Jim Mannion – 8/18/05

This page was last updated on August 24, 2005.

Bush takes care of his bosses; Jim Mannion; Beaver County Times; August 18, 2005.

I worked for an oil company for almost 24 years and it never ceases to amaze me that people believe oil companies conspire with each other to cut supply and drive up prices. Here’s a refresher idea for the business impaired. You make more money selling product than you do when not selling product.

Below is a detailed critique of the subject letter.

“Does no one pay any attention to the obscene profits the oil companies are making?

“Today, the price of gas jumped another 5 cents, making it 10 cents for the week. The oil companies have reported profits of more than $100 billion, and that is just with the cost of crude oil at $43 a barrel. Today, it is at $66.”

[RWC] What is an “obscene” profit?

“The number of oil refineries in this country dropped by 50 percent since 1980. Does anyone see the connection of our President Bush and Vice President Cheney with their involvement with the oil industry?”

[RWC] You’ll find the closed refineries were small refineries built near local oil fields a long time ago. In some cases, the local fields “dried up” and bringing in crude from distant fields was too expensive. In all cases, the refineries were old and inefficient. Some processed less than 20,000 barrels per day and could no longer compete with modern refineries capable of processing hundreds of thousands of barrels per day. If these refineries had been kept open, we’d have less gasoline today and we’d be paying even more. Mr. Mannion failed to note that while old inefficient refineries were closed, larger modern refineries had their capacities increased. The refineries also added technology to allow them to get even more usable product from a barrel of crude oil.

President Bush and VP Cheney had nothing to do with this trend; economics did. I worked for an oil company that closed several old/small refineries but at the same time invested in capacity in its modern refineries.

“In an aside, the oil and gas industry were already set to receive $10 billion dollars in tax breaks over the next five years. The energy bill the president just signed gives them an additional $11 billion in tax breaks and $12 billion in subsidies.”

[RWC] There’s no question the oil and gas industry needs no subsidies, tax breaks, et cetera. Though President Bush frequently said he opposed the incentives, in the end he signed the energy bill. I believe he should have vetoed the bill until the subsidies were removed.

“Thank you, Mr. President, for looking out for the people who employ you.”