E-mail criticizes U.S. environmental regulations on the oil industry.
Several readers (including members of the Phillips family) have maintained to us that there is no descendant of Frank Phillips matching the description of the putative author of this piece, which itself appears to be a rewritten/expanded version of an earlier article (one not originally attributed to William 'Bill' Phillips). Given the uncertain provenance of the 'Phillips' authorship version, we'll address our analysis primarily to the wording of the (presumed) original:I hadn't realized, until the hearings on energy that were held this week in House and Senate committees, that the United States doesn't have any big oil companies. It's true: the largest American oil company, Exxon Mobil, is only the 14th largest in the world, and is dwarfed by the really big oil companies - all owned by foreign governments or government-sponsored monopolies - that dominate the world's oil supply. With 94% of the world's oil supply locked up by foreign governments, most of which are hostile to the United States, the relatively puny American oil companies do not have access to enough crude oil to significantly affect the market and help bring prices down. Thus, Exxon Mobil, a small oil company, buys 90% of the crude oil that it refines for the U.S. market from the big players, i.e., mostly-hostile foreign governments. The price at the U.S. pump is rising because the price the big oil companies charge Exxon Mobil and the other small American companies for crude oil is going up.Ranking businesses according to 'bigness' can be based on a variety of different metrics: geographic reach, scale of operations, market value, gross revenues, net profits, etc. Exxon Mobil is certainly one of the world's largest (in terms of gross revenues) and most profitable public companies. (Many of the world's largest non-public companies are also in the oil business.) The statement here about Exxon Mobil's being 'only the 14th largest [oil company] in the world' refers to the amount of oil and gas reserves that company controls, and it is generally true that the major (public) oil companies have much less access to oil and gas resources than they did a few decades ago, most of which are now controlled by national oil companies:Despite record crude prices, the major oil companies are struggling to access resources that are being jealously guarded by national companies with whom they are forced to establish partnerships. As paradoxical as it may seem, high oil prices do not mean a golden age for the likes of ExxonMobil, Chevron, Totalor BP. Of course, with a barrel of oil at more than 140 dollars, they are seeing major profits, but the future has never seemed so uncertain. The problem is access to reserves. The oil majors now control less than 10 percent of world resources of gas and oil, against 70 percent in the 1970s, according to figures released by the office of Ernst and Young at the World Petroleum Congress in Madrid. As a result they are being forced to explore in increasingly extreme conditions.The statement that '94% of the world's oil supply [is] locked up by foreign governments, most of which are hostile to the United States' might be a considered a bit misleading since many of those 'hostile' countries have relatively small oil reserves, while the country with the second-largest oil reserves, Canada, is U.S.-friendly (and both Mexico and the United States are also among the countries with the largest oil reserves).This is obviously a tough situation for the American consumer. The irony is that it doesn't have to be that way. The United States - unlike, say, France - actually has vast petroleum reserves. It would be possible for American oil companies to develop those reserves, play a far bigger role in international markets, and deliver gas at the pump to American consumers at a much lower price, while creating many thousands of jobs for Americans. This would be infinitely preferable to shipping endless billions of dollars to Saudi Arabia, Russia and Venezuela. So, why doesn't it happen? Because the Democratic Party - aided, sadly, by a handful of Republicans - deliberately keeps gas prices high and our domestic oil companies small by putting most of our reserves off limits to development. China is now drilling in the Caribbean, but our own companies are barred by law from developing large oil fields off the coasts of Florida and California. Enormous shale oil deposits in the Rocky Mountain states could go a long way toward supplying American consumers' needs, but the Democratic Congress won't allow those resources to be developed. ANWR contains vast petroleum reserves, but we don't know how vast, because Congress, not wanting the American people to know how badly its policies are hurting our economy, has made it illegal to explore and map those reserves, let alone develop them.Drilling for oil off of most of the Pacific and Atlantic coasts has largely been barred due to a moratorium imposed by Congress in the early 1980s and by an executive order signed by President George H.W. Bush (a Republican) in 1990. The congressional moratorium has to be renewed every year, and it has remained in place for nearly three decades through a succession of administrations and Congresses, both Democratic and Republican alike. (On 14 July 2008, President George W. Bush lifted the executive order barring offshore drilling that had been signed by his father eighteen years earlier.) The congressional moratorium is due to expire on 1 October 2008 unless Congress votes to extend it.Some analysts have claimed that if the oil industry could extract oil and gas from oil shale in a cost-effective manner, oil shale deposits in the U.S. (particularly on the western slope of the Rocky Mountains, site of the world's largest such deposit) could produce viable oil reserves of about 800 billion barrels (three times the current proven reserves of Saudi Arabia). However, the cost and effectiveness of oil shale development (and the resource use and environmental effects attendant to accomplishing it) remain a subject of considerable debate, and oil companies remain barred from undertaking commercial oil shale projects on federal land:At best production is years away, while unpredictable oil markets, growing water demand, sizable electricity needs and climate change all pose potentially huge hurdles. Democrats have barred the Bureau of Land Management from leasing any federal land for commercial-scale oil shale projects. Skeptic Randy Udall of nearby Carbondale, Colo., argues that oil shale is but a poor cousin to other fossil fuels, with an energy content per ton less than one-third that of cattle manure and only slightly better than the potato. Any oil shale project in this region would mean new water demands on the Colorado River and its tributaries, vital waterways for much of the western U.S. and northern Mexico. That potential demand for water worries rancher David Smith of nearby Meeker, Colo., who relies on water from the White River that he fears will be diverted to the oil shale operations. The oil companies, Smith said, could help ease concerns by sharing in the cost of a water storage project. 'They have not offered to do that,' Smith said. Besides water, Shell's oil shale project would require far more electricity than the existing power grid could supply. That likely means construction of a new power plant. In this part of the country, the most economical way to fire a power plant would be with coal. But in the next Congress, lawmakers are likely to pass legislation to limit greenhouse emissions, and coal-fired plants are huge emitters of carbon dioxide. That would add to cost, ever oil shale's nemesis.The subject of opening the Alaska National Wildlife Refuge to oil exploration and development is another issue that has been pursued across the years through a succession of administrations and Congresses, both Democratic and Republican alike. The issue has been complicated by the uncertainty of many factors involved in the opening of ANWR to U.S. oil production, such as the total amount of oil underlying the area, the size of the oil fields that might be found in ANWR, the quality of the oil that might be found in ANWR, the potential production capacity of ANWR drilling operations, how long it would take before ANWR operations began providing significant amounts of oil for the U.S. market, what effects the oil extracted from ANWR would have on world oil supply and prices, and the environmental impacts of oil exploration and development in ANWR. As of now, both major-party presidential candidates, Senators John McCain and Barack Obama, are opposed to opening ANWR to oil exploration.
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