Gas soars; voters whine; oil profits boom; politicians pander
From the Wall Street Journal (subsc. req.):
Booming crude-oil prices and improved refining profits are poised to put a firecracker under Big Oil’s first-quarter earnings and set the stage for a year that could come close to rivaling the industry’s record year in 2008.
First-quarter crude prices averaged about $100 a barrel, or about 20% higher than a year ago, pushed upward by oil-supply concerns due to political unrest in the Arab World and a recovering global economy. That spike is expected to lift earnings by about 50% at Exxon Mobil Corp., and about 33% each at Chevron Corp. and ConocoPhillips, compared with a year earlier….
“Major oil companies are firing on all cylinders,” says Fadel Gheit, an analyst with Oppenheimer & Co. “Their first-quarter earnings are going to be much, much better than a year ago.”
If oil prices continue to climb, they could at least rival 2008. That year, U.S. producers reported astronomic profits as crude hit $147 a barrel for a time. Exxon that year earned $45.2 billion, more than any other U.S. publicly traded company in history.
And of course, those numbers don’t become any easier to swallow when you consider the $4 billion in subsidies that the American taxpayer coughs up each year on behalf of Big Oil. Efforts in Congress to eliminate those subsidies have failed because Republicans have cast the reform as a tax hike. So even in the midst of a deficit panic, government is required to keep on subsidizing one of the most profitable industries on the planet, a practice defended by the party that proclaims itself the champion of the free market.
Intellectually, the current situation is not that complicated. People are demanding more oil than the market can supply — an economic recovery is boosting consumption at the same time that disruptions in the Arab world threaten oil output. So the price is jumping.
However, that market-driven fact of life is hard for people to accept. With the price of gasoline approaching $4 a gallon — close to the record average of $4.11 in 2008 — consumers don’t want an explanation, they want a solution. And politicians in turn are motivated to give them one, or at least the illusion of one.
Republicans, for example, want to cast government, and more specifically the Obama administration, as the villain. They propose that the federal government drop environmental restrictions and open additional areas to oil exploration and production, suggesting that such steps will lower the price at the pump. But among energy experts, there’s really no debate. Even if we removed all environmental restrictions on domestic oil production — and last summer’s Deepwater Horizon tragedy in the Gulf suggests such a step would come with a heavy price — the amount of additional oil that could be produced in the United States would be too small to move the global market, where the price of oil is set. We may not like to acknowledge that fact — it drives home our relative helplessness — but it remains fact nonetheless.
(And of course, every additional barrel of oil pumped from beneath American territory today makes us even more dependent on foreign oil tomorrow.)
For his part, President Obama is following the futile course set by his predecessor. Last week, he announced a federal investigation into the role of speculation in driving up oil prices, just as President George W. Bush did in 2005 and 2006. Those investigations turned up little or nothing, as will this one. But politically, it gives Obama an alternative villain to whom he can point, which in his situation is important.
The uncomfortable truth is that because the need for oil is so ingrained in our economy and lifestyles, oil prices have to move a lot in order to produce even a slight decrease in demand. They have to rise high enough to make it hurt before people will curtail consumption.
So … are you hurting yet?
– Jay Bookman
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
824 comments Add your comment
Thulsa Doom
April 25th, 2011
4:49 pm
Bada Bing,
We were too young and stupid to have on at least half a web suit. We just had shorts. A full wet suit probably would have made it bearable.I’m out yalll have a good one.
Southern Comfort (aka The Man)
April 25th, 2011
4:53 pm
Later Doom…
I’m right behind ya.
Gas Blues: The Price of Gasoline Climbs to $3.88 – ABC News - - ГАЗ България
April 25th, 2011
5:01 pm
[...] SunGas Posing a Political ProblemFox BusinessCNN -Dallas Morning News (blog) -Atlanta Journal Constitution (blog)all 1,838 news [...]
MPercy
April 25th, 2011
5:06 pm
Doggone/GA @3:01 pm
http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2408&DocTypeID=7
“Tax Units with Zero or Negative Sum of Income and Payroll Taxes, 2010″
Number (millions) 34.9
As percent of all tax units 22.8
I’ll conceded that they may pay some federal excise taxes, esp. gasoline excise tax. In the case where their excise taxes do not exceed their “negative sum of income and and payroll taxes”, they are *not* paying federal taxes in any capacity. Of course, they’d need to consume 540 gallons of gas to reach $100 of gas excise taxes (10 gallons/week or so).
