I suggest you look at the Renewable Fuels Association’s webpage on ethanol plants before taking the word of somebody like Chevron’s CEO, David O’Reilly.

The 70% figure that Mr. O’Reilly refers to presumably is the share of ethanol-gasoline blends that is either blended by the company or distributed by its filling stations. If that is a correct figure, it is surprising.

The production of ethanol itself is dominated by two companies, Archer Daniels Midland (ADM) and POET, each accounting for 1/6th of current capacity. Other, medium-sized firms, such as Aventine Renewable Energy, US BioEnergy Corporation and VeraSun Energy Corporation account collectively for another 1/6th. A competitive fringe of smaller companies make up the bulk of the remaining capacity.

In any case, it sounds as if Mr. O’Reilly needs to do some homework on ethanol also. Here’s what he says about calls for even greater ethanol use: “U.S. farmers cannot currently produce enough corn to make more than 15 billion gallons of fuel. Producing 36 billion gallons would require huge corn imports or a massive overhaul of the U.S. agricultural economy.” Um, if it gets to that point, Mr. O’Reilly, the price of imported corn would be even higher than what domestic corn fetches today. The only reason ethanol is produced from corn in the USA in the first place is because of large subsidies that favor it, and high import tariffs that discourage imports of sugarcane-derived ethanol from Brazil.

No, if government policy insists on the USA using 36 billion gallons of ethanol (I thought the target was 35 billion gallons by 2017), meeting that challenge will more likely involve imports of ethanol, not of corn, and especially not corn to make ethanol.

Chorus
So before you go and point your finger covered in gasoline
And whine about their record profits
Remember things aren’t what they seem
Try and educate yourself with the facts or just admit you’re spoiled
If you don’t like it don’t buy it
It’s not the fault of “Big Oil”

We want it, they sell it, what’s not to understand
It’s simple as the law of supply and demand
They’re making just pennies per gallon at the pump /
While the government gets double and the roads still suck

Repeat Chorus

If you wanna keep the price down
But wanna keep the oil in the ground
You can’t have it both ways
That’s economics 101
Class dismissed go have fun

Repeat Chorus

http://www.therightbrothers.com/

The problem with this mentality is that as in any industry, as ROI increases so does the healthiness of the industry and willingness to invest more into it. Because gas is more expensive, people want revenge and forget that environmentalist and heavy government regulation has prevented the construction of new refineries and other oil facilities essential in keeping gas prices at a consumer friendly rate. Now the United States imports 12% of its gasoline from Europe… And if any company were to begin construction today, it would take at least 7 years to bring up a new refinery to full operation…. thats if they get over the red tape in actually building one.

Who here mentions that the oil industry takes a dime (who does the drilling, refining, and transporting), while the government gets 50 cents per gallon– meanwhile the service station gets squat? There honestly should be a demand to lower the tax rather than raise it but its always the evil oil companies.

I also think people need to realize that, as a percentage of revenue, most oil companies profits have remained pretty stable. Big oil revenues are up because the price of a barrel of oil is up, although not as high as the $77 per bbl (nominal) we saw last July/August 2006. And while oil is no doubt subject to the laws of supply-and-demand (which makes any sort of price manipulation pretty assinine), hedge funds and other speculative investors are dabbling in oil futures, which push up prices and create volatility.

The real reason we’re getting squeezed at the pump, besides the price of oil, is two-fold:

1. Lack of refining capacity in the US – this is a key point that all those “No Gas on May 15″ people don’t understand. If the price of oil is rising and if the refining process is bottlenecked due to weather, maintenance, or some other reason (like it is now), the price of gas will skyrocket (because afterall, there is only so much being produced while demand hasn’t slowed). It takes anywhere from 6 to 8 years to build a refinery and have it come online. Oil companies probably won’t build new refineries because the prospect of alternative fuels and better gas mileage on cars will reduce demand for gasoline.
2. Taxes – Chicago alone taxes each gallon of gas by 9% (we have the highest average price for a gallon of regular unleaded at $3.59 per gallon). Heaven forbid we reduce gas taxes when the price goes up – Dismal Jim Doyle would frown upon that because his coffers in Madison wouldn’t be flush. Same with Illinois.

I don’t complain about high gas prices because I feel I understand why they’re high. I don’t like that they’re high, but I don’t blame oil companies – they’re only a small part of the problem. I’ve adjusted how much I drive because of gas prices, and will eventually own a hybrid because it makes financial and environmental sense (yes, I am concerned about our environment). But I’m also getting tired of paying so much in gas taxes.