In the wake of Hurricane Katrina, more than a few preening peacocks are parading themselves before the television cameras as energy pundits. Give these self-anointed energy seers their due. They know what sells. It's the same recycled script Hollywood has been peddling for decades: big is bad and Big Oil is worse yet. Interestingly, Hollywood is situated in California, one of the world's largest consumers of oil, guzzling more than 2 million barrels a day-mostly for choking levels of transportation. Nevertheless, as one California-based energy analyst once observed, "This is a state where people drive fairly inefficient vehicles to Sierra Club meetings to tell the rest of the world not to drill for oil." Meanwhile, onshore and offshore California, there's an estimated 70 billion barrels of oil equivalent of resource potential that will likely never be tapped because of this self-indulgent mindset. But back to the boob-tube pundits. Their theme in early September: price gouging by oil companies. To support this thesis, some cited the record second-quarter, pre-Katrina profits of all the major oils and the 2004 salaries of these companies' heads. Absent from their rants, however, was any mention of such elemental economic issues as supply and demand. Conveniently, they ignored a decades-long public policy that has placed some of the richest domestic oil frontiers off limits to drilling. Too, they seemed unaware that U.S. oil consumption has been rising 2% annually-to a current level of 22 million barrels per day-and that recent hysterical speculation in the futures market has between $10 and $15 to current crude prices. For more on this, see the October issue of Oil and Gas Investor. For a subscription, call 713-993-9320, ext. 126.

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