exploration, extraction and delivery

Have these costs increased 48% over the last 3 months?


Fair question.

No, they haven't. But you didn't put the capital at risk, so why should you get the reward ?

If this were ice cream at the supermarket then it would be a simple matter of cutting out ice cream from peoples diet, but to most working families driving to work is only way they can make a living, and the privilege to making that living has been IMHO unfairly gouged. If the electric company increase profits 48% via price increase in less then 4 months company execs. would be on trial.

...and invading the country making the ice cream!

No offense mike, but your economic analysis of the costs of rents, the role of OPEC in price fixing and the relative power of the big five or six oil companies in the world is, um, surprisingly naive from somebody otherwise well informed.

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What we should not do is subsidize that benefit. Instead of using an excess profits tax to fund alternative energy development, I think we should stop the subsidies to the oil and gas industries and put that money into alternative energy development. I just don't see any public policy reason why these companies should be supported with tax dollars. And I think smart politicians should expand that argument to the pharmaceutical industry (how many billions are wasted because Medicare is prohibited by law from bargaining for prescription drug prices?),

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I agree, but there are some things to think about. We pay off the drug companies for two reasons:

1) They are large campaign contributors - if you aren't for them they are against you!
2) If we don't help them out some way in this country, they'll take their jobs and move to a less expensive country just like every one else is doing. Technology is easily moved these days and there are plenty of people in Asia willing to work for less. When they have something to manufacture there are fewer environment restrictions there

No offense mike, but your economic analysis of the costs of rents, the role of OPEC in price fixing and the relative power of the big five or six oil companies in the world is, um, surprisingly naive from somebody otherwise well informed.

OPEC is a non factor in my argument. What I’ve posted is about the profit margin increase on the product after the Oil is acquired from OPEC.OPEC also does not ‘price fix’ since they only control the amount of production and currently all or most OPEC Oil nations exceed that production output limit already.

As for the big 5, they are the ones in question.

Has oil production fallen off in the past 6 months?

It's my understanding that American oil companies produce at least some of their own oil. So their extraction costs don't go up even if the price does, and they can pocket the profits.

I can't get that ethanol pdf page to work on my Firefox browser, so I haven't read it. But if there is collusion going on, I think the proper response is not a windfall profits tax but a suit to end the collusion and collect civil penalties; it's certainly not a check to the public from the government. If demand is tight during the summer driving season, then the price will go up and the compaines will get the profits. I see nothing wrong with that. I see a whole lot wrong with continuing to give the companies tax breaks. Seems to me that a windfall profits tax doesn't address the behavioral problems of oil companies or consumers; it allows prices to stay high, and the corporations can still make more money though at a lower profit margin. But ending government subsidies is certainly in the public interest, and possibly investigating collusion if there is good reason to suspect that it's going on.

If we don't help them out some way in this country, they'll take their jobs and move to a less expensive country just like every one else is doing. Technology is easily moved these days and there are plenty of people in Asia willing to work for less. When they have something to manufacture there are fewer environment restrictions there

I don't think this argument applies to the oil industry. You have to pump oil where it is; you can't move your operations to a place where there is no oil but the labor is cheap. Oil continues to be pumped in the US because it is profitable to do so, not because the oil companies manage to get huge favors from Congress. More generally, if the labor is cheap and it makes a difference, then companies will go there anyway. If we subsidize businesses to make them competitive with cheaper foreign competitors, we still wind up losing because we are in essence making the products more expensive by funding them with our tax dollars.

As for campaign donations, I've said it before: public campaign financing. We'll save whatever we allocate for campaigns many times over if it gives Congress the backbone to end corporate welfare.

Ah, but there you're wrong in detail, Mike. The payments made to Saudi Aramco, for example, are based on the spot price. So, yes, OPEC countries have a direct impact on the cost of deliverable crude. The costs born by the big five or six are variable. They are not flat. What do you think controlling production volume is if not price fixing?

Then there is the fact that those pesky chinese are buying crude too.

How about talking about the fact that US gas economy standards haven't changed in twenty years, that US residents won't allow new refineries?

Production is down a bit this year and down for the past two-three years.

It's my understanding that American oil companies produce at least some of their own oil. So their extraction costs don't go up even if the price does, and they can pocket the profits.


Yeah, but that's producing oil under the control of a government's authority. For example, Chevron develops oil fields in Saudi Arabia, but Saudi Aramco decides how much Chevron can take out and what the rent/tax is for pulling the oil.

Oil continues to be pumped in the US because it is profitable to do so, not because the oil companies manage to get huge favors from Congress

Because we try to buy domestically produced oil for the petroleum reserve and we give them incredibly cheap financing for exploration and development.