When they are not effectively paying any payroll taxes, the notion that SS/Medicare are “insurance” is belied. For these tax units, SS/Medicare are straight transfer payments–they will not have paid into the system (or rather, they paid in with someone else’s money) but will take out just the same.
And as always, state and local taxes are a different matter.
MPercy
April 25th, 2011
5:22 pm
Keep Up the Good Fight! @3:19 pm
The CBO puts out a nice paper every year. It starts with data from 1979 and currently ends with 2005.
Total Effective Federal Tax Rate (income+payroll+excise+…)
* the lowest quintile rate was 8.0% in 1979 and 4.3% in 2005
* percentile 96-99 rate was 27.7% in 1979 and 25.7% in 2005
* top 0.01 percentile rate was 42.9% in 1979 and 31.5% in 2005
Effective Income Tax Rate
* the lowest quintile rate was 0.0% in 1979 and negative 6.5% (-6.5 percent) in 2005
* percentile 96-99 rate was 16.7% in 1979 and 15.2% in 2005
* top 0.01 rate was 21.0% in 1979 and 17.0% in 2005
Share of Total Federal Tax Liabilities
* the lowest quintile paid 2.1% in 1979 and 0.8% in 2005
* percentile 96-99 paid 14.2% in 1979 and 16.3% in 2005
* top 1 percentile paid 15.4% in 1979 and 27.6% in 2005
* top 0.01 percentile paid 2.7% in 1979 and 6.5% in 2005
Share of Pre-Tax Income
* the lowest quintile earned 5.8% in 1979 and 4.0% in 2005
* percentile 96-99 earned 11.4% in 1979 and 13.0% in 2005
* top 1 percentile earned 9.2% in 1979 and 18% in 2005
* top 0.01 percentile earned 1.4% in 1979 and 4.2% in 2005
In 1979, the 96-99 percentile was 3.408M households earning an average of $162,400.
In 2005, the 96-99 percentile was 4.672M households earning an average of $269,800.
In 1979, the top 0.01% was 9,000 households, earning an average pretax income of $7.33M.
In 2005, the top 0.01% was 11,000 households earning an average of pretax income $35.47M.
buck@gon
April 25th, 2011
5:37 pm
getalife @ 2:48
As liberals and democrats like to say about Reagan, I will say about Bill Clinton. He never submitted a balanced budget. But boy oh boy, do we ever hear the cliche’s about the W disaster. We’re sick of them. It’s time to grow up and focus on the present.
And if you think that “our (what I’m sure you would call a ) conservative mess” including trillion dollar deficits, runaway entitlement spending (that W had attempted to fix via S. Security and Medicare, then harmed with Presc Drugs) in a worsening economy where the dollar is becoming worth less and less, where it is being dumped by many as the default world currency, will be fixed by same old Democrat “spend, baby spend,” there’s a bridge I want to show you.
It’s on North Avenue in downtown Atlanta. Cashflow is good, but I’m willing to sell it to you. Asking price is $10 million.
If you believe government can spend our way out of a recession, by either printing money or by borrowing money to give to retirees and hospitals, then why not by the bridge? Call your congressman and have them wish up the money for you.
That would be legal, right?
buck@gon
April 25th, 2011
5:41 pm
getalife,
Also, “politics” is very different from policy, economics and foreign policy. You can play politics, for example, as they all do, but you could say, have a foreign policy or an economic policy be clear or not. In the W-disaster case, both policies were pretty clear, foreign much more than economic.
In our current President’s case, nothing is clear. No one is sure of anything, where they stand with us or outside the country.
If you listen to NPR or read Jay Bookman, the politics though are MUCH BETTER now. Isn’t that nice?
Mighty Righty
April 25th, 2011
6:01 pm
The left has been making excuses for thirty years why we can’t drill. Not enough oil to make an impact on prices, kills, the Caribou, will destroy the environment, would take ten years to have any impact, etc., etc. Meanwhile they actually advocate higher prices. Implement policies which are designed to increase energy cost, then when energy does go up, they act shocked and blame big oil, wall street, Republicans, anybody but themselvse. Hypocrits all, everyone.
Mighty Righty
April 25th, 2011
6:19 pm
Jay, Many of us are on fixed incomes, unemployment, welfare, earning less money than we did two years ago, struggling to make ends meet, while our transportation cost has increased hundreds o dollars a month, our food cost has increased another hundred or two. We are stuck with a President who’s policies are contributing to the economic demise of this country, sitting cluless with his finger in his you know what, and you representing the liberal thought in this country are saying quit whining!
