Washington DC April 2008
Dragged or volunteered, the heads of the big 5 American Oil companies appeared before the House Select Energy Committee to answer questions about everything from windfall profits and executive salaries to alternative fuels research. Republicans sweet talked their honored guests by sympathizing with their development and exploration cost burdens, excessive taxes and over-regulation by an environmentally sensitive government. Democrats meanwhile, unleashed a more critical barrage of probing questions while banging the gong for everything ethanol and alternative.
It was true theater as weathered executives from Shell, Exxon, BP, Conoco Phillips, and Chevron danced around questions from various legislators, gave short advocacy speeches, threw in their own share of manure and fell into more than one bear trap. It was amusing to observe the sudden camaraderie this 'group of five' seemed to emulate when faced with their common governmental oversight enemy. What are usually fierce competitors, now seemed to be telepathically connected with one another as they avoided tough answers and jumped on one another's band wagons when a few positive points were scored by big oil.
Although too short and not very deep, with questioners only allowed five minutes each, the hearing revealed a lot about our 'hate to be dependent' relationship with Big Oil.
1) Although Big Oil experienced record profits with what some would call opportunist price gouging and others might term extremely strategic and well executed larceny, they are still in a tough racket. Oil companies don't have too many friends these days and although they are everyone's favorite target during these tough economic times, they are the only companies we've got. Amercian Oil (counting BP America which bought ARCO) only manage something like 15% of all the oil being pumped on the planet, and they are competing hard for America's share. Like them or not, we are going to need what they produce for some time to come yet. You're driving to work tomorrow right?
2) Are the Oil Companies really trying to make progress in alternative fuels and energy? It seems like we've gotten so used to the influence of big oil companies on our energy future that we forget they are in business to make money. Alternative energy is not really their problem, they are in the Oil and Gasoline and Natural Gas business. In fact, perhaps for PR value, perhaps because they want to be in the energy business fifty years from now, big oil is experimenting with all manner of alternatives. While all agree that they are dedicated to spreading the conservation message, the use of corn based Ethanol-gasoline mixes and biodiesel seemed to be the most well developed prototyping the big 5 are engaged in now. These options make sense as they make use of the same equipment and distribution systems that Exxon, Shell, Chevron and the like are already using.
3) We need to look elsewhere for additional answers and help to get alternative fuels on line. Although the big five executives appeared sympathetic and have spent real r&d dollars and even fielded as may as 30 service stations, in the case of E85, they are not moving anywhere fast enough to bring alternative fuels on line for the average consumer. When pressed on questions of new bio-diesel pumps at stations or wider spread marketing of E-85 (ethanol gas) the executives were sure that they wouldn't stand in the way of an individual franchisee who wanted to buy his own pump for these alternatives- as long as it didn't "get in the way of the brand" according to one executive. Another said that his brand wouldn't be allowing that. The party line seemed to emphasize that customers hadn't accepted the new fuels yet and that they weren't that popular. There was no comment about whether new fuels were being offered at a cheaper price.. None of the big five seemed to know anything about fuel from coal and weren't interested in talking about it.
4) There was a further peeling back of the onion as one of the Big Oil companies revealed that while complaining about new drilling leases in the Gulf of Mexico or Alaska not being opened up, that they were not in fact, actively drilling at each of the lease locations they had now. Another expressed concern about taking too much of America's food supply by using so much corn to make Ethanol- which seemed a lame attempt at trying to keep the ethanol content of their gas mixes low so people won't figure out that they could be using much higher amounts of Ethanol in their cars.
To their credit, Big Oil seemed to be leaning towards application of better technology for extracting more oil from old wells, now that the price warrants it, as well as plans to develop oil sands and oil shales, long thought to be economically infeasible. And you can forget a windfall profit tax on oil companies. They were pretty clear in letting the legislators know that in such a case, less money would be available for investment and it would have a dollar for dollar, negative effect on consumers.
It would seem that the oil companies 'control the juice' and the means to distribute it, and whether or not we agree with their pricing, we have few options. For progress to happen fast, grass roots development of fuels and alternative low cost refining methods might be the only solution. The Federal government seems hamstrung with too much debt to throw the billions into r&d that it might take to come up with a true breakthrough. Right now it may be best to hope for smaller increases in efficiency, rube goldberg backyard alternatives and a combination of bailing wire and chewing gum to try and control our spiraling fuel costs. Oil companies can't be faulted for being successful at their core mission- making money, and one could certainly argue strongly that they provide a valuable service. We just can't look to them to develop the answers that are ultimately, not in their own best interest.
Can we trade drilling in Alaska for guarantees of lower fuel prices? Will corn farmers become the new energy billionaires of the next decade? Will re-chargeable electric cars allow us to side-step these issues completely? Maybe all or none of these things will happen...
Bart Allen Berry is the Founder of MyEnergyPlanet web portal all about energy efficiency, energy savings and the new energy economy.
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