Amidst the current kerfuffle of Republicans and Democrats blaming each other for ever higher gas prices, focusing on issues ranging from oil company tax breaks to impediments on new drilling, the most significant item of information extant is barely focused upon.
Last week in Congressional hearings none other than the Darth Vader of all things oil, Rex Tillerson, CEO of ExxonMobil bravely informed his Congressional interlocutors that the price of oil should be no higher than $60 to $70 a barrel. He attributed the difference from the plus $100/bbl current at the time of his pronouncement, to speculation and trading on the commodity exchanges. It is a position that this corner has promulgated for years. Well and good. But coming from Tillerson, that is truly from the horse's mouth.
In addition, there was another core nugget of information coming forth at the hearing. That the average cost of producing a barrel of oil is circa $11/bbl. Thereby, and for once giving oiligopoly credence to the enormous profits at hand in the oil sector. It is as though General Motor's Chevrolet Volt was being built at a cost of $25,000 and selling for well over $200,000, and with much less fuss and bother.
And yet, and yet, this news barely reached the headlines of the business press and the forever endless parade of talking heads on our television screens.
And all this within the recent flood of attention to manipulated pricing with the formation of the Oil and Gas Pricing Fraud Panel under Attorney General -- "there may well be lawful reasons for increases in gas price given supply and demand" -- Eric Holder. This after endless months/years of hearings and blather coming forth from the forever ineffectual CFTC.
And there, in recent weeks, was President Obama himself taking up the cudgel of speculation -- blaming it for rising oil prices in a recent address to a community college.
Well, here for once we have smoking gun evidence of one piece of the high oil/gas price puzzle -- the impact of speculation. There are many others such as OPEC manipulation, crude oil hoarding by bank holding companies and oil traders, reckless judicial interpretation of sovereign immunity, thereby precluding antitrust legal proceedings in this country against the national oil companies of OPEC nations. The list goes on. But with this piece of evidence in hand will the government act forcefully, or will oil interests once again prevail!?