About Oil
By Harris R. Sherline
June 9, 2008
I'm usually not given to conspiracy theories, but I am beginning to wonder a bit about the oil crisis. The fact that the shortage of oil and gas in this country has been self-induced by our feckless political class in concert with environmentalists tends to support speculation that opposition to our developing any sort of energy resource is secretly being funded by our "friends," the Arabs. The theory holds that the goal of preventing the U.S. from achieving energy independence is behind the steep rise in oil prices.
Congressman Steve King recently observed that The Heritage Foundation has convincing empirical data "that the people that are advancing this cap and trade want to slow our economy down, want to reverse our economy, and they know that if they shut down energy, they back the economy off and they are doing it all because they worship mother nature." (Glenn Beck: "Anwr or Bust!", May 21, 2008)
According to the California Energy Commission, "One barrel contains 42 gallons of crude oil. The total volume of products made from crude oil based origins is 48.43 gallons on average -- 6.43 gallons greater than the original 42 gallons of crude oil...due to the additional other petroleum products...that are added to the refining process to create the final products," which are:
Finished Motor Gasoline, 51.4% = 24.89 gallons
Distillate Fuel Oil, 15.3% = 7.41 gallons
Jet Fuel, 12.3% = 5.96 gallons
Still Gas, 5.4% = 2.62 gallons
Marketable Coke, 5.0% = 2.42 gallons
Residual Fuel Oil, 3.3% = 1.60 gallons
Liquefied Refiner Gas, 2.8% = 1.36 gallons
Asphalt and Road Oil, 1.7% = 0.82 gallons
Other Refined Products, 1.5% = 0.73 gallons
Lubricants, 0.9% = 0.43 gallons
"Additionally, California gasoline contains approximately 5.7% by volume of ethanol...that brings the total processing gain to 7.59 gallons..."
From another perspective, the price of gas is comprised of the following: Crude oil, 72.7%; 11.5%; Refining, 10%; Distribution, 5.8% and Taxes, 11.5%. ("Paying Through The Hose, Santa Barbara News Press, page B4, May 27, 2008).
Since the price of crude oil accounts for over 70% of the price of gasoline, and given the fact that world-wide demand is currently around 87 million barrels a day vs peak oil production of 85 million barrels, it appears that relatively little can be done in the short run to reduce the cost at the pump without increasing supply.
The U.S. Energy Information Administration reports that the total U.S. petroleum consumption of liquid fuels and other petroleum products averaged 20.7 million barrels per day in 2007 - about 24% of total world production. ("Short-Term Energy Outlook," May 6, 2008).
Oil billionaire, T. Boone Pickens, recently predicted that the price of oil would reach $150 per barrel by the end of this year. Other experts believe it may reach $200 a barrel. (Glenn Beck: "Anwr or Bust!", May 21, 2008)
The list of energy projects that are currently being blocked includes:
ANWR (the proposed drilling area is only 2,000 acres out of a total of 19 million acres, which is "equivalent to one large farm in a state about the size of South Carolina." ("Congress Raises More Obstructions To Oil Availability," By E. Ralph Hostetter, GOPUSA, May 23, 2008).
Development of nuclear facilities.
Deep sea drilling within 100 miles of the Florida and California coasts.
New 100-year leases to drill in the Gulf, although China, Cuba and Venezuela are proceeding to drill in these areas.
Development of shale oil fields in western states.
Development of dams and hydroelectric projects.
Development of new oil refineries (for over 30 years) and cutting the number of operational oil refineries in half since 1982.
In addition, development of natural gas resources is being limited (potentially enough to heat every home in the U.S. for the next 150 years) and oil fields in California have been shut down.
In 1973 we imported 34.8% of our oil, today we import 60.3%.
Since 1977, with the exception of three years, the federal and state governments have collected more in taxes every year from the sale and import of oil than the oil industry earned in profits.
Congress has approved trade legislation that the EPA says will increase the price of gas by $1.50 a gallon. They have also approved lawsuits against the oil companies for the "possible future destruction of an Alaskan Eskimo village," but perhaps the most absurd action taken by our legislators was authorizing a lawsuit against OPEC. (Glenn Beck: "Anwr or Bust!", May 21, 2008)
With political leaders like these, who needs enemies?
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Read more of Harris Sherline's commentaries on his blog at "opinionfest.com."
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Note -- The opinions expressed in this column are those of the author and do not necessarily reflect the opinions, views, and/or philosophy of GOPUSA.