Joe Mama
April 25th, 2011
6:20 pm
The right has been making excuses for thirty years why we can’t invest in alternative energy resources. Not enough wind/sun/tides/geothermal energy to make an impact on prices, solar energy doesn’t work at night, can’t plug cars into a wall socket, none of them will ever generate enough power to replace oil/coal/nuclear, it would take ten years to have any impact, etc. etc. Meanwhile, they actually exacerbate the situation by consuming as much energy as they can (blocking stiffer CAFE standards, buying and arguing in favor of larger and larger SUVs, ridiculing hybrid and plug-in cars (but Ah-Nuld has a hydrogen-burning Hummer) and demanding the continuance of wasteful incadescent bulbs when CFLs are more efficient and LEDs even more efficient than CFLs. They refuse to even consider policies and technologies that will reduce our future reliance on foreign energy resources, and then when energy costs do go up due to supply and speculation issues, they act shocked and blame environmentalists, Democrats, hybrid car makers, people who use CFL and LED lighting and anybody but themselves. Hypocrites all, everyone.
Fixed that for you.
Mighty Righty
April 25th, 2011
6:41 pm
I want all you Democrats to know that there are little children of the less fortunate going to bed hungry tonight because high gas prices means no food on the table. They don’t care that this administration’s energy policy will generate ten percent of their electricty within twenty years. Tonight, mass transit will not be on their mind. The $40000 Volt just won’t be on their mind. Old People, living on their $800 per month Social Security income aren’t waiting for high speed rail. Mr. President, we need help now! We don’t need no damn commission to study the problem. We would be encouraged if we tyhought you cared.
Joe Mama
April 25th, 2011
6:47 pm
Going hungry . . . because of higher GAS prices, not because of higher food prices and Republican calls to cut back social programs like food stamps and WIC, huh?
Jay
April 25th, 2011
6:51 pm
MightyRighty, you’re paying “hundreds” more for transportation? Really? If gas has gone up by a buck a gallon, you would have to use hundreds of gallons a month, which at 20 mpg means roughly 4,000 miles a month.
Plausible, but not likely.
A hundred dollars more for food? The latest figures put annual food inflation for 2011 at 4 percent, so you’d have to spend $2500 a month to be spending $100 more. And that won’t be until the end of the year — food inflation has been barely half that 4 percent.
Besides, as a good conservative, what do you want government and the president to do in this case? You want him to intervene in the free market on your behalf? You want him to save you somehow.
You know that old line about no atheists in a foxhole? I’m beginning to think that there are no conservatives in a recession.
itpdude
April 25th, 2011
7:28 pm
A lot of people have curtailed consumption. Now, an inspired move from Obama would be to open the Strategic Oil Reserve and fast-track opening up drilling on land and off of Florida if and only if mileage requirements for autos be raised by 20 MPG over the next 10 years, 10 in 5 years and the remainder in the last 5 years. Also, develop more alternative energy from solar, wind, and water currents. Also, require new roofs on all residential and commercial buildings to be reflective.
Yarbles
April 25th, 2011
7:31 pm
The reason all of these oil companies make so much money is they have every step of the process from extraction to a packaged product in house. Here’s the catch: That entire process is based on a model where the oil company can be profitable when oil is under $12 (yes, TWELVE dollars) a barrel, so are the exploration leases that the government gives away like candy.
Potential solutions:
- Price regulation
- Remove private/corporate exploration and drilling leases – or charge market value for them – watch the prices drop then.
- Make oil production in the Gulf and ALL refineries part of the Army Corps of Engineers have them run it. Charge the big oil companies to process their oil for sale into the American market.
Go ahead and scream about Socialism all you want, think about me when you’re paying 6 bucks a gallon and your food costs have quadrupled.
As for alternative technologies, wake me when there’s something feasible. Until that point, this is what we’re stuck with.
Murray
April 25th, 2011
10:23 pm
Mr Bookman:
Please write something about sugar supports.
ODDOWL
April 26th, 2011
1:47 am
Wall street is responsible for these high gas prices… The speculators who play the option market are buying up oil futures and driving up the price of gasoline. Its nothing more than greedy cutthroat capitalism. The answer; Boycott gasoline and drive down the prices.
Mighty Righty
April 26th, 2011
7:24 am
When Obama took office, gasoline was $1.60 per gallon and today it is $3.90 per gallon. I am spending $2.30 per gallon more than pre Obama for one gallon of gas. I use two gallons plus per day going to work. By the way, not that it is any of your business but it is more tah 40 miles to my job one way. Do the math. My wife and I spend more than $150 dollars per week not including transportation cost and groceries are up at leaset 20%. Jay, it’s 14 miles round trip to the grocery store! Do the math. Ask your wife what groceries cost.
