Big Oil profits not being used to increase production

kc — Tue, 22 Jul 2008 07:33:10 -0700

A few weeks ago I wrote a column about how the push by oil companies to obtain permission to drill in ANWR and offshore was about tying up leases for the future, not to increase production.

Here is a big piece of evidence to support that view. The Big Five oil companies, who are reporting record-shattering profits, are pouring 55 percent of that money into stock buybacks and dividends, while the amount of money spent on increasing production has stayed virtually unchanged for years.

Hate to break it to the people who think we can drill our way out of our energy problems, but the oil companies have no intention to help us here. It is in their best interests to keep production limited, to sit on millions of acres of leases the already have, and trying to tie up even more. It's that little thing called unregulated capitalism at work. With all the consolidation in the oil business, there is little competition here. These oil companies can lock up the supplies and watch the price go up. Their only worry is that the price will rise too much and the government will come in and bust up their party.

So yes, they make a big deal about new offshore drilling and ANWR. And if they convince Congress to go along, they'll drill a couple of holes here and there to make it look like they are doing something. But looking at their track record with the oil leases they already have, they certainly aren't going to increase oil production enough to make the price go down. Why would they? Heck, their shareholders would probably sue if they did.

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Big Oil profits not being used to increase production