If all things were equal you would be right but they are not. Interior Inspector General (IG) Earl Devaney reported recently on the Royalty-In-Kind (RIK) program the Interior Dept oversees. It deals with oil/natural gas trading. The report states "RIK staff had inappropriate relationships with industry that could compromise their objectivity" and stated the programs contracts "provided significant risk to the United States and are inconsistent with accepted contract law generally". The MMS runs the RIK program. The report further states the staff had been too cozy with the oil industry and has failed to protect the public interest. It stated that modifications to contracts "appeared to inappropriately benefit oil companies." The IG, FBI, and DOJ have all been involved in the criminal investigations over sr. govt officials favoring treatment of oil firms. Our own govt fails u

If you ran a business, am81430, be it big business or a small business, you'd know that the profit margin is what either enables you to stay in business or close the doors. You just can't get past the fact that when a company sells $400 billion in products and earns 10 cents for each dollar of sales they're going to show a profit of $40 billion. Do you know that Microsoft, Phizer, Google, and every other business get essentially the same tax breaks that the oil companies get? Check it out so you don't continue to talk through your hat with irrelevant statements like it's easier to start a computer company than an oil company to justify Microsoft having twice as great a profit margin as Exxon-Mobile.

In theory your proposal sounds reasonable and could possibly have some impact. But it all falls down to the oil industry and its willingness to withhold production quantities tapped from domestic sources for domestic use only. With the notable exception you make about China. I just don't see big oil doing that because it is not in their best interest profit-wise to do so. The govt could mandate it but I am sure the oil firms would want even bigger subsidies and tax breaks then they get now to leverage out the "losses" or difference in what they could make in the general market. But I do have to say your point has merit and we need to start somwhere. This still does not include the ramp-up we should be doing for alternative sources as well.

TR, I have told you before your support for Obama may be hurting him. Statements like :

"There could be a varying US price for domestic sales of oil in Merca if the US gubmint nationalized its oil companies. Or if those same oil companies decided to forego their historic profits for a time. Both are equally plausible."

are going to get you fired from the campaign. Did you see Obama's back pedal on Iraq today. He changed his statement twice in one day. And then made a statement disputing his statement. Sad but humorous.

pd, I think I could concede in part to your argument. It is costly to drill, however, I think you might be able to agree that if we reduce our import of foreign oil based on the amount we retrieve from our own sources, then sell a chunk to the Chinese to offset any drilling costs, that alone would put a nervous pinch on the Saudis and our pal Hugo down south.
Oil companies are just like every other business…even small business. You don’t go into business for the purpose of not making a profit. Individually we can also pinch the gas companies that peddle Saudi or Hugo fuel. Just purchase your gas from a station that sells “friendly” or domestic fuel. Then when big oil finds out that they are experiencing “fuel mutiny”, they just might take note.
I’m just trying to throw ideas out here because there are a sad number of people who only want to talk about the problem but not try to come up with solutions.

It is not a matter of profit margin (that's like arguing that a stock split really does anything -- but if you think it does then I'm probably wasting my breath) especially when the company is posting record billion dollar profits while reaping tax benefits designed for a distressed industry. Give it a rest. Comparing XOM to MSFT is foolish too, since it is much easier to start a computer company than an oil company.

You assert that we could resolve the situation by drilling our own oil and keeping it in the US. That is simply unrealistic. The costs for drilling, especially deep sea where much of the deposits are located, are astronomical. The oil firms would have to agree to keep profits down and retain the oil for only domestic use, but these are huge international firms that would balk at the notion of limiting their profits from their investments. And in that case if the oil goes to the open market it would do little to bring down prices for US consumers. Only if the Govt stepped in and mandated your proposal would it possibly work. And that is problematic as you state-when the govt steps in regarding market manipulation.

The profit margin of the oil companies is in the 7 to 10 percent category. The profit margin of Microsoft is at least double that, the pharmaceutical industry has a profit margin of 18 percent, and Google is in the 50 percent category. Why should the government take excess profits from the oil companies which are making 8 or 9 cents on each dollar of sales, when Google is making 50 cents on each dollar of sales? Because they sell more product than Google?? The oil windfall profits tax that the Democrats are eager to push through will be passed on to the consumers. If the government took one-fourth of your profits, Phrog, would you eat the loss? Not if you wanted to stay in business. The Democrats are big on developing class envy, hence punishing "big oil" with a windfall profits tax to show the little guy that they're sticking up for them.

