Oil

I absolutely do not understand that people still cling to the idea that oil was a motivation for any actions in Iraq or Afghanistan. We are most certainly NOT dependent on any oil outside of that produced in North American. Period.

1) Historically, the US has been a net exporter of oil. That means that we produce more than we consume and sell the excess. By about 1970 or so, we became a net exporter of oil, but what we got from Mexico alone was sufficient that North America was a net exporter. As consumption and prices rose, oil sands in Canada came in just as demand was peaking in the US.

2) Today, they US is a net exporter of oil without considering Mexico or Canada. This is primarily because the oil industry has developed new technologies that allow closed or marginal oil wells to become productive again (at a very low cost.) We are not today dependent on oil from any foreign country including Mexico and Canada.

3) The cost of production of crude in the US is around $17-18 a barrel. In Mexico it is about $20 and in Canada it is more like $55 (but coming down.) American and Mexican crude tends to be the best in the world --- light, non-acidic, low sulfur.

4) One exception to my rant is oil from Venezuela. The Venezuelan government owns Citgo, including company gas stations, refineries, and pipelines. Citgo imports oil only from Venezuela and there is little that can be done about short of nationalizing Citgo. We don't need to import it, but it is Citgo's choice.

5) We get more oil from Africa than from the Middle East.

6) So, if American oil is all we need and its cost of production is far below international oil prices, what makes American gasoline prices fluctuate with international prices? It is a shell game and there isn't a pea. The American oil industry does to the American consumer exactly what Enron did to California with electricity. Enron would buy massive amounts of electricity in California, then "ship" it on paper out of state, creating a shortage, then sell the electricity back to California at a huge markup. American oil companies export huge amounts of American oil (as much as 30%) making a huge profit because of the disparity between the cost of production and overseas oil prices. They then import oil from other countries, primarily Nigeria, to replace the oil. By doing this they "peg" the cost of crude to the international market instead of the domestic market.

7) If American oil companies, willingly or unwillingly, adopted an "America first" policy and did not co-mingle foreign and domestic oil as a scam, the price of gasoline would fall below a dollar a gallon almost immediately. And oil companies would still be among the most profitable industries in the world.

8) If we worried about future oil dependence, we could simply form a North American Oil Cartel with Canada and Mexico that required that the needs of US, Canadian, and Mexican consumers must be met, based on the cost of production, before a drop of oil was exported. The practice of importing expensive crude to "replace" oil that was sold abroad would be outlawed.

9) We can also outlaw speculation in oil futures. Speculation just adds to the misery without adding or subtracting a drop of crude from the process. If oil speculation were legitimate there would be an approximately equal amount of shorts and longs. Instead speculators bet that the price of oil will go up, then create paper shortages so that it does go up --- but only on paper.

10) We have enough oil in the US to satisfy domestic needs for at least 40 years. Add just oil from Mexico and Canada and we have enough oil foir at least the next hundred years. Add to that the vast amount of natural gas (a BTU is a BTU) available in this country and we have oil and natural gas reserves for many decades if not centuries.

11) And people should have a much better handle on the Keystone pipeline than they do. a) Right now gasoline prices in almost 1/3 of the country are much lower than in the rest of the country because of the absence of a good pipeline connection to Canada. This means that oil is cheaper there. If the pipeline was built, that 1/3 of the country would jump to slightly above the other 2/3. The oil would then flow to Texas refineries where it would be partially-refined and shipped overseas as crude or refined there and the refinery products shipped overseas. All the profits would go to Canada, all the oil overseas, primarily to Japan, China, and South Korea, and all the risk to the American taxpayer. But what troubles me the most would be that the American government would be required to use eminent doman to take hundreds of thousands of acres of land from American citizens for the actual pipeline, easments, access roads, pumping stations. etc.