Tag Archives: oil

What Should the Price of Fuel Be at the Pump?

Geek!This is Tim Whitney’s submission for the HP Magic Giveaway. Feel free to leave comments for this article as you see fit – your feedback is certainly welcomed! If you’d like to submit your own how-to, what-is, or top-five list, you can send it to me. Views and opinions of this writer are not necessarily my own:

Appears everyone is screaming about Big Oil and their record multi-billion dollar profits. In America, everyone has a god-given (or natural) right to work hard, deliver a quality product, and make money – commonly understood as Capitalism.

Based on my web research, information from the EIA, and my own calculations, we Americans consume approximately 190,858,000,000 (billion) gallons of gasoline & diesel fuel per year. My research also indicates that Big Oil makes about $0.10/gallon or about $19,000,000,000 (billion) dollars in profit on fuel sales.

Big Oil could certainly make more profits – if they choose to – as we are still a free county. As one loyal American Capitalist, I could not fault them if they did make more money on “their” products. This would certainly open the door for more competition (bio-fuels?) – if we truly have an open/free market.

Does this mean I like paying $3.00 per gallon for fuel – NO WAY! I’m mad as hell and I think we should all stand up and tell the “real profiteers” we are not going to take it anymore. Just who are the real profiteers?

Sure the Middle East is a big profit player and I would even pay more per gallon — if we could stop using imported oil. Yet again, they are businessmen and it’s their oil, coming out of their ground and they have every right to charge what they want to. If you don’t like what someone charges – buy it from someone else, this is also your right.

By now you must be wondering who I think is raking us over the coals – if it’s not Big Oil and not the Middle East. The answer may surprise you, but the real profiteers are the local, state, and federal bureaucrats. Say what? You heard me loud and clear. Did a bureaucrat dig a well, build a pipeline, a refinery, or even drive a delivery truck? When was the last time you saw a bureaucrat-owned and operated gas station? Yet, our bureaucrats make more than four times the money per gallon of fuel than Big Oil does. The average “tax” is $.046/gallon, filling the government coffers to the tune of approximately $87,795,000,000 (billion) per year. Where is the yelling & screaming about this unbelievable tax (profit) the government Bureaucrats take – for not delivering a product?

What should the price of fuel be at the pump?

  • $25.55/gallon – I hope you are wondering why I suggest this. Simple math is the answer. Total projected government Depredations in 2007 is expected to be approximately $4,400,000,000,000 (trillion). Big Oil gets $2.50/gallon and local, state, and federal Bureaucrats get $23.05 per gallon. I’m sure you think I’m crazy – as people are already going broke at $3.00 per gallon.
  • $14.29/gallon – this would pay Big Oil about $2.50/gallon and the Federal bureaucrats would get the rest – $11.79/gallon. Why? The Federal budget for 2007 is $2,251,000,000,000 (trillion), and simple math tells the rest of the story.
  • $2.58/gallon – with crude oil costs at ~$76/barrel, no calculator is needed here. With a Presidential Executive Order, “all” fuel taxes could be suspended, until the price of crude oil drops below $50/barrel. See Executive Order 11051. This would also demand a restraint in total government /bureaucratic spending by $87,795,000,000 (billion) or a two percent reduction in spending for 2007. Of course, this restrain may also spur Congressional bureaucrats into real action with regards to an energy policy – one that keeps their fuel tax gravy-train rolling (by making sure oil stays under $50/barrel).

Please give all the above suggestions a little more thought before dismissing them as nonsense or frivolous. Think of all the various taxes and non-productive time we could eliminate – especially the income tax – by simply putting “one sales tax” on our energy-based economy. At either of the “depredation prices” suggested in 1 or 2 above – there will be ample incentive / demand for competition, conservation, new more efficient fuel technologies, and an end to our imported oil addiction.

“European governmentshave long used gasoline taxes not only as an important source of revenue, but also as a policy tool to drive down oil consumption and reduce pollution. Williams said taxes account for about 66 percent of the pump price in Britain – so, of this month’s average price per gallon of $6.40, about $4.22 goes to the government.” – The Boston Globe, 04/30/06

Competition (and only true competition) will create extremely economical transportation, less vehicles on the roads, a surge in telecommuting, and alternative energy breakthroughs. Competition, not bureaucrats, will generate real energy results on an annual basis – instead of decades or centuries, if left in the hands of Bureaucrats. However, paying $511 or $286 for a 20 gallon fill-up at the gas station will bring a lot of things into perspective for each and every driving American – real fast. Maybe it’s this “perspective” the bureaucrats should be investigating – their own windfall profits on every gallon of highway fuel sold in the USA.

Is Offshore Oil Drilling a Good or Bad Idea?