Mighty Righty
April 26th, 2011
8:20 am
Joe Mama-your argument is that if the energy supply remains constant while demand increases there will be no increase in the price of energy. THAT IS A UNIQUE CONCEPT. I don’t know of any conservative that is opposed to developing alternative sources of energy on which we have spent billions of dollars over “the last thirty years”, thus far to no avail. At this time, in spite of “thirty years” of research and billions spent, there is no “cost effetive” source of alternative energy. To date, the conservationists claims to new sources of renewable energy are “windmills” which have been around at least since Don Quixote, battery powered cars which have powered golf carts for at least 60 years. The new light bulbs are neon which has been available for as long as I can remember. Come on, folks what have we gotten for our research? I noted with interest, you mentioning “tides” as a source. The problem with tides energy is your party opposes touching the ocean. Your party opposes clean hydro power, and clean nucleur power in favor of windmills! Meanwhile, people are going without food to pay Obama prices for food and gasoline.
Joe Mama
April 26th, 2011
9:30 am
Righty — “Joe Mama-your argument is that if the energy supply remains constant while demand increases there will be no increase in the price of energy. THAT IS A UNIQUE CONCEPT.”
Yeah, that’s why I didn’t *make* that argument.
My argument is that with increasing demand, price can only remain static or drop if energy supply increases and especially if energy production cost decreases at the same time. The only way to do that, AFAICS, is by adding new resources into the mix
“I don’t know of any conservative that is opposed to developing alternative sources of energy on which we have spent billions of dollars over “the last thirty years”, thus far to no avail.”
We haven’t *spent* billions of dollars on alternative energy resources over the last 30 years, so far as I’m aware. Perhaps you know something different?
“At this time, in spite of “thirty years” of research and billions spent, there is no “cost effetive” source of alternative energy.”
Wrong. We haven’t spent that much in R&D and we certainly weren’t spending *anything* on it 30 years ago. In fact, President Reagan turned us *away* from alternative energy research and decided instead to kiss Arab oil sheik butts.
“To date, the conservationists claims to new sources of renewable energy are “windmills” which have been around at least since Don Quixote”
Windmills work quite well if sited properly, and there are some interesting new high-efficiency designs like the ‘eggbeater.’ Maybe you should look into them.
“battery powered cars which have powered golf carts for at least 60 years.”
Except that lithium batteries, which are a new leap in battery storage technology, haven’t been around that long and permit street-legal cars to run on electricity. If you want to take a golf cart out on 285, be my guest.
“The new light bulbs are neon”
No. they aren’t. I think you just don’t know what you’re talking about here.
“which has been available for as long as I can remember.”
You clearly don’t know about LED lighting.
“Come on, folks what have we gotten for our research?”
Nothing, because the federal government spends almost nothing *on* it. But private research is proceeding in leaps and bounds, and LED lighting became practical for home use about 2-3 years ago. It’s still expensive, but I’ve been switching to it in my home and my power bill is definitely going down.
“I noted with interest, you mentioning “tides” as a source. The problem with tides energy is your party opposes touching the ocean.”
Yeah, wrong. This is already being used in Scandinavia. The reason it isn’t being used here is because *your* party likes energy resources that come out of the ground, not energy resources that they can’t fence off and demand others pay them for.
“Your party opposes clean hydro power,”
Wrong.
“and clean nucleur power in favor of windmills!”
There’s nothing clean about nuclear power, though recent advances in technology make it safer than it used to be. If you need to be brought up to date about that, I’m your man.
“Meanwhile, people are going without food to pay Obama prices for food and gasoline.”
Frankly, I’ve come to the conclusion that you have no idea what you’re talking about.
independent thinker
April 27th, 2011
7:50 am
And Boehner is not convinced we should remove 4 billion dollars of subsidies to big oil to help balance the budget Just chalk that one up with no taxes paid by GE and record profits this past quarter.
CarWasher.net » Blog Archive » Carwasher. Net: 1Q PROFIT SURGES 73% ON HIGHER OIL PRICES
April 27th, 2011
10:19 am
[...] Climb Could Be Crude Itself Wall Street Journal (blog) TheStreet.com - Automated Trader - Atlanta Journal Constitution (blog) all 157 news articles » [...]
nate
April 28th, 2011
3:05 am
the price needs to go higher. Get this poor filth off of the road. I can afford 20 a gallon.
Tax Hike vs. Subsidy – What’s in Your Wallet? « The Brazen 3
April 28th, 2011
9:37 am
[...] The perception of oil subsidies from the left. [...]