Oil Oil Everywhere, But Not a Drop to Drill”

Like I was sayin… some people just don’t get it.  On Wednesday this week, a democrat lead house sub-committee killed a measure to allow for exploration in the waters off the American coast.

The measure put forth by Rep. John Peterson, R-PA, would have allowed drilling in the waters 50 to 200 miles off the American coasts.  The measure was defeated in a 9-5 vote along party lines.

According to Rep. Peterson, “There is no valid reason for Congress to keep the country from energy resources it needs”.  However, Democrat David Obey, D-Wis countered “We are kidding ourselves if we think we can drill our way out of these problems”.

The issue is that we aren’t doing anything to alleviate the cause of the problem.  The record oil prices are caused by increasing world demand and speculation through oil futures trading.

With several developing countries growing at a record pace, their demand for energy is driving up the price of oil.  We need to attack the problem in several ways.  First, we need to increase the supply of oil and increase capacity to refine it.  Most of the known American oil reserves have been legislated off-limits by congress in an effort to appease environmentalist donors.  With increased world supply, the price comes down.  Also, the news that America will be adding supply will drive OPEC to increase production in an attempt to lessen the pressure on congress to reverse course.  We’ve gotten so worried about drilling for oil that several foreign countries have started drilling off of our coasts since we won’t.  Today, several countries including China and India are drilling for oil within a hundred miles off the Florida coast.  This area is off limits to American companies.

We also need a longer term strategy beyond increasing supply and becoming less dependant upon foreign sources of oil.  America needs to become better at conserving oil.  This would take several steps.  First, we need to utilize nuclear energy as a source of electricity.  America is 19th in the world in the production of nuclear energy behind most of Europe.  We also need to stop burning diesel fuel in oil heating units.  This method is very inefficient when compared to electricity and natural gas.

We also need to further develop hybrid technology that allows Americans to have the types of vehicles they want or need while improving fuel efficiency.  I prefer to drive SUVs and would just as soon drive an SUV that gets 30 mpg as I would drive my current 20 mpg model.

Lastly we need to develop new sources of fuel vehicles that eliminate the need to use gasoline.

The issue is that many people in congress believe that we need to do all of one and not attempt any of the others.  It will be a long time before we have a fuel cell M1 Abrams tank or 747.  By developing our own sources of oil, we will be sure that our need will not outpace our domestic supply.  We would also be able to reduce the demand for gas through cars and light trucks with better fuel economy.  This combined with the extra supply would allow us to ensure that we have sufficient oil supply to support military and heavy transportation needs.

Finally, when we have the technology to use new fuels to fuel our vehicles, we will not need to rely upon oil to fuel any of our vehicles.  However, again we can’t hope and pray that this technology is available in the future why we continue to suffer with our current lack of action to address the other ways to reduce prices.

Finally, newer rules that allow for more speculation in the oil markets have allowed speculators to drive the price of oil up.  I have seen references to the fact that based upon historic supply/demand models, oil should be somewhere in the $70 to $80 range right now.  However, speculators trading oil futures have driven the price up.  In the past, mostly only oil companies could trade futures which allowed them to forecast and control future prices.  Another big difference in the futures market is that you can trade on a 5% margin.  This creates a huge upside for those that stand to profit from rising prices.  Although I am usually against government interference in the market place, some regulation in this area would help keep speculation from being responsible for huge jumps in oil price.

Change We Can Ruin the Country With

Like I was sayin… change isn’t always good.  Senator Obama has an ambitious plan to bring change to America.  However, several of those changes will make things much worse.

One of the keys to understand how America will suffer under an Obama administration coupled with a Dem congress is to look back to the debates.  Obama was asked if he supported the raising of the capital gains tax even though raising the tax would bring in less revenue to the government.  He indicated that it was the right thing to do if you look at it through the lens of fairness.  What he is really advocating is that we should take more money away from “rich people” even if it means the government takes in less money.  Apparently it is better for some people to have less even if it means nobody benefits.  This is some sort of insane leftist thinking that will raise taxes to the point that the government takes in less money and sees that as being a good thing.

He is also on record as advocating raising taxes on the evil oil companies.  Many people who are sick of paying “too much” for gasoline nod their heads like lemmings.  Many people don’t understand that there isn’t really any such thing as corporate income tax.  All business taxes are passed on to the consumer.  If you raise taxes on oil companies, you either get higher prices or less oil (and then higher prices).

Obama also likes to push ending the Bush tax cuts (which is really just raising taxes).  One of the things the Bush tax cuts did was to increase the child credit by $500.  I am amazed at the people that support ending the tax cuts, but don’t realize it means they will pay an extra $500 a year per child in taxes.

With the rest of the world getting ready to pass America by, we as Americans need to wake up and become competative in the world.

First, we need an energy policy that makes sense.  America gets around 20% of its energy from nuclear energy.  This ranks America 19th in the world behind the UK, Finland, Spain, Sweden, Belgium, and France to name a few.  We haven’t build a nuclear plant in years and we are beginning to lag behind the rest of the world.

We also have our oil policy totally wrong.  America has enough known oil supplies in the ground to run America for over 60 years without using any foreign sources of oil.  We also haven’t added any new refineries in years.  It has gotten to the point that other countries have started drilling off our coasts to get oil that we refuse to get.  Oil isn’t the solution in the long term, but we need to reduce our dependence on countries that do not support America or worse support those that would do America harm.

America is the greatest country on earth, but will soon find itself somewhere in the top 10 if we do not wake up and start making common sense actions rather than pursue populist policies that do not address short or long term issues.

Yes America needs change, but the change candidate isn’t bringing the change that would build America up, but rather would continue to push America toward its eventual ruin.