TR, I think I could agree with you regarding nationalization of oil companies in a theoretical sense; Except that I fear nationalization. It transfers too much power to the government. I fear the government that is capable of manipulating and controlling industry as a means for power grabbing. That is why I fear our government today. As far as profits go, I would have to view balance sheets and P & L sheets to understand where the profit margin lies. When politicians bemoan the “big oil” profits, they are not looking deep into cost analysis, or depreciation of facilities and equipment, and amortization of oil company debt. All must be carefully examined before asserting that the oil companies are making an insane profit. But, if they are making an insane profit beyond an acceptable profit margin, then, yes I will agree that the execs need to blister some of that to help the economy.

Speculating that speculators will stop speculating if they take a substantial financial hit may or may not be true, TR. You don't know for sure, nor do I, but I think it would be worth a shot. A speculator with a million barrels of oil futures would probably be forced to sell his futures to pay the margin calls. If many other speculators were also forced to sell to make margin calls, the price of a barrel of oil would drop. That's not speculation, but rather the way that the futures market works.

Another thing that's not speculation is that we'd be getting a million barrels a day from ANWR today if President Clinton had not vetoed the drilling-in-ANWR legislation in 1996 and had not the Democrats voted in lockstep to sustain his veto. The Democrats genuflected to the tree huggers and now America is paying the price.

As AM stated and you agreed with, there is no difference between Mercan and World oil prices. There could be a varying US price for domestic sales of oil in Merca if the US gubmint nationalized its oil companies. Or if those same oil companies decided to forego their historic profits for a time. Both are equally plausible.

According to Newt Gingrich, if President Bush were to sign an Executive Order to withdraw a million barrels of oil a day from the Strategic Petroleum Reserve, the price of oil would drop as much as $50 a barrel. The oil speculators, who for the most part are unable to take delivery of the oil futures they've bought, would take a financial bath, and I'm sure that more than a few of them would not get back into the market after taking huge losses. The minimum purchase on the futures market is 1,000 barrels, so speculators could get a margin call of up to $50,000 for each unit they own. Ouch!!

Incidentally, a million barrels a day is what we'd be getting from ANWR today if President Clinton had not vetoed the drilling in ANWR legislation in 1996 and had not the Democrats voted in lockstep to sustain his veto. A million barrels a day is what Senator Schumer said would drop gas prices 50 cents a gallon. Thanks

Am, you are correct. Today, there is no difference between world and American oil prices. However, tomorrow could be different. If we were to drill in ANWAR and off our coasts, retain the oil for ourselves, reduce our dependance on foreign oil imports, refine our own oil, what do you think that would do to the world oil market. It is very simple. We drill our own oil…thumb our noses to the world oil, they loose a large chunk of exported oil, their revenues go down, the world demand for the oil that we drill from ANWAR and off the coast in return drives the value of the American dollar up. You can’t look at this from a global perspective. Think American. Think about us first. When we start to reduce the amount of any goods that are imported from foreign lands, believe me, they will take notice and all of the sudden America will be popular again.

there was no difference between world oil prices and American oil prices. So, I for one sir, am concerned about world oil prices. Especially when it is over $140/bl

am, who really gives a flying whoopy about “world oil prices”? It’s high time we get our collective heads out of the clouds and think about American oil prices. The issue is to reduce our dependence on foreign oil. By drilling in ANWAR and of the coast, we will have reduced American dependence on foreign oil by a much larger margin than 0.4 and 1.2 percent. Think about this. If we drill here and retain the oil for American needs, guess what will happen to the dollar and oil prices. Dollar increases, gas prices decrease. It’s the basic theory of relativity put in practice on economic terms rather than physics terms.

and when would we see this benefit. I believe that your statistics are grossly inflated. Additionally, we would not see a drop of that oil for at least ten years. When would the budget deficit be covered? By 2028? Anybody read the May EIA report? From the report: "With respect to the world oil price impact, projected ANWR oil production constitutes between 0.4 and 1.2 percent of total world oil consumption in 2030, based on the low and high resource cases, respectively.1 Consequently, ANWR oil production is not projected to have a large impact on world oil prices."

Drilling in ANWAR will not help us with our dependence on foreign oil, remember when the Alaska pipeline was built in Perdue Bay and paid for by us the taxpayers, well 93% of oil that passes through that pipeline goes directly to Japan. Our superior thinkers in Washington need to say to hell with the "free market" playbook. Any oil that is drilled for and found on United States soil, should be consumed domestically, before any of it is allowed to be sold outside the country. If we did drill in ANWAR tommorrow, every last oil company would market that oil to the highest bidder outside of our country and put money over the needs of their own country, it's absolutley tresonous.

One immediate effect of simply announcing a policy of aggressively developing domestic oil resources would be an end to the inflationary effect of speculation on oil prices. Right now, it is a good bet that future prices will rise, so speculation on that rise accelerates that trend, but if increased supply and lower prices are the better futures bet, speculation will drive prices down just as quickly.