House Democrats call for nationalization of refine

[RadioPatrol]

Well Bruz, you might get your wish:

Urgent: House Democrats call for nationalization of refineries

Per Pergram-Capitol Hill

House Democrats responded to President's Bush's call for Congress to lift the moratorium on offshore drilling. This was at an on-camera press conference fed back live.

Among other things, the Democrats called for the government to own refineries so it could better control the flow of the oil supply.

They also reasserted that the reason the Appropriations Committee markup (where the vote on the amendment to lift the ban) was cancelled so they could focus on preparing the supplemental Iraq spending bill for tomorrow.

At an off-camera briefing, House Majority Leader Steny Hoyer (D-MD) said the same. And a senior Republican House Appropriations Committee aide adds that "there were multiple reasons for the postponement" including discussion on the supplemental. But the aide said there was the thought that Democrats may wish to avoid a debate today on energy amendments.

Here are the highlights from briefing

Rep. Maurice Hinchey (D-NY), member of the House Appropriations Committee and one of the most-ardent opponents of off-shore drilling


We (the government) should own the refineries. Then we can control how much gets out into the market.

Does this mean the FED would ignore the Environmental Wackos and build more Refineries ... after all they are running @ Max CAP now .... how the hell do these ignorant asses think they can get more GAS out of any give refinery with out expanding ...

 

[ImnoMensa]

No: It means like Venezuela they mean to nationalise oil.

Maxine Waters let the cat out of the bag a couple of weeks ago.

Its all a part of the socialisation Communist conversion planned by democrats.

 

[blacklabman]

The government can't even run the cafaterias in the Capitol.

 

[Bruzilla]

Well Bruz, you might get your wish:

Does this mean the FED would ignore the Environmental Wackos and build more Refineries ... after all they are running @ Max CAP now .... how the hell do these ignorant asses think they can get more GAS out of any give refinery with out expanding ...

Sadly, I don't think so. The comment that was made was just an off-handed one and not one intended to reflect a policy shift. I think it is an important point to remember some things about refineries. Most oil companies sold off their refinery interests in the 1980s and 1990s, so few oil companies have any stake in the refineries that support them. The energy companies that bought the refineries don't have the same cushion provided by domestic oil that the oil companies do, so their margins are slimmer, which means if there is a demand to build new refineries... the tax payers are going to get hit with most of the cost. It also bears remembering that there is absolutely zero financial incentive for the energy companies to build more refineries. So there's going to be no rush to build new refineries even if all of the environmental restrictions are lifted, which then goes back to the subject of the question at the press conference... having the people build the refineries. The congressman's point was that if the people are going to have to pay to build these refineries, they should belong to, and be controlled by, the people.

Of course, guys like blacklabman will rush out to decry government control or operation of these refineries, citing (as always) the worst examples of government ineptness, but guys like him forget that just about every public water system in the country is owned and operated by a municipality or government of some kind. Guys like blacklabman should think about what their water would cost if a for-profit business controlled their water and was able to pass along every cost increase and profit requirement onto his water bill... probably about three or four times what it costs now. The same goes for electricity. Many power generating plants are owned by municipalities or very highly regulated by them. There's a lot of stuff that the government does wrong, but there's a lot of stuff it does very well, and regulating the distribution of must-have things like water and electricity at the lowest price possible is one of the things they do very well, which is why I would like to see oil and gas added to that list.

As for more capacity, that's not much of an issue. The refineries are running at about 85% of capacity, which is pretty efficient. Where the problems come in is if a refinery has to close down for some reason. So, let's assume we rush out and build a bunch more refineries... what will the benefit really be? I mean we first need to pay for these and they ain't cheap. Next, the existing refineries are running at an excellent efficiency rate right now and meeting all demands, but what happens when a bunch of new refineries come on line? The efficiency of the existing refineries will drop. They will no longer be running at 85% but more like 70% or less (depending on how many new refineries are built). The same number of people will be employed, the same amount of energy will be needed to keep the lights on, but the output will be less, which will make their price per gallon requirements higher. I think what we need is a few extra refineries to pick up the load when one goes down, but we don't need a bunch of them.

 

[Bruzilla]

No: It means like Venezuela they mean to nationalise oil.

Maxine Waters let the cat out of the bag a couple of weeks ago.

Its all a part of the socialisation Communist conversion planned by democrats.

It is true that Venezuela has a nationalized gasoline system, as does Saudi Arabia. But what does that mean? First of all, CITGO and Aramco do not buy their oil on the market. They control their own oil from the ground to the pump, which is why you can buy a gallon of gas for about 80 cents in Venezuela and about $1 in Saudi Arabia. There is absolutely no reason why we can't do the same thing in the US. We are sitting on more than enough oil stocks to meet our needs AND lower costs even more by selling surplus production, yet we pay a market rate for oil whether it is pumped in Ohio or shipped from Saudi Arabia.

