Is It Time To Nationalize The Oil Industry?

[chefmike]

Is It Time To Nationalize The Oil Industry?
by Raymond J. Learsy

An interesting article in www.huffingtonpost.com

Raymond J. Learsy is the author of "Over A Barrel:Breaking The Middle East Oil Cartel"
He made his life in the commodities industry, beginning in 1959
his bio available at the above link

Is It Time to Nationalize the Oil Industry!?

Vice President Cheney said yesterday a spike in world oil prices is entirely possible as the West deals with Iran's nuclear ambitions. After Cheney's comments the price of oil climbed to over $67/bbl in an inexorable march to new highs.

There is something terribly wrong here. The rise in oil prices poses an enormous burden on our economy and perpetuates vast transfers of wealth to nations who wish us ill.

And yet, in the oilpatch there is muted satisfaction that oil prices are ever ratcheting higher and earnings reports ever stronger. And the oilpatch has friends. VP Cheney's political base is Wyoming and President Bush's Texas: two States that have enjoyed an abundance of riches since the onset of the war on terror. With each threat, with each geopolitical event that heightens fears of oil dislocation the oilpatch grows wealthier. And as Texas and Wyoming et al prosper those living in the Midwest or Northeast and west have trouble paying their heating bills.

Back in 1962 John F. Kennedy, issued a statement on the then steel crisis, and I quote "Simultaneous and identical actions of United States Steel and other leading steel corporations increasing steel prices by $6 a ton constitute a wholly unjustifiable and irresponsible defiance of the public interest in this serious hour in our Nation's History, when we are confronted with grave crises in Berlin and Southeast Asia, when we are devoting our energies to economic recovery and stability, when we are asking reservists to leave their homes and families for months on end and servicemen to risk their lives…." The Steel industry backed down.

The oil industry will respond that it is the market that sets the price. As I have set forth in my blog "A Funny Thing Happened On the Way to the Gas Pump," January 15, 2006, that is a highly questionable contention. Yet the influence of the oil industry and their hires on "K" Street is so strong one despairs that the oil industry's interests and the nation's interests as currently constituted can ever be fully aligned to constructively respond to today's exigencies.

It should be known that nationalization is not unique to the American experience. During WW1 the nation's railroads were nationalized and administered by the US Railroad Administration. After 9/11 the private airport security industry was nationalized and put under the authority of the Transportation Security Administration.

Though most of us do not welcome more Government involvement in our daily lives other than on important issues of national security, as we were reminded only yesterday (bin Laden's radio address), we are at war!

[BlackAdder]

I think its high time we stop paying money to the very terrorists nations we are trying to combat.....almost all the terrorists on those planes were Saudi werent they?......

[scorpion]

Bin ladin????He are wearing a shirt... why dont go and fuck his ass :P :P :P
Scorpion

[yourdaddy]

You dreamers. We can't even get the democrats to open up the ugliest beach in Alaska, to get our oil out, yet you want to nationalize the little bit we have in reserve. Actually, if we could extract all the reserves in the Gulf of Mexico and Anwar, we'd have enough for about 10 years of independence. Good luck in talking the dems into that.

[chefmike]

his usual troll drivel

The editorial refers to nationalizing the US oil industry...US oil reserves were not the focus of the authors editorial. Go watch NASCAR...if we want your opinion, we'll ask rush, or oreilly what it is.

more on this subject from the authors blog...

This may be boring, but it is important. Gasoline prices are creeping up again responding in large measure to tenacious oil prices that are nearing three month highs touching almost $65 a barrel surpassed only in September/October by market conditions influenced by hurricanes Katrina and Rita. Over the past few years the price of crude oil has advanced almost lockstep with the price of natural gas, and the advance in natural gas prices has served as a persuasive explanation and rationale for the extraordinary escalation in crude prices and in turn gasoline and refined petroleum products.

But something strange has been happening. Over the last few weeks, with unseasonably warm weather, supply balances etc. the price of natural gas has plunged from a peak of $15.75 per 1,000 cubic feet on December 13, 2005 to a close of $8.79 on January 13, 2006 a drop of some 45%! On the same day oil closed at $63.92/bbl near its three month high. If the price of natural gas and crude oil have been so intrinsically tied together on the march to ever higher highs, why this sudden divergence in “market” pricing as natural gas prices erode? Could it be that one commodity is responding to market conditions and the other commodity is not? That the market price for crude oil is manipulated while that for natural gas is not? Inherently the market for natural gas is a geographically North American market (produced in, consumed in the U.S. and Canada, with some Caribbean and other offshore imports of Liquefied Natural Gas representing but a small portion of the total). Given the players in natural gas production and distribution, and after Enron, it does not lend itself to manipulation as the risk of anti-trust infringement and prosecution is too great.

