WASHINGTON -- The American Petroleum Institute (API) sought Monday to get its message out ahead of the House Select Committee on Energy Independence & Global Warming hearing (see report in this issue of CSP Daily News). Oil company profits in total dollar amounts are huge because the companies are huge and must be so to go up against giant multinational competitors in a global market, API President Red Cavaney said during a conference call.
In terms of return on investment, "we make an acceptable return" but one in line with other industries, Cavaney argued.
High crude oil prices [image-nocss] top a list of factors that have combined to produce high gasoline prices in today's high-demand, tight supply world energy market, API added in a press statement. Even so, U.S. consumers and businesses have abundant supplies as the oil and natural gas industry continues to produce record amounts of fuels.
To keep consumers and the economy supplied with the fuel they require, the nation needs energy policies that encourage efficiency, investment in long-term initiatives and advanced technologies and the elimination of barriers to domestic oil and natural gas supplies.
"Our industry believes that the best way to deal with price volatility is to allow markets to function and follow well-reasoned, workable energy policies that enable oil and natural gas companies to attract the investment they need to meet U.S. energy needs," said Cavaney.
API has produced The Truth about Oil & Gasoline: An API Primer. Some of the factors shaping today's crude oil and gasoline markets discussed in the API primer include:
Global demand, which is forecast to continue to grow in the decades ahead. The International Energy Agency (IEA) estimates that sustaining an annual 3.6% rate of global economic growth to 2030 will require another 33 million barrels per day in oil supplies. Even with significant growth in renewables and improved efficiency, more than half the world's primary energy demand in 2030 will be met by oil and natural gas. The depreciation of the U.S. dollar, which has helped push up prices for all commodities, including petroleum. The lack of access to potential supplies due to a shift in ownership structure abroad, causing about 80% of all reserves to be held by state-owned oil companies, and an inability to explore and develop potentially vital resources in the United States.Charles T. Drevna, president of the National Petrochemical & Refiners Association (NPRA), also commented on the scope and purpose of today's House Select Committee for Energy Independence & Global Warming. He said, "Congress' preoccupation with the profits of American oil and gas producers is entirely misguided given that market forces and global tensions are the key factors in current oil prices and refining costs. As domestic refiners, we purchase oil on the markets to produce gasoline, and shrinking margins are the best evidence of how we bear the brunt of high crude prices first."
He added, "Assaulting an American industry with punitive taxes, additional federal renewable fuel mandates that may have a negative impact on supply and actually increase greenhouse gas emissions, and the exploitation of its executives for just another Capitol Hill photo op is hardly a remedy that will produce the desired relief for consumers. Political theater never provides realistic solutions to our nation's energy challenges. The American consumer deserves better from policymakers."
Drevna said new investments in 2006 alone reached more than $174 billion, a 29% increase over 2005; and between 1992 and 2006, the U.S. oil industry invested more than $1.25 trillion in a range of long-term energy initiatives. This compares to net income of $900 billion.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.