I hate arguing for subsidies since Iâ??m not a big fan of them. However if you look at the breakdown from this hostile site you will see that $3.85 B of the $5 B of the subsidies goes to public related utilities, research, health benefits, and recovering of remnant resources that otherwise wouldnâ??t be used. Which ones should we do away with?
I wouldnâ??t mind doing away with all even with the understanding that it would probably hurt those programs.

I think that the entire idea stems from a Fordist idea of federal government technocrats allocating funds for "private" companies to perform research, directing what kind of research will be done and who will be doing it. Five year plans.

That's poppycock. Technology is just progressing too quickly for any government bureaucrat however wise and all-knowing to make that sort of decision.

...most of the subsidies are design to get the oil companies to do something they would not do otherwise. For example researching alternative fuels.

I won't address the first clause, I'm merely including it here for context. What I want to address is the idea of having the oil industry carry the water of researching alternative fuels.

If I were in the oil business, I would look at alternative fuels in one of two ways:

1. Potential competition for my main interest and area of expertise, which is oil. It would be at best a distraction and a diversion of resources from what I got into the business to do, and what I know I'm best at. I'd rather not bother with it -- which means if oil is one day supplanted by some other energy source, I'm going to go broke faster than you can say "peak oil."

2. A way to diversify my business and give it a headstart into the next generation of the energy industry, in the event that oil ceases to be the primary fuel of Western civilization -- which means if the assumptions about oil and about alternative energy, on which I'm basing my decision, prove to be unfounded, I'll find I've been pouring money down a rathole.

Either way, I should have to make a choice and risk the consequences.

One word on the subsidies to the oil companies, most of the subsidies are design to get the oil companies to do something they would not do otherwise

Unfortunately, that's simply untrue. Lots of the subsidies that the oil industry gets defrays the expenses of doing things they'd do anyway. It just makes it more profitable to do it.

And, Steve, about the 8% chart that you and others have been showing. Sure, there are industries that have a higher ROI than the oil industry does. But there are also lots of industries that would kill for the 8%. Perhaps a chart that relates profitability by sector to GDP would be appropriate at this point.

(I'm not kidding, it really is!)

1: 'Seasonal Blends' It's 'Enviro friendly' to create gasoline that burns at it's best under certain driving conditions. Supposedly. Yet, it does cause supply restrictions, given point 2, which is a limited refining capacity. Re-tooling this limited capacity to create these blends every few months, costs the refineries millions every year. And they actually have to stop making gas while the production line is shifted to the new blending, thus making supply/demand even worse. Where do you think that cost difference goes? Thank you, un-American left for forcing this enviro-wacko nonsense on us. If the Democrats were really serious about lowering the costs of fuel, don't you think we'd see them eliminate this enviro-wacko madness?

2: Limited refining capacity: We have not built one new refinery since 1976.Our current systems are running at around 95%, despite the gyrations of the different blends we're forcing though every few months... see point 1. Worse, we're losing some of the refineries we now have online because they can't deal with the regulatory load placed on them in the name of the 'environment', and the outrageous taxation on the investors in those companies and the companies themselves, al of whom make such systems possible. Thank you, un-American left for forcing this enviro-wacko nonsense on us. If the Democrats were really serious about the cost of gas and heating oil, don't you think they'd get serious about eliminating the mountain of red tape and impediments we're up against in the task of increasing our refining capacity?

3: World demand: The third world, along with places like China, for example, are seeing their energy demands increase. It's interesting to note that as such they're not working under the same environmental regulations nightmare we are here in the states and thus their gas prices are far cheaper. Wonder why manufacturing jobs are moving to China, and what is responsible for such shifts? The cost of energy being lower there is a large chunk of the deal. Thank you, un-American left for forcing this enviro-wacko nonsense on us. If the Democrats were serious about the cost of fuel, don't you think they'd call for our *adding* to the world supply? Which is a nice tie-in to;

4: Lack of domestic drilling: We have oil here in the US; lots of it, but the usual suspects won't let us drill for it; ANWR, for example would be turning out about a million barrels a day. Think that'd help? Remember, Bill Clinton vetoed drilling there, and the Democrats in Congress blocked the idea when Mr. Bush re-proposed it more recently as a part of his energy bill. Thank you, un-American left for forcing this enviro-wacko nonsense on us. If the Democrats were serious on this topic, don't you think they'd be willing to allow us to drill for our own oil?

5: Taxes: Not only are we dealing with tax levels amounting to as much as 70 cents per gallon in many states, particularly in the left-leaning north eastern states, but we're also paying a very heavy tax burden when is placed on the oil companies, and everyone in the delivery process... all of which adds to the cost you and I pay at the pump.... Because they pass it along as a cost of doing business. If the Democrats were really serious about lowering the costs, don't you think they'd lower the taxes both on the oil companies and direct taxation on the buyers at the pump.. Both of which come out of your wallet?

6: The growing world economy; More or less a good tie-in to point 3... As the World economy recovers from Clinton, we're seeing increasing demands and somewhat shorter supply. This is normal in an economic growth pattern. But this wouldn't be a problem, but rather a blessing, had the rest of the factors not been in place. And all the rest of the factors are directly attributable to the left.

Remember that when you go to the pump, gang. You're paying for the snail darter. Doesn't it feel good?

Make building new refineries a matter of national security.

Let's produce more crude oil right here in the US.

Make a V8 engine that'll run on natural gas, ethanol, or 85 octane, whichever is available.

This is America. We invented the computer chip and the moon rocket. We can solve this energy problem.

As we said in our post over at the Oil Drum on this (that Steve so nicely linked to a couple of posts down), there's a list of things that can be done from both the supply side and the demand side...but the whole issue is being approached in such a partisan manner that nothing productive is getting done and the rhetoric is nothing but inflammatory.

If there's one issue that could unite the country right now, it's energy. We need leadership beyond partisanship, simply put.

Prices go up, people use less thus lowering demand, and new production is initiated thus increasing production. We're talking third grade economics here (literally, my third grader had a study sheet on it this week). Instead, I expect the cartels, i.e., Republicans and Democrats, to do everything possible to exascerbate the situation for their own benefit.

But this pesky freedom thing must be done away with, since it causes far too many problems.

The $100 rebate thing is absolute crap.

My sentiments exactly.

Thank you for making this common sense statement in your comment, it is appreciated

"The answer is complicated but the first step should be our leaders explaining how complicated it is and all the different steps we can take to solve the problem. It will take years and everyone wants an answer now."

"For example, someone explain why crude prices would go up when refineries go off line? With less refinery demand crude supplies should increase and prices fall. Gas should go up but not crude. Yet when Katrina hit the refineries crude went up in price."

Big, big, big sigh

A quick google search found this information from an MMS engineer
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Statistical Highs

Shut-in 9.418 BCF and 1.557 MMBbls

Evacuated 660 manned platforms and 89 rigs

46 platforms destroyed
20 platforms with extensive damage

4 jack-up rigs destroyed
6 semi-subs / jack-ups adrift

-------------------------------------------

So at one point more then 1.5 million barrels per day of oil were off the market because of hurricane Katrina, don't you think that might account for some of the increase in the price of crude????

Oil prices that are too high aren't helpful to OPEC. High oil prices make OPEC competitors (Canadian oil sands, Gulf of Mexico deepwater wells, etc) profitable and lead to increased production from regions outside of OPECS control.