Kansas energy adviser defends industry’s profits

Workers for Glaze Drilling, of Spring Hill, work on an oil drilling platform west of Gardner. Oil exploration in the area is slowly on the rise.

While many Kansas drivers might be unforgiving to the oil industry executives who defended their profits before the U.S. Senate on Wednesday, Lee Allison was more sympathetic.

Allison worked in the oil industry before joining the Kansas Geological Survey at Kansas University, and now serves as Gov. Kathleen Sebelius’ science and energy adviser.

The industry’s recent big profits, he said, are not part of an attempt to gouge consumers – rather, they’re a natural result of the law of supply and demand. Drivers rarely complain when gas prices are low, even though oil companies are taking a hit.

“Oil is a global commodity, so the prices are being driven by the global market,” he said. “All of the oil companies have gone through tough times in the last 20 years when prices dropped to $8 or $9 a barrel.”

Besides, Allison said, recent higher prices could end up increasing revenues in the Kansas oil industry by up to 35 percent – around $4.7 billion a year.

“That’s substantial money,” he said. “It brings a lot into the state. When you see reports that state (tax) revenue is up, it’s that we’re seeing revenue as our oil and gas are sold.”

AAA of Kansas reported Wednesday that the average retail price of unleaded gasoline was $2.37 a gallon, down 10 cents from a week ago. Oil was selling for $59 a barrel, the lowest price in three months.