Why Aren't Oil Companies Drilling?

CBS Evening News: Oil Companies Are Only Exploring One-Third Of U.S. Land They Have Rights To

(CBS)  It was the battle hymn of the Republican National Convention last summer: "Drill baby, drill."

With gas prices soaring to $4 or more a gallon, the call for off-shore oil drilling in places previously off-limits hit a fever pitch, reports CBS News chief investigative reporter Armen Keteyian.

But despite making record profits, today, oil companies are drilling on less than one-third of the acreage in this country that they have the rights to.

John Felmi represents the oil industry.

"The leases aren't being used because there's probably no oil there," said Felmi, the chief economist with the American Petroleum Institute.

A recent U.S. Government Accountability Office report suggests otherwise. Bottom line: oil companies only "develop leases when it is most profitable to do so."

"There are clearly oil and gas resources that are undeveloped in some of the existing leases," said Frank Rusco, with the GAO.

The Department of the Interior estimates 68 billion barrels of oil lie in areas already accessible to drilling in the Gulf of Mexico and Alaska. But today, nearly half of the existing rigs sit idle. Setting the stage, experts insist, for yet another oil crisis when the economy comes back to life.

"I suspect we'll end up having a shock, and a shortage and then the prices will skyrocket," said Matthew Simmons, an energy investment banker.

The oil industry, which made nearly a quarter of a trillion dollars in profits in the last two years, an all-time high, argues that its hands are tied to shareholders.

"We had a serious decline in terms of prices and in terms of earnings in the 4th quarter of last year," Felmi said. "It's hard to spend money on investment that you don't have."

It is hard to fathom, when Exxon-Mobil's earnings last year were a staggering $45 billion - the largest corporate profit ever. While Exxon is increasing its spending on oil product by $3 billion, it is pumping over 10 times that - $35 billion - back into its stock, shareholder dividends and cash reserves. At a time when America needs more energy, needs more oil, Exxon is raking in record profits and stashing away $35 billion.

"I consider it being prudent with the owners of your money," Felmi said.

Exxon-Mobil declined our request for an interview. In a statement, the company said it's "investing at record levels to find and develop new supplies of energy."

Consumer advocates like Dan Weiss are not impressed.

"Big oil is swimming in profits with money drained from the pockets of American families," said Weiss, who is a senior fellow with the Center for American Progress. "In the meantime, they're doing little to alleviate future oil shocks."

Rending moments like the cheering at the Republican National Convention virtually meaningless - until Big Oil decides the price is right to drill baby, drill.

[noloyalisti]

It's a lot easier for the oil companies to use American taxpayer money and troops to steal oil in other countries like Iraq. As in most fascist countries like the United States, you have right wing big corporations running the media, the military and legislature for their own profit.

That is why they have these lobbyists buy Congressman and buy elections through private donations.

[carbonates]

I guess the stockholders of publicly traded oil companies are supposed to accept that drilling is required and that they should shoulder the loss incurred by drilling in unprofitable leases. Perhaps the government should return the money the oil companies paid for these leases, which amounts to billions of dollars each year. I am sure the taxpayers will be happy to carry the extra burden- in fact maybe we should get CBS to pay for that. I am sure they have no profit motive. CBS news has reached a new low of sensationalist, biased, incorrect reporting on this. I knew there was a reason I never watched CBS.

[KathyJB]

Oh, and there are thousands out of work because Oil Companies aren't drilling. I thought things would pick up the end of this month, April, but it doesn't look like it will. There are a lot of other companies who are connected one way or another with the oil field, right on down to the local bakery, who are hurting.
In my own opinion, they are waiting to see just how many taxes and fees will be thrown at them from the EPA, and whoever else want to punish them. They are going to have to raise the price of a barrel of oil to phenomenal amounts just to make a profit.

[KathyJB]

Most of the Americans at the Tea Bag protests were about all of our money they are throwing out the window. I think it is vile how the left media zealots have been so vulgar in their descriptions of these protests. Just goes to show why they are losing money.

[maverickgrn]

Oops. That should have read NOT using the land, but using the lease to maintain their monopoly.

[maverickgrn]

If these places that are being leased are not being used because they are not realistically useful for oil production, then the leases should be canceled or not renewed. The land should be used for a better purpose. If it is not good for habitat, parks, or agriculture (trees, etc.), then is it a windy spot? Does the sun shine there? There must be some better use than to lease it to a corrupt industry that is using the land, but is using the lease to maintain their monopoly.

[quickly101]

And the greed goes on.

[dodgefan95]

Something needs to happen soon....with all the drilling rigs that are stacked out, there are alot of laid off rig hands wondering when they may be going back to work!

[hm1342]

Posted by gopisajoke at 10:40 AM : Apr 14, 2009:

"Do you really expect to ever see them supporting something that puts money in workers' pockets and lowers the prices of the goods they sell?"


Actually the answer is "yes". Once someone or some company delivers a fuel source and propulsion system that is economically competitive to internal combustion engines, then you will see the oil companies falling all over themselves to make gas as cheap as possible by drilling everywhere that has oil. OPEC countries would do the same if they saw oil prices (and their economic power) plummet. Currently electric cars are suitable only for urban commutes. Hybrids are a step in the right direction but have issues of their own and overall operating costs may actually be higher than conventional vehicles. Ethanol is a government-subsidized joke at this point.

