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Wednesday, February 6, 2008


All the politicians running for office are claiming that each will be able to decrease the US dependency upon foreign oil making oil cheaper for domestic consumption. In one way this might be true, but in many ways they cannot achieve what they promise – and they know it. The only thing that might be accomplished is that they might be able to decrease the flow of oil dollars out of the country. But the price of oil will not change.

The price of oil is NOT determined by what it costs to remove it from the ground. The true cost of obtaining a barrel of oil is not much greater now when oil reached $100/barrel than when it was only $50 just a few years ago. The oil companies were making money then when the price was $50. Think of the tremendous profits now when the price of oil is double that. It is no wonder why the oil companies are making historic profits. Why last year alone Exxon Mobil was the most profitable company in the world.

What determines the price of oil is the market trading of oil by individuals who neither take the oil out of the ground nor refine it. It is determined by those market makers on Wall Street and other financial centers around the world who trade this commodity up and down and in the ethereal futures market. The futures market consists of a bunch of people who want to buy or sell oil at some future date. The current market takes some of its ques from this and so the market goes.

I have tried to get the figures of how much it costs the oil companies to get a barrel of oil out of the groung. Good luck. What I can gather from inference is that it costs less than $50/barrel because when just a few years ago oil was selling for less than $50, the companies were making money.

If the US were to become oil self sufficient – something which I doubt will ever happen short a miracle -- the price of oil will remain the same because of the market pricing. Do you actually think that the oil companies will sell oil at a price sufficient to make a good decent profit if the world price structure were considerably higher? Do I need to answer that question?

To get to a point mentioned earlier about whether we can become self sufficient, within the entire US, considering all the free flowing oil we have under the ground both in the continental US and offshore and the oil shale deposits in Colorado, we have considerably more oil than Saudi Arabia. We could be self sufficient, but the “not-for-profit environmentalists and their powerful lobbyists prevent the government from moving in that direction. Unlike in Russia when Vladimir says drill there, they drill there and out comes the oil! Our government is powerless to do any such thing because it is impossible to satisfy many political faction at the same time. Additionally, we have more coal reserves within the US than Saudi Arabia has oil, but the use of coal faces a similar more devastating quagmire of the environmentalists.

But we will still hear those mouthy politicians promise what they fully well know they cannot deliver. Most Republicans would like to drill offshore and in the arctic region, convert the tremendous oils shale reserves, and to use coal, but the Democrats, beholding to the environmental “Kooks,” prevent progress in these areas. But these same Democrats continue to promise for lower oil prices. How are they going to fulfill their promises considering what I have already said?

It is all smoke and mirrors, folks.

From the oil patch here in Panama and paying $3.15 + per gallon for diesel fuel for my car,

nicola michael c. Tauraso, M.D.
Director, Tauraso Medical Clinic

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Anonymous Anonymous said...

Why do you even worry about what is going on in the U.S., since you do not even have the heart to live in your former country anymore.

February 8, 2008 at 9:34 AM  
Blogger Dr. Tauraso said...

Dear Anonymous:
Touchy, touchy. I live where I want to live, but I am still on planet Earth. Besides it is none of your business where I choose to live. The fact is that the price of oil affects everybody on the planet. I still have to buy gas for my car here in panama. I could move to Venezuela where they tell me gas is .25/gallon, but living under a madman is not my cup of tea. I am concerned by what happens in the US only as it affects the rest of the world.

It has nothing to do with the fact that I "do not have the heart to live in" the US. I live in Panama because I choose to do so. Before you criticize me, perhaps you should try living here and trying it out first hand.

I was a US citizen by the accident of birth, not by choice. I am free now to make my own decisions, but the US -- the freest nation in the world does not give me that freedom. Ironic, is it not?

Frankly, I am sick and tired of those do gooders who think they know what is better for me than I. Please give me a break.

Dr. Tauraso, never Anonymous!!

February 9, 2008 at 1:07 PM  

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