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Foreign Oil Dependency and Political Lunacy
If you are like me, you are probably starting to feel some angst over the continuing rise is gas prices. My wife and I are discussing the idea of selling our cars to get more fuel efficient ones. I may even get a Vespa.
A large factor that is driving my concern is the growing realization that our government doesn't have a clue about what a real energy policy should look like. Unfortunately it appears that both parties simply want to demogogue and attempt to buy votes.
"Yesterday the House of Representatives overwhelmingly approved legislation allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices...the bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow. The measure passed in a 324-84 vote, a big enough margin to override a presidential veto." - Reuters
Notice that this news piece came from Reuters and not The Onion. This legislation is so comical as to defy all logic. Who in the world do we (America) think we are that we can dictate how other counties use their own natural resources? Notwithstanding the inevitable global economic crisis it would cause, is there anything legally stopping OPEC counties from simply refusing to sell crude oil to the United States?
Does anyone actually believe that the United States will file antitrust charges against OPEC countries? Of course not. So in reality, this legislation is nothing more than the Democratic-led Congress pandering to the American voters so that they can say that they are "doing something" even though they aren't doing a damn thing.
Of course Republicans aren't suggesting much better. Newt Gingrich's American Solutions is advocating more domestic drilling, which would just delay the inevitable for another day for our children to deal with.
Yet no one seems to want to suggest the obvious: as a country, we need to quickly reduce our dependence on ALL oil, not just foreign oil. And the only way to do that is (paradoxically to some) to raise gas prices. The law of supply and demand dictates that higher prices lead to lower consumption. Always.
Want to know what is really happening with the increasing cost of gas? The New York Times said it perfectly last week:
"No industrialized economy is as reliant on oil, or as obsessed with gasoline prices, as the United States, the world’s biggest consumer of oil. But the oil market is largely immune to Washington’s machinations, and prices have more than quadrupled over the last six years for reasons that are increasingly disconnected from what happens in the United States.
The reality is that oil is a globally traded commodity, and Americans must pay international prices to get their share. And those prices reflect the fact that global supplies are stretched and struggling to meet a booming demand that is being driven by growth in developing countries, notably China and India. This has left the world with a very slim cushion of extra production."
This is the biggest joke I have ever witnessed. No, I am not kidding. Is this the plan? Sue our way out of this mess? And by suing OPEC, do the politicians really think that it will make them want to increase supply (like they really have the spare capacity). Maybe, just maybe, OPEC actually doesn't have spare capacity.
Andy
Why not? We can sue them in our court with our jury, convict them and froze all their trillion in assets in USA. And if they did not lower price - just confiscate all this money as ill gotten.
And maybe their raising prices to get as much as they can out of what little is really left.
Why haven't you mentioned the fact that the commodity is priced in US dollars? So while the fed reduces interest rates to spur spending, they are driving down the value of the dollar which adds to the appreciation of oil, so it is only natural that oil producers want prices to increase. It's still expensive for us (Europeans) to buy oil, but our currency is strenthening again the dollar, which mitigates the expense considerably.
I am for increasing tax on oil and put the proceeds into social security - it will make me conserve and protect me in old age. Anonymous
If you freeze their assets, have you considered that they might dump dollars and bonds? Bad idea. Not to mention, private property to consider.
Let oil prices stay high or go higher. It will make it more economical for US engineers to create profitable solutions. Eventually we will be the leader and export our technology for profit and boost our own economy. For new energy solutions to take hold economically we need a "scale of economy" to drive new systems of energy generation and transport. Same as $10/minute cellphones in the mid 80's kick started the cellular service infrastructure. Now, 20 years later, we enjoy relatively cheap cell phone service in most areas of our vast and beautiful country. As an aside, remember we were slow to adopt cellphones compared to Europe and others? It was because we already had a massive landline infrastructure in place. There was a fearful reaction from landline phone companies (change is bad! The sky will fall and you won't be able to dial 911!). Consumer demand prevailed and phone companies still figured out how to make a buck. Thank God the US Government was not more involved. We can once again prevail with the voting consumers demanding a massive reduction in energy independence.
Oil money is like money made from the drug trade. It supports dictators and terrorists. It is the crack-cocaine of the US government. We badly need rehab but won't admit it.
One more thing, does anyone feel like the US government repeatedly underestimates the tenacity of US businesses and engineers to overcome problems and eventually profit from the solutions? We usually prevail once the right economic incentives are in place to drive our capitalistic ways. Call this good or bad but our capitalistic ways have made America great. We Americans have, by sheer numbers alone, the most creative culture on earth and the US government historically squanders it. Liberal or Conservative, we have a common goal and that is to reduce our reliance on oil, particularly Middle East oil, which our young men and women are dying for today. God Bless!!!
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