From Deseret News archives:
U.S. oil industry is the target of much misinformation
To set the record straight, here are few of the myths followed by the correct information.
Myth: The oil companies are making obscene profits.
Fact: The oil companies' profit margins are poor. They make about what a government contractor on a cost plus fixed fee (no risk) contract makes: 9-10 percent. As an example, Exxon Mobil's profit margin is 10 percent, Chevron's 8.1 percent and BP's 7.6 percent. These are the three largest U.S. producers.
From 1986-99 the price of oil, adjusted for inflation, was the lowest it had been since World War II. More than 600,000 people in the industry lost their jobs. Because of low margins, almost no upgrades or replacements were made to the refining infrastructure and very little on-shore exploration. Even at $100 per barrel, the price of oil adjusted for inflation is not as high as 1981.
Myth: The oil companies control the price of oil and gasoline.
Fact: All of the public oil companies in the U.S. have combined worldwide oil reserves of 34 billion barrels of oil or 3.4 percent of the world's supply. Saudi Arabia alone has more than 25 percent and Venezuela 15 percent. The U.S. could become de facto energy independent except that most of our remaining large reserves in Alaska, off the coast of California and off the coast of Florida (an estimated 60 billion barrels of oil) are locked up by the green lobby. The price of oil and gasoline is controlled by the New York Commodities Exchange and includes buyers and sellers from all over the world.
Myth: The oil companies are delaying oil shale development.
Fact: Even at current prices, oil shale development is problematic. The major problem is the environmental lobby, which would fight oil shale development in Utah, Wyoming and Colorado with all the funding it could get. Before any large project can proceed, millions of dollars must be spent on an environmental assessment of the biology, archaeology, air quality, etc., and then there is no guarantee that the environmental lobby would not kill the deal as it has in Alaska, Utah and elsewhere.
Exxon lost $2 billion on its Colorado oil shale plant in the early 1980s when the price of oil collapsed, and that was before all of the environmental regulations passed by the Clinton administration. Any meaningful oil shale development would cost $10 billion to $20 billion and take 10 years. In the meantime the price of oil could collapse, particularly if we get a major worldwide recession.
Don J. Colton is the president of Pioneer Oil and Gas.
Recent comments
Timj -as of now, the world only has about 16 years left of oil...
George | April 10, 2008 at 11:42 p.m.
Backward-Thinker: Okay, WHAT "green, renewable, energy" are you...
Ya Gotta Love Em | April 7, 2008 at 8:49 a.m.
In hard economic times, the government and media will always look for...
Jerry | April 6, 2008 at 9:06 p.m.
- 2 arrested in Roy double slaying 6:33 p.m.
- Working on new HIV/AIDS vaccine 6:32 p.m.
- BSA to host audiocast over Internet 5:47 p.m.
- Garbage trucks to trash teen drinking 5:47 p.m.
- Court seeks judicial candidates 5:29 p.m.
- Simple candies for the holidays 5:15 p.m.
- Latkes from frozen hash browns 5:14 p.m.
- Cakes taking a starring role 5:14 p.m.
- KSL is No. 1 5:14 p.m.
- Late local news ratings 5:14 p.m.
- 2 citations issued at Y.-U. game
- BYU says Hall incident resolved
- Max Hall: a fixture in rivalry lore
- 'Grandfamilies' a growing trend
- Witness: Mitchell wanted attention
- Mitchell called intelligent, controlling
- MWC '09 season in review
- Jazz win 6th in 7 games
- Daughter: Mitchell fed me my pet
- Jazz ready to be without Harpring
- Hall mouths off about hate of Utah
901 - Cougars beat Utes in overtime
482 - Hall reprimanded by MWC
400 - Max Hall issues apology
387 - Hall's pain reflects self-betrayal
342 - Utes won't respond to Hall
272 - BYU says Hall incident resolved
222 - 2 citations issued at Y.-U. game
151 - BYU is champion of the state
142 - Religion in politics is tiresome
127
TO AGGIE MAN: BRILLIANT LINEUPS I've been saying for 2 years now that our...
After last week it should be an easy vote for anyone who watches college...
What feels wrong about it? The church isn't hiding anything about the...
Maybe there is not enough money in the Salt Lake/Provo/Ogden market to...
(cont'd from above) This "authority" given by one branch to another is...
Actually, if you watch the video, the interrupters were not journalism...
One year I went to byu-san diego game. i got up to cheer and someone throw a...
Ok, besides the fact that the Bush Administration LIED thru their teeth about...
I personally thing Max's statements merit the negative attention he is...
May want to consult your Websters. Morals have nothing to do with...

