Friday, February 24, 2012

Drill Baby Drill. Economical Analysis into the impact of the proposed American Oil drilling

There has been a lot of talk over the past few years over drilling for oil. Proponents claim that this will save the American economy, opponents claim that it will destroy the environment. On the saving the American economy with hundreds of thousands of jobs, the Cornell Global Labor Institute did research and found the total net gain to the Keystone Pipeline would be between 20-127 permanent jobs total. When we do the drilling in the Tundra and Taiga of North Alaska as has been proposed we will ravage hundreds of thousands of acres of land that are currently protected and have a gigantic amount of permafrost storing enough water to raise sea levels (scientific fact unopposed by any scientist). They also claim that this will bring down oil prices with the current economic system by increasing supply. Here is why that is practically impossible and wishful thinking.

There are 18 large oil companies in the United States, all private, an anomaly in the world, with Exxon Mobile dominating by a longshot. Unless we allowed foreign corporations to drill our oil (which would be basically outsourcing the profits to their headquarters) those 18 would be the only companies that would benefit from drilling oil. An oligopoly of less CEOs than a modern typical Kindergarten classroom by the way. What is to stop them from gathering in the Cayman Islands and discussing what their prices are going to be? The answer is absolutely nothing. In fact, only 5 of those companies make the list of the 187 largest corporations of the world, ExxonMobil, Chevron, ConocoPhillips, Koch Industries, and Marathon Oil. It is safe to assume that the other 13 companies would get very small stakes and these five could outbid the others, increasing their profits and leaving the others to rot from the other companies' dominance.

Now, with five companies in control of North Alaska (which is safe to assume) what is to stop them from decreasing oil prices to give the illusion that this worked? Nothing at all. In fact, they could bring the prices so low that the other 13 companies would be drowned out of the market with their massive stocks. Seems like those stinking liberals were wrong again! Not quite. As I just said, 13 companies just went bankrupt and a majority of Americans are thinking that our oil concerns are over with prices at 80 cents per gallon, maybe lower. With only 5 companies now they can do pretty much whatever they want, they can raise prices and we will have nowhere else to turn, given that they control the vast majority (over 80%? likely) of America's oil. They then could raise prices as high as they want without increasing the pay of oil workers. That is a very scary scenario and very likely. We would have no other places to get our oil either, because of their corruption of our political system and probable sanctions on foreign oil in the name of "national security", and with the amount of money they have they will probably increase the amount they already donate to our political system (source: which will make politicians who oppose them be out-campaigned by the oil oligopoly's choice.

Did I forget to mention? Alaska is now completely covered with oil rigs in the north, destroying habitat beyond the travel region of most Americans (hear no evil, see no evil, speak no evil) which the mass media (which they already control, just watch some public or counter-media and you will be amazed) will fail to report yet again. This water has to go somewhere, matter cannot be destroyed, which means it will go to the oceans, and sea level will rise. The increase of greenhouse gases in the atmosphere will poison our environment and make recovering from climate change (which is supported by every scientist in good standing with the scientific community) a lot further down the road than it is currently.

The prices have risen too, so a period of oh, let's say 50 years, which has already been proven to make most people forget what life was truly like and gives enough time for history to be rewritten (point in case: America's mass-transit system, look up "Great American Streetcar Scandal" on youtube, you will be amazed at the corruption) which will make recovery more difficult than it is now. Social revolution? Likely.

Let's not go down this path, it will bring nothing but pain to 99.9% of all people in the world. I hope I am not being too bleak and dreary, but this is truly what is going to happen if we drill in Alaska. Economists, whether they are socialist or capitalist do agree on one thing, private oligopolies are bad. Prices will not come down in the long-run, we will not be truly energy independent, we will just be getting ripped off by the oil companies who already have control of shipping. If you doubt my claim that controlling the means to shipping (fuel) can cause someone to control an economy, read "Dune" by Frank Herbert and watch out for the Guild which did exactly that.

Again, energy independence will not come from more oil drilling, it will come from renewable resources which are exactly that, renewable and cannot be monopolized or oligopolized. That is the only path to energy independence for the United States of America.

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