Wednesday, November 12, 2008

Who Gets the Money?


I'll post a question just for fun, because everyone loves politics!
My question is: The oil industry makes massive profits - is it better for that money to be controlled by the shareholders, or would it be better if consumer prices were reduced so there were no profits and the money was left in control of the consumers? Who should get the money: investors/shareholders or people who did not participate in the development of the resource, but only consume the product?
It's not like the money does not get spent. Investors do spend the money on other ventures. Maybe they build the Burj Dubai. When consumers spend most of it goes to the local community for food, shelter and services.
The question came from a twisted path. I've been a contributor to Greenpeace for 20 years and I get a quarterly magazine. This month they pleaded to control the Alberta oil sands projects that are using and polluting water and stripping the land and killing birds. I don't agree with them entirely. Oil is important and we have to balance the good with the bad.
My view on water (tailing ponds) is that it always evaporates and recycles. You cannot run out of water and it always cleans itself in the long run. So using water in any amount is not bad.
My view on the land (surface mining) is that nature will reclaim it. It was not clean in the first place - it was full of oil. What they return after extraction is dirt with less oil. I don't see a problem there. Over time nature will blow in sand and soil and it'll be the same as it was. So using land is OK (but only up to the point where the reduction of vegetation threatens the support all of the life on the planet).
Burning gas to provide heat for the extraction process raises the greenhouse gas emissions and I think that is bad.
Anyway the project is huge. Being a tech nerd, I wanted to see how huge it is, so I went to look at it on Google maps (I entered 'Fort McMurray Alberta' - just look for the huge grey patch north of there). You can see the tailing ponds, you can see the huge dump trucks.
I thought I could get better pictures in Wikipedia. I read the Wikipedia articles on oil sands and Athabasca oil sands to learn the history, technology and economics (I love Wikipedia!). The articles say that they are building more mines out there right now, so there will be construction work out there for at least ten years. So I'm thinking, if I really get broke, there is work out there.
While describing the economics, they go into how it costs like $25 to produce a barrel of oil, which they can sell for $60 to $100. I'm thinking: that's an outrageous profit! Is it moral? If they just dropped the selling price to $30, reducing their profit, a huge amount of money would be left for the consumers to spend on other stuff, which would provide jobs for people. As it is, the investors use the profits to capitalize other ventures, which provide jobs for people.
So which is better? That the consumer or the producer gets to control the money… Oh, I won't give an answer. It's a really big question.
I might have posted this because I just read 'Trinity' by Leon Uris, about the English exploitation of Ireland, or maybe not. Who knows how minds work?