We have government control of water and electricity in most every area of the United States. Does this make these operations examples of Communism? So what's the difference with handling oil and gas the same way? Why are we paying $4+ a gallon for gasoline when there is no reason for us to do so? With all the oil stocks we have, we should be paying $1 tops.

 

[AK-74me]

With all the oil stocks we have, we should be paying $1 tops.

Which is all irrelevant until we decide to exploit some of it.

 

[awpitt]

It is true that Venezuela has a nationalized gasoline system, as does Saudi Arabia. But what does that mean? First of all, CITGO and Aramco do not buy their oil on the market. They control their own oil from the ground to the pump, which is why you can buy a gallon of gas for about 80 cents in Venezuela and about $1 in Saudi Arabia. There is absolutely no reason why we can't do the same thing in the US. We are sitting on more than enough oil stocks to meet our needs AND lower costs even more by selling surplus production, yet we pay a market rate for oil whether it is pumped in Ohio or shipped from Saudi Arabia.

We have government control of water and electricity in most every area of the United States. Does this make these operations examples of Communism? So what's the difference with handling oil and gas the same way? Why are we paying $4+ a gallon for gasoline when there is no reason for us to do so? With all the oil stocks we have, we should be paying $1 tops.

You're thinking more along the lines of treating oil as a utility instead of actually nationalizing it, right? With the recent talk of lifting the offshore moritorium and drilling in ANWR, I'm beginning to think both would be good ideas if it would allow us to close our market to any oil from overseas. We would be in control from the ground to the pump and OPEC can try to find someone else to sell to.

 

[Bruzilla]

You're thinking more along the lines of treating oil as a utility instead of actually nationalizing it, right? With the recent talk of lifting the offshore moritorium and drilling in ANWR, I'm beginning to think both would be good ideas if it would allow us to close our market to any oil from overseas. We would be in control from the ground to the pump and OPEC can try to find someone else to sell to.

That's absolutely what we should be doing! Just because Communists are doing it, or the Sauds, doesn't mean it's a bad thing. But I think we do need to look at nationalizing it as this does seem to work in Venezuela and Saudi Arabia. If we try to treat it like a utility, we can end up with gas costing .50 in PA and TX, and $2.00 in Oregon and Idaho. If we have a national oil company like Aramco, that controls all the oil pumped by the US, and the refineries that make it into gas, there's no reason why we can't have the same low-cost fuels that Venezuela or Saudi Arabia have.

 

[Bruzilla]

Which is all irrelevant until we decide to exploit some of it.

Which is another argument for nationalization. I have made this argument before and I'll make it again: there is no financial motive or reward for the oil or energy companies to pursue more drilling or refineries, and that's the real reason why we've had neither. These companies have vastly more influence at all levels of govenment than the greeners have. The idea that somehow the Sierra Club and Greenpeace wield more control in DC than Exxon/Mobil is laughable. When it comes to taxation and other negative business issues, the oil/energy crowd has no problem getting bills killed over anyone's objections... but when it comes to bills that drive prices higher by restricting exploration, drilling or refining, they are powerless to the will of the Greeners. I can't believe anyone buys their nonsense!

As long as we leave these matters in the hands of for profit businesses, they will never make a serious effort to exploit additional resources.

 

[Larry Gude]

No...

should think about what their water would cost if a for-profit business controlled their water and was able to pass along every cost increase and profit requirement onto his water bill... probably about three or four times what it costs now. The same goes for electricity.

...it would be cheaper privatized as long as there was competition, BUT you would see the cost. Governments best friend is the ability to bury costs. We do it with payroll tax withholding and with social security and municipal utilities. Government has the power to provide consistency which keeps the natives quiet. We don't see the increases, but we do pay for them. A fee here, a charge there. Costs buried in this part of the budget, picked up over there in property taxes or sales taxes of the fee on your phone bill.

The problems arise with things become quasi governmental and trans national. The labyrinth of tax breaks, incentives and government paid infrastructure costs along with unfunded mandates makes things like an oil company, a refinery, water and electricity incomprehensible to us peons.

As it is intended to be.

 

[Larry Gude]

Yeah...

The idea that somehow the Sierra Club and Greenpeace wield more control in DC than Exxon/Mobil is laughable. .

...but when a high exposure, emotion based group that the public loves happens to have an agenda that helps the oil companies, we have strange bedfellows. The best friend oil companies have is Al Gore.

 

[Bruzilla]

...it would be cheaper privatized as long as there was competition, BUT you would see the cost. Governments best friend is the ability to bury costs. We do it with payroll tax withholding and with social security and municipal utilities. Government has the power to provide consistency which keeps the natives quiet. We don't see the increases, but we do pay for them. A fee here, a charge there. Costs buried in this part of the budget, picked up over there in property taxes or sales taxes of the fee on your phone bill.

