Friday, August 01, 2008

Emirates or Exxon: Either Way You Take It in the Shorts

Maddow brought up an interesting point yesterday I hadn't thought much about before--no, I am not obsessed, thank you; I simply recognize quality when I see it--namely, that the drill here instead of buying oil over there camp falsely conflates "domestic oil" with "United States" rather than "US oil companies." In the absence of nationalized oil companies--quelle horreur--opening up the coastal shelf to exploration and production simply provides us the opportunity to pay a US-based multinational corporation for our gasoline instead of paying the Sultan of Oman. A company like Exxon, for example, which just shattered its own US record for quarterly earnings with a staggering $11.7B profit posted in the second quarter of this year. That's billion.

And, she added, most of that profit isn't even coming from sales to the US consumers they currently have under their thumbs. Can this be true? I did some looking. Everyone who is convinced that domestic oil production and gasoline refining are the solution to all of our woes needs to take a deep breath and take a look at this.

A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department.

The surge in exports appears to contradict the pleas from the U.S. oil industry and the Bush administration for Congress to open more offshore waters and Alaska's Arctic National Wildlife Refuge to drilling.

"We can help alleviate shortages by drilling for oil and gas in our own country," President Bush told reporters this week. "We have got the opportunity to find more crude oil here at home."

We need to find more crude oil here at home so we can... ship it overseas in order to fatten ExxonMobil's wallets even more? The argument to increase domestic production would make sense if we had a Department of Petroleum whose revenues flowed directly back into the nation's infrastructure or even just a giant petty cash drawer for little things like schools and up-armored HMMVs. But we don't. What we do have are companies that operate in the global market and will move their product to the area with the highest profit margin. They exist to line their own portfolios, not to alleviate the skyrocketing prices that are gobsmacking low- and middle-income Americans.

The exports were also equal to half the 3.2 million barrels of gasoline, diesel fuel and other petroleum products the United States imported each day over the 4-month period.

Throwing open ANWR and the continental shelf will marginally increase the global oil supply and maybe cause a small, short-term ripple in prices. But don't fool yourself into thinking that adding another million or so barrels to US corporate oil tanks will do anything but give them more options for their export markets and decisions on refining capacity, and provide the opportunity for 11.7 billion to be chump change down the road.

Drilling domestic oil does not mean domestic market relief and thumbing our noses at the sheikhs. It just means more discretionary product in the hands of private companies whose last interest is giving you a break at the pump.

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