9 in 10 Americans blame Wall Street and Big Oil for spiking gas prices

Exxon profitsAmericans know who’s to blame for spiking gas prices: Big Oil and Wall Street.  Brad Johnson has the story.

As oil prices have skyrocketed, sending gas prices surging to $4 a gallon or more around the nation, American families have suffered. Although the surging prices threaten the national economic recovery as Americans cut back their household spending and driving, oil companies and commodity speculators have reaped billion-dollar payouts. Fossil-funded conservatives blame environmental regulations and President Obama, but a new poll by Opinion Research Corporation for CNN shows that the American public, no matter what party, know that they can just follow the money to find who’s to blame. Nine out of ten Americans believe that oil companies and speculators are to blame for the recent increase in gas prices:

89 percent of Americans believe oil companies deserve a great deal of (61 percent) or some (27 percent) blame for the recent increase in gas prices.

90 percent of Americans believe Wall Street speculators deserve a great deal of (59 percent) or some (31 percent) blame for the recent increase in gas prices.

Remarkably, the poll found that a majority of Americans of every ideological stripe “” Democrat, Republican, liberal, conservative “” believe that oil companies and speculators deserve a great deal of blame for gas prices. Only self-identified Tea Party supporters break with the rest of the American public, with about 4 in 10 putting the onus on Big Oil and Wall Street.

By comparison, only a quarter of Americans believe that Obama, Republicans, or environmental policies deserve a great deal of blame. (About half of Tea Partiers put most of the blame on Obama and environmental regulations.)

Goldman Sachs, a top commodity speculator, smashed investor estimates with its first-quarter profits, just after admitting a speculative bubble was driving up oil prices and hurting the US economy. Exxon made $5 million an hour the first three months of this year, while complaining that Congress is considering taking away the tax subsidies that have allowed it to pay zero income taxes. Koch Industries, as a top oil distributor, refiner, and trader, is funneling a fraction of its billion-dollar profits to conservative politicians and lobbyists who fight oil market regulation. Glencore, the world’s largest diversified commodities trader, is planning one of the largest IPOs in history, creating four new billionaires and several hundred millionaires.

Republicans in Congress are now fighting attempts to rein in speculators and end subsidies for oil companies.

— Brad Johnson, in a ThinkProgress cross-post

13 Responses to 9 in 10 Americans blame Wall Street and Big Oil for spiking gas prices

  1. Roger Blanchard says:

    A fundamental reason why the price of oil has been rising in recent years, which you certainly won’t hear from the media, is that global production has largely been flat. In 2005 global total liquid hydrocarbons (TLHs) production was 84.595 million barrels/day (mb/d) and in 2010 it was only 86.711 mb/d. That is a rise of only 2.50% over the course of 5 years. The production increase is actually deceptive because what has been increasing is largely natural gas liquids and ethanol production, both of which have much lower energy densities than crude oil.

    The energy content of the crude + condensate + ethanol + natural gas liquids, which makes up about 97% of total liquid hydrocarbons, declined from 163.3 QBtu in 2005 to 158.9 QBtu in 2010.

    For global crude oil + condensate production, the energy content has gone down from 153.2 Quadrillion BTUs in 2005 to 146.9 QBTU in 2010 while production increased from 73.712 mb/d to 74.042 mb/d. The data indicates to me that what is increasing is condensate production while crude oil production is declining.

    Obviously, demand for TLHs is increasing in countries such as China and India, which influences price. Also, exporting countries, in general, are increasing their consumption so there is less to export. The high demand for TLHs combined with limited supply leads to higher prices.

    Also, the value of the dollar has in general decline in recent years and oil is traded in dollars.

    The reason global production has flattened out is that many of the large fields throughout the world are in decline and what is being added involves generally much smaller fields that peak quickly and decline rapidly. An example of a large field in decline is the Prudhoe Bay field in Alaska. Production peaked in 1988 at 1.56 mb/d. Today it is producing around 0.3 mb/d. That is why Alaskan production has declined from 2.02 mb/d in 1988 to ~.65 mb/d now.

    Countries such as Russia and China are poised to see their oil production decline in the near future. Also, Mexico will return to decline, after a year or so of stable production, as the Ku-Zaap-Maloob project goes into decline.

    U.S. oil production (crude oil + condensate) increased in the last 2 years, mainly due to increases in the deepwater Gulf of Mexico (GOM) and the Bakken Shale region of North Dakota. I’m confident in stating the deepwater GOM oil production peaked in 2010 and Bakken Shale production could peak as soon as 2015 based upon my modeling of production.

    It wasn’t surprising to see the price of oil decline last week but unless something significant happens to reduce demand, I don’t expect to see it go to less than $90/barrel. I expect to see $200/barrel oil by 2015 so it’s wise to be prepared for that.

    Roger Blanchard
    Sault Ste. Marie, MI

  2. Sasparilla says:

    #1 Roger Blanchard – thank you – extremely well written and detailed especially the declining BTU count from 2005 to 2010 – I hadn’t seen that before and its a bit of a stark reminder of where we are with oil.

    I believe the last time we found more oil in a year than we burned was in the 60’s, ever since then we’ve been burning much more than we find.

  3. Mike Roddy says:

    Yeah, good one, Roger Blanchard. Drop by more often.

    As for public perception- the GOP has more than a year until election season to spin this. Expect to hear repeatedly that Obama wants to both jack up gas prices and take away their big trucks.

    As marginal as this issue is, it’s about the only one they’ve got.