The problems arise with things become quasi governmental and trans national. The labyrinth of tax breaks, incentives and government paid infrastructure costs along with unfunded mandates makes things like an oil company, a refinery, water and electricity incomprehensible to us peons.

As it is intended to be.

Well of course there are increases, but when you don't have to worry about maintaining profit margins and appeasing stock holders, those increases are minimized.

You can look at things from a theoretical perspective, or you can look at cases that yield definate emperical data. First, Saudi Arabia and Venezuela have fully nationalized oil companies, CITGO and Aramco. The government controls every aspect of their oil from oil pump to gas pump, and they are paying an average 90 cents a gallon. You can make all the theoretical arguments you like, but the inarguable fact is that the system is working extremely well in these countries.

Also look at Argentina, which went from having a state-run public water system to a privatized system. After a short period of reduced water bills, the company that won the contract started increasing their bills, resulting in increases ranging from 100% to 500% over the previous state-run bills. The contract with the government allowed the company to pass whatever costs they saw fit onto the consumers, and since people have to have water they knew they would pay. When the government tried to cap increases at 18%, the company stopped making investments in ensuring quality water and let the system fall into decline in order to force the government to allow them to charge higher rates. As a result all of the water concessions are either under legal dispute or have already reverted back to state control.

The lesson of Argentina is that it's a bad idea to allow a for-profit operation to run the distribution of something that everyone needs and that there is no substitution for. There is no such thing as competition in a captive market, that's why the oil companies went from pricing their own products based on their own costs to a spot market where everyone pays the highest rate back in the 1980s. That ensured that every oil company would sell it's products at close to the same price, so no one company could undercut another. And since there's no real substitute for gas, people will have to pay whatever these companies charge. This is why the government-controlled system works better in this area of business than the for-profit system.

 

[Bruzilla]

...but when a high exposure, emotion based group that the public loves happens to have an agenda that helps the oil companies, we have strange bedfellows. The best friend oil companies have is Al Gore.

That's a fact, and on many levels. The Greeners like Gore help the oil and energy companies by keeping supplies limited. These companies are also the ones who get the lion's share of all the alternative fuels research dollars that the Greeners are always calling for. These companies are also the ones that benefit from the hysteria-driven price increases that result from their dire predictions of more hurricanes, etc.

It wouldn't surprise me if there was a frame portrait of Gore in the office of every CEO in the industry.

 

[Larry Gude]

I'll...

You can look at things from a theoretical perspective, or you can look at cases that yield definate emperical data. First, Saudi Arabia and Venezuela have fully nationalized oil companies, CITGO and Aramco. The government controls every aspect of their oil from oil pump to gas pump, and they are paying an average 90 cents a gallon. You can make all the theoretical arguments you like, but the inarguable fact is that the system is working extremely well in these countries.

...give you a few minutes to see if you recognize the gaping hole in that point.

 

[Bruzilla]

...give you a few minutes to see if you recognize the gaping hole in that point.

So what's the gaping hole?

 

[Larry Gude]

Well...

So what's the gaping hole?

Saudi Arabia and Venezuela have fully nationalized oil companies, CITGO and Aramco. The government controls every aspect of their oil from oil pump to gas pump, and they are paying an average 90 cents a gallon. You can make all the theoretical arguments you like, but the inarguable fact is that the system is working extremely well in these countries.

Do we pretend that $.90 a gallon gas occurs in a vacuum or do we consider the whole, Saudi and Venezuela, when we look at that $.90?

We're not talking about moving from Maryland to Florida because they have so much better government. We're talking about living in the US vs. living on the moon.

So to speak.

 

[Bruzilla]

Do we pretend that $.90 a gallon gas occurs in a vacuum or do we consider the whole, Saudi and Venezuela, when we look at that $.90?

We're not talking about moving from Maryland to Florida because they have so much better government. We're talking about living in the US vs. living on the moon.

So to speak.

I'm not getting your point. Are you inferring that the government or economic structures of Venezuela and Saudi Arabia are so much different from the US that we could never successfully implement such a program here? These countries have their differences from the United States, but Saudi Arabia is every bit as capitalist as the United States, perhaps even more so. Venezuela has a quasi-communist leadership but a largely capitalistic economy. Lastly, and most importantly, we already have government owned and/or controlled distribution of water and electricity so there's already hard proof that such a method works very well in the United States.

So where's this hole again?

I think that we should follow the Aramco model, and have a government-operated oil company that runs the exploration, proceesing, delivery, and retail sales of oil and gasoline products. Thos company would use domestic oil and price it's products solely on their cost to get the oil out of the ground and to the consumer. If they can do that for $20 a barrel, then their prices are based on $20 a barrel. Any surplus production could then be sold on the global market at the market rate, with all revenues from foreign sales being used to offset domestic prices. Lastly, on the retail side, I would offer independent merchants with franchises to operate retail stores just like the current gas station/mini-mart concept. The merchants would pay a franchise fee, and they would be able to keep the profits from mechanic services or food, drinks, etc., and the franchise fees would be used to maintain the stores with surpluses used to further lower the cost of fuels. With that model we could likely get below 90 cents a gallon.

 

[Larry Gude]

Obtuse...

I'm not getting your point. Are you inferring that the government or economic structures of Venezuela and Saudi Arabia are so much different from the US that we could never successfully implement such a program here? These countries have their differences from the United States, but Saudi Arabia is every bit as capitalist as the United States, perhaps even more so. Venezuela has a quasi-communist leadership but a largely capitalistic economy. Lastly, and most importantly, we already have government owned and/or controlled distribution of water and electricity so there's already hard proof that such a method works very well in the United States.

So where's this hole again?

I think that we should follow the Aramco model, and have a government-operated oil company that runs the exploration, proceesing, delivery, and retail sales of oil and gasoline products. Thos company would use domestic oil and price it's products solely on their cost to get the oil out of the ground and to the consumer. If they can do that for $20 a barrel, then their prices are based on $20 a barrel. Any surplus production could then be sold on the global market at the market rate, with all revenues from foreign sales being used to offset domestic prices. Lastly, on the retail side, I would offer independent merchants with franchises to operate retail stores just like the current gas station/mini-mart concept. The merchants would pay a franchise fee, and they would be able to keep the profits from mechanic services or food, drinks, etc., and the franchise fees would be used to maintain the stores with surpluses used to further lower the cost of fuels. With that model we could likely get below 90 cents a gallon.

...adj; 'intentionally not getting a point so as to agitate and frustrate.'


Government run $.90 a gallon gas in a kingdom or a dictatorship is all well and good. It does not translate to $.90 a gallon gas in the worlds great capitalist bastion if we turn it over to the feds. It could work. It would work, same as electricity and other utilities. It won't be cheap, but it would be rather stable and I would argue that stable energy promotes the general welfare.

 

[Bruzilla]

...adj; 'intentionally not getting a point so as to agitate and frustrate.'


Government run $.90 a gallon gas in a kingdom or a dictatorship is all well and good. It does not translate to $.90 a gallon gas in the worlds great capitalist bastion if we turn it over to the feds. It could work. It would work, same as electricity and other utilities. It won't be cheap, but it would be rather stable and I would argue that stable energy promotes the general welfare.

Thank you for explaining your position better. I disagree with your contention. The same system you claim is incapable of the low costs seen in Venezuela has done a superb job with electric and water, so I see no reason why the same would not occur with oil and gasoline. In addition, we used to have a model of the system I described that worked superbly in this country... it was the for-profit model before 1973. Oil was pumped by oil companies, shipped to their refineries, refined into gasoline, and sold at their retail outlets. There were no spot market prices for gasoline, no global oil prices, and the price of oil was based on the actual costs incurred to get it. This system worked just fine until 1973 when the oil companies saw that they could drastically increase prices and the consumer would still pay them. That was when the quest for greater profits started and we got spot pricing and commodities markets to eliminate competition and ensure level pricing across all vendors, sell offs of refineries, dropping low-profit doemstic oil for higher profit foreign oil, etc. All I'm proposing is a return to the pre-1973 model, which worked very, very, well and would work just as well under a nationwide oil company system.

 

[Larry Gude]

How...

Thank you for explaining your position better. I disagree with your contention. The same system you claim is incapable of the low costs seen in Venezuela has done a superb job with electric and water, so I see no reason why the same would not occur with oil and gasoline. In addition, we used to have a model of the system I described that worked superbly in this country... it was the for-profit model before 1973. Oil was pumped by oil companies, shipped to their refineries, refined into gasoline, and sold at their retail outlets. There were no spot market prices for gasoline, no global oil prices, and the price of oil was based on the actual costs incurred to get it. This system worked just fine until 1973 when the oil companies saw that they could drastically increase prices and the consumer would still pay them. That was when the quest for greater profits started and we got spot pricing and commodities markets to eliminate competition and ensure level pricing across all vendors, sell offs of refineries, dropping low-profit doemstic oil for higher profit foreign oil, etc. All I'm proposing is a return to the pre-1973 model, which worked very, very, well and would work just as well under a nationwide oil company system.

...exactly, do you expect a nearly 40 year gone system based on some 80% domestically produced product to be replicated today in an environment where barely 40% of the product is subject to the placid environment of domestic US concerns and the rest comes from not so tranquil environs? Saudi and Chevezland do enjoy, you know, the vast advantage of having the stuff in their back yard. Didn't think about that, didja?