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thinking ahead about energy

thinking ahead about energy

The U.S. economy depends heavily on oil, particularly in the transportation sector. World oil production has been running at near capacity to meet demand, pushing prices upward. Concerns about meeting increasing demand with finite resources have renewed interest in an old question: How long can the oil supply expand before reaching a maximum level of production, a peak from which it can only decline?

On Thursday, the U. S. Governmental Accountability Office released a report urging attention to the looming problems posed by a finite oil supply, the unpredictability of sustained production at current levels, and the potential for severe consequences, including a worldwide recession. The report recommends a strategy to coordinate and prioritize federal agency efforts to reduce uncertainty about the likely timing of a peak and to advise Congress on how best to mitigate consequences.

Read a summary of the report: GAO: U.S. needs a peak oil strategy.

sharing the burden

sharing the burden

Headline: Oil industry behemoth Exxon Mobil Corp. said Thursday its third-quarter earnings rose to $10.49 billion, the second-largest quarterly profit ever recorded by a publicly traded U.S. company.

I admit I know very little about the complex economic factors that produced such a record-breaking profit, and very little about the process and people that determine retail prices for oil products. I do understand that high profits are driven by high demand, that we pay more because we ask for more.

Nevertheless, I find the incongruity disturbing … that an oil company is making more money than ever, while its customers are struggling more than ever to find the money to pay the record-high prices for its products. Isn’t it true that in the end, that $10.49 billion comes out of our wallets? Exxon-Mobil makes more because it takes more … from us.

Energy is a common human need, and the increasing demand for energy coupled with a diminishing supply of non-renewable sources of energy is a common human problem. It seems to me that the burden of this problem should be shared, by consumer and producer alike.

So it would be interesting to know what Exxon-Mobil will do with its windfall profits. If the profits were to be invested in the research and production of new sources of energy, renewable sources of energy, that could be a way of sharing the burden …

who’s to blame?

who’s to blame?

From the Los Angeles Times (Exxon Reports Record-Breaking Profits)

Exxon Reports Record-Breaking Annual Profits
By Jesus Sanchez, Times Staff Writer

ExxonMobil Corp. today said its annual profits soared more than 40% last year to a record-breaking $36.1 billion as the world’s largest publicly owned energy company reaped the benefits of soaring prices and demand for crude oil and gasoline.

The company’s annual and quarterly profit figures, which were even larger than Wall Street had expected, sent the company’s shares up more than 3% in early afternoon trading on the New York Stock Exchange.

ExxonMobil’s annual profit was the largest ever reported in corporate history, Standard & Poor’s stock market analyst Howard Silverblatt told Associated Press.

The energy giant also claims the second-largest annual corporate profit ever reported, $25.3 billion in 2004.

The Irving, Texas-based company’s profits rose strongly across most of its units despite the damage and disruption to production and refinery facilities suffered during the Gulf Coast hurricanes. For the fourth quarter, the company said profits, including special one-time items, surged 27% on a year-over-year basis to $10.7 billion.

Company officials, mindful of the anger triggered by last year’s surge in energy prices that sent gasoline soaring to $3 a gallon in many parts of the nation, stressed the company’s investment in expanding production. Last year, ExxonMobil spent $17.7 billion in exploration and facilities.

“There is a great deal of public interest in global energy prices,” ExxonMobil Chairman Rex W. Tillerson said in a statement. “We recognize that consumers worldwide want and need reliable supplies of affordable energy — to fuel their vehicles, light and heat their homes and run their businesses. Our strong financial results will continue to allow us to make significant, long-term investments required to do our part in meeting the world’s energy needs.”

ExxonMobil and other industry officials have been active in trying to head off renewed calls to slap a windfall profits tax amid record profits.

Last week, Chevron Corp. also reported record high fourth quarter and annual profits despite costly repairs to its Gulf Coast facilities. The San Ramon, Calif.-based company said that annual profits surged to $14.1 billion last year from $13 billion in 2004.

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We have no one to blame but ourselves. We create the demand that drives up prices. We do not worry over much about finding alternative sources for tomorrow’s energy needs as long as we have enough to maintain our accustomed lifestyles today. We cannot blame elected leaders or oil company executives for an economic reality that we have created and we permit to endure.

And yet … There is something disturbing, something almost sinister, about the juxtaposition of regular folks in our own nation and around the world feeling the energy squeeze, choosing between heat and food, choosing between heat and health care, with the huge oil companies (and their executives) reaping unprecedented profits. Maybe that’s how the economic “game” works, but there are clear winners and losers. The pain is not shared. The people’s pain is the oil company’s gain.

I know I would have a hard time living with myself if my windfall came at the expense of someone else’s suffering …