Today is one of those days -- everybody has a conspiracy theory. Lots o' people
in the blogosphere speculating that the Miers
withdrawal was timed to take the media off the trail of the likely
indictments of key White House staffers. We don't agree, but there is actually
one story out there that the adminstration doesn't want you to hear. Actually,
two stories -- but like everything else with Bushco., it's all connected.
And since they don't want you to hear about it, we'll have to tell you.
It's all about oil.
With all the Miers/Rove/Libby/Wilma clutter, you probably only heard in passing,
if at all, that the world's largest oil company, Exxon Mobil, announced its
third quarter results today. They
did pretty good:
NEW YORK, Oct 27 (Reuters) - Exxon Mobil Corp. on Thursday posted a quarterly
profit of $9.9 billion, the largest in U.S. corporate history,
as it raked in a bonanza from soaring oil and gas prices.
Record profits for Big Oil at a time when consumers are paying sky-high
prices for gasoline have brought calls for a windfall profits tax or other penalties
on oil companies.
The companies have been enjoying an unusually rosy environment for months.
In the third quarter, oil prices and refining margins rose sharply after Hurricanes
Katrina and Rita ripped through the Gulf of Mexico, disrupting energy operations
in the region.
Exxon Mobil made an extra $4 billion -- give or take -- over last year's third
quarter without really lifting a finger. It's because the world oil supply is
tight, and traders bid up the price. And so all that extra money came from us,
money that we used to spend on, say, dinner or a movie, but now disappears every
week at the gas station.
The people who run Exxon Mobil didn't invent a new product, or discover a major
oil field, or even come up with a brilliant new marketing scheme. They simple
used the basic laws of supply and demand to take billions of dollars of your
money and stuffed it into their own pockets.
In fact, everyone made out like bandits. Poor Royal
Dutch Shell -- they netted a mere $9 billion. Profits at Conoco Phillips
are up a whopping
But you might have more cash, and the oil companies might have less, if the
Bush administration had even started to adopt a more realistic energy policy
-- one that addressed the now-hard-to-ignore fact that the world is getting
close to burning more oil than it has the capacity to produce.
In fact, a
report in the New York Times today proves that the Bush White House went
out of its way to avoid or ignore pointed warnings that the world was running
out of excess oil capacity. Remind you of anything? How
about 9/11. Or maybe Hurricane
The Times article finds several instances where Bush or his aides ignored warnings
about a lack of spare oil production capacity -- the precursor to what many
experts call "peak oil,"
the day when demand exceeds capacity for good.
In Saudi Arabia:
Just before meeting with Prince Abdullah in April, President Bush said
he wanted "a straight answer" about how much extra oil the Saudis
At that session in Texas, the prince reaffirmed the previously announced
expansion plans. Saudi Arabia's capacity now stands at about 11 million barrels
a day. The Saudis pump about 9.5 million barrels, leaving a cushion of about
1.5 million barrels, mostly of heavier grades not very usable in the West. There
is virtually no other global spare capacity.
Stephen J. Hadley, the national security adviser, told reporters after
the meeting that the Saudi program was "a very good plan because it addresses
the underlying issue you have when you talk about price, which is an issue of
availability of oil and availability of capacity."
But there are doubts about the Saudi assertions about how much oil they
have. Data about reserves is tightly guarded, and the Saudis dismiss skeptics
But they do not dismiss Edward O. Price Jr., the former head of exploration
for Saudi Aramco and an adviser to the United States government on Persian Gulf
oil during both Iraq wars. He questioned future reliance on Saudi capacity in
an article in The New York Times last year and wanted to know from his former
colleagues how they reached their estimate of more than 150 billion barrels
of extra oil. Twenty years ago, a detailed study by geologists
from four large American oil companies then in partnership with Aramco found
little in the way of undiscovered oil resources, he said.
In the United Arab Emirates:
An energy policy report by Vice President Dick Cheney in May 2001 recommended
that the president actively support initiatives in Persian Gulf nations allowing
foreign investment that could lead to increased production. The United Arab
Emirates was cited as one of the few countries that could increase its oil-production
A status report on Mr. Cheney's task force, released in January by the
Energy Department, said administration officials moved to carry out the recommendation
in four countries. The U.A.E. was not among them, however, and the president
was not mentioned in the report.
When Mr. Bush spoke after the Iraq war with Sheik Zayed bin Sultan al-Nahayan,
the emirates' ruler until his death late last year, he discussed
security and Iraq, not oil investment issues, according to a Western
diplomat, who spoke on condition of not being identified because of the sensitive
nature of discussions between heads of state. A White House spokesman declined
And lastly, in Iraq:
In Iraq, too, the Bush administration's hopes have been disappointed. The
removal of Saddam Hussein in 2003 changed Iraq from a pariah into a possible
backstop for global oil markets. Soon after the invasion, top administration
officials were bullish about Iraq's production: they said it would exceed the
prewar level of 2.5 million barrels a day and reach 3 million barrels by the
end of 2003 or late 2004.
But a report in July by the Government Accountability Office found that
Iraqi production had declined since late 2004 to 2.1 million barrels a day from
2.5 million barrels, despite White House legislative requests for almost $3
billion to restore the oil industry there to its prewar abilities.
An important reason for the decline, the report found, was improper management
of the reservoirs. Gary Edson, then a deputy national security
adviser, was told two years ago that Iraqi production would drop, not increase,
according to an outside report presented to him.
During all this time, the White House dithered -- poo-poohing conservation
and alternative energy. The task of dealing with our reliance on foreign oil,
and of addressing the very real possibility of "peak oil," was merely
left to future generations. So far, the only ones to benefit from the administration's
"energy policy" has been Big Oil.
There's been a lot of talk of incompetence
within the Bush administration, on the handling of the hurricanes or the badly
botched nomination of Harriet Miers. We don't think so. We think these people
know exactly what they're doing.
And we can give you about 9.9 billion reasons why.