The Real Story Behind High Oil Prices

I’m getting tired of the knuckleheads on Capitol Hill wasting time parading oil executives into hearing rooms to pummel them over profits every week rather than actually solving the problem. Isn’t this still America? Aren’t we still a capitalist nation? A quick lesson on the purpose of a business: to make money. Yes, it’s that simple. The purpose is no greater or less than that. We should be cheering their profits.

Let’s say I were to grant you that a corporation could make “too much” money (I won’t, but let’s say I did). The oil industry has a profit margin well below the average of all industries. The reason for the huge profits in absolute numbers is simply the fact that it is the largest industry in the world. It would be like Joe’s Bar & Grill complaining that Applebee’s makes too much in comparison.

Anyway, let’s move on. Let’s take a look at what the mental midgets in Washington have done to address the issue of high oil prices:

  • They have made ANWR off limits to drilling
  • They forbid drilling off of the Florida and California coasts
  • They will not allow leases for drilling in the Gulf while China and Venezuela have signed leases
  • They are shutting down oil fields in Colorado
  • They won’t allow shale oil field development in some Western states
  • The EPA just added polar bear to the protected list even though their numbers have increased substantially. Oh yeah, and the polar bears are in the same area where we need to drill for oil.
  • They passed legislation allowing us to sue OPEC–I’m sure that won’t piss them off and cause them to cut off our oil.
  • There have been rumblings of a windfall profits tax (even though I pointed out earlier that they are below average in their profit margins). Trust me, increasing a company’s expenses, will not lead to lower prices.
  • All 3 presidential candidates have promised to pass cap and trade legislation (to fight the phantom global warming problem). The EPA estimates that this will increase the price of gasoline by $1.50 per gallon–other say it could be more like $5.00 per gallon.
  • They have not allowed the construction of a new refinery in over 30 years.
  • They will not allow the deployment of coal-to-oil technology. We are the Saudi Arabia of coal and could be energy independent with this technology.
  • They won’t reduce the federal gas tax–not even for the summer.

And they’re asking the oil executives why prices are so high? Stop the political grandstanding and provide real solutions folks.

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