Tuesday, March 1, 2011

Does this sound familiar?

Stop by the gas station today and you are going to pay a lot more to fill up our tank than you did last week. Oil is over $100/barrel again and that could go higher depending on what happens in the Middle East. If somehow this conflagration extends to Saudi Arabia and Kuwait, there is no telling how high oil prices could go. I don’t wish to sound alarmist but $200 is not out of the question and that would mean some crazy gas prices here in America. For many Americans doubling the cost of gasoline and diesel would be crippling. The costs to get to work, the cost of petroleum based consumer goods, the cost of food and other products, all would go up even more than they already are. Best case scenario, the revolutionary fervor settles down once Mad Dog Kaddafi gets his wish to die as a “martyr”. Worst case the U.S. gets militarily involved in Libya and the region continues to blow up. Regardless, it looks like we are headed for a summer of painfully high gas prices which is going to really hurt places that depend on travel and tourism.

If this all sounds familiar, well that is because it is. Just a few years ago gas prices were through the roof. At that time people finally started talking about adding to our oil exploration, domestic drilling and refining capacity. We finally seemed to be getting serious about energy independence. I know that complete independence is probably not feasible but certainly an independence that mitigates the huge swings we see when something bad happens in the Middle East and that allows the U.S. to be less beholden to OPEC is plausible. Exemplified by Sarah Palin’s “Drill, baby, drill!” mantra, the American public was on board with responsibly increasing American domestic oil production.

What has happened since the gas price spikes a few years back? Nothing.

As near as I can tell we have taken no concrete steps to increase oil production. The exact opposite seems to be true, fueled by the BP oil rig explosion in the Gulf of Mexico. Along with the BP spill, gas prices settled down and Americans as is our modus operandi completely forgot the high gas prices, relegating them to the lore of Americana like the Wild West and Great Depression even though they occurred just a few years ago. Now we find ourselves with our proverbial pants down as gas prices skyrocket and we still have no control over production.

The problem is that building capacity, drilling rigs, refineries, etc. takes time. Lots of it. This isn’t like adding a few new sewing machines in a textile factory to increase production. The cost and time and regulations to build oil production capacity require that we get started before prices hit crisis levels. Once again our elected officials aided by an apathetic public have left America unprepared and at the mercy of sweethearts like Kaddafi and Hugo Chavez.

Instead of borrowing hundreds of billions in a failed gambit to stimulate the economy, a better course of action would have been to fast track oil exploration permits. Instead of trying to tax the huge profit of oil companies, give them an incentive to invest that money and in doing so create jobs now and in the future, jobs that unlike stimulus money not only don’t add to the deficit, they actually increase tax revenue by providing secure, high paying blue collar jobs, the exact sort of jobs that have disappeared in the economic downturn. We have been drilling for oil offshore since the late 1800’s for crying out loud! Given the need for jobs combined with the national security threat posed by oil dependence, it is high time that environmental alarmists take a back seat to the adults in this country.

I would rather have young American men at home drilling and refining our own oil than dying in the Libyan desert in an attempt to stabilize that region of the world.
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