Double Bubble, Oil is Causing the U.S. Lots of TROUBLE!

Oil derricks over American flag

By Dante Vitoria August 23, 2016

Is it time for the U.S. to make a REAL SERIOUS effort to decrease our oil consumption? Many say yes. A slippery slope, but it could be done with… what’s that old chestnut…”with good ol’ American ingenuity”.

Let’s take a look at some, dare I say dreaded “F” words…FACTS!
Fact #1: In 2015, the United States consumed over 7.1 BILLION barrels of oil and other petroleum based products, that’s over 20 barrels per person.
Fact #2: In 2008, a barrel of oil traded over $100. On Monday August 22, it closed at $47.05.
Fact #3: Since the 1st quarter of 2015, over 130 North American Oil and Gas companies have filed for bankruptcy, with MANY more to follow. This represents BILLIONS of dollars!

Well, by now, my readers know your favorite “Brooklyn Boy” has a question or comment right?
YOU BET I DO!

There is a “set cost” or “break even” point for anything produced for the company that produces it to “break even” (cost of production = selling price).
Who says I slept through Economics class?

The break even point includes another one of my favorite 4-letter words…”DEBT” service (paying off the debt to build the infrastructure to drill the oil).
So now we all have a basic understanding of the term “break even”…RIGHT?

Do you think the OPEC nations have ANY debt service left? I hate to point it out, but MOST of their infrastructure was paid by U.S. oil companies in the first place!
Point being, their “break even” is “0”.

Now let’s look at some other oil producers:

Welcome to…Williston, North Dakota:
Since 2010 the population more than tripled to 36,000. 10,000 houses and apartment buildings were built. Not to mention, the city spent $70 million to build a high school plus another $68 million for a recreational center and new water and sewer systems.
It renovated it’s Main Street just to become “cosmopolitan”. It created a position for a Williston Civil Service employee to; of all things…write parking tickets!
When you have one of “those” guys (or gals) you have ARRIVED!
At one point, a two bedroom apartment in “beautiful downtown Williston” was renting for over $4,000 per month. Higher than the average of little places, like NYC, LA, Boston, Washington, DC or any other city in the United States!
Today, the city is a virtual ghost town.
With under a 60% occupancy rate (and MANY units were paid for 2-3 years upfront by oil producing companies for their employees) the city is headed for disaster…and soon.

Welcome to…Eagle Ford, Texas:
Eagle Ford’s shale production decline has been swift and dramatic. Two years ago, there were approximately 225 PRODUCING oil rigs, MOST running three shifts a day!
Today, less than 50 are operating, and usually one shift a day.
This region is a couple of hours east of San Antonio…or about 100 miles east of “nowhere”!
There are no big cities in this region.
A town named Gonzales is a classic “snapshot” of the region.
A population of just under 7,000…they lived in trailer parks or “camps” like sardines set up just for workers to sleep and shower. Now…NOTHING!
The average yearly salary for these men was $80,000.00!!!
Now, IF you can FIND a JOB at all, you are working in a chicken processing plant…earning minimum wage (IF you are LUCKY).
To make matters WORSE, landlords have refused to lower rents, which were doubled and tripled in 2010 (the start of the Oil Boom) from $500 to $1,500 a month.
The ancillary effect…many families do not have a roof over their heads or food to eat!
GOD BLESS AMERICA!

OK I know you’re thinking, “Vitoria, you promised you would point a finger at someone…where is it?”
Hey hey hey… take it easy, don’t get excited…

The powers that be in our President’s administration.
We make treaties and agreements with the oil producing nations everyday. Read the paper, watch the news…read Dante’s Inferno…and those are the ones we are made aware of.

How about legislating the large oil companies to purchase the oil that is produced in the U.S. at “break even” or, dare I say a small percent over “break even”??
Unfair you say?
So was that little “oops” BP had in the Gulf of Mexico!!!
How about a good old fashioned excise tax on the companies that buy oil from the likes of the BP’s until our oil producers can sell theirs?

And of course, a few of my favorites:
Are you listening Governor Cuomo?
FRACKING!!!
It is controversial that is for sure, and a “hot button” topic almost anytime it’s brought up.

So, let’s establish a standard practices and procedures guide:

  1. Oversee all companies who participate in this type of drilling
  2. Fine and put those who fail to adhere to these practices and procedures out of business.

You lower your “break even” point exponentially and supply large quantities of oil in a short period of time.

And MY personal favorite! Ready?!?!?
Have Sasha, Malia, Bo or Sunny give “Daddy” a geography lesson…Fort McHenry is in CANADA!!!
Let them drill, build a pipeline across the boarder and SELL U.S. oil.
I know, I know…wise guy!
But am I?
Or do I just have the “stones” to point things like this out and COMMENT on it?
You tell me…

It is my belief that our country owes the Williston’s, and Eagle Ford’s a GREAT DEBT…these and many other places helped immensely, without any notoriety or fanfare. Just good ol’ fashioned hard work.

Mr. “O” says “survival of the fittest” when asked about this mess. Wouldn’t that have been an answer suited to the Auto Makers?
Oh, there I go AGAIN!!! Confusing FACTS for our President’s outstanding choices for our economy.

One last question for Mr. “O”, who regularly extolls the virtues for “Alternative Energy”, which by the way…I am in favor of as well.

Why did your administration fail to fulfill a LEGAL REQUIREMENT to study the environmental impact of requiring ethanol in gasoline?
I want to KNOW…SO DOES the Inspector General of the EPA!!!
Just saying…

Dante Vitoria is the Founder and CEO of The Vitoria Group in New York City.

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