Friday, October 07, 2005

Dark Prince of Oil Decries Dark Side of Oil

Imperial Oil CEO decries high oil, expects gasoline costs to 're-equilibrate'

Yep even the bosses of Big Oil are whining about oil costs. These are the guys who have a monopoly on the extraction and refining of oil, and facing increased public pressure over their record profits and price gouging, are trying to shift the blame to the 'market'. Whatever that is, since they are a monopoly dominating that market. Oh yeah thats right its OPEC's fault. Except OPEC is toothless.

This is rich. Well actually Imperialist Oil is rich. Methinks they are getting nervous about the calls to Nationalize the industry.

Tim Hearn, president and chief executive of Imperial Oil Ltd. (TSX:IMO), told Calgary business leaders Thursday that there's a "dark side" to sustained high crude prices that have driven fuel prices to record levels. While world oil prices have dropped by nearly $5 US this week to close Thursday at $61.36 US, Hearn said he'd prefer to see them keep falling to between $30 US and $40 US a barrel. "Those kinds of prices will more, long-term, reflect the replacement costs of the kinds of energy sources that oil will come from," he said after his lunchtime speech.

In other words the high prices are driven by speculation on future prices, such as betting that expensive Tar Sands oil will replace Alberta's declining conventional oil Reserves.

Hearn said lower prices would help the global economy, and many businesses, including even those in the energy industry who are currently seeing massive profits from the higher prices of both oil and natural gas.

May I ask a rhetorical question? If lower prices would help the global economy and you set the prices why don't you lower them...oh yeah its all those futures speculators on Wall Street that are the 'market', so much for supply and if that ever existed outside of economics text books.

Mackenzie pipeline uneconomic, Imperial CEO says

Meanwhile Mr. Hearn and Imperialist Oil are back at the trough asking for handouts and subsidies for the Mackenzie Pipeline project. Can you say BLACKMAIL? How do you spell Corporate Welfare Bum? IMPERIAL OIL.

CALGARY -- The proposed $7-billion Mackenzie Valley natural gas pipeline doesn't make economic sense unless Ottawa signs another special fiscal deal for the backers, the chief executive officer of Imperial Oil Ltd. says. "We're not asking for handouts, we're not asking for giveaways," Tim Hearn, Imperial president and CEO, told reporters after a speech yesterday at the Calgary Chamber of Commerce.

They aren't asking for handouts or giveaways, yeah right, well they already got those for the past decade, why change now see Corporate Welfare for Big Oil

Mackenzie Valley would be more profitable than a proposal for a gas line out of Alaska and other projects looking to import liquefied natural gas (LNG) to North America from Qatar, said brokerage Tristone Capital Inc. in a lengthy report in May on the subject.

"Pipelines appear economic," Tristone concluded, noting that Mackenzie would recover costs and produce a 10-per-cent return with natural gas at about $3.10 (U.S.) gas a thousand cubic feet.

Imperial -- majority owned by Exxon Mobil Corp. of Irving, Tex., the world's largest public oil company -- is using a long-term natural gas projection of $2.50 a thousand cubic feet. In the 1990s, gas averaged $2, which rose to $6 this decade before hurricane Katrina. It is now about $14.

"The world is not short of natural gas," Mr. Hearn said. "I'll guarantee you that if LNG comes into North America, you won't find $14 gas. I don't know where it'll be but it won't be $14."

Many market outlooks suggest that while LNG will probably pull down gas prices in North America, $5 a thousand cubic feet has been suggested by a majority of prognosticators as a reasonable long-term forecast

Asked about Imperial's gas forecast, Mr. Hearn said: "I'm not going to comment on it." Asked why he believes the pipeline is not economic, Mr. Hearn said: "I'm not going to answer your question."

The Globe and Mail reported last week that Imperial is asking for significant breaks from Ottawa, requests that follow the federal government's offer in July of $500-million (Canadian) in social and economic funding for northerners.

Research conducted by the Sierra Club of Canada, an environmental lobbyist, indicated last week that Imperial's requests amount to a dollar tally of $2-billion.

Yep they aren't at the trough with their hand out, no siree, not Imperialist Oil.

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