Tuesday, April 25, 2006

The Left Caused Higher Gas Prices

(Please note, this post was changed from its original. I released it too soon in draft form. My apologies for anything that was more incomprehensible than usual!)

President Bush has announced a new investigation into the cause of the astronomically high gasoline prices from which we now suffer. The investigation is going to center around loose allegations of anticompetitive behavior among the various petroleum retailers and distributors, and while there may be something to that it doesn't address the real problem.

If anything, it shows that Bush is responding to pressure from within the party and probably from his new Chief of Staff to be seen doing something--anything--on gas prices. Mind you, this will likely go nowhere, as the oil and gas suppliers aren't stupid enough to do any gouging in the open, especially in an environment where it might be caught. And the president is really powerless to deal with the price of oil. It is a market-controlled price. But an investigation into the big bad oil companies looks good, and like Bill Clinton's idea war room that pumped out a new feel-good proposal every week which generally went nowhere but sounded nice, it seems that Bush is buying into some of that fluff politics for the sake of his political viability.

Notwithstanding what I just said about the likelihood of the success of such an investigation, the fact that Exxon Mobil is reporting that its profits last year hit a new high and were of a "record" variety, after Katrina's wrath damaged our refining and distribution infrastructure in the Gulf, raises some serious questions. It stands to reason that higher costs of the raw material (because OPEC wants it that way) and of its refining (because Katrina and Rita scored big hits on our refining abilities) would translate into higher costs at the pump. That's painful, but it has no moral component. But by that same reasoning, the higher costs should not translate into significantly greater profits, as the margin between cost and profit wouldn't/shouldn't change. That margin would "float" on top of the costs, largely unchanged. That's just how business works.

But it becomes something different if, after passing on costs to us, the petroleum supplier hits us again, and uses the excuse of high oil prices to justify the higher pump price to score a huge opportunistic profit. And if that is really going on, (I have a very hard time believing that it's not--if anyone can explain to me how their profits can soar in the face of such costs in a way other than I have suggested, please let me know) a price needs to be paid for profiteering from anti-market behavior.

But that is not nearly so much the problem as having OPEC in the driver's seat. And for that, we need to thank the left. Because whatever we think of petroleum companies, OPEC an organization comprised of mainly unfriendly dictator-run nations whose only positive is that they have reserves of petroleum within their borders, can dictate terms to the rest of the world as to what it will cost us to use energy to keep our nations running. And we've seen the effects of having OPEC commanding the international oil market. The gas shortages of the early 1970s, those under Jimmy Carter, interminable gas lines, and the economic ramifications that come with exorbitant energy prices and lack of access to energy sources are the fruits of OPEC's cartel control of the market. And with Iran's running mouth, Mahmoud Ahmadinejad stating that oil is undervalued, things are not looking up.

So in a very real way, the left has placed us under the government of dictators because we depend upon such people's nations to provide us with the fuel we need to remain operational.

Because of environmental regulation, the last time a refinery was built in the United States was 30 years ago. The result is that we cannot really modernize our refining capacity, must rely on less efficient 1960s and 1970s technology, further preventing us from protecting our energy production infrastructure by moving facilities inland. It not only is more pollutive, which one would think the enviro-left would oppose, but dangerous. The danger is that it increases the relevance of people like Ahmadinejad, the Saudi Royal Family, and Hugo Chavez by allowing them to dictate energy terms to us, and by giving them the cash for their oil. In such a way, we are buying from them the rope by which they will hang us.

And because of environmania, the left has prevented domestic exploration of energy sources such as those to be found in the Arctic National Wildlife Refuge. But the fear by a myopic but noisy few with poor science on their side that caribou would be upset or displaced by exploration, is inhibiting the growth of our national economy and requiring us to beg for mercy from dictators who have no reason to offer any. So because of a misbegotten concern that an animal might not like it, (and evidence suggests that caribou tend to thrive in the warmer environment of a drilling station), we have placed ourselves at the mercy of the OPEC robber barons.

But a series of other environmental restrictions enacted by Executive Order fiat during the Clinton Administration have restricted access to natural gas (while promoting its use), thus making it nearly unaffordable, requiring different gas formulations in different areas of the nation, and promoting unnecessarily restrictive environmental regulations have not advanced the cause of energy independence and efficiency.

So while the likes of Harry Reid complain about the cost of a gallon of gas, blaming the problem on the Bush Administration, they really have no room to do so. Because their party's radical environmental policy has wreaked havoc on our economy and exposed us on the national security front by promoting dependence on other nations whom we might otherwise consider enemies to meet our energy needs. The environmental overregulation is a body of law whose time has passed. Technology permits cleanliness without a loss in production, and we should be permitted to pursue that for our own national well-being.

Of course, the left is more interested in orthodoxy, not innovation. And they are not interested in any economy-growing energy policy that doesn't pay homage to their environmentalist philosophies. This is evidenced by the Cheney-Halliburton demagoguery (because Cheney was head of a very wealthy oil and gas servicing company, that's a very bad thing), and the bashing of Bush whose history in the Texas oil and gas business was used similarly as an unpleasant rather than a positive quality.

These men have the industrial experience and knowledge to formulate a very economically beneficial and environmentally safe energy policy which would enable us to improve our infrastructure and increase our ability to deliver energy in a cheaper way and with less environmental impact.

But tell that to the left, who view industry and our economy with suspicion and loathing, and whose misbegotten environmental policies promise to perpetuate a system that enriches expansionist dictators who oppose our political objectives and who export terror to our shores.

Because one does not have to go to the length of actively supporting terrorism in order play a role in weakening our national security.


Anonymous Anonymous said...

Proud to read your ideas! Would also be nice to see this composition tightened up. Your Dad

8:32 PM  
Anonymous Poomba said...

I think your ideas are right on the mark. Your Dad has every right to be proud! Everyone is complaining about gas prices, but I'm tiring of the oil companies being blamed. What upsets me is that when I fill up my tank, more of that money goes to the government to the oil companies. But yet it's the government that holds Congressional hearings to villify the oil companies?!

10:04 PM  
Blogger Earl said...

The fed. tax is for roads and bridges to drive our vehicles on.The oil profits are paid to stock holders and excutives.Would you compile a list of the big money winners.[The rich and greedy?]A discusted 84 year old WW2 vet.EARL.

10:41 PM  
Anonymous Michael said...

If we're choosing sides I'll take private industry over government any day.

SOME of the taxes on oil go to roads but a lot of it goes to pet projects and supporting the bureaucracy in general. It's the same with state funded education.

And any further intervention on the part of the government in the energy industry is going to hurt the industry, and the country.

11:27 PM  
Anonymous stix said...

Ok, seriously, how cute is your Dad?! I was tooling around and saw your blog...I think you make good sense on this issue.
Earl, I have no problem with taxes in general--they are a necessary evil--but in this case a bigger percentage of pump price goes to the government than goes to the oil co. In fact, taxes are the largest contributor to pump price behind crude. That, to me, is unreasonable.

4:57 PM  
Anonymous Anonymous said...

Great post. I especially liked when you pointed out so eloquently that prices going up does not mean that profits should also go up. They should be stable or at best go mildly up. Too many people confuse the issue and it drives me crazy trying to explain it to them. I guess now I can point them to your well-reasoned post.

Mpls, MN

9:56 AM  

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