Oil, oil, oil
As oil prices continue their climb to new heights, the only remaining OPEC country able to increase production is feeling political and economic pressure to do so—although not in the way expected by Congress. Saudi Arabia will add another 500,000 barrels of daily output to raise its production to the kingdom’s highest level in 25 years, in an attempt to allay unrest and to continue its client countries’ economic growth so they will continue to purchase additional oil.
Left unsaid by the Saudis is that current oil prices have rekindled alternative-energy efforts, which eventually would destroy their oil market altogether. The major auto manufacturers are well along in their development of hydrogen and electric vehicles, and the cost of producing oil from shale located in the United States is about half the current cost of a barrel of oil. Some projections say that the U.S. has enough oil shale to meet its current needs for the next 400 years.
Meanwhile, Exxon Mobil is unloading its 800 company-owned gas stations in addition to 1,400 dealer-operated locations. While in 2007 American oil companies turned in an 8.3 percent profit (which is seven-tenths of a percent below the average for all U.S. manufacturing), Exxon’s divesture is unlikely to affect oil and gas prices as the largest American oil and gas companies produce only three percent of global oil production and six percent of global refining capacity. Selling marginally unprofitable retail outlets will carry nowhere near the same price impact as drilling for more oil (such as in ANWR, which happens to be located merely 60 miles from the 15 billion barrels of oil already sent by Alaska through the pipeline in Prudhoe Bay).