"Contrary to the theory, oil production shows no sign of a peak." Those words could have been written by me, but they weren't. Instead, they appeared in an Exxon Mobil advertorial on The New York Times op-ed page a few weeks back. Now, to prove the point, comes news of Mexico's big new deep-water discovery in the Gulf of Mexico. Maybe 10 billion barrels, says Mexican President Vicente Fox, bigger than Cantarell, Mexico's giant offshore field and largest oil basin.
The find is great news for the people of Mexico, where Pemex, the state-owned oil company, has through its discovery vastly expanded accessible oil reserves. And because Pemex works for the benefit of Mexico's citizens, the profits from its development of the new 10-billion-barrel find will, like Pemex discoveries before it, accrue to all Mexicans.
Contrast that with the situation here in the United States, where the oil industry has lavished hundreds of millions of dollars on Washington's K Street lobbyists, all for the purpose of buying influence in our nation's capital. As a result, Congress and the executive branch have lost sight of the greater public good and have helped steer our national interest into an oil-patch ditch. Oil companies have been permitted to gain access to leases on federal lands and their underlying oil and gas rights for a pittance, if that. And the rationale for this largesse? It was meant to encourage the development of significant new oil reserves to enhance the nations energy self reliance. At least that was we, the ever gullible public, were told. In truth, unlike Mexico's Pemex, the oil patch made only marginal additions to our national production capacity but the profits it rakes in from this "giveaway" have been enormous.
The dimensions of this giveaway are shocking. An estimated $7 billion of royalties alone owed to the federal government may be lost over the next five years because of "royalty relief" voted by Congress. In the meanwhile the oil companies' production costs are in large measure, covered through a combination of depletion allowances for oil and gas already pumped, plus depreciation credits and other favorable tax incentives. The favor is returned to the public, the original owners of the resources on federal lands and offshore in the form of extortionist monopoly prices for gasoline, heating oil, fuel oil, diesel oil and so on with the resulting profits accruing to the oil giants exclusively.
Nice work if you can get it. And the oil industry has been getting it for far too long. It's time for all of us to take back the riches of our publicly owned lands and return them to the nation's benefit. Given their boundless greed the oil companies can no longer be trusted to husband these resources in the national interest. It is time for us, the public, to override the "oiligopoly - the K Street Oil Lobby's" millions and their government acolytes to insist that our leaders henceforce create a national oil trust to develop and extract the oil and gas underlying federal and public lands.
The profits from the national oil trust's enterprise would ideally go to funding alternative fuel programs, mass transportation, hydrogen technology, hybrid car credits and whatever would help us distance ourselves from our dependence on fossil fuels. After all, these natural resources are part of the heritage that belongs to all Americans, and the benefits from their development should flow to us, not just to the oil patch and their "K Street" hires.
A federal oil trust would not be unique in concept nor experience. It could be patterned on the successful Tennessee Valley Authority, which was created by Congress in 1933, at another time of national crisis, to develop the Tennessee River system. The TVA, an independent government corporation was founded to promote navigation of inland waterways, to control flood waters of the Tennessee River by building dams, generating electricity which was made available to the region at affordable prices. It gave an enormous boost to the economies of the seven states bordering the Tennessee River Basin, which in the years of the TVA's founding were the most disadvantaged in the nation.
While promoting the development of alternative fuels the national oil trust could fund the development of both an economically viable and environmentally sound program to unlock the more than one trillion barrels of petroleum (according to the U.S. Department of Energy) in the oil shale deposits of the Western United States (deposits greater than those acknowledged by Saudi Arabia by a factor of at least four). Here is a project that would be a worthy challenge to American ingenuity whose successful solution would accord us full energy independence, regain our self respect and permit us to conduct our national and foreign affairs free of the threats our oil dependency engenders.
The largest holdings of oil shale are found on Federal lands. These belong to the nation and should be developed
in the nations interest and not just become another boondoggle for the oiligopoly few. Given their scope and their potential importance to the nation's future, and in contrast to the self-serving recent history of the oil giants, the development of the Western oil shale deposits under nothing less than the aegis of a national oil trust would portend disaster.
All wishful thinking? Perhaps. But not if we make it an issue of national debate and make it clear to our elected officials that they are in the employ of the nation and not the oil patch.