Doesn’t that headline hit you between the eyes like tennis ball? Mobile Oil is going to invest $100B in new oil exploration over the next 5 years. Mobile just reported $9B in profit. $9 BILLION.
I don’t’ even know how to process those numbers do you? Is there an economist in the house?
As I blogged about at this link here, the economics of a “scarce” resource drives the further searching for that resource. It’s a function of economics, though in this case it might seem crazy giving what we are doing to the environment. But even more troubling, in my opinion, is the effect on the poor.
With oil bouncing up and down from $70 - $75 per barrel, it’s clear there is money to be made for someone. It’s also clear that oil heat is expensive and will be getting more so. U.S. Home heating with oil currently accounts for 3% of the total oil used in the U.S. (according to the consumer fact sheet at FuelOil.com ). Oil itself is primarily used to heat homes in the Northeast and Mid-Atlantic region and accounts for 40% of all homes heated in the Northeast. The U.S. Energy Information Administration (EIA) has determined that 6.6 million households heat with oil (see table CE1-9c at this link here)The poverty rate in the Northeast is 10.7% (See U.S. Census definition of Northeast here, see table 2, “Poverty in the United States: 2002” U.S. Census Bureau). So, it may be reasonable to assume that 10% of those 6.6 million households are in the poverty zone, that is approximately 660,000 people have have to figure out whether to eat or heat. That’s not a pretty picture.
One organization that is trying to help is Citizen’s Energy Corporation, headed up by former Democratic Massachusetts Congressman Joe Kennedy. Citizen’s Energy supplies oil discounted down about 40% off retail price. So at a retail price of around $2.70 a gallon in February 2006, 40% off is a HUGE savings for people living at the line of eating or heating.
One question for you though, while your sipping your latte and reading here at Beck’s Cafe: can you name which of the major oil companies, who are investing billions of dollars in exploration and who have oil reserves tied up, is donating oil to Citizen’s Energy or other similar groups to do their part to help? Frankly I know of only one - Citgo. Citgo is the century-old U.S. refining and retailing arm of Venezuela´s state oil company Petróleos de Venezuela - PDVSA. Venezuela is mostly hostile to the U.S.
This donation activity has actually come under a call for scrutiny by the U.S. House Energy and Commerce Committee. It was viewed as trying to undermine our politics and breed sentiment in favor of Venezuela.
So let me understand? 660,000 homes are at the poverty line and need help. Citgo comes in and donates oil to do just that. Mobile and Exxon sit back on their profit hoard and let the certain members of the U.S. Government try and put political pressure on the receivers of this oil (the ones helping the poor) to try and stop the donations.
HUH?
To the best of my knowledge, there is not headline screaming, “Mobile reports $9B in profit, donates free heating oil to poor families hardest hit by the climbing price of oil”. The silence is deafening. And, from what I read, the discounted heating oil going to the poor continues - from Citgo, Citizen’s Energy and a host of other agencies.
So dear reader what do you think? How do we help the poor? They now have to make choices on food, heating or cooling or lighting. Do we give the money or do we write our congressman or what??
Here are a couple of ideas I had to prime the thinking pumps:
- Higher tax credits (tied to cost of electricity and oil heating…something like that. Yes there are downside to this to)
- Lobby the U.S. Oil Companies to do their share (maybe they are - anyone out there know of some press releases saying so?)
It’s Spring and soon it will be Summer. Do we care about heating oil now? Nah, not really. But when September hits many will. And with oil continuing to rise in price now is the time to make plans so that when Winter comes even the poorest among us will feel as toasty inside in their homes as they did outside in the Summer sun.
(photo courtesy of Automatt, used under Creative Commons license)
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