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In the never ending American political circus, the clowns on the Senate Judiciary Committee recently held yet another hearing at which they attempted to showcase their zeal for helping the public by putting oil industry executives on the defensive. Unfortunately, the news coverage and commentaries by political pundits did not emphasize the fact that, at least this time, the politicians failed, and why.

They were outgunned by a lineup of high powered oil company executives representing five major U.S. firms: BP America, Inc., Shell Oil Company, Chevron Corporation, Conoco Philips Company and Exxon Mobile Corporation, who came well prepared.

The hearings produced some important information about the oil market that should be receiving widespread distribution (web site):

Collectively, American oil companies account for a very small percentage of the world oil market. The American oil industry is able to compete for only 7% of the world's known reserves, about 75% of which is controlled by national oil companies that are supported by their respective governments.

In spite of the fact that Exxon Mobile is the largest U.S. oil and gas company, they are a relatively small player on the global stage. The company accounts for only 2% of the world's energy production, just 3% of world oil production, 6% of the world's refining capacity, and only 1% of the world's petroleum reserves.

In order for American companies to compete successfully in the world's oil market, they must be financially strong enough to carry out huge, complex energy projects that require enormous long-term investments. For example, Exxon Mobile spends around $1 billion a day just for day-to-day operations and to make the necessary capital investments that are required to stay in business.

"Because foreign oil companies and governments control the overwhelming majority of the world's oil, most of the price you pay at the pump is the cost paid by the American oil company to acquire crude oil from someone else."

IBDeditorials.com also noted (May 22, 2008):

"...since 2002 the U.S. oil and natural gas industry has earned about 8.1 cents per dollar of sales -- exactly the same as all U.S. manufacturing, excluding autos. Not much of a windfall."

"...the Department of the Interior notes that most of the oil and 40% of the natural gas under public lands is off-limits to drilling. That's about 19 billion barrels of oil and trillions of cubic feet of natural gas."

One wonders what the people who want to prevent us from developing our own energy resources are trying to accomplish. My guess is that, like so many other matters that are critical to the economic well being of our nation, such decisions are made on the basis of politics, rather than what's right or is best for all Americans.

Blaming the oil industry for secretly manipulating the price of oil is just another in a long history of conspiracy theories that pop up whenever something happens that people don't understand. It has been going on for a very long time, hundreds of years. Some interesting examples are discussed in a book that was first published in 1841 by Charles Mackay, titled, "Extraordinary Popular Delusions and The Madness of Crowds."

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