmental regulations putting an effective moratorium on Refinery building. Truth is this. We need refined petroleum products. We need a clean environment. We require fuel for our society to prosper. We require healthy citizens for our society to prosper. This is the fundamental conflict that oil executives pose whenever they discuss supply and demand… profits, too. Well, here’s another truth. Oil companies built the Alaska Pipeline. One of the largest engineering projects in the world up to that point. It’s hard to describe the expanses, complexity, and environmental regulations, in play on the pipeline. It cost billions to build and stretches across an area that is hard to appreciate on most map projections.
Shell oil is capable of investing 5 billion dollars building the Troll offshore oil platform. That investment has repaid them with current orders worth 120 Billion dollars. What profit margin could an oil company expect to reap from new refineries? Probably not much. It’s true that Environmental issues make new refineries expensive to build. Every company has cost centers that don’t generate as much profit as others. Since oil companies own the entire process, from extraction to retail sales, consider refineries a cost center. Say one new refinery cost $20 Billion dollars to build. Exxon made more than $36 billion last year. So, the investment of 8 months’ profit would be required to build our imaginary refinery, or pay for all the damage caused by Hurricane Andrew. I don’t care how stringent the environmental regulations are, there are still a couple bucks left over to build new refineries. What possible difference could it make to Exxon’s bottom line? They’d amortize the construction over 50 years, and they’d be in line for heavy funding from the government. Even biting the entire thing off in one fiscal year wouldn’t be too bad. Telling the shareholders that you just made a $16 billion dollar profit last year won’t get any CEO fired. It would still pay for that crazy retirement package. It would even pay for some much needed research and development in new energy production.
That’s another thing that really upsets me about our current oil situation. No matter how legitimate the causes, I’m paying through the nose for gas. That profit, that dazzling wealth, won’t go one inch towards making a transition towards a new energy source. Instead, money is lining pockets on an unprecedented scale. Once we are forced to change from an oil standard to, say, a Hydrogen standard, I’ll STILL be paying through the nose to fill up. It will just be a new excuse. Instead of investing these record profits. Instead of investing a small percentage of these record profits, oil companies will rely on you and me to rework their entire infrastructure to handle Hydrogen. So, we’ll pay twice, when we shouldn’t have to pay once.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: