Tuesday, April 29, 2008

Oil: What is the Magic Number?

I was having a discussion with a student this morning and we were trying to figure out what would have to happen for Americans to get organized to deal with these gas prices. I paid 3.95 for the cheap stuff in San Diego this morning. Actually, I paid 3.96 when rounding up the nine-tenths of a percent that we pay. That in of itself is amazing. Many of us have already been conditioned to round down this number, but I digress...

Shell and B & P are reporting first quarter earnings of 17 billion USD combined. Chakib Khelil, Algeria’s energy minister (left) and the president of OPEC is warning that crude oil could end up costing over 200 USD a barrel. That would likely mean we are paying over 8 dollars a gallon.
This posses a variety of scenarios, problems and concerns. The first question we must ask is what will it take for us to act? 5 dollars a gallon? 7 dollars a gallon? 8??? What is our price? What is gas going to have to cost before we get organized and do something about it? I am starting to think we are trapped in a game of the Sims whereby the player got up to go to the potty room and forgot about the game. But again, I digress...

McCain and Clinton want to cut a 5 cent gas tax (saving the average American 50 cents to a dollar per week). This is Obama's response:

Bush is blaming the problem on taxes and not his idiotic policies that have expanded our debt thus devaluing the currency we are using to buy crude oil. Not to mention the illegal and boneheaded war in Iraq which lead to a decrease in oil output and regional stability thus pushing prices higher. Not to mention whoring out our manufacturing base to China which is now getting rich and buying gas as it advances toward development and a culture of waste and leisure.

So what are we going to do? Bitch? Send out emails? A quick Google search of "solutions to the gas problem" produces over 5 million returns. I liked the idea that argued we should all boycott Exxon-Mobil until they lower prices. Then when they do, move on to Shell, then Citgo, ect. That might work, and the Internet is a great tool and resource for us to organize. There are sites like http://www.carpoolconnect.com/ that are great for starters. But what is that going to do for food prices? Truckers are paying through the arse to get your local grocer the food they sell you. A carpool is not going to help us there.

Which leads me to another problem in the form of biofuels. Turning food into fuel is a great idea in a society that has a problem with obesity. We have such an abundance of food that it makes sense that we should drive using it. Plus, its renewable! But what about the other parts of the world that rely on these foods to subsist? This is a real crisis. And what happens to the economies of the oil producing countries once we (humans, not just Americans) stop using oil? More instability I suppose. What about the orangutans?!? We abandon them are our own peril.

But hey, enough of the chit chat, did you hear what Reverend Wright said???


Bradda said...

If I have to watch one more minute of Rev. Wright I think I might throw my TV out for good. How is he the BIG story? With everything going on in the country let alone the world, we get a whole day of Rev. Wright?
Good post Sal. It needed to be said sadly.

.e. said...

If you look at the Fortune 500 (which includes only American companies), 3 of the top 5 on the list are Exxon Mobil, Chevron, and ConocoPhillips.

Furthermore, when you look at actual profits, Exxon Mobil is number 1 with over $40,000,000,000. General Electric is a distant second place with $22,000,000,000. The third most profitable is Chevron with about $19,000,000,000. ConocoPhillips is pulling in about $12,000,000,000.

So basically, 2 out of the 3 most profitable companies in the US are oil companies, with ConocoPhillips not too far behind.

So yeah, I'd say there's a problem.

.e. said...

Just for fun, I took a look at the Global 500. Here you go.

1. Wal Mart- United States (retail)
2. ExxonMobil Corporation - United States (oil/retail)
3. Royal Dutch Shell - Netherlands (oil)
4. BP - United Kingdom (oil)
5. General Motors - United States (automobiles)
6. Toyota Motor - Japan (automobiles)
7. Chevron - United States (oil)
8. DaimlerChrysler - Germany (automobiles)
9. ConocoPhillips - United States (oil)
10. Total - France (oil)

So 6 out of the top 10 are oil companies.

.e. said...

Also, you guys might find this interesting. It shows world gas prices (per gallon) in American Dollars.


I willsay the magic number would be around $6-8 / gallon.

.e. said...


Will someone who remembers html link that in this post please!