Oil!

I'd like to address TX's Backup Plan For Gas, a blog entry submitted on Friday, April 25 in My Thoughts About Texas Government. The author asked many important questions about oil production, particularly with regard to our home state.

First off, yes, we do have oil in Texas! And wells across Texas have been producing oil since 1901. Oil production taxes are collected by the state, and the benefit to the state treasury is in the hundreds of millions. Historically, oil has benefited higher education in Texas, as well as public schools, scientific research, environmental protection, and has prompted philanthropy throughout the state.

The problem is that our cars cannot run on oil-they need gasoline, which requires the crude oil to be refined. There are 149 operable petroleum refineries in the United States, alone. Texas happens to not only have the largest number of oil refineries in the nation (27), but it also has the largest refinery in the United States. This particular refinery in Baytown, owned by ExxonMobil, produces over half a million barrels per day. I'm fairly certain that Texas is not “saving our oil for the future”…although the U.S. does have petroleum reserves. According to statistics from the U.S. Government, in 2005 the total world oil production was 82,532,000 barrels/day. This sounds like a lot, however, the total world oil consumption the same year was 83,607,000 barrels/day. (It’s impossible to consume more than we produce, so there must have been some carry-over from the last year.) Anyway, you get the picture...

Remember when we the article read about the effects of concentrated control of the media? Seven giant corporations control the majority of our nation's newspapers, magazines, radio and television stations, book publishing houses, and movies. Likewise, oil industry consolidation is limiting competition in the oil refining sector. For instance, the largest five oil refiners in the United States are: ExxonMobil, ConocoPhillips, BP, Valero and Royal Dutch Shell; they now control over half (56.3%) of domestic oil refinery capacity. A May 2004 U.S. Governmental Accountability Office (GAO) report found that mergers in the oil industry directly led to higher prices—and these actions have not been challenged by the U.S. government. In summary, it is uncompetitive actions by a handful of companies with large control over our nation’s gas markets that is directly causing these high prices. We are all feeling the pinch. The most effective way to protect consumers is to restore competitive markets.