For Big Oil company profits that is:

By just about any measure, the past three years have produced one of the biggest cash gushers in the oil industry’s history. Since January of 2002, the price of crude has tripled, leaving oil producers awash in profits. During that period, the top 10 major public oil companies have sold some $1.5 trillion worth of crude, pocketing profits of more than $125 billion.

“This is the mother of all booms,” said Oppenheimer & Co. oil analyst Fadel Gheit. “They have so much profit, it’s almost an embarrassment of riches. They don’t know what to do with it.

More after the break . . .
Yet despite this immense flood of money coming in they’re finding it difficult to plow some back into the business:

But as the industry looks for places to put that cash, it’s finding it harder and harder to put funds to work finding new deposits of oil and natural gas.

. . . Oil producers also have to spend money to keep oil flowing from aging fields, by drilling more holes in the ground to squeeze fewer and fewer barrels out of the same fields. The cost . . . has risen by as much as 50 percent over the past five years . . . So the cost of maintaining existing levels of production is now consuming more than half of the industry’s annual capital outlays, most of which used to go to discovering new oil fields.

That means a smaller portion of oil industry profits are being put to work to find more oil. One big reason is that finding promising areas to develop new reserves has become increasingly difficult.

So what are the oil companies doing with their profits if they can’t invest in finding and acquiring new oil resources?  Why, making their shareholders happy, of course:

Many publicly traded oil companies have been busy buying back their own stock, which helps drive up the price of the rest of the shares left on the open market. Since January 2002, stocks of major oil companies have gained 88 percent; during that period the Standard and Poor’s 500 index has gained less than half as much.

Oil producers have also given investors a raise by gradually increasing the dividends paid out to shareholders. And they’ve paid down their debts to record low levels. ExxonMobil, for example, is virtually debt-freewith a cash pile of more than $25 billion.

The upshot?  Whether intentionally, or, if you wish to be charitable, through purely unintended consequences of its war and energy policies, the result has been higher oil and gas prices. The Bush administration has primed the pump of the crude oil market and given some of its largest contributers a big, big boost in terms of sheer economic largesse.  Not since the days of the Gilded Age in American history has an American government been so beholden to the “money interest.”

You see, this is what being a compassionate conservative really means: Compassionate to Conservatives and their causes. In this case, compassionate to the interests of capitalists such as Big Oil.

Now I know some will say we were headed for a big increase in crude oil prices in any event.  How can you tie this to the Bush adminstration specifically.  Well, I don’t have an open and shut case, but consider the following:

Since Bush has taken office his administration has done everything possible to eliminate restrictions on the use of oil and gas.  For one example, Detroit has not been required to meet higher standards of fuel efficiency in the cars they manufacture.

Bush has also resisted all attempts to work with our allies to reduce manmade emissions of greenhouse gases worldwide.  Not only by rejecting the Kyoto treaty, but also by refusing to even consider further international negotiations on the matter.  At the same time there has been a concerted effort to downplay the consequences (and the existence) of global warming, to the extent of having Congressional Committee subpoena the records of Climate Scientists who have published work showing the dramatic rise in global warming over the last Century, while at the same time censoring offcial government reports from government scientists that conflict with the Administration’s views.

The Bush Energy policy ignores funding for alternative sources of energy and for conservation.  A lot of talk about the coming hydrogen economy, yes, but little action.  Meanwhile investment and incentives for solar, wind and other forms of renewablke energy are slashed, as indeed are federal funds for research into ways to conserve more energy.

Couple this with what we know of the aftermath of the wars in Afghanistan and Iraq.  Deals struck to build a natural gas pipeline through Afghanistan with the regime in Kabul.  In Iraq, awarding all energy related contracts (rebuilding infrastructure and operating the fields themselves) primarily to American companies.

Now consider the consequences of the war.  Increased instability in the region with rumors of wars or military strikes against Syria and Iran.  Chaos in Iraq caused by an intransigent opposition to the US led occupation forces, and extreme difficulty in returning oil production to levels that existed prior to the invasion (much less to levels that existed prior to the first Gulf War).  All of these have made the markets very jittery.

To sum up, Bush’s energy policy has made us more dependent on oil (increasing demand) while his war policy in the Middle east has operated to reduce supply, as well as scare the markets into price increases that, while inevitable, were not destined to spike up so rapidly in the absence of war.

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