Why does oil in America have to be placed on to the global market?

There are a lot of misconceptions here. First off, you should remember that it is only OUR oil so long as it remains in the ground. The oil companies pay for leases for the right to look for the oil and then they pay royalties to the owners of the land (and to the State of Alaska and to the people of the USA) to extract the oil. At that point, the oil is THEIRS, not ours. They have bought and paid for the oil, and this is not a Soviet-style planned economy, so they can sell to anyone they want. The short energy crisis in California and the far West in 2001 was caused by existing stocks of petroleum being sold from US wholesalers to foreign refiners because the foreign buyers were willing to pay higher than the world market price.

It is not a requirement that the oil be placed on the world market, many explorers and extractors actually have direct contracts to sell to specific buyers. But in general the oil is auctioned on the world market because there is the most potential for profit there (just like any other commodity, you put it up for sale and you take your chances). The market sets the world price, so that is the price the refiner must pay to get access to the oil to turn it into useful products, and then they add their costs and sell it on to the distributor. Anyone who really wants the oil is free to offer more than the world rate as well. There is a whole chain of ownership from the ground to the gas tank, and while many of the links in the chain may very well be part of the same multi-national corporation, that does not change anything. This is called Vertical Consolidation, which is prevalent in many industry supply chains, which makes processing more efficient and cost effective and thus maximizing profits. I know Profit is sometimes seen as a dirty word, but without profit there can be no dividends and no salaries for the people who produce the gasoline. Eventually, the entity that is giving away the product will go out of business and then everyone is poorer because of it.

Anyways, getting back to the question at hand, again Alaska is not a stand-alone entity and it does not OWN the oil infrastructure, it was subsidized by the American taxpayer but is owned by private entities. Also, not all oil is the same, and refineries can only work on specific grades of oil. The majority of the oil produced in Alaska is not sent to the USA but instead to the Far East because the refineries along the American Pacific coast cannot handle the oil (a smaller pipeline in the 1990s was built across Canada into the US Midwest so some of the oil can be processed for US consumption, but only when US refiners are willing to pay for it). Yes, the oil is exported and cannot be used in the USA, but its presence on the world market at additional supply helps to offset indirectly the total amount of world demand to reach a final price. And, even if the facilities in Alaska could handle every drop of oil that came out of the ground, I am sure Alaska produces far more oil than the local economy can consume.

Oil from Alaska is not put on the world market sorry to dispel your theory on that. Gas is so expensive there because of the added transport to get it where it needs to be.

It is loaded on a barge in Seattle then goes to Fairbanks where it is loaded onto another barge that goes over 1,000 miles where it is loaded onto a another barge to go 250 miles where it is put into barrels and several small planes then fly it to remote areas. Alaska is bigger than the western USA and has 1/10000 of the roads and infrastructure. Ever notice the costs of good in Hawaii? Every thing is brought in by ship and that is not cheap.

It provides jobs for Americans? America doesn't have that much oil to begin with. Still, many American oil companies want to make some money and if there's some oil to be tapped in American soil, then why not? It's also more about having a reliable source of oil, not just the price. I mean, foreign countries could shut down their operations, which probably won't happen, but still if America has more oil wells, it means America can have access to oil if foreign countries decide to slowdown their productions. In the end, nuclear power or fusion nuclear power (if it's possible) might be the only way to profitably generate energy.

You asked:

Why does our government allow oil companies to use our resources and not return the favor by giving a percentage of oil to American for wholesale price?

The problem is you're barking up the wrong tree. The oil companies are not making all the money from the sale of crude oil. Most states own the rights to the oil (especially Alaska) and price their oil at or a few bucks below that of oil on the open market and they sell it to the oil companies for that price. The oil companies are not reaping the money in, the states are. So stop trying to blame it all on the evil oil companies. :-)

I do agree with you in regards to why we don't get a price break though. The problem is our oil is combined with oil imports so it it hard to tell which gallon of fuel is due to local or import crude. But then again we do get a price break of a sorts. If we did not have a partial supply of local crude just imagine how much a barrel of crude would be going for. So in a way local crude is helping to keep the price of fuel down.

You should be asking:

Why does Oil cost so much?

Why do the American people let a private corporation (The Federal Reserve) control the entire supply of money in the United States.

Why do we let this corporation print all the money congress needs, and call it a loan? Why aren't we upset when this newly printed money makes its way back into the market - causing inflation and the subsequent decline of the dollar.

Why are we so surprised that it now takes more dollars to purchase a barrel of oil than it did before?

Foreign Oil we buy from foreign government will be more expensive.

Titanium used to be expensive but when Russian Titanium was dump to the open market or global market, the price of Titanium drastically dropped becuase there were more Titanium available in the market.

Think of what will happen if the untapped oil in the U.S. are readily available for the open market.

It is pretty simple. America doesn't produce that much oil. The ones that are selling the commodity sell to the highest bidder. That is because it is a global commodity. Besides, we don't have the refinery capacity to support our gasoline consumption, so we have to import gasoline anyway. If ABC oil company can sell their oil at $1 more per barrel to China, they will do it. It is not out of greed. It is business.

Maybe you think we should establish the "US Oil Bureau" to have the government drill for oil. What do you think the end of that story would be?

Because of the oil company oligarchy is protected by the U.S. Congress and the White House. Plain and simple. The last thing these "patriotic capitalists" want is competition. No more than GM and Ford want electric cars and propane cars to take over the entire U.S. auto industry. Damn their eyes.

Too many naive people seem to believe that markets cannot be manipulated. Well, Enron managed things successfully and nearly got away with it. J.P. Morgan and others had profound affect on the stock market prior to Oct. 1929. I could add to the long list but if you don't already know, you will not likely ever know. Do you actually believe insiders do not exist? I call them hedge fund traitors.

Free market Global economy share and share alike

even the Canadians Nationalize their oil fields in Alberta and put the oil on the global economy..it is written in Treaties

Because with all the talk of opening up "free trade" in global markets to keep prices Down for Americans- the bus administration really just wants to exploit their citizen he way China, India, and Taiwan do. Make us think we have a lot and sell it out form under us to line their pockets. bush' family is an oil family. All his friends are in pharmaceuticals, and industrial agriculture- we're whoring out our resources and losing our Independence to globalization.

Soon our rivers will be as polluted as China's and our waterways will look like the Ganges all in the name of "lower taxes" on genetically modified crap food that turns us into obese, cancerous drones. .