Sierra & Tierra: Big Oil's Excuses Are Running on Empty
By Javier Sierra
On the rollercoaster of gas prices, we are reaching yet another peak, while our wallets cry and Hispanics in particular, feel the squeeze.
According to a study by the Center for American Progress (CAP), 72 percent of Hispanic households are going through financial hardship, and 41 percent through serious hardship, because of the pain at the gas pump.
But for some reason, the loudest complaints aren’t from the suffering consumers. It's from Big Oil.
For years, the oil industry has demanded that more of our coasts and public lands be open to drilling with phony promises of energy independence and lower gas prices. Their wishes, more than ever, have been granted by obedient politicians, addicted to the contributions from the world’s richest, most powerful industry.
Even though domestic consumption has decreased, we are extracting more oil from more places in the U.S. than ever in the past eight year. Then, why have gas prices shot up again?
The answer in part is pure arithmetic. The U.S. consumes 20 percent of the world’s oil production, yet it possesses only 2 percent of the planet’s reserves. It is literally impossible to drill ourselves out of this hole. And even if domestic production could make a dent in gas prices, Big Oil’s growing exportation of domestic supplies makes their energy independence promise laughable.
In addition, in 2011, oil exports, including crude from public lands, exceeded imports for the first time since 1949. According to Bloomberg News, these exports will more than double by 2015, to the tune of 450,000 barrels a day.
This isn’t about energy independence, it’s about Big Oil’s unlimited greed. In 2011, the top five oil companies in the U.S. generated $135 billion in profits, a stratospheric amount that the GNP of very few nations can match.
To add insult to injugy, Big Oil continues to receive $4 billion in federal subsidies each year. One could think that an industry that has been around for more than a century should be ready to wean itself from the public trough. But Big Oil’s power in Congress is formidable. Last month, an attempt to end $24 billion in tax cuts for this industry was defeated by 47 senators who over the years have received a combined total of more than $23 million in campaign contributions from Big Oil.
Speculators’ greed is also a contributing factor in this drama. According to the U.S. Commodity Futures Trading Commission, “speculative premium” by traders can increase the price of a barrel of crude oil by $23. If the price of crude oil rises by $10, it translates into a 23-cent increase in the price of gasoline at the pump. And for every penny that the price of gas goes up, oil companies’ profits soar by $200 million.
Even so, Big Oil’s allies in Congress keep blaming President Obama for the rise in gas prices. Their obfuscation is keeping them from seeing reality. Truth is, to end our oil addiction in the short term, we must end exports of crude extracted from public lands, do away with federal subsidies and limit excessive speculation by traders.
In the long term, we need to foster advances in efficiency in cars and trucks, improve our public transportation options and invest those Big Oil subsidies in clean, renewable sources of energy.
The CAP study shows that Hispanic consumers, especially those in California, overwhelmingly support these solutions. Meantime, Big Oil’s excuses to continue on this disastrous path are running on fumes.
Javier Sierra is a Sierra Club columnist. Follow him on Twitter @javier_sc