Tuesday, July 15, 2008

Congressional Republicans Got You Gassed Up?

Diatribe time!

Congressional Republicans' new tactic for staving off electoral disaster in November is full of gas. In fact, it might be ONLY gas.

Republicans are banging Democrats for doing nothing but investigating price gouging and talking about a windfall profits tax when, low and behold, we can drill off-shore and in the Arctic National Wildlife Reserve (ANWR) and apparently get gas down to $1.15 tomorrow!!!

I’ve written about this issue before, but now I’m furious because, this tactic is working, which means my fellow citizens are so very short-sided when they're desperate.

If we start drilling now, there will be NO results for YEARS, but it will allow Republicans to claim some kind of moral victory while giving the impression that the urgency is gone. We need the urgency of high gas prices to stir a REAL solution such as: (1) developing alternatives in solar and wind power; (2) developing alternatives in grain-based fuels; (3) improving fuel efficiency in our cars; (4) giving tax incentives for hybrids; (5) giving incentives for public transportation; and (6) encouraging people to live in the same freakin' county where they work, which might have the ancillary benefit of stopping suburban sprawl.

I’m not speaking about all Republicans, but for some, their arrogant addiction to excess, which is best illustrated in the oil discussion, is maddening. Some British-sounding bloke sitting in for Rush Limbaugh the other day was again attacking Obama for his comment that we all can’t drive SUVs and have our thermostats set at 72 degrees. Some conservatives have spun this as Obama trying to regulate everything you do. Nonsense. Obama was simply saying that, to lead globally on energy conservation, you have to, ya know, CONSERVE ENERGY! But this chap found that notion outrageous. He actually said when a man drives an SUV that is so huge, his neighbor thinks there is an eclipse when it passes, that's America. He went on to say that it's American when the man wants to run his AC on full-blast with his SUV windows down. (Interesting choice of male gender only, by the way).

And people wonder why America is hated across the globe. Of course, these same conservatives will yell at me for even CARING that we’re hated. In fact, if there is a bumper sticker that best typifies how some conservatives feel about the world citizenry (as well as a good number of their fellow Americans who don’t have the luxury of driving cars that get 2 miles per gallon) it’s this: “F--- ‘em!”

But let’s get past the bombast and ask this practical question. If we start drilling offshore and in the ANWR, how does that break our dependency from foreign oil? Exactly.

Yes, I know, my party is hardly above such tactics, but this one is particularly cynical and foolhardy because it won't even work. The increased industrialization of the world means demand will continue to rise at a rate that keeps the price today right where it is. This is a short-term-fix, except for the fix part.

If we REALLY want to save money RIGHT NOW, tell George Bush to release half the oil in the strategic reserve on bid to America's oil companies. That would give us an IMMEDIATE savings because that’s the only oil in the American terrority that is available RIGHT NOW. But will Republicans get that done? Of course not. Because, as intellectually-challenged as President Bush is, he HAS seen Mad Max. President Bush knows we can't be trusted to control ourselves, and only by hoarding this gas can he keep us all from wearing football shoulder pads, riding around in jeeps, and killing each other with crossbows.

But I’m not convinced that an investigation won't do what we want. Republicans hate government putting its big old nose under the books of oil companies, but if you look back to the Clinton health care debacle in 1994, you’ll remember that, as miserably-executed as that effort was, it led a bunch of terrified insurance companies and healthcare providers to reform. Without cost controls, these entities knew they were going to fall under the government yoke, and let me tell ya, that’s a terrifying prospect for any business.

Some businesses do outpace the government in achieving socially beneficial results. In fact, in MOST cases, the incentive was found by business, not government. But usually this is done by one maverick company in an industry that achieves a market gain which the others must follow for pragmatic, not moral, reasons. That’s the market. But I don't see any innovations for Big Oil. Do you?

Also, I keep coming back to record oil company profits. Someone explain this to me, please. Oil Company A makes 10 billion in year one. In year two, the price of crude oil goes up 2 billion, which makes the cost of that creating that gas go up 2 billion. But the oil company profits go up by 4 billion. How is this possible? If the company simply passes on the cost increases ONLY, wouldn’t the profits stay the same? But they don’t. Curiously, they continue to grow.

CNN argues that we should look on the positive side of oil industry profits. Big oil has been largely immune from layoffs, and the industry’s workforce has seen real wages gain. Of course, it has! But they get it by hosing the rest of us. (If I worked for an oil company, I'd be loving life! Can you imagine what your retirement looks like when it's funded by all oil stocks?!?)

A strong investigation into potential oil industry collusion will bring oil industry profit margins down to 8 percent, like the rest of the S&P. Seriously, how is it that 95% of gas stations in Indianapolis have the exact same daily price? Where is this alleged competition?

I’m sorry. I'm done. My head is about to explode. I feel like Lewis Black.

Don’t buy this “quick drill with no refill” hype from your Republican Congressional candidates. You want to do something meaningful? Read what T. Boone Pickens is saying. Sure, he wants to drill everywhere, too, and he's a NIMBY hypocrite, but his emphasis first on alternative fuels is a strategy you aren’t hearing from Republicans. And when a lifetime oil man says America is getting screwed by big oil, trust me, folks....he KNOWS what he's talking about.



2mpg said...

Once we drill all these new wells, we can just sit back and relax. All those folks in China and India will surely "take their foot off the gas" once they realize that we'll be out from under the yoke for eight or ten years, right? Surely the Republican lovers of free markets have thought this through, don't ya think?

This offshore drilling issue is based upon so many stupid fallacies that the voters will figure it out by the time it matters. I just wish some issue groups like MoveOn would spend some of their millions on it to educate John Q. Public.

varangianguard said...

