Oil Prices: Who's Responsible?

According to our government and our media, China is. But this is just overlooking the real facts. Though it is true that China's demand is increasing, and, as demand increases, prices go up, it is not true that they are responsible for the increase in prices. Nor, for that matter, are OPEC, the source of much of the world's oil. Rather, a look at the financial statements of an industry giant tells the truth.

Exxon-Mobil reported its total earnings for FY2005 at $36.1 billion. This an absolutely huge amount of money, and thats profit, not revenue. More telling than the total figure is that FY2005 profits were $10.8B higher than FY2004. A barrel of oil at the end of 2004 was around $40 a barrel, while it is around $75 now. A large portion of this increase is reflected in the growing profit margins of the multinational oil companies.

What can be done about this? Quite a lot actually, and it's quite easy to do so. Stop driving your car so much; walk short distances, carpool to work, and ride the public lines when feasible. The government will not do anything to curb costs on their own; it is up to us. The United States accounts for 25% of the world's energy consumption and about 8% of the world's population. We have plenty of cutting we can do, and when demand goes down, so do prices.

Of course, the real solution is to push for a real initative to work on renewable resources that require things that are common all over the world: wind power, solar power, and, eventually, hydrogen power. And don't look to the government to do this. Support greentech companies, sign up with power companies to use renewable resources (many companies have an option whereby all your power needs will be supplied by such power sources for an extra $5-10 a month), and reduce oil consumption. If everyone did their part, things like this would be history.

So, to answer the original question: Me and you.