  4. Dickensian American says:

    Excellent post at #1. Good consolidation of the numbers. Those QBTU’s–are they before or after the energy in overhead required for extraction? Peak energy theory, as I understand it, is not based on absolute and complete consumption rather than being about increasing difficulty of extraction over time as near surface deposits are used up.

    As we approach (or have already passed global production peaks), it’s also very important to remember that the 70’s oil shock here in the US came within two years of overall US oil production peaking. This synchronicity is often overlooked as pundits try to rewrite history and simply blame Carter’s foreign and energy policies for the oil shock.

    Bringing this back to the topic at hand, I was too young during the 70’s to register–but how did the oil companies make out then? Were they also raking in unprecedented profits while mom and pop had to wait in line at the gas station for hours at a time? If my general history of finance is correct, there were still too many safeguards in place from the FDR era reforms for Wall Street to be making a killing (at our expense!) at that time though.

  5. Lewis C says:

    Roger – it is very good to see these figures of comparative liquid fuels’ energy supply published here on CP.

    From your data, I calculate that between 2005 and 2010 there has been a 2.7% decline in energy supplied as ‘crude + condensate + ethanol + natural gas liquids,’ and a 4.1% decline in energy supplied as ‘crude oil + condensates’.
    The fact that this decline has occurred during a period of booming demand and exceptionally high prices affirms your assessment that crude oil production has been declining involuntarily – i.e. that for reasons of resource depletion we have passed the global peak of production and are already well into a predictably steepening curve of declining output.

    It is commonly assumed – on not a lot of evidence – that developing nations will be hit far harder by climate destabilization than the industrialized nations whose cumulative airborne GHG stocks are causing most of the problem. Yet this position seems likely to be reversed for the destabilizing impacts of a growing scarcity of liquid fuels – one pretty basic indicator is the sheer scale of China’s workforce that already travels by electric bike or bicycle (over 150 million?) compared with that in the US (3 million?). It seems pretty clear just whose economy will buckle first as oil prices rise towards $200 per barrel.

    In this light, give the extent to which the Peak Oil and Climate issues are but the consumption and waste aspects of a single dependency, I’d be interested to read your views on the prospects for integrating a “nations’ subsistence oil-supplies” protocol within the requisite UN climate treaty, as compared with the prospects for agreeing such a UN protocol in isolation.



  6. Joan Savage says:

    Diluting the BTU value per retail gallon is another price gouge. And, thanks to Roger Blanchard for the big picture on BTUs.

    An astute friend picked up on the diluted BTUs when his car’s mpg dipped significantly in winter. His mechanic pointed out that it wasn’t all due to road conditions, as the percent of ethanol mixed into vehicle fuel can fluctuate above the “at least 10% ethanol” sticker message on a pump, resulting in poorer mpg. The mechanic had told him it could be as high as 20% ethanol.

  7. paulm says:

    Democracy (as we know it) is not going to contribute effectively to solving global warming.

  8. Roddy Campbell says:

    I’m surprised to see a story here supporting the notion that oil companies are ‘to blame’ for rising oil prices (in dollar terms, as someone pointed out).

    Given the belief in peak oil, rising Chindia demand, and lack of investment in alternatives to oil for transport, I thought an ever-rising price due to these fundamentals would seem natural, here, and even good.

    The Grantham letter you posted on was pretty clear, from a practitioner, on the effects of speculation in oil, he had them as de minimis over anything but the shortest term, which I agree with.

    Also the post seems cross about how ‘As oil prices have skyrocketed, sending gas prices surging to $4 a gallon or more around the nation, American families have suffered.’ and how it can ‘threaten the national economic recovery’.

    a) I thought you wanted higher fossil fuel prices, to choke demand and stimulate alternatives

    b) It’s $8.80 at the pump in the UK, enjoy your $4!

  9. Michael Tucker says:

    No one has made a credible case for oil companies controlling the price of oil. Sure speculators and the strength of the US dollar have a great deal to do with the price of crude but it seems to be out of the hands of the oil companies. If they had even a basic level of control why would they allow radical price swings like we have seen in the past?

    I believe speculators have a great deal of influence on the price of crude but oil companies are easy targets and most Americans haven’t a clue as to how oil is priced on the world market. Speculators make stupid mistakes too but I think they may have it right at the moment at about $100 per barrel. I don’t think we will see gasoline prices fall much – something about a flood threading Louisiana refineries.

    I’m sure the ‘return to normal’ in the Middle East and Africa will begin any day now…speculators are ever optimistic.

  10. Leif says:

    Re. Roddy Campbell @ 8: There are lots of ways that big oil can manipulate the market price while appearing blameless at first glance. Shortages no doubt are an underlying factor but one must factor in refinery capacity and product preference, (US fossil oil likes sweet crud that is becoming rare), and of course a well funded campaign supporting denial of needs, puppet congress folks, greased media. Then there is unscheduled “maintenance requirements” and so much more.

  11. Roger Blanchard says:

    Dickensian #3,

    The energy content values correspond to what has been produced and doesn’t consider the energy needed to extract the liquid hydrocarbons. It should be obvious that the energy needed to extract the liquid hydrocarbons is increasing as oil companies have to go to tar sands, deepwater oil, heavy oil, etc as conventional oil declines.


  12. Rick says:

    Seems to me, 9 in 10 Americans have never heard of Peak Oil.

  13. Roger Blanchard says:

    Mike #3,

    I look at CP everyday but I’m pretty busy so don’t respond extensively.

    Although I consider myself an expert on oil supply issues, I’d like to think I have extensive knowledge of climate issues as well.

    You might be interested in my following commentaries concerning oil: