John Feehery: Speaking Engagements

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Oil. More or Less?

Posted on July 9, 2008

 


 


            My dad used to work in the oil business.   Oil put me through college, so I have always had a soft spot in my heart for the business.


 


            With gas prices being what they are right now, the oil industry is under a great deal of scrutiny.


 


            They are making about the same percentage of profits as they always have, but because prices are so high, they are making more money.


 


            Democrats in Congress love to bash the oil companies.   But that message hasn’t really worked politically because it has done nothing to bring down prices.


 


            The Democrats tried to turn their attention to the oil speculators, but they discovered that many of these so-called “speculators” are pension funds owned by everyday Americans.  Dry hole.


 


            And now, they are coming to the grim conclusion that they might have to change their long-held position and support more domestic oil exploration here in America.


 


            Against this backdrop comes good news about the oil industry’s efforts to get more oil production from Iraq.


 


            Wall Street Journal reporter Neil King has an excellent story about the remarkable turnaround of the oil industry in the Kurdish areas of Iraq, where the oil is basically oozing out of the ground.


 


            King reports, “Iraq is well known as one of the planet’s last great oil repositories, with more than 115 billion barrels of reserves, by most estimates.  The surprise is how much oil – and easily accessible oil – there appears to be in Iraq Kurdish region, a rugged, Switzerland-size area that has seen centuries of conflict but essentially no oil exploration, until now…Kurdistan’s three provinces could hold more than 25 billion barrels of crude.  That’s roughly five billion barrels more than the remaining proven reserves of the U.S.”


 


            It will be easy to get this oil onto the market through Turkey, but right now, because of internal Iraqi political bickering, it still hasn’t starting flowing. 


 


            The Iraqi government recently attempted to sign no-bid contracts with western oil companies to get their technical advice necessary to insure that these key oil reserves get to the marketplace, a good sign of progress for both the Iraqis and for the oil industry.


 


            Inexplicably, Democrats jumped at this effort and cried foul.  As the New York Times reported,  “A group of Democratic senators led by Charles E. Schumer of New York is appealing to Secretary of State Condoleezza Rice to block a set of contentious no-bid oil contracts that Iraq has decided to award to the Western oil giants Exxon Mobil, Shell, Total and BP.  And if that appeal, which Mr. Schumer’s office said it faxed in the form of a letter to the State Department on Monday afternoon, is not heeded, the senators will try to cut off financing for as-yet-unspecified programs in Iraq that are not directly in support of American troops, Mr. Schumer said in an interview on Monday.”


 


Nope, we wouldn’t want western oil companies to get any advantage, against, say, the Chinese or the Russians.  Wouldn’t be prudent.


 


What is up with these Democrats?


 


They are against any domestic production and are only reluctantly coming to the conclusion that they may have to change that position.


 


And they are against any efforts to give American companies a bit of an advantage in getting more oil production from Iraq.


 


Oil prices rise and fall based on the fluctuations of the marketplace.  More supply usually means lower prices.  Democrats seem fixated on policies that will only limit supply, which will result in much higher prices.