Thursday, June 19, 2008

It's Big Oil- no. 3

The majority staff of the United States House Committee on Natural Resources, chaired by Nick Rahall (D.-W. Va.), issued in June, 2008 a report entitled "The Truth About America's Energy: Big Oil Stockpiles Supplies and Pockets Profits." Here is a summary of the committee's summary:

The federal government has dramatically increased drilling permits for oil and gas development on public lands since 1999. But many permits haven't been used, leaving nearly 10,000 permits stockpiled by oil and gas companies. If there were drilling on the 68 million acres of land currently currently under lease but not in production, U.S. oil production would nearly double and natural gas production increase by 75%, thereby cutting our importation of oil by one-third.

Oil is demand-inelastic; as its price increases, demand drops only minimally because it's an essential good. As the price of oil rises, demand for gasoline at the pump drops less than the price has increased, increasing profits of the industry. Can we escape the conclusion that oilmen may be holding down supply until the price increases drastically? And, with the President and the Vice-President of Big Oil running Washington, will the Democratic Congress acquiesce or fight back? And will its presumptive presidential nominee find his voice?

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