The fact that Londoners pay $9 per U.S. Gal. for gasoline brings little comfort to America’s low and middle-income wage earners who are forced to spend a major part of their disposable income getting to and from work. With Congressional approval ratings at an all time low of less than 10%, politicians are jockeying for political positions they hope will keep them from being ousted in the upcoming elections.
The vacuous, if not downright stupid, efforts of die-hard Democrats in stalling any effort to increase our domestic oil production promises to be a major problem for them in November. In spite of this, House Speaker Nancy Pelosi steadfastly refuses to allow any legislation to come to the floor for consideration if it involves expanding domestic drilling. Instead, she argues the President should release oil from the federal oil reserve to bring down prices. While she is admitting that an increase in supply should have a dampening effect on prices, she also knows the President cannot legally tap the strategic reserve for any reason other than a major disruption in the nation’s oil supply.
Another delay tactic used by Pelosi is demanding oil companies drill in the millions of acres already under lease before being allowed to explore elsewhere. Oil companies pay millions of dollars up-front to the government at oil lease auctions; however, approximately 80% of the leases acquired prove not to be economically viable. Companies point out that with the price of oil over $140 per barrel, they would be stupid not to exploit any lease with a potential for actually producing oil.
Democrats who fail to keep up to date on their talking points are forced to fall back on their mantra that new efforts at increasing domestic supply would not result in new production for years to come. That of course, assumes that everything stays as is. The timetable for new oil production could easily be reduced to no more than three to five years by waiving government regulations and shortening the permitting process. The one area that both parties seem to agree on is that the current price of gasoline provides the best opportunity in several generations for expanding government and increasing taxes. Many see the crisis as an ideal excuse for tightening and increasing controls over the oil and automotive industries.
Another popular political tactic to assuage voter anxiety is the promise of renewable and alternative energy as though we could convert our entire transportation and manufacturing systems over next week. In reality, there is no alternative to petroleum-based energy in the foreseeable future other than coal and nuclear. Biofuels like ethanol are finite sources of alternative energy that are not only less efficient than oil but consume badly needed farmland, creating food shortages and raising food prices. Wind and solar power may be a good source of supplemental energy, but in the long run proves to be more expensive to generate using current technology.
To generate enough wind energy to supply New York City would require three million acres of turbines, an area the size of the state of Connecticut. It requires 3.73 acres of farmland to produce 1,000 gallons of ethanol, and a year to grow the corn needed to produce it. In 2007, we produced 7 billion gallons of ethanol using 23 million acres of farmland that would otherwise have been used in the production of food.
Oilman and fund manager, T. Boone Pickens is currently blanketing the country with TV ads touting his wind energy project in Texas. The initial stage involves 700 wind turbines located on 400,000 acres of land. When fully operational it should produce enough electricity for 1.3 million homes. The price tag: $10B.
Two Illinois Congressmen introduced a feel good plan this week to bring us to energy independence within fifteen years. The plan offered by Rep. Peter Roskam and Rep. John Shimkus called the Energy VISION Act contains similar provisions to the McCain Plan. It would provide $177.6M for the development of a new generation of automobiles and another $177.6M for the development of an alternative aviation fuel. Under their plan, car buyers would be given tax breaks for upgrading autos more than fifteen yeas old for more fuel-efficient models. Other elements of the plan involve $2B in clean renewable energy bonds to finance the construction of alternative and renewable sources of energy and a federal grant program for research and development of a solid Oxide fuel cell.
There are several steps we could take immediately that would make America energy independent in a short time. Most of them involve getting the government out of the energy business. When Congressional leaders like Pelosi, Reid, and Durbin rail against oil company profits they fail to mention that the lion’s share of oil profits go to the government making it the biggest profiteer by far.
The first and perhaps most egregious step in the process is the issuing of oil leases. For example, the auction of a single lease sale in the gulf of Mexico just brought in $3.7B in March to the federal government. The oil company that won the bid may or may not be successful in actually getting oil from the lease. In another example, Shell Oil paid the government $2B for an offshore lease in Alaska at a recent auction. Environmental lawyers then blocked exploration on the basis that oil company ships might bump into whales swimming in the area.
There is no shortage of available energy in the United States. The problem is with government restrictions on recovering it. There is enough energy available to last us for at least another hundred years if the Democratic Party and their radical environmentalist allies would allow energy companies to develop it.
The truth of the matter is that the socialist dominated Democratic Party led by the backers of Barack Obama, want to bring the American economy to its knees so they can usher in a new economic order based on their warped idea of “social justice”. The government engineered energy crisis may be their last best hope of doing so.