Crude oil is another story. Much more than natural gas in North America, crude oil is a world commodity and produced in worldwide locations and priced on international exchanges on a minute by minute basis. Some 40% of the world’s oil trade is controlled by the OPEC cartel and their vested interest in keeping oil prices high is paramount. It was reported this week that OPEC’s revenues in 2005 were at record levels and were expected to reach $522 billions in 2006, a further increase of 10% according to the US Department of Energy. “It is just a phenomenal transfer of wealth from consuming to producing nations” said an analyst at Merrill Lynch.

The oilpatch, its supporters in and out of government and all those who benefit by high oil prices, be they oil companies, suppliers, financial institutions, “K” street lobbyists etc., will tell you that it is free market forces of supply and demand that determine oil prices. But is it so?

Consider that the minute by minute price of oil is set on the futures markets traded on exchanges in New York, London, Dubai, Singapore, etc and now increasingly through electronic trading. Trading is virtually unregulated and basically opaque – that is to say one doesn’t know who is buying or selling and trading can be done anonymously through straw men or accounts and therefore lends itself to manipulation (witness the allegations of trading malfeasance at Refco) by those who have the means and interest in pushing markets higher or lower.

The members of the OPEC cartel certainly have a keen interest in pushing markets higher and given the flood of billions being cashed in, have the means to do so.

A funny thing happened on December 12, 2004. Then after a slight and inappropriately timed fall back in oil prices OPEC’s President and Saudi Oil Minister predicted “Watch what happens tomorrow. I tell you prices will go up tomorrow”. And indeed, with some unusual gyrations the quoted price of oil did go up on December 13th.

Putting his highly visible public reputation so clearly on the line the only way al-Naimi could have been certain that the price of oil was going to up the next day was if either Saudi Arabia through its national oil company, Aramco, or OPEC or its it agents played and manipulated the oil futures markets on that day. And if indeed the oil futures markets was manipulated on that day it raises the very crucial question; when before and since have the oil futures trading markets been tampered with, how blatantly have the markets been distorted and how have these manipulations impacted the price of oil now and in the past.

Given the malign impact the price of oil and its strange distortions are having on our economy, on the massive transfer of wealth to the OPEC cartel nations and the oilpatch in general, it is urgent that the trading of oil on commodity exchanges be closely scrutinized and subject to immediate Congressional investigation and requisite action. The time to act is now!

[Felicia Katt]

Chefmike, I have to say no. Rather than getting the Government into the oil business, we need to get the oil business out of the government. Letting oil company lobbyists set energy policy is too much like letting pedophiles run day care centers.

as far as the "ugliest beach in Alaska". go here. or here or here and see for yourself the pristine wilderness in question.

FK

[yourdaddy]

I see you conveniently left out pictures of the totally ugly beaches where exploration would ACTUALLY take place. It's a totally featureless area, democrat.

[BlackAdder]

Im all for opening up the oil reserves....The dependence on foreign oil must end!!! If we could cut out buying from OPEC for even a single year, they would CRAWL to us......You cant tell me we cant support our own oil consumption for a year.....

[TrueBeauty TS]

Im all for opening up the oil reserves....The dependence on foreign oil must end!!! If we could cut out buying from OPEC for even a single year, they would CRAWL to us......You cant tell me we cant support our own oil consumption for a year.....

I agree that we should end our dependence on foreign oil but we, as a country, are not ready to do that and not serious about it. We still want to drive our gas guzzling SUV's because it's our God given right as Americans to drive a big ass car. Can you even imagine, that if everyone that drove an SUV drove a smaller car and got even 5 more miles to the gallon how much gas that would save??? I'm not trying to demonize all SUV drivers, I know some wonderful people that drive those, but you can see my point.

In fact, we should look farther than 10 years in the future and actually develope alternative forms of energy and fuel. (Since we are already giving oil companies subsidies for doing just this very thing. Because with a 600% profit margin, they just couldn't afford to do it themselves.) We should have done this the FIRST time we had an oil crisis back in the 1970's but we just don't learn. MAYBE when prices hit $4-$5.00 a gallon people might start to take it serious.

Unless we start to walk the walk, we shouldn't talk the talk.

[JohnnyWalkerBlackLabel]

off topic Hybrid technology has gotten a huge boost

and quiet as kept BMW has been running Hydrogen engines in some of their vehicles for a year now..............successfully

if the U.S. really gave a fuck about this oil crisis they'd allow companies like BMW to bring in their hydrogen filling stations at least for their own customers and let them sell their hydrogen vehicles to the public........