This week, Exxon-Mobil, the world’s largest publicly traded company, announced first quarter profits of $11 billion on revenues of $117 billion.

Thanks go to the rising price of oil which has almost doubled in the past year and to higher gasoline prices, which on average, rose about 30% (in the United States) over the year. The irony is that Exxon-Mobil’s announcement caused the value of its stock to fall some 4% because it didn’t live up to Wall Street’s expectations.

Apparently, Exxon could have made more profit, had it not chosen to hold back on additional price hikes for gasoline. The current price of gasoline in the States is running above $3.60 a gallon. Some people are contemplating $4.00 a gallon (diesel fuel has already passed the $4.00 mark) in the next few weeks. That would still be less than what we pay in New Brunswick. At $4.00 a gallon, Americans would only be paying the equivalent of $1.06 a litre.

Exxon-Mobil wasn't the only oil company struggling with huge profits. Companies like BP and Royal Dutch Shell Plc had better than expected first quarter earnings, up 64% and 25% respectively. ConocoPhillips' first-quarter earnings increased 17% to $4.1 billion. Petro Canada’s first quarter profits were more than a billion dollars.

Presidential hopefuls Hillary Clinton and John McCain have suggested that one way to help Americans with their gas prices would be to give them a "gas-tax holiday," in which pump prices would be temporarily exempt from certain federal taxes, providing consumers with an 18.4¢ a-gallon price break if the full benefit of the tax holiday was passed on to them. Even then, the savings would only be temporary.

For those who advocate similar action in New Brunswick, there are two considerations (i) the U.S. proposal is only a temporary measure. (ii) an equivalent saving would only amount to about 4.5¢ a litre and (iii) the cost of the tax loss to the government would have to be borne by a service cut in some other sector of the economy – health, education, highways, whatever.
Senator Barack Obama doesn’t support the proposed tax holiday but he does support, as does Clinton a proposed windfall-profits tax on oil companies. In Obama's case, he would impose a tax on each barrel of oil priced over $80.

The Energy Information Administration, a statistical arm of the U.S. government says that World oil consumption is projected to grow by 1.2 million bbl/d in 2008. Almost all of the growth is expected to come from China, the Middle East, Russia, Brazil and India. If they are right, demand will keep prices high.

The highly regarded Ernst & Young Item Club in the UK warns of the potential impact on manufacturing from high fuel costs, believing the UK could move into recession by 2010. The think-tank's gloomy scenario follows OPEC president Chakib Khelil's recent warning that the price of crude could keep rising to top $200 a barrel.

Nineteen years ago, the fall of the Berlin Wall effectively signaled the end of the Soviet Union as the world's second superpower as it lost control of its satellites in Eastern Europe.
Less than a month ago, the United States may have ceded its claim to superpower status when the price of oil passed $110 a barrel, gasoline prices crossed the $3.50 threshold and diesel fuel topped $4.00. As was true of the USSR, the U.S. will no doubt stumble on like a superpower but if its economy is gutted to pay for its daily oil fix, it too could become an ex-superpower.

The United States was for a long time, the world's leading producer of oil, supplying its own needs while generating a healthy surplus for export. That is no longer the case.

Oil was the basis for the rise of giant multinational corporations like Rockefeller's Standard Oil Company (now Exxon Mobil). Abundant, affordable petroleum was also responsible for the emergence of the American automotive and trucking industries, growth of the domestic airline industry, development of the petrochemical and plastics industries, the suburbanization of America and the mechanization of its agricultural sector.

Without an abundance of cheap oil, the United States would never have experienced its historic economic expansion post-World War II.

No less important was the role of oil in fueling the global reach of U.S. military power. Every Humvee, tank, ship, helicopter and jet fighter requires its daily ration of petroleum, without which America's technology-driven military would be forced to abandon the battlefield. The U.S. Department of Defense is the world's single biggest consumer of oil, using more of it every day than the entire nation of Sweden.

Let’s hope the next president can cut back on that military consumption.