Granby/William Hamilton " Gas prices too high? Look in the mirror
May 7, 2008
Let’s install mirrors on gas pumps so we can see reflected the people responsible for the high price of gasoline. After all, we are the ones who have elected the members of Congress, of either party, who have refused, ever since the Arab Oil Embargo of 1974, to allow the United States to become independent of oil from the Middle East.
For a nation sitting on 300 years of oil, gas and coal, this is outrageous. Were it not for our need for Middle Eastern oil, our petro-dollars would not be going to our Arab “allies” or to Iran to pay radical Islamists to kill our soldiers, sailors and Marines.
Some members of Congress are trying to blame high gas prices on Big Oil. Yet, when we look in that pump-mounted mirror, we are often seeing a person whose retirement or other income rests wholly, or in part, on IRAs, 401K plans, and other pension plans that include Big Oil stocks in their investment portfolios.
But current or even higher (ouch!) gas prices will not make most Big Oil investors rich. While current Big Oil profits may seem as obscene as the salaries paid to the executives at Disney, ABC, CBS, NBC and PBS, et al, it costs billions to find oil, get it up out of the ground, refine it and transport it to the gas pump. The return on investment (ROI) of even the best-managed, investor-owned Big Oil companies is just under 10 percent ” far less ROI than industries such as banking, manufacturing and pharmaceuticals. Moreover, while most U.S. businesses are taxed just over 20 percent, Big Oil is taxed at over 40 percent.
Canada and Mexico are the two largest suppliers of crude oil to the United States; however, the OPEC nations of the Middle East, plus Venezuela, are sitting on 77 percent of the world’s known oil reserves. Currently, investor-owned U.S. Big Oil has access to only 4 percent of the world’s oil. Ironically, those sitting on the 77 percent do not have a home-grown ability to extract their own oil. They must import western geologists and oil-field technicians.
Given the burgeoning economies of Red China and India and the ever-increasing needs of the older industrialized nations, the Demand side of the Supply and Demand Equation will spiral ever upward. For the person you see in the mirror to have relief, the Supply side must be increased. Unfortunately, we will all be long dead before alternative energy sources such as wind and solar produce more than 3 percent of our domestic energy needs. We are “stuck” with abundant un-extracted oil, gas and coal. Meanwhile, France produces 75 percent of its electricity from nuclear power. Hello.
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Congress has put 85 percent of the U.S. Continental Shelf off limits to exploration for oil or natural gas. Congress even refuses to allow that frozen far northern tip of Alaska to produce oil from one of our largest-known oil reserves.
Some temporary (but wholly inadequate) measures are possible: For summer travel, Congress could suspend the federal gas tax (18.4 cents-per-gallon) and, instead of keeping it full, we could maintain the Strategic Oil Reserve at its current 97 percent.
While using feed-corn for ethanol is reducing some gas prices by about 15-percent, we will soon learn that using vegetation consumable by humans, beef-cattle, poultry and pigs will, eventually, starve the world’s poor. Instead, we should be making bio-fuels from inedible plants such as sawgrass (Cladium jamaicense) which, regrettably, has no lobbyists.
So, aim the “blame game” at a Congress that fails to act, either due to raw partisanship or, in some cases, to please their corn-grower constituents and/or please the “Greens.”
If you watch C-SPAN II, you’ll witness the world’s greatest “dithering” body refusing to allow our oil supplies to increase. Meanwhile, as long as Senate Rule XXII allows a law favored by 59 Senators to be defeated by 41 Senators, try not to frown too much into that mirror. That causes wrinkles that will need a petroleum-based cream.
For over 21 years, syndicated columnist, William Hamilton, has written, on assignment, for the editorial pages of USA Today. Dr. Hamilton is a Distinguished Graduate of the U.S. Naval War College and was a research fellow at the U.S. Army War College U.S. Military History Institute. He is a former assistant professor of history and political science at Nebraska Wesleyan University.