The oil industry and government oversight

From aWashington Post piece

At a joint hearing before the Energy and Natural Resources Committee and the Committee on Commerce, Finance and Transportation, oil executives repeatedly explained that oil and gasoline prices are set on world markets that they do not control. Asked why they did not keep gasoline prices low after hurricanes Katrina and Rita, company officials said doing so would have caused shortages. Charging market prices, they said, held down demand.

So when supply drops, as is inevitable, we can expect ever higher prices and more contentious Hearings.

The night before the hearings, the retiring ExxonMobil CEO, Lee Raymond, spoke to Charlie Rose on PBS. Several important points emerge from that discussion:

• Mr. Raymond is a chemical engineer. [Scientific illiteracy may be the main problem.]
  
• Exxon Mobil studied alternative fuels 20 years ago and found them non-competitive, especially for transportation. Replying to Charlie Rose's remarks about current studies by other oil giants, Mr. Raymond points out that Exxon's old studies are still valid, in that the 'Laws of Thermodynamics' have not changed.
  
• Oil is priced less in 'real' dollars than they did back in 1981. The cost to find or produce oil costs 50 cents compared to $4 a barrel back then. [I am not clear about this point, but for how long will that continue?]
  
• Gasoline is priced at $6.50 in France and $7 in England per gallon, because of large gas taxes there.
• Anticipating the effect of the Katrina and Rita, ExxonMobil moved product out of the Gulf Coast areas and refined gasoline in Europe for American markets.
  
• The idea of running out and peak oil were not discussed per se, even though Mr. Raymond stressed the importance of a long term view. [What happens when prices rise ever higher to keep down demand? Mr. Raymond did cite $1000 a barrel as being inconceivable.]
  
• Charlie Rose pressed Mr. Raymond to acknowledge excess carbon dioxide as causative for global warming. Mr. Raymond would only say the jury is out. [Again, this is a distraction from the sword up there.]
• Mr. Raymond says nuclear is part of the solution. China has much nuclear[see this].
• People built electricity plants that run on natural gas thinking that fuel was plentiful; turns out, it's not.
  
• Mr. Raymond concludes we, producer and consumer, are in this situation together.

So few in government and the media get it. Here's one, Rep. Bartlett R-MD, who comes close. He hosted a peak oil conference in September where Richard Heinberg points out that one study (in pdf) by the U.S. government might have been suppressed. One of several agencies that is supposed to be concerned with peak oil is the U.S. Department of Fossil Energy. Is there something in our human natures that refuses to recognize the bad news?

Just to show how so many don't get it, look at how the environmentalists react to the committee testimony. See the temporary link on this CSPAN page for coverage of a News Conference on Rising Energy Prices and Record Oil Industry Profits. Present were:
Navin Nayak from U.S. PIRG, Kert Davies from Greenpeace, Robert Dewey from Defenders of Wildlife, Sara Zdeb from Friends of the Earth, and others. 11/9/2005: WASHINGTON, DC: 20 min.