Geek!This is James Robbins’s submission for the HP Magic Giveaway. Feel free to leave comments for this article as you see fit – your feedback is certainly welcomed! If you’d like to submit your own how-to, what-is, or top-five list, you can send it to me. Views and opinions of this writer are not necessarily my own:

Fuel prices are at an all time high around the world today, and yet again, the United States is in trouble on Wall Street. Americans are not traveling as much because of the increasing fuel prices. There have been many ideas about how to solve this issue, but only one will solve the problems of cost and independence from foreign oil. This solution is offshore drilling. Offshore drilling will provide this country with the opportunity to lower fuel and natural gas prices. It will also free the U.S. from the need to buy oil from countries in the Middle East without a significant risk to the environment.

In a world where gasoline and natural gas are pretty much essential, would it not be nice to be able to afford them. The country dividing controversy of offshore drilling has become a debating piece once again with the 2008 presidential election season under way. Some say that drilling in the Outer Continental Shelf (OCS) is too dangerous for the environment, and others say that we should drill our way to independence from high priced foreign oil. Foreign oil causes many problems for the United States. There are wars over oil and the price of it, as well as crude oil transport tankers running aground and devastating our coastlines. To stop these terrible things from happening, we must drill off our own coastlines. Environmentalists are convinced that drilling in the OCS would not reduce fuel prices for ten years, and they are probably correct to think that. On the other hand, if the OCS was opened to drilling, Middle Eastern leaders would see this, and immediately reduce the price of a barrel of oil drastically. This would be the psychological impact that is needed in today’s everyday life in the United States.

Furthermore, there are concerns that offshore drilling will cause major oil spills into the ocean. However, there has been only one offshore drilling incident off the coast of the United States. In January of 1969, off the coast of Santa Barbara, California, there was a blowout under a drilling platform. The blowout caused the loss of three million gallons of oil into the ocean. In contrast, marine transportation, in 1975 alone, lost about six hundred and thirty million gallons of crude oil into the ocean. The tanker incidents in 1975 lost more oil than the drilling platform off Santa Barbara’s coast in 1969. In 1976, another major oil spill soiled the panhandle beaches of Florida. This incident occurred by transportation of oil, not drilling it. This fact alone should be enough for everyone to realize that offshore drilling is safer than marine transportation, but environmentalists are holding firm to their conclusions.

The greenies (environmentalists) are saying that fish and oceanic life is at an extreme risk by the pollution that the drilling platforms are putting into the water. In the Gulf of Mexico, there are about 3,700 oil drilling platforms, and roughly 3,200 of them lie off the Louisiana coast. According to environmentalists, this would severely affect the commercial fishing industry, but is has not to date. Louisiana produces one-third of America’s commercial fisheries with no major oil spill ever. Nevertheless, environmentalists still say that drilling in the Outer Continental Shelf (OCS), will severely harm ocean life, when in fact, it has been proven that urban runoff and sewage treatment plants dump twelve times more petroleum into the ocean than the thousands of drilling platforms that reside in the Gulf. Mark Ferrulo is an environmental activist in Florida that has been quoted saying that Louisiana’s coast is “the nation’s toilet”, but most of the Red Snapper that is served in Florida’s restaurants are caught off Louisiana’s coast. The Gulf of Mexico has never been healthier. For example, off the Louisiana-Texas boarder lays The Flower Garden Coral reefs. They are unlike any of the Florida Keys reefs in the fact that they are surrounded by dozens of platforms that have been in operation for fifty years and are thriving. According to G.P. Schmahl, a Federal biologist who has worked in both places, “The Flower Gardens are much healthier, and more pristine than anything in the Florida Keys. It was a surprise to me, and I think it’s a surprise to most people”.

With natural oil seeps polluting our oceans at an enormous rate, something needs to be done to control it or stop it all together. There is actually more oil seeping naturally into the Gulf of Mexico than is spilled by rigs and pipelines. There has been a moratorium on oil drilling in the Santa Barbara bay for thirty-eight years. In that time, an estimated nine hundred barrels of crude oil has leaked from the drilling platforms. In comparison, the natural seeps have leaked an estimated two million barrels. Not only does this represent a $280 million dollar economic loss at today’s prices, it represents a serious environmental and public health problem.

Bruce Allen, a former JPL physicist who is a resident of Santa Barbara and a member of the air quality board discovered a serious air pollution problem. Allen discovered that airborne hydrocarbon contaminate levels can be as high as ten times that of Los Angeles. He said that most of Santa Barbra’s residents were surprised to find out that their oil and high priced gas problem is not a man-made one, it is natural. Allen says that the natural seeps are a result of being on an active geological fault line that is releasing the trapped oil, which is estimated at thirteen billion recoverable barrels in the Pacific Coast region. Allen believes that the environment will benefit from drilling the deposits by reducing the amount of oil and gas seepage. The National Academy of Sciences has found that less than one percent of the oil found in the ocean comes from offshore drilling platforms, where as the majority of the oil (62%) released into the marine environment is the result of natural seeps. Crude oil that seeps into the ocean in North America is estimated to exceed 47 million gallons and 180 million gallons worldwide.

