Rusted Sky

First, we'll go with the NY Times take.

Senators Sharply Question Oil Officials - New York Times

WASHINGTON — Democrats on the Senate Judiciary Committee vented their fury over high gasoline prices at executives of the nation’s five largest oil companies on Wednesday, grilling the oilmen over their multimillion-dollar pay packages and warning them that Congress was intent on taking action that could include a new tax on so-called windfall profits.

Such showdowns between lawmakers and oil titans have become a familiar routine on Capitol Hill. But with gas prices nearing $4 a gallon, and lawmakers headed home for a weeklong Memorial Day recess where they expect to get an earful from angry constituents, there is added urgency for Congress to appear active.

It's not important to SOLVE the problem, after all - just to LOOK like you're doing something.

At the Judiciary Committee hearing, Democratic senators struggled to have the executives explain how oil prices had risen so high. The senators expressed doubt that basic laws of supply and demand were at work and suggested instead a more sinister combination of monopolistic behavior by oil-producing countries, speculation in the futures markets and sheer corporate greed.

And of the three, guess which is least important?

If you don't like monopolistic behavior by oil-producing countries - why can't we drill for more oil here at home?

The executives pushed back, suggesting that Democrats in Congress were at fault for not allowing more drilling and exploration for domestic oil and insisting that global economic conditions outside their control were mostly responsible for the high prices.

“As repetitive and uninteresting as it may sound, the fundamental laws of supply and demand are at work,” said John Hofmeister, the president of Shell Oil Company. “Oil exporting nations, as has been said, are managing their natural resource development and production to supply their local and global markets in their own self-interest.”

The price goes up because the demand goes up. This is apparently difficult to understand for Democrats in Congress - and they'd rather punish the oil companies because the worldwide price of crude is going through the roof than allow for more drilling in the US.

Look well, my friends, at the clowns playing at managing a crisis. There's no proposal to actually SOLVE the problem - they blame the supplier and then tie their hands so they can't produce more and bring down the price.

This crisis has been a long time coming. During it's approach, there's a number of things that could have been done to mitigate the effects. Each time, however, the 'easy' choice was made. Environmentalists got what they wanted - the squeaky wheels got the grease. Areas were put off-limits. Drilling was forbidden. Each step brought us closer to this, until the tipping point was reached. I think it was about when Katrina hit it became apparent we needed to increase the domestic oil supply - but such a thing was politically unfeasable at the time.

And now - we're in for a hard stretch of it. Pretty soon, people aren't going to care about the environmental aspects of drilling off the coasts or in ANWR. They're going to want to know why we can't. And I don't think the Democrats are going to be able to blame the oil companies for policies they've clearly fostered and encouraged.

They'll try, of course. To do anything else - like actually attempt to solve the problem, will be an admission of error. And that's simply not something that can be done.

Let's look at how CNN's Money reporting was slanted...

Oil executives go before Congress - May. 21, 2008

"You have to sense what you're doing to us - we're on the precipice here, about to fall into recession," said Sen. Richard Durbin, D-Ill. "Does it trouble any one of you - the costs you're imposing on families, on small businesses, on truckers?"

The executives said it did, and that they are doing all they can to bring new oil supplies to market, but that the fundamental reasons for the surge in oil prices are largely out of their control.

"We cannot change the world market," said Robert Malone, chairman and president of BP America Inc. "Today's high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation."

Malone's remarks were echoed by John Hofmeister, president of Shell.

"The fundamental laws of supply and demand are at work," said Hofmeister. The market is squeezed by exporting nations managing demand for their own interest and other nations subsidizing prices to encourage economic growth, he said.

In addition, Hofmeister said access to resources in the United States has been limited for the past 30 years. "I agree, it's not a free market," he said.

The executives pushed the idea that large parts of the U.S. that are currently closed to drilling - like sections of Alaska, the Rocky Mountains and the continental shelf - should be opened.

"The place to start the free market is in our own country," said one executive. [The drilling ban] sets the stage for OPEC to do what we are doing in our own country, and that is effectively limiting supplies."

John Lowe, executive vice president of ConocoPhillips, said Congress should enact a balanced energy policy. In addition to lifting the drilling ban, such a policy could include measures to encourage alternative energy sources, remove the ethanol tariff, promote energy conservation, cut regulations around refining.

"We must work together to find a real solution," said Lowe. "U.S. oil companies should be viewed not as scapegoats, but as assets."

The executives also named several things that Congress should not do, first among them being a hike in taxes or an undoing of the mergers of the late 1990s.

The difference between the NYTimes and CNN Money is that reality is important to money managers. They need the little, petty details that the NYTimes doesn't want to bother with - like the executives giving suggestions on how to get through this.

But what would you want to bet that the Democrats are going to take the absolute worst way out of this? Hike taxes? Maybe even propose nationalization of the oil companies?

I swear, you'd almost think they were on the Saudi payroll.

J.