Ronnie, there's a bit of a misunderstanding about supply & demand and how it relates to the strategic oil reserve vs. supply & demand and how it relates to future oil drilling:
The SOR is oil that is available
right this second, so to speak, and can be put onto the market immediately... Any allowance of drilling in ANWR or new offshore drilling permits won't do diddly for supply & demand for ten years at best, 20 years more likely. It is also not permanent, and will end on December 31, 2008. It is estimated that prices will drop anywhere from 5 cents to 25 cents when it's enacted on July 1st (it's only 70,000 barrels per day).
As for supply & demand vs.
drilling, the oil companies have about 10,000 permits to drill,
currently on over 68 MILLION acres leased to them that they can drill on, today, right now, this very second - over 30 million of them acres being offshore. These are acres that congress and everyone involved has already given the green light - they have nothing stopping them from drilling on these acres. Infact, there are many wells - including
Alaska's National Petroleum Reserve with more KNOWN amounts of oil than ESTIMATED oil in ANWR - which already has everything inplace (wells, pumps, pipes, etc... basically already has a "straw in the ground" as I heard it the other day) - that has simply been "capped" and is not being used.
The myth of 'free market supply & demand' is a farce; I'll have that debate with you any day - and as far as the oil companies are concerned, there's nothing "free market" about them - but that's for another topic & I don't want to stray here (you're welcome!
). Believe me - I'm all for regulated free market; but this is not an example of free market by any means.
Here's the deal about profits. First of all, the IRS has nothing to do with oil's profits. Oil companies are publicly traded, so if their numbers are false, it is the Securities and Exchange Commission (SEC) that prosecute. Companies have to give very exact, detailed information about profits, forecasts, etc.
That being said, a mere 10% profit is just laughable...
Since 2001, oil profits have increased 176%, using the big five: ExxonMobil, BP, Royal Dutch Shell, ConocoPhillips, and ChevronTexaco. To back that up even more, this is
just a report on Exxon, taken from a current
businessweek article:
Quote:
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Exxon Mobil's shareholders should be a happy bunch. The company racked up a record $40.6 billion in profits in 2007 on sales of $358.6 billion, on top of $39.5 billion in 2006 on sales of $335.1 billion, and $36.1 billion in 2005 on sales of $328.2 billion. Since Tillerson's elevation to chairman and CEO in January, 2006, the stock climbed from 55 a share to 96 on May 21, 2008, before easing to 85 on June 3.
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It doesn't matter diddly what they "claim" to have made in profits to the public, only what they report to the SEC. I found this info
HERE, which is backed up with it's sources on the bottom of it's page if you don't believe them.
BOTTOM LINE:
The problem isn't supply & demand, since all suppliers are currently at or near peak production... The problem isn't ANWR, offshore drilling or any of that bs - 68 MILLION ACRES of available resources with TEN THOUSAND approved drilling permits (yet only one refinery permit - go figure)...
The problem is speculation. You're going to hear a lot about the "Enron Loophole" this next week - if not, google it.
The article I quoted above brings up some interesting things if you put two & two together - speculation to drive up the cost of gas also affects stock... Interesting fact: Exxon spent more money last year buying back
it's own stock rather than "investing" in other resources or drilling, yadda yadda. What does that tell you? The more oil companies make landgrabs, sit on them & do nothing, then wait until their stock is at a premium - that's when they can make some cashola.
Same as Enron...
Here's a great USA Today article I recommend reading:
Can Congress really lower gas prices? - USATODAY.com