"Republicans are banging Democrats". That sounds, well, less than politic. ;)

Now really, are you furious because the Republican call for increased drilling is getting a hearing, or because it might "allow Republicans to claim some kind of moral victory"? Is that because you believe that only Democrats have any grounds to be considered "moral"? Sounds like a simple case of sour grapes. Unless, of course, you really meant something else?

I agree that energy alternatives need to be supported, except for grain-based ethanols, which I consider a bankrupt technology.

You know, I'm insulted that you think everyone can just get a job in the same county they live in. It isn't quite that easy. I would LOVE to get sustainable and renumerative employment in the same county I live in. Hell, I'd settle for the same state. I'm what is considered an "extreme commuter", but not by simple choice. The work I do is somewhat specialized, and the "jobs" for the last seven years have either been in Louisville or Cincinnati. Sure, I could move closer to work, but my wife has a career set in Indianapolis, and she could never get a commensurate job at this point in her career path. So, until Governor Daniels really improves the local job picture, I'm kind of stuck. At least I have a person to share the driving with.

America isn't "hated" across the globe. That is a glib and underinformed portrayal that we are so despised. When other governments get out the protesters to chant "We hate America", it's for internal consumption and political convenience, not because most people in the world "hate" us.

So, the President releases half of the Strategic Reserve and, what? Nothing in the short term. Why. Not enough refining capacity. Why not? Big, bad Government, that's why. Republicans aren't the only NIMBYs out there. Ask the Kennedys, for instance.

Insurance companies reformed?? I saw yesterday that Allstate posted almost a $5 billion dollar profit last year. And, it's still like pulling teeth to get money out of them. That's reformed alright.

Government, Big Multi-national corporations, whatever. They all screw us. No matter who is in charge. Strong investigation? Bah. "Hounds" are looking to become "foxes" after their terms of office are complete. It doesn't change anything in the long term. It's just which hand is yanking our chain, left or right.

Hopefully, I don't buy anything my Congressman is selling. Too many terms and not enough results. Unfortunately, too many fellow voters in the District think he's God's gift to women, or the golf course, or pork (I haven't figured out why they keep returning him term after term).

Jacob Perry said...

Yeah, what he said.

This post was silly and inane, and certainly not objective in the slightest. That makes it well below the standards this site has set to this point.

The FACT is that opening up drilling (which your party opposes simply because another party proposes it, which is why I hate partisanship) would lower oil prices significantly because it would greatly affect the futures market. It would significantly lower the price of future contracts, which would have a significant impact on current prices.

Partisanship is an ugly thing, even when you attempt to cloak it in "objectivity".

Anonymous said...

Opening up these areas to drilling would have absolutely no effect on the futures market. It's not a matter of partisanship. It's a matter of economic reality. Emerging economies are growing faster than the supply of global oil can keep pace. Open up the American and Canadian deposits, and you may see a reduction in the net increase in oil prices for a brief period of time, but the futures market would swallow the meager estimated production gains in days. If prices dropped at all, it would be a drop of only pennies per barrel of oil, and the production wouldn't hit the market for a decade.

If the Republicans want to move forward in a bipartisan manner to resolve the global energy problems, they'll start banging the drum of conservation and alternative energy and stop arguing that we can drill our way out of this problem.

This problem can only be addressed when America shows world leadership by weaning itself off of ALL petroleum, not just FOREIGN petroleum.

Jacob Perry said...

Another fine example of useless partisanship...

As this Investor's Business Daily editorial points out:

• "Even if drilling works, it'll take a decade or more for the oil to flow."

This is quite an argument coming from the Democratic Party, which has made keeping oil off the market a linchpin of its energy policy for decades.

If President Clinton hadn't vetoed the idea of drilling in ANWR back in 1995, we'd have that oil on the market today. Ditto if Congress had approved ANWR drilling in 2002, when President Bush requested it.

Even so, the larger point is false anyway. New oil will be flowing in some cases within three to four years, according to industry estimates. But the impact on prices will be immediate. Why? Because markets would suddenly have to discount future oil prices for the expected gain in oil supply. That would cause oil prices, especially in futures markets, to drop.

By the way, this isn't just conjecture. President Reagan, within a week of his inaugural in 1981, removed domestic controls on oil. Energy prices began tumbling almost immediately, with oil falling from $34 a barrel in early 1981 to just $11 by 1986.


Jacob Perry said...

Said editorial can be found at: http://www.ibdeditorials.com/IBDArticles.aspx?id=299977602247481

Anonymous said...

Reality check time:
The United States currently has enough crude oil held it's Strategic Oil Reserves to last TWO MONTHS at our current consumption rate. Please note the word CRUDE because that oil in the SOR's is not refined yet and the refineries are all operating at capacity.
SO dipping into the SOR's is little more than a fart in a whirlwind.
Think the price of gas is high now? Fasten your seat belts because going to get much much higher.
At this exact moment, ONE BARREL of sweet crude (the good stuff) is selling at $138 s barrel.
One barrel holds 42 gallons of crude oil.
One 42 barrel of crude oil will yeild 19.5 gallons of gasoline.
Dividing the current $138 per barrel cost by 19.5 gallons of gas that can be extracted from that barrel you get a cost per gallon of $7.08.
Bear in mind that $7.08 is just the cost of the raw materials not the finished product you pump in your vehicle.
The last reality check concerns the urban myth that the US has the largest untapped oil reserves in the world. We don't. In fact, the US peaked out in 1970 and has gone down ever since. What we have left that hasn't been tapped would be consumed by us faster than Joe Sixpack goes thru a case of Bud on Super Bowl day.

Be happy you're only paying $4 bucks and some change now. In a year your going to be paying a helluva lot more. The developing countries we have been offshoring all our jobs to and have put cheap goods on our table are now pulling up a chair to sit our table.

varangianguard said...

Lordy, we are saved!