Saturday, March 28, 2009


Right-wingers think capitalism is perfect in every way -- utterly incapable of error -- and yet some of us stubbornly resist the True Faith. Why on earth would we do that? Well, beyond the obvious economic horrors we're experiencing now, it's stories like this, from yesterday's New York Times:

Rising Fear of a Future Oil Shock

Sharp reductions in investments and low oil prices could curb future supplies by almost eight million barrels a day within the next five years, according to a study scheduled for release Friday, the latest warning that the world could face a new energy shock when the economy picks up....

The global slowdown has forced oil companies to slash their investments, postpone or cancel expansion plans, or delay drilling in many corners of the world....

Excuse me -- "forced"? "Forced"?

What we're being told here is that even though they know it could easily lead to an energy crisis a few years from now, oil companies can't possibly increase drilling for oil now because the price they're getting for oil right now is too low. They simply can't afford it!

These are the same oil companies that made gargantuan profits in 2008. ExxonMobil made $45.2 billion last year -- the largest annual profit ever for a U.S. firm. The French energy giant Total had the largest annual profit in French history, the equivalent of $18 billion. Chevron's profit for the year was a record $23.93 billion. And on and on. But they can't possibly afford to think long-range and stick with expensive drilling projects to stave off entirely predictable future shortfalls?

...The report says about 7.6 million barrels a day of future supplies are "at risk" of being deferred or canceled, like heavy oil or deepwater projects, and which could bring total supplies to 101.4 million barrels a day by 2014. Last year, the group projected that capacity would rise to 109 million barrels a day by then.

...Christophe de Margerie, the chief executive of French oil company Total, recently said that producers would find it challenging to bolster supplies even to 90 million barrels a day by the middle of the next decade as projects get canceled.

I love that passive voice. The projects "get canceled." They "are 'at risk' of being deferred or canceled." No -- you are planning to defer or cancel the projects. This is your choice.

... many producers warn that oil prices remain too low to sustain increased investments.

"Sustain"! Yes -- the oil companies are living paycheck to paycheck! They're just barely hanging on!

..."I have often described unsustainably low oil prices as carrying the seeds of future spikes and volatility. In a low-price environment, the trend is often to focus on survival instead of expansion," Ali al-Naimi, the Saudi oil minister, said recently.

"Survival"! Yes -- God only knows how the oil giants will manage to hang on!

"The lower that oil prices drop now and the longer they stay low, the greater the negative impact on future supply," John Lipsky, the first deputy managing director of the I.M.F., told an OPEC conference in Vienna this month. "In other words, today's low prices could be setting the stage for another price run-up in the future."

Oh, please. These people are either children or scoundrels. They claim they can't possibly engage in real long-range thinking, but it's their decision to focus on short-term quarterly profits to the exclusion of all else. I know, I know -- that's what investors supposedly demand. But do you think no one would buy oil company stock if the returns were up and down from quarter to quarter but still massive over the long haul?

Of course, I'm overlooking the obvious point: an oil-price shock is what's likely to make the profits massive, if last year is any indication. And that, obviously, is where the scoundrel part comes in.

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