Posts tagged “Barack Obama”
I am traveling some over the next two weeks, and did not have a chance to record my weekly video segment this week. However, last Friday I was a guest on Alan Colmes’ show on Fox News Radio, so I will share that this week instead. I had been a guest on his show last month to discuss whether President Obama bears responsibility for high gas prices.
As I said then, gas prices are outside the control of a sitting U.S. president. As an aside, gas prices appear to have peaked for now and are on the way down. Does anyone who blamed Obama for higher prices think he is responsible for bringing them back down? That is in fact a dangerous issue to campaign on, because if gasoline prices fall between now and the election — and you have made a big deal out of how they are the President’s responsibility — guess what? President Obama now takes credit for falling gas prices.
Anyway, I am drifting off topic here. On his show, Alan and I discussed my new book Power Plays. Some of the topics we discussed were:
- What peak oil means
- The role of speculators in the oil market
- Why I am skeptical that we will address rising carbon emissions
- Whether methane hydrates are a viable alternative energy source
- The difference between our oil shale resource and oil reserves
- Which alternative fuels are promising
Unfair Profits or Lots of Volume?
Most people, if asked to name off the top of their head which industries were taking advantage of consumers to generate insanely high profits, would likely have the oil and gas industry at the top of their list. Isn’t it a well-known fact that with gas prices spiraling through the roof, “Big Oil” is by far the most profitable industry out there, hence they must be taking advantage of consumers?
Actually, it’s not that simple. But public opinion would have it otherwise.
In fact, industries such as internet information providers and personal computers rank well above major integrated oil and gas (Big Oil) when it comes to profit margins. The simple definition of profit margin is: A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings.
If an embargo is successful in preventing Iran from selling a significant amount of oil on the world market, what would replace it?
On Friday the White House released the following statement:
there currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their import of Iranian oil, taking into account current estimates of demand, increased production by some countries, private inventories of crude oil and petroleum products, and available strategic petroleum reserves and in fact, many purchasers of Iranian crude oil have already reduced their purchases or announced they are in productive discussions with alternative suppliers.
That the President or anybody else is counting on the world demand for petroleum curve to shift left in 2012 seems doubtful. And which are the countries from which increased production is anticipated? Libyan production averaged only 500,000 barrels/day in 2011, and if things go well could soon be producing a million barrels more than that daily. In the mean time, disruptions in Sudan, Syria, and Yemen have taken out a separate 640,000 barrels/day. The best hope is perhaps Saudi Arabia, which presumably has been making private statements to U.S. officials similar to this public statement from Saudi Oil Minister Ali Naimi last Wednesday:
Saudi Arabia’s current capacity is 12.5m barrels per day, way beyond current levels demanded, and a reliable buffer against any temporary loss of production. Saudi Arabia has invested a great deal to sustain its capacity, and it will use spare production capacity to supply the oil market with any additional required volumes.
Who is to Blame?
I’ve been working for the past week on a fact-sheet for ASP on gas prices; what is causing this spike, and why they’re going so high. I will post a link to it when we publish it, but suffice it to say that we’re not going to come down and say that President Obama is responsible for high gas prices. Although I believe that there are some good reasons to be exploring for oil and gas here at home (e.g. balance of trade, new construction jobs), we should not delude ourselves into thinking that’s going to actually lower prices. More to come when we release the report next week, so keep an eye on this space.
I want to take a minute, though, to write about a few conclusions I’ve drawn after diving into the sometimes heated and nasty rhetoric around gas prices. One big conclusion that I’ve come to about gasoline in the U.S. is that we simply use too much of it; much more than is necessary. I think that’s mostly a factor of the low pump prices that we had grown accustomed to over generations. Though prices have been high and very unstable since 2005 when Katrina shut down refining in the Gulf, we have really only begun to change our economy to the new world of high prices. I wrote before about how the U.S. energy market is poised for a “Fundamental Shift” as we produce more oil and use less. However, I am somewhat surprised that it continues to take this long.
In response to Republican claims that the Obama administration is not working to lower gasoline prices, U.S. Department of Energy (DOE) Secretary Steven Chu said that the DOE is on track to lower gasoline prices through some indirect methods, including promotion of alternatives such as biofuels and electric vehicles. Speaking at a White House hearing on the DOE’s budget, Chu said his department is making investments in technologies to improve automobile gas mileage, expand battery life for electric vehicles and develop biofuels to reduce U.S. oil imports. “We very much want to not only slow the price, but reverse the rising cost of gasoline,” Chu said. “We definitely feel the pain that every American and every business feels when the… Continue»
Newt Gingrich — Gas Price Fairy
If you have been following the news at all, you know that President Obama is catching a lot of heat over rising gas prices. He used his weekly radio address this week to talk about the issue:
Most of his critics are way off the mark, for reasons I will get into below, but Newt Gingrich is perhaps the most out-of-touch with reality:
“If you would like to have a national American energy policy, never again bow to a Saudi king and pay $2.50 a gallon, Newt Gingrich will be your candidate,” he said to cheers. “If you want $10 a gallon gasoline, an anti-energy secretary, and in weakness requiring us to depend on foreigners for our energy, Barack Obama should be your candidate.”
Here are my choices for the Top 10 energy related stories of 2011. Don’t get too hung up on the relative rankings. They are mostly in no particular order, although I think the top story is pretty obvious. 1. The Fukushima Daiichi nuclear disaster On March 11, 2011 the tsunami that flooded Japan’s Fukushima Daiichi nuclear plant resulted in the worst nuclear crisis since Chernobyl. The tragedy spurred heated debates over whether nuclear power could ever be totally risk-free. Several countries decided that the potential consequences were just too great, and reversed their plans for new nuclear plants and in some cases shuttered existing plants. The incident will likely slow the global development of nuclear power for years, just as… Continue»
The Importance of Being Decisive When I worked in Scotland, one of my managers was a wise Englishman named Graham Walker. As with many people whose paths I have crossed in my life, some nuggets of wisdom were transferred from Graham into my long-term memory. One of the things that stuck with me was Graham’s push for decisiveness. He would tell me “Just make a decision and move on. We have a business to run here.” Graham would say that most of the time the decisions would prove to be correct, and when they weren’t we would live with them or correct them down the road. (And of course if a person frequently makes incorrect decisions, then they can be… Continue»
Like many of you, I have been following the debate over the proposed Keystone XL pipeline that would bring crude from the oil sands of Canada to refineries in the U.S. I am on mailing lists covering both sides of the issue, and based on some of the e-mails I get it seems that many people don’t realize that we already have pipelines crisscrossing the U.S. I get the impression that some people feel that it would be unprecedented to lay an oil pipeline across the country. But below is a map showing the location of the major oil and gas pipelines in the U.S.: Figure 1: Major Oil and Gas Pipelines in the U.S. (Source). If you include smaller… Continue»
Hug the Green Industry, Kill Big Oil When Barack Obama was campaigning for president, I thought he displayed a “comic book” view of the energy industry: Lots of stereotypes of the good guys and the bad guys. He would support the good guys (those who aspired to produce renewable power) and deal with the bad guys (those who were actually supplying the fuel that allowed him to campaign across the country). If he was elected president, there would be green jobs galore, and we would embark upon a major transition away from fossil fuels. He seemed to believe that our high level of dependence on fossil fuels was more due to policy reasons than economic reasons, and the country needed… Continue»