This has been an exciting year already. Exciting for some good reasons and exciting for some bad reasons. From presidential primaries to earthquakes, and everything in between, its difficult to imagine many years that have started off with so much excitement. Of course, nobody has had as exciting a year as the oil industry. By far, the first six months of 2008 have proven to be the most promising for "Big Oil" in a long time.
Take, for instance, the ballooning price of oil. In January of this year, oil finally surpassed the dreaded $100/barrel mark. Since then, the price has peaked at $133/barrel with per-gallon prices reaching $4.08 nationally. The last time gas prices surged this way, after Hurricane Katrina, the oil companies experienced world record breaking profits.
More great news for the oil industry this year has come from the United States Congress. The Democrats in Congress have submitted multiple pieces of legislation that would have sacrificed some of those record-breaking profits in favor of investment in renewable sources of energy, but all of them failed.
The Energy Security Act was a bipartisan bill written by Senators John Warner of Virginia, and Joe Lieberman of Connecticut that would have allowed the government to monitor and regulate greenhouse gas emissions the same way they monitor and regulate water quality or air quality. A positive for the environment, but a negative for anything that releases carbon, like oil. The bill failed to gain the 60 votes it needed to pass the Senate and move to the House. The Renewable Energy Tax Credit needed to be re-approved so it wouldn't lapse. The credit gives tax incentives to companies to develop renewable sources of energy and hire "green workers." The re-approval was beaten back by opponents of renewable energy (think oil). Finally, a Windfall Profits Tax was submitted that would have raised the tax on oil revenues once they reached a windfall level. This is partly to recoup the billions Americans have given oil companies in the form of subsidies, grants and tax credits to help them invest in new sources of oil. The tax was defeated.
Finally, Presidential candidate John McCain is also contributing to Big Oil's big year. Just this week, Mr. McCain announced that the best way to end our oil addiction is to drill for more oil all over the United States. He wants to lift the oil drilling ban that is in place in important ecosystems, like the coast of Florida, so that we can avoid real energy reform and instead continue to rely on the oil companies to provide us with a filthy limited resource. President Bush is supporting this idea and has asked the Congress to make it happen. Of course it would be years before this new oil exploration, drilling and refining would lead to actual gasoline in the tank. Oil companies could also opt to send the oil overseas, where it may be more valuable, rather than sell it in the U.S. Plus, the volume would be small compared to the amount we currently import from abroad. You can read all about that HERE.
It has been a busy six months for the oil industry. Anyone who thought we were on the threshold of a new energy future that would rely less on century old technology and more on 21st century innovation is probably feeling very frustrated right now. But for the oil industry, things have been very exciting.