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June 11, 2008


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Maybe they should contact their Democratic friends on Capitol Hill and tell them.
They want it all spent on alternative fuels so their friends can make a bundle.

Christopher Taylor

The mood of the nation is beginning to shift on drilling, people understand that more local supply = cheaper fuel and they're sick of paying so much for gas (and through it, everything else). Meanwhile, Democrats in congress continue to block efforts to lower fuel costs and do nothing to help matters.

But by all means, vote more of them in come November. And get ready for 5+ dollars a gallon gas. They keep talking about a depression around the corner, who knew that was something they wanted to happen too?


I can still remember the OAPEC inspired oil crisis way back in the fall of 1973. A now-deceased friend and I waited on lines for what seemed like hours hoping to get some gas just like millions of others did. There was talk then of decreasing our dependence on foreign oil, but despite the passage of thirty five years very little has changed. It seems that this entire problem is complicated by the three p's. The unholy trinity of politics, profits and power. The oil in place is plentiful, but the reserves available are small due to such complications as having the technology to increase the recovery factor. Does the technology exist to increase the amount of oil sold to the public? Is it being utilized? It seems strange that after three and a half decades, and with the five biggest American oil companies making thirty six billion dollars in the first three months of this year alone that the technology hasn't been developed. What is being done in the areas of water-flooding, gas injection and other techniques to increase the supply? A basic principle of economics is that when supply is increased price goes down, so perhaps Exxon Mobil, Chevron and others are acting in their own best interests. In the meantime, in my own area, families with both parents working full time are forced to visit food banks just to feed their children. It would be nice to know that our Congress is doing something as they are voted in to represent the people, but it seems like the same old story of party conflict is still operating.

jj mollo

Maybe I'm the only one, but I think high prices are exactly what we need. I realize that some people get hurt in the short run, but nothing every changes if you don't do the right thing, and the pain we feel now will only get worse if we don't change.

At some point we have to wean ourselves of oil. Am I the only one who believes that? High prices will help us do that! My only regret is that we are not collecting the higher prices as taxes. If we had imposed a 50 cent tax as John Anderson asked us to in 1980, we would be a lot better off today. This talk of lowering gas taxes is pandering of the highest order. Any letup in price, or any hint of a future letup will just discourage the entrepreneurs who are pursuing alternative solutions. Drilling for new oil is fine as long as it doesn't lower the price -- which is something we can control! If a tax break needs to be effected, it should be in the form of free trade in ethanol. And drop the ag subsidies.

Full speed ahead on nuclear! Full court press on conservation! I would even advocate a temporary enhancement of coal production. Anything to facilitate flex fuels and/or electricity. But don't let those oil-based fuel prices drop.

jj mollo

Mismanagement of the the Strategic Petroleum Reserve is even a bigger pander. Our emergency backup should serve a more serious purpose than helping to pay the weekly grocery bill. Doesn't anyone know what an emergency is anymore? I'll bet we all understood on 9/11.

Frank Warner

Let the free market work with oil. Even if we allow drilling in ANWR and the Outer Continental Shelf, the prices aren't going to tumble much, and certainly not soon, so stop worrying about that.

We need our own oil so we're not propping up dictators by buying their oil, and so we're not draining our economy buying something we're fully capable of producing ourselves.

A higher gas tax might help, but I'd like to see more analysis on that. The gas tax should be a percentage, rather than a per gallon levy, if only to make sure the tax pays for the rising cost of highway maintenance (where blacktop costs are related directly to energy costs).

Oil prices are likely to be uncomfortably high for at least five or 10 more years. If those high prices don't spawn alternative energy to power our cars, we'll be glad we drilled in ANWR and the Outer Continental Shelf, not to mention the oil shale fields of Colorado and Utah.

Yes, it would be nice to get off oil-based transportation. On the other hand, if 20 years from now it turns out that oil fuel still is one-fifth the cost of the alternatives, we'll want that oil. We can't run our economy at a major energy cost disadvantage and expect to compete for long.

And yes, that means we should start building 200 nuclear power plants immediately. That cheaper energy would kick-start our economy for a whole generation.

But this is us talking here. Except for two or three exceptions, do you notice many members of Congress who demonstrate any urgency? We need oil. We need electricity. Congress sleeps.

Who are they sleeping with?

jj mollo

You are right about the economic cost of an energy disadvantage. That's precisely the reason that we should be taxing oil. It would allow us to keep a larger proportion of the money within our own economy. Let's say for hypothetical purposes that 6 dollars is the price point which causes economic behavior in the US to change sufficiently to curb the price. If we had a two dollar tax on gas, we would already have reached that point and a third of the price would be returning to our own coffers. If we continue as we are, we will reach that price point soon anyway and our behavior will change, but OPEC will be getting the lion's share of the price and it will be draining our economy.

Dislocations like this are always painful, but it's better to take your medicine as soon as possible. If you delay appropriate economic measures, you only end up with sudden collapses or one sort or another. Keep it gradual, but pay your dues.

You are also right that it should be a percentage rather than a flat number. But once again, that's just an instance of people trying to avoid taking their medicine because it tastes bad.

Frank Warner

Congress, unfortunately, seems incapable of doing anything in gradual steps. It will commit itself to a bad idea when that commitment doesn't seem to hurt anyone, but then it will cling religiously to that bad idea until all the cards come tumbling down.

Now, if we impose a substantial gas tax, it's too late. A hundred million Americans already have arranged their homes, schools and jobs based on cheap gasoline.

Even if Congress had passed a $2 gas tax eight years ago, its leaders would have repealed it long ago at the first squeak of protest.

jj mollo

You are right, of course, which is why I recommend endowing an independent agency similar to the Fed, or even the Fed itself, with the authority to impose a variable gas tax. The mission would be reducing consumption without hurting the economy.

Just as the Fed imposes an increased interest rate, which is essentially a broad-spectrum consumption tax, to cool off a non-sustainable economic boom, the fuel usage control board (FUB?) would have technical authority to manage the flow of fuel into the economy by controlling the strategic petroleum reserve and the federal fuel tax at the pumps. Fundamentally, these kinds of important, but painful, policy decisions need to be removed from the realm of partisan politics.

Think of the political advantages too. Both parties could rail against it without having to take the responsibility for changing policy. The Chairman could come before Congress once a month to be castigated and pleaded with. He could shake his head sadly while mumbling somberly and expressing his feeling that the bad times might be behind us.

Having this kind of political theater would allow the politicians to pose gloriously for the edification and amusement of their constituents. Having this kind of economic authority would allow the US to put a leash on consumption while taking price control away from OPEC.

Frank Warner

I'm a little wary of commissions taking power from elected representatives, but it might work.

So might a simple law, requiring that each class of American vehicle double its miles per gallon within five years. But Congress isn't that bold, except in wartime, and its members don't seem to notice the war.

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