[hm1342]

And you failed to mention the taxes that were not paid on that oil via the bush tax CUTS. - Posted by rharrin1 at 5:22 AM : Apr 14, 2009

According to CNN (a highly partisan right-wing news organization - NOT):
http://money.cnn.com/2008/07/31/news/companies/exxon_profits/

"In addition to making hefty profits, Exxon also had a hefty tax bill. Worldwide, the company paid $10.5 billion in income taxes in the second quarter, $9.5 billion in sales taxes, and over $12 billion in what it called 'other taxes.'"

So what taxes were you talking about that weren't being paid?

To be fair, Exxon-Mobil and every other for-profit entity passes tax costs on to employees, shareholders and consumers in the form of lower wages, reduced dividends and higher prices at the pumps...

[douglas_dunn]

ShooShoeBush wrote:

THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING! THE SKY IS FALLING!

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

Take a breath ShooShoeBush. You'll survive. So will the U.S.A., with or without the help of the Republican Party loyalist rabble and their despicable leadership.

Try this. Chant over and over again: "I WILL NOT BE A DEPRAVED HYPOCRITE. I WILL NOT BE A DEPRAVED HYPOCRITE. I WILL NOT BE A DEPRAVED HYPOCRITE." Then, God willing, you may awake from your nightmare and discover you have become a liberal thinker. It a wonderful transition. I did it. And I highly recommend you try it.

I'm LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL LIBERAL AND PROUD OF IT.

Doug

[douglas_dunn]

ShooShoeBush,

You quote Karl Rove while attacking others? Why don't you just write MORAL IDIOT on your forehread?

Doug

[douglas_dunn]

ShooShoeBush wrote:

I'm a REALITY CHALLENGED WOUNDED REPUBLICAN. A few months ago before President Obama was elected, I was absolutely sure I was smarter than everyone else, but then my leaders turned out to be DEPRAVED HYPOCRITES. I no longer am so sure, but just in case I keep bashing my fellow citizens waiting for a new Republican Messiah to lead me to the promised land of unquestioned superiority. I know he'll come.

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

Now there is some refreshing candor. Salute you ShooShoeBush.

[gopisajoke]

It's all greed supported by the Republicans. They should activate those rigs, drill where they already have leases, and up the supply of America's oil reserves. But that wouldn't drive up the price, it would lower it. It would also create jobs in America, something the Republicans are against unless it's low paying jobs held by illegal immigrants. Whatever lines the pockets of Big Oil and Big Business and squeezes the families of this country into poverty is always what you can find on the Republican agenda. Do you really expect to ever see them supporting something that puts money in workers' pockets and lowers the prices of the goods they sell? There is no limit to the Republican and Big Business greed. That is exactly how we got into the shape we're in. They simply took too much and cut too many good paying jobs. I will certainly remember the "last 8" when I step into a voting booth!

[johndevinejr]

Posted by hollysbaby at 6:33 AM : Apr 14, 2009
+ report abuse + permalink

I am happy that you can speak your mind. I am even happier that you continue to promote failed policies and that you and your group no longer have the power to impose your totally bankrupt ideas on us.

[USA_is_back]

You are a complete moron ....

It amazes me how a lib thinks the government already makes close to twice the p[rofits the oil comapnies do and what benifate do we see from that. So what do you think will happen if the government gets all the profits.
Posted by stimporksuks at 6:37 AM : Apr 14, 2009

YOU should learn to spell "BENEFIT" (not benifate) before you call others a moron !

[hankvreeland]

The article said "Exxon-Mobil's earnings last year were a staggering $45 billion". Yet it did not mention that this was an eight per cent profit. By comparison for profit hospital last year reported twelve per cent profits and not long past, mortgage rates were over ten percent.. The article also said "oil companies only "develop leases when it is most profitable to do so." Does CBS recommend the oil companies become non profit organizations. A hundred years ago the Hearst papers were described as "yellow journalism" . Today, CBS once respected news organization, does not even meet that standard.

[johndevinejr]

Nothing you post is true. None of your predictions come to pass. Nobody thinks you're adding value to the conversation.
Posted by julesarcher1 at 6:24 AM : Apr 14, 2009

Says who? YOU? Sorry but you represent only one....no matter how many nic names you use.
Posted by Rowdy105 at 6:28 AM : Apr 14, 2009


Okay, I'll rephrase. I've not seen anything truthful in your posts. I've not seen any of your predictions come true. I don't know of anyone who finds value in what you post.

Yes, says me. Only me. This is the only name I use here.
Posted by julesarcher1 at 6:29 AM : Apr 14, 2009

julesarcher

Rowdy will jump on the repubs bandwagon no matter what they say.

Like all repubs
She will say what she is told to say
She will believe what she is told to believe

And while doing as she is directed she will claim to be in favor of life liberty and the pursuit of happiness.Of course she gets to define what will make you happy.

All posts must be cleared by Mr Limbaugh's office.

[Newster1]

They aren't drilling BECAUSE as long as supplies are tight the prices stay HIGH, it is counter profit to drill and find MORE oil because the prices would drop further.
They WANT supplies tight, but the dumb sheeple don't seem to GET that concept of supply and demand.

[julesarcher1]

Okay, It doesn't matter whether YOU find value in my posts....most communist supporters HATE the truth and don't value it and wouldn't see the truth if it knocks you on the head!
Posted by Rowdy105 at 6:33 AM : Apr 14, 2009

I can understand your position, I just don't agree with it. I'm not comfortable speaking neagtively about others so with that, I wish you well.