The message is clear: Success is bad. How dare you succeed when so many people are struggling? How thoughtless of the oil companies that they make money when the government has a desire to not cut spending or change their taxing habits. The assault on big oil continues.
After a show trial that embarrassed the democratic leadership whose hatred for the US oil industry transcends common sense, we now have yet another investigation of Big Oil. Last week at a congressional hearing Chevron CEO John Watson wiped the floor with the Democratic leadership that led to a classic and telling exchange with Senator Jay Rockefeller. Rockefeller said that big oil was out of touch and that the American people want big oil to be part of the "shared sacrifice" to get the budget under control. John Watson shot back, "I don't think that the American people want shared sacrifice, I think they want shared prosperity". Rockefeller shot back saying, "What a lovely statement."
Do you understand how out of touch that is? We don't get to shared prosperity until we get to shared sacrifice. Well the democrats decided to strike back with a bogus investigation on price fixing by oil companies and refiners. Another shameful waste of taxpayers’ money by politicians that are out of touch and show not only that they have no idea how the oil industry works, but how the economy works or any idea how to get the US economy back to prosperity.
The letter was sent to the Federal Trade Commission by Senator Claire McCaskill and signed by Senate Majority Leader Harry Reid Senator, Charles E. Schumer Senator Patty Murray and Senator Dick Durbin. The letter started with a warm, "Dear Chairman Leibowitz, We write today to request the Commission begin an investigation into potential price fixing of gasoline by U.S. refiners. Recent reports have indicated that U.S. refiners are cutting back on U.S. gasoline stockpiles in order to artificially keep prices high and inflate their bottom line."
The first line is downright misleading. The reason that refiners have cut down on supply is because of federally mandated switch to the summer blends of gasoline. This happens every year and perhaps Senator McCaskill is not aware of this regulation. In fact if she wants she can go to the 25th Federal Trade Commission investigation into price fixing in 2006. In that report the FTC said that there was absolutely no evidence to suggest that refiners manipulated prices through any means, including running their refineries below full productive capacity to restrict supply, altering their refinery output to produce less gasoline, or diverting gasoline from markets in the United States to less lucrative foreign markets. The evidence indicated that these firms produced as much gasoline as they economically could, using computer models to determine their most profitable slate of products.
The letter goes on to say, "If true, this behavior is a direct affront to the American people who are still struggling with the economic downturn." Well it is not. Senator McCaskill then pretends to act like she has an idea how prices work by saying, "The rise in the price of oil is certainly a driving factor behind the recent rise in gasoline prices, but concerns have been raised that while gasoline use is declining, U.S. gasoline inventories remain below average and refining margins continue to rise. According to information posted by the Energy Information Administration U.S. refiners are using only 81.7 percent of their capacity, a decline of 7 percent from the same time last year. Moreover, since the beginning of 2011 U.S. refiners have seen over a ninety percent increase in their refining margins. While some have argued that this increase is due to potential impacts from recent flooding along the Mississippi River, this cannot justify the steady increases in their margins since January of this year."
Can't justify their margin increases? Does Senator Mc Caskill realize that refiners lost money in the fourth quarter of last year? The sharp rise in margins came from nothing. Does she want refiners to lose money? The other point is that refiners produced a record amount of gasoline. Refiners are more efficient and produce more gas out of the same barrel. That is good for the consumer and the environment. Would she like refiners to be less efficient to make her feel better?
The letter goes on to say that, "At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices, the idea that refiners may be manipulating the market to keep prices artificially high goes beyond reproach. It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation."
Well I think it is beyond reproach to make false accusations against the oil industry for purely political purposes when even a cursory examination of the facts makes it clear that these accusations are unfounded, unjustified and patently false. So what is the motivation for the Democrats to investigate big oil or speculators or refiners? Is it because of their failed policies on energy or on the economy in general? Is it because their big donors are green energy companies? Does it bother them that the answer to our nation's energy woes and the problem of reliance on foreign sources of fuel has been solved by the ingenuity of the oil companies and not by some wind farm maker? Are they a bit embarrassed that they are not embracing the greatest technological achievement in over a century with shale production opening up massive amounts of domestic energy in our own country that has created and will create good high paying jobs? Do they hate the success that the oil companies have had making profits on the billions of dollars they have risked to bring energy to our shores and maintain our way of life, the envy of the world?
I thought the more you risk, the more you should be rewarded. It should also give you the incentive to produce more and continue to invest the billions of dollars it's going to take to meet US energy demand. The millions of jobs that are going to be created as a successful business expands. Oh yes, I forgot, success is bad. Well at least the good news is the Senate voted down a vote to repeal $21 billion in so called tax breaks. Some Senate Democrats broke with Senate leaders, realizing the tax is unfair and would increase oil and gas prices and not reduce them.
People want to know what I think about Iranian President Mahmoud Ahmadinejad taking a more active interest in the Iranian oil industry and temporality taking control and reports that he will attend the next OPEC meeting. I think that Ayatollah Ali Khamenei is tired of the guy and will do anything to get him out of town for a while so he can have a break. The meeting of course is going to be more interesting as tensions between the Saudis, who run the cartel, and the Iranians are running high. Get ready for fireworks and some great quotes!
Bad data on housing, industrial production and Redbook sales, all brought oil down yesterday but options expiration and that seemed to bring us back up. Oil is following through today on comments that the IMF is happy with Greece's progress! The Euro rebound should give us a bounce!
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at email@example.com.