The other day I filled up my very fuel efficient SUV and shelled out $65. A year ago or so, it cost me lees than $50 for the same amount of gas. Assuming I fill up three times a month, I’ll be paying an additional $540 per year to operate my motor vehicle.  

A lot has changed in the last year on the international stage. China and India continue their unrestrained appetite for crude oil. The war in Iraq continues to stoke fears of terrorism. There’s that nut-case in Iran sitting on a lot of crude oil while threatening to unleash a nuclear holocaust on the world. And the other ding-ding in Venezuela, Hugo Chavez, recently threatened to torch his own oil fields if attacked.

            But it’s so much easier to blame Big Oil for profiting on everyone else’s misery.

            Some historical perspective is in order.

            From 1978 to 1982 I worked for Dynamit Nobel, a company that supplied chemicals to the oil and natural gas industry. During this period of time, the price of crude oil went from $30 per barrel to just under $65.

            It quickly became a time of great prosperity for anyone involved in the oil industry. In my travels through Texas and Oklahoma, there were oil wells everywhere—even farmers had pumps going on their unplanted fields to cash in on the “black gold” rush.        

Seemingly out of nowhere, oil service companies sprang up. Since the price of crude was so high, they developed a method to maximize the yield from existing wells by a process called fracturing. Huge pumps driven by twin V-16 diesel engines were used to literally jam viscous gels containing a “proppant” such as sand or sintered bauxite into wells under enormous pressure. Any tiny fissures in the oil-rich rock formation were widened and propped open. Yields increased markedly on wells that had become slow.

            But then in late 1982, the price of crude oil collapsed in just four years to under $20 per barrel where it vacillated back and forth reaching a low of under $15 per barrel in 1998 before beginning its climb to where it is today.

            I didn’t hear anyone crying for the oil industry during this time. But there were good people who were hurt. Some of the companies I called on no longer exist. People lost their jobs and their homes. It was a bleak time for anyone working in the oil industry.

            Exploration, drilling and refining crude oil into gasoline and other chemical products involves enormous financial risk and regulatory hurdles. And that assumes an oil company today can actually drill a new well or refine crude oil in a recently built refinery—both tall orders.  

There hasn’t been a new oil refinery built in the US in decades. Oil companies continue to be frustrated by radical environmentalist groups bent on preventing new drilling platforms in the Gulf of Mexico, and offshore on the West Coast. Despite repeated attempts to grant access to allow oil companies to drill with respect to the environment in the Arctic National Wildlife Refuge (ANWR) all such legislation has failed to pass Congress.

            It’s easy to demonize “Big Business” when it profits on our pain. But the past year is only a snapshot in the overall profit and loss picture of an industry that has suffered its ups and downs.  

            We may never see $20 per barrel crude oil prices again. So be it. But let’s not blame the Exxon-Mobil’s of the world. The simple law of supply and demand is at work here. And while that’s no consolation when you fill up your tank and choke back the tears as the attendant swipes your credit card, it could be worse: You could be living in the UK where gasoline is over $5/gallon. n