Fishtar: Your position is logically incoherent on multiple levels.
To outline your viewpoint on oil markets, as best I understand them:
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All oil inherently belongs collectively to the people.
Cite: ("It is our oil.)
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Oil exploratory rights and licenses are underpriced because of a conspiracy by oil companies to underbid these rights at auction, and the state intentionally gives oil rights away for free.
Cite: (“but an auction with only 3 bidders who know each other is highly suspect”, “the state does pretty much give the companies the oil”).
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License fees for oil production and exploration are set as a percentage of the price of oil, all oil costs the same to produce between companies and over time, and increases in the price of oil are driven solely by demand, which all result in oil companies making an unreasonable amount of profit.
Cite: (“Right now they pay 18% in severance tax”, “Say gas costs $1 a gallon to produce”, “demand determines that it is worth $10 a gallon”)
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We have reached peak oil, prices are stable in the short term, and prices are only going to rise in the future.
Cite: (“we have hit peak oil”, “It is all uphill from here”, “If the price of petroleum was like to fluctuate much in the future, it would be one thing”)
This position is, at a minimum, outlandish, and indicates a fundamental lack of understanding of market economics.
Let’s look at each assertion in depth.
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It is true that oil on public property is the property of the people, but this argument ignores the substantial sums of oil located on private property. In addition, the cost of extracting oil is not free, and the public lacks the ability to extract the oil independent of private companies. In addition, companies pay the value of the oil to the government in the form of royalties and via auctions for oil rights.
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You are effectively positing the existence of a multinational, billion-dollar conspiracy by heavily regulated oil companies to artificially underbid the price of oil at auction. Belief in such a hypothesis, without correlating evidence, is at best absurd. You also seem to believe that regulators are part of this conspiracy and give away oil rights for free.
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Although some oil fees are set as percentages, the public is always going to get precisely what the oil is worth due to the competitive bidding process. If all license fees were increased arbitrarily, as you seem to suggest (I’ll get to that later), the prices paid at auction for oil rights would decrease until the government received precisely as much money as it did before. Absent some sort of industrial-governmental conspiracy, oil companies will pay precisely what the oil is worth (factoring in the need for oil companies to produce a profit) as based on market oil prices via whatever combination of fees the government spells out.
The crux of your argument seems to be the idea that oil companies are producing unreasonable amounts of profit. But as Schnitte mentioned upthread, oil companies produce relatively as much or less profit than other industries. The large nominal values of their profit is a result of oil’s economies of scale and oil’s importance in the world economy. Because you either ignored or didn’t understand these points when last raised, I’ll elaborate on them again. First of all, petroleum is subject to enormous economies of scale (perhaps moreso than almost any industry besides basic utilities) due to the enormous capital investments required. This favors larger companies, which means that the industry will have fewer but larger players in it. Next of all, oil is fundamental to industrial society and is of enormous economic and geopolitical importance. This means that the oil industry will be larger than less important industries. The result of these two factors is that oil companies will be larger than other companies, and as a result, will have larger nominal profits. However, relative profits are no bigger than in other fields.
You also seem to believe that all oil costs the same to produce, which is demonstrably false. The price of oil produced via hydraulic fracturing, for example, is substantially higher than the price of oil produced by conventional drilling (e.g. Saudi Arabia). Because the price of oil exploration varies over geography and time, you can’t say that all oil costs precisely 1$/gallon to produce, which means you can’t arbitrarily assume that oil companies are reaping in profit whenever the price of oil rises. In addition, the belief that changes in oil are caused solely by demand is false–as any economics textbook will tell you, any market price will be determined by supply and demand unless the supply is perfectly unchanging over time. In addition, the recent drop in oil prices was caused by an oversupply of oil due to increased fracking in the US, not due to a drop in demand.
- An entire separate debate over peak oil could be had, and believing that it has been reached is not unreasonable, but treating it as a given is not correct. It’s also irrelevant to both the discussion and the point you were trying to make. As for believing that oil prices are constantly increasing and stable over the short term, a look at the average price of oil over the last few years should be enough to disabuse you of both notions.
There are plenty of other false and unsubstantiated statements you’ve made, such as the idea that we should hoard our oil as much as possible and buy overseas oil instead, and the belief that the Deepwater Horizon spill is having an ongoing detrimental effect on the Gulf of Mexico. But I think this is enough for one post. If you still want to argue, I’d recommend reading up on oil markets or even just basic economics first.