The people who are against drilling in the Outer Continental Shelf do not think that there is enough oil around the United States to make a difference in the price of gas. Two federal bans have blocked the U.S. from gathering and exploring for oil in the OCS. The bans are an executive ban and a legislative ban. President George W. Bush lifted the executive ban on July 14, 2008 leaving only the legislative ban in place. If congress abolishes their ban on offshore drilling, oil companies will be able to find out exactly how much energy the OCS is holding. Because of the ban, it is an estimate that the OCS contains eighty-six billion barrels of oil and four-hundred twenty trillion cubic feet of natural gas. These estimates are likely to be very conservative because it is currently illegal to explore the OCS.

Technology used to find oil and gas deposits has come a long way in the past 40 years. Oil companies now use 3-D seismic and 4-D time imaging technologies to more accurately find the deposits instead of drilling exploratory wells to find it. Safety features of the platforms have also come a long way in the past forty years as well. All offshore wells now are equipped with storm chokes that detect damage to valves at the surface to shut down the well in the event of an emergency. Blow out preventers are now installed below the sea floor to prevent catastrophes such as the one in Santa Barbara in 1969, and sensors are now used to monitor the subsurface and subsea-bed conditions to prevent spills due to an unexpected change in well pressure. This new technology has drastically reduced the amount of spilled oil on the platforms. In recent years the offshore drilling platforms new safety features have been put to the test when two major hurricanes named Katrina and Rita barreled over top of them. This real life extreme test has proven that the platforms are much safer than they were in 1969 without any major oil loss. All of the safety features that have been implemented on the rigs worked just as they were supposed to.

In the year 2006, environmental organizations warned “Exploration and development of gas resources produces routine discharges of spent drilling mud, contaminated produced waters, and highly-toxic metals and hydrocarbon compounds into the marine environment, in addition to creating a demand for onshore gas processing facilities in sensitive portions of the coastal zone”. The fact is that the drill cuttings are now being used as raw material for rebuilding Louisiana’s wetlands, bricks, and even roads. Despite what the environmentalists have been saying, the evidence is clear about the drilling processes by products.

Next, people want to know what is going to happen to the rigs when they have pumped all of the oil out of the ocean that they can. Federal environmental experts in the 1940’s mandated that the rigs are to be removed once they have stopped producing. In 1993, some of the rigs in the Gulf of Mexico stopped producing and the oil companies tried to comply with the federal mandate, but the local anglers put up a fight to keep them since the fishing was so good. It turned out that the rigs are a huge benefit to the marine environment than anyone thought they would be. The rigs to reefs policy was implemented in light of this find. The RTR policy is beneficial to everyone involved. It saves the oil companies money because they do not have to dismantle the platforms and dispose of them on land. Moreover, it is beneficial to the marine environment because the rigs are the largest artificial reef complexes in the world. There are three methods to the RTR policy. The rigs can be completely toppled and submerged in the ocean, the rigs can be towed and placed, or there is a partial removal platform reefing method to create an artificial reef. The Minerals Management Service (MMS) encourages the reuse of obsolete offshore drilling platforms as artificial reefs in U.S. waters as long as the structures do not pose an unreasonable impediment to future mineral development.

Accordingly, offshore drilling is the best thing that could possibly happen to this country in the aspect of energy. The country would be better off financially because the oil companies would not have to buy oil from Middle Eastern countries, and the oil that they did purchase would be cheaper because of the psychological impact that drilling in the outer continental shelf has produced. The environmental impact would not be as significant as environmentalists have predicted. The insignificant amount of crude oil that will leak will actually help the coral reefs grow and be healthier around the country where drilling will take place.

Are you Worried about the Gas Crisis?

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On June 9th, the National average for gas prices per gallon hit the $4.00 mark. This all-time high came as no surprise to most of us. Does this concern you? Are you worried about the gas crisis? Bloggers on Lockergnome have been discussing this for several weeks. Let’s look at what some of them have had to say.

Around where I live it is starting to look like a used car lot. By the shopping centers you immediately notice the Suburbans, Pick up trucks and other gas guzzlers with for sale signs affixed. Pricing is surprisingly low for these road warriors that guzzle gas like an alcoholic guzzles booze. Rumor has it that the car dealers don’t want the big boys unless they come with their own oil well.

Not only has the cost of car gasoline hiked up, everything has hiked up as a result. Food is more expensive. Utilities are more expensive. The price of everything is climbing, and many people are barely keeping their heads above water financially. Many more have already sunk, before they really even had a chance to grab for a life jacket.

One of my clients called with a computer problem that I determined to be a hard disk failure. I gave them a price for a new hard disk plus my labor and waited for their decision. I got a call stating that they would have to wait for the repair, since the price of gas and food was cutting into their budget.

I won’t even bother to ask if the gas crisis is hitting you where it hurts. I know it is. It’s affecting us all. What are your thoughts and comments about the alarming rate the economy is slowing down, prices are continuing to climb, and the job market is staying the same?

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