Nobody is to Blame

The thing about the current oil crisis that is really frustrating is that no one party is to blame. Congress points to Big Oil who points to Middle Eastern leadership who points to the attitudes of consumers who blame speculators. Oil prices are at their current level due to a multitude of causes and no one party is to blame, but a congress of policy, attitudes and actions.
Perhaps the easiest parties to blame are the Big Oil companies. With record profits (close to $500 billion combined annually among the six biggest companies) and billions of dollars in tax breaks, Big Oil companies are an easy target for American consumers who find themselves in dire financial times.
In general, these companies respond to allegations of price gouging by pointing to the rising costs of production. From exploration to actually getting crude out of the ground, all operations in the production of oil have become more expensive in recent years. The easily accessible and exploitable deposits of oil are all but gone, and methods of finding and acquiring more difficult deposits come with increased cost. Further, Oil companies point to restrictive policies of oil producing countries, namely the member nations of OPEC.
During the 1973 oil crisis, OPEC nations utilized "The Oil Weapon" to punish nations who supported Israel in the Yom-Kippur War. The United States and other countries in direct support of Israel were targets of an embargo. OPEC nations cut production by 25% and this lessened supply resulted in a dramatic rise in prices.
The precedent of Middle Eastern oil producers underproducing in order to raise prices is the source of much recent criticism. Big Oil companies and Western governments accuse, mainly Saudi Arabia, of under-producing in order to keep worldwide prices high. Saudi Arabia, however, responds that worldwide demand has increased with the increased industrialization of China and India to such a level that even running at capacity, producers are unable to meet global demands.
United States consumers are notorious for their gas guzzling habits. Everyone knows the oft-quotes statistics about the ridiculous ratio of United States consumption to production as well as judgments against the uneconomical gas usage of SUVs and pleasure cruisers. But many American consumers are reluctant to cut back on their consumption when subsidies are offered in other countries that effectively render conservation financially unnecessary.
Indeed, in order to keep the prices of oil low in some countries, subsidies are offered. Unfortunately, this prevents the harsh lesson taught by painfully high prices, and demand continues to rise in these countries. Subsidies allow trends toward conservation to remain unnecessary and out of control demand to persist.
Other experts point to financial speculation as a source of the high cost of crude oil. Oil is traded in futures markets in which the right to buy crude at a set price at a future date is bought and sold. Some contend this practice, though no actual crude is sold, drives up the worldwide cost of oil completely independently from actual supply and demand. In a written testimony before Congress, financial expert Michael Masters contended that futures markets created a "demand shock" that results in inflated prices.
Many people believe that above all causes, the Iraq war is the source of high oil prices. Following the invasion in 2003, oil production dropped from more than 3 million barrels per day to just around 1 million barrels per day in 2006.
Honestly, any party involved can point to a host of other source of the price of gas and make a good case for why they are not responsible, but another party is. A concerned citizen out to discover The Truth behind gas prices would inevitably walk in an unending web between entities as convincing argument after convincing argument led him back and forth as he revisited each party many, many times. Truly, no one party is to blame, but we must avoid the distraction of finger-pointing and each party needs to be held accountable for their contribution to a problem that is as complex as it is consequential.

Revived (Hopefully)

Although crude oil prices have fallen in the wake of Hurricane Gustav's landfall, consumers will not see much relief in gasoline prices. The Gulf Coast is home to much of the United States' drilling and refining operations, and 10-20% of the US' refining capacity was shut down in anticipation of the storm. The storm did not cause nearly as much damage as speculated, and oil drilling and refining equipment was largely spared. Oil operations are expected to resume at full capacity by this weekend.

After the storm became of less concern in the eyes of oil traders, they focused on fears of stunted global economic growth, even in rapidly developing countries such as China and India. In order to avoid a steep price drop in the cost of crude oil, OPEC has decided to fight for a $100/barrel floor in prices. This will maintain gas prices around their current levels following the drop in prices as the increased demand of the summer season has dissipated.

