[Rhodes22-list] Excess Oil Profits

[stan]

Thanks - almost missed it since been too occupied beating the bushes to have 
time to open all e-mails.

ss

. ----- Original Message ----- 
From: "Brad Haslett" <flybrad at gmail.com>
To: "The Rhodes 22 Email List" <rhodes22-list at rhodes22.org>
Sent: Thursday, November 06, 2008 11:05 AM
Subject: [Rhodes22-list] Excess Oil Profits


> Stan, this is for you.  A poster retired from the oil business gave
> this short explanation on the Beech board.  Brad
>
> ------------------------
>
> "redistribution of wealth from all of Americans to oil companies that
> have posted world record quarterly profits (Exxon/Mobile 14+billion,
> BP 10+ billion)"
>
> A couple of basic points from someone who was in the business.
>
> The people making the (so called) excess profits are those who own the
> resource.
>
> Who are whose people? In the U.S. individuals can and do own mineral
> rights. A tiny, tiny bit may still be owned by the oil companies. In
> almost all cases those owners lease their rights to oil companies. For
> that the oil companies pay owners bonus money up front, all costs
> associated with exploration and production, and then a share of any
> resulting production. These days that share (royalty) is often in the
> 20%-25% range or higher. That means that the lessor (owner) gets to his
> credit that percentage of what comes out of the ground. Most take it as a
> direct payment from the lessee (oil company) without the burden of any
> associated costs.
>
> The other, and single largest owner, is the U.S. Government (theoretically
> us). It owns the minerals under all federal lands onshore and offshore.
> Think about that for a minute. It's a tremendous amount of area and
> production. The offshore area goes out to ~200 miles from the coastline
> of the entire U.S.  Almost all the entire oil producing area in Alaska is
> owned by the government. All national park land in the Western U.S. is
> government owned.
>
> All of the above regarding royalty payments still apply. That means when
> the price of oil recently shot up who was making a lot of the resulting
> profit? You got it, the U.S. government. No additional costs, all profit,
> all in that great big piggy bank only Congress can tap.
>
> Oh, by the way, those same oil companies and all other individual royalty
> owners must pay the U.S. Government taxes on any profit/income they
> derive. Add up the total funds transferred to the U.S. Government from
> all of the above to get an idea of how much risk free wealth is already
> transferred and redistributed by Congress. Ever wonder why it was so hard
> to get Congress to do something to reduce prices? Now you know 'the rest
> of the story'.
>
> Other point. Outside the U.S. almost no individuals own any mineral right.
> Governments own all of it. Most producing agreements allow the oil
> companies to earn a share of any reserves found. That share is constantly
> changing based on current price. As price goes up, the number of barrels
> an oil company is entitled to (reserves) actually declines. The profit
> margin is very small. It is also common internationally that binding
> contracts structured prior to the discover of oil are some how almost
> always subject to change after oil is discovered. How can this be? The
> government controls the law. The law changes at will. Sort of what we
> seem to be seeing increasingly in the U.S. (deep water royalty
> percentages for example.
>
> Sorry for the wordy reply. I'm just hoping to slightly illuminate a
> subject upon which to many are totally ignorant.
>
> Don Lawrenz
> '82 58P Baron
> KDWH
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