Tag Archives: Oil Prices

Trouble In Paradise

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The Middle East oil countries have done very well during the past thirty or so years. The have combined to form the Organization of the Petroleum Exporting Countries (OPEC) and have raised the price of oil from somewhere near $5 a barrel to over $100 a barrel (although the cost of oil is currently dropping).

The Wall Street Journal reported today that as the Western countries begin to develop their oil resources, OPEC members are fighting over production quotas and prices.

The article reports:

But even modest cooperation between many members has broken down, and Saudi Arabia, in particular, has moved to act on its own. While it cut output earlier this summer, other members didn’t go along. Since then, it has dropped its prices.

Each member has a different tolerance for lower prices. Kuwait, the United Arab Emirates and Saudi Arabia generally don’t need prices quite as high as Iran and Venezuela to keep their budgets in the black.

Late Friday, Venezuelan Foreign Minister Rafael Ramirez, who represents Caracas in the group, called for an urgent meeting to tackle falling prices. The group’s next regular meeting is set for late next month.

But on Sunday, Ali al-Omair, Kuwait’s oil minister, said there had been no invitation for such a meeting, suggesting the group would need to stomach lower prices. He said there was a natural floor to how low prices could fall—at about $76 to $77 per barrel—near what he said was the average production costs per barrel in Russia and the U.S.

The history of oil prices has often been that when the Middle East begins to drop their prices, Americans stop looking for cheaper oil in their own country. Considering the current instability in the Middle East in the OPEC nations, that would be a big mistake.

America needs to be energy independent for both economic and security reasons. It is time to develop our own resources.

Is Anyone In Congress Reading The Constitution ?

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Yesterday The Hill reported that six House Democrats, including Dennis Kucinich, have proposed a “Reasonable Profits Board” to control gas profits. When are they going to propose a “Reasonable Profits Board” to control movie industry profits, sports organization profits, college profits, etc.? Why are they only picking on the oil industry? Because they have an ulterior motive. When you read down the article a bit, you find it.

The article reports:

According to the bill, a windfall tax of 50 percent would be applied when the sale of oil or gas leads to a profit of between 100 percent and 102 percent of a reasonable profit. The windfall tax would jump to 75 percent when the profit is between 102 and 105 percent of a reasonable profit, and above that, the windfall tax would be 100 percent. The bill also specifies that the oil-and-gas companies, as the seller, would have to pay this tax.

Kucinich said these tax revenues would be used to fund alternative transportation programs when oil-and-gas prices spike.

What is going on here? It’s simple. This is using class warfare to channel the anger that will occur when oil and gas prices go up because of America’s energy policies. Why am I blaming America’s energy policies? The Obama Administration just ended the Keystone Pipeline project, which would have helped with America’s energy independence and helped keep gas and oil prices stable. Please note that the federal tax on gasoline is 18 cents per gallon. The government does nothing to earn that tax money–no exploration, no scientific research, etc., yet they collect money every time an American fills up his gas tank.

The government does not have the right to judge whether any corporation’s profits are reasonable or not. Blaming the oil companies for the Administration’s failure to encourage domestic energy production is simply wrong. At some point the American people will wake up and see what is going on if they haven’t already. The people proposing this should be voted out of the House of Representatives this year!

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