Automated External Defibrillator

Every commercial for cars these days somehow involves the prepositional phrase "at the pump," usually prefaced with the word "pain." Earlier this summer I decided that articles in newsmagazines and the consistent cadence on CNN about how gas prices are destroying the lives of working Americans were not enough to make me feel how truly imminent the collapse of our country is. I decided experience would be the only way truly feel this plight. I needed to do some driving.

While trolling Craig's List for summer employment, I came across a job in Breckenridge. What better way to experience the plight caused by high gas prices than to commute 150 miles round trip every day? On the morning of my first day, I pulled up to a gas station at 6:15. Running on fumes for the past day, I was able to experience a complete fill up in order to establish a reference point for how much I would be spending on gas. $48.76 was my total, and I felt lucky that it was nowhere near the $75 left on the readout at the pump from the previous customer. An energy drink in hand, I started my commute.

My first day was a short one just so I could learn the ropes and get the hang of the job. I earned four hours of pay at 7 bucks an hour. At the end of the day, I lost nearly $25 in order to drive four hours round trip and work. Things were not looking promising.

A the end of my second day, which was thankfully a full one, my $7 an hour earned me close to $56 bucks. Overall I was up around 30 bucks and about a gallon of gas. Things were looking up.

As weeks progressed and work got busier, my commission began to be a factor and my daily earnings increased. However, on my best days I was still spending a quarter of my earnings on the gas I used to get to and from work. The novelty began to wear off and I started looking for more practical employment.

to be continued...

The Death of Greymack

I was driving home from a job interview when I made a left turn onto Quincy from Lowell. The Specials were blasting so I did not hear my engine die. I attempted to accelerate as I came around onto Quincy and nothing happened. I looked down to see my tachometer reading 0 RPM. Zero is not nearly enough to drive a car. I coasted to the side of the road, threw on the hazards and lifted the hood.
My expertise on fixing cars ends with the observation that there is indeed an engine under the hood and gas in the tank. I noticed the engine was hot (excruciatingly so) so it had indeed been working recently. A turn of the key didn't result in the familiar grinding of a bum starter, but it didn't result in silence either, so I knew the battery was working. But since the car didn't start, something else had to be wrong.
Long story short, on the ride home from the mechanic, we had to fill up the backup van. The full tank of gas cost 75 dollars.

I'm just glad I didn't have to pay. Awesome.

When We Left Earth

I like this show. At least the two half-episodes I've seen.

I wonder how long it took to sort through all the archival footage and conduct the interviews.

worthwhile revision coming soon.

Isenseven

The isenseven, a snowboard film production crew, use the Sony FX-1 and the Sony XDCAM EX-1 HD-cameras. These are both currently out of my price range ($30). The teaser to their latest video is here. They also use Adobe editing and effects software (I'm assuming that means Premiere and After Effects).

Exxon's Quitting

According to a story on Reuters.com, ExxonMobil Corp is getting out of the retail gas business. Of the 12,000 Exxon-branded service stations around the country, only about 2,000 are currently owned by ExxonMobil Corp. Over the next few years, they plan to sell off the remainder, though the stations will retain the Exxon or Mobil branding. The article mentions that owners of service stations are struggling to turn profits as they cannot pass on the high cost of gasoline to consumers.

In other news, ExxonMobil posted $40.016 billion in profits last year.[i]

I got to thinking about 40 billion dollars in relation to the obscenely high dollar amounts thrown around these days. Part of me thought it isn’t actually that much. Then I decided to see what can be done with 40 billion bucks.

Option 1

40 billion dollars can pay for 220,113 4-year Penn educations (including room and board)[ii] with enough money left over to buy a Mercedes C300[iii]. That’s enough free rides to Penn for every person in Philadelphia between the ages of 17 and 26[iv]. And a Mercedes. Take away five of those educations, and I could afford fuel [at current costs per gallon ($4.00), the EPA’s estimate of average yearly miles driven and the C300’s fuel economy] for 100 years[v].

Option 2

If cars and education aren't your game, you could use 40 billion dollars to buy 20 Space Shuttle Endeavours.[vi]

Interlude

ExxonMobil’s 40.601 billion dollar profit in 2007 is greater than the gross domestic product of 52% of the world’s countries according to a list by the International Monetary Fund. These countries are:

Latvia Bolivia Cameroon Luxembourg Uruguay Cyprus Panama Côte d'Ivoire Ghana Honduras Nepal Uganda Estonia Jordan Bosnia and Herzegovina Paraguay Turkmenistan Cambodia Botswana Bahrain Trinidad and Tobago Malta Jamaica Senegal Georgia Gabon Afghanistan Brunei Albania Democratic Republic of the Congo Madagascar Republic of Macedonia Burkina Faso Armenia Mozambique Zambia Chad Nicaragua Equatorial Guinea Mauritius Mali Republic of the Congo Laos Iceland Benin Papua New Guinea Tajikistan Haiti Namibia Guinea Malawi Kyrgyzstan Moldova Niger Rwanda Mongolia The Bahamas Mauritania Swaziland Barbados Togo Suriname Sierra Leone Fiji Eritrea Bhutan Central African Republic Lesotho Guyana Burundi East Timor Belize Zimbabwe The Gambia Saint Lucia Djibouti Cape Verde Maldives Antigua and Barbuda Seychelles Liberia Grenada Saint Vincent and the Grenadines Samoa Solomon Islands Vanuatu Guinea-Bissau Saint Kitts and Nevis Comoros Dominica Tonga Kiribati Myanmar São Tomé and Príncipe[vii]

Option 3

With $40 billion, you could buy Isla San Pedro—a 16,000 acre island off the coast of Chile[viii]— and furnish it with an equivalent to the most expensive estate in the United States (pool, fingerprint scanner-equipped vault and outdoor air conditioning system included)[ix]. For transportation, you could buy a rare Ferrari Enzo[x] as well as your own Airbus 380.[xi] Of course, you’d need an airport equivalent to the largest international airport in the US to go along with your Airbus[xii] and a baseball stadium equivalent to New Yankee Stadium[xiii] for recreational purposes. After buying all that, you would still have enough money remaining to provide rent for every homeless person in the United States at the current average rate for five and a half years.[xiv] [xv]

What did ExxonMobil do with its 40.6 billion dollar profit last year? Tune in next week for that discussion.

The original article:

http://www.reuters.com/article/newsOne/idUSN1238193020080612?pageNumber=1&virtualBrandChannel=0&sp=true

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Sources:

[i]http://www.reuters.com/article/newsOne/idUSN1238193020080612?pageNumber=1&virtualBrandChannel=0&sp=true

[ii] http://www.upenn.edu/about/faq.php

[iii] http://autos.yahoo.com/mercedes_benz_c_class_c300_sport_sedan-specs/

[iv] http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=16000US4260000&-qr_name=ACS_2006_EST_G00_DP5&-ds_name=ACS_2006_EST_G00_&-_lang=en&-_sse=on

[v] http://www.epa.gov/otaq/climate/420f05004.htm

[vi] http://www.nasa.gov/centers/kennedy/about/information/shuttle_faq.html#1

[vii] http://www.imf.org/external/pubs/ft/weo/2008/01/weodata/weorept.aspx?

[viii] $12 million, http://www.privateislandsonline.com/isla-san-pedro-chile.htm

[ix] $50 million, ,http://www.forbes.com/2005/08/11/cx_sc_0812homeslide.html?thisSpeed=90000

[x] $670,000; http://www.supercars.net/cars/1934.html

[xi] $300 million, http://www.forbes.com/2007/03/06/jets-private-travel-forbeslife_07billionaires_cz_ls_0308jets.html

[xii] $4.8 billion, http://www.colorado.edu/libraries/govpubs/dia.htm

[xiii] $1.3 billion, http://www.ballparks.com/baseball/american/nyybpk.htm

[xiv] http://answers.google.com/answers/threadview?id=486753

[xv] http://www.pbs.org/now/shows/305/homeless-map.html