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Wednesday, Aug. 24, 2016

Energy Policy

Posted Wednesday, August 22, 2012, at 9:11 AM



President Obama is certainly not the first president to suggest releasing the Strategic Oil Reserve to bring down gasoline prices. To do so would be an incredible abuse of our emergency preparedness system. After all, it is not called the Strategic Re-Election Oil Reserve. Prior presidents deserve the same critique.

Yet, there is a bigger point. If releasing the Strategic Oil Reserve, thus increasing the oil supply, will bring down prices, the President has, perhaps unintentionally, admitted the success of supply side economics. Supply modulates demand and greater supply drives down prices. Presidential decrees and Congressional laws can no more change the laws of economics than they can change the laws of physics.

There are two primary forces driving petroleum prices at the moment.

The reason that gas prices had been down in the recent past is the first factor-driving price: The dollar has risen in value against other high demand currencies. Petroleum is sold worldwide denominated in U.S. dollars. The dollar has been buoyed up as people fled the Euro looking for relative safety, thus increasing demand on dollars, increasing their purchasing power, and reducing gas prices.

The second factor driving prices is the supply of petroleum available to the market. At the moment, Mexico and Venezuela are following the lead of OPEC. The goal of OPEC is to restrict and control the world oil supply, to force prices upward, to maximize profit.

The United States government owns approximately half of all American real estate and all of our territorial waters. For reasons unknown to me, oil and gas deposits seem to be largely located in remote places; places owned by the U.S. government.

If it is so important to keep petroleum prices down that we may deplete our emergency supply, why isn't the government opening oil leases like mad to increase domestic oil production? Why isn't the Keystone pipeline from Canada approved and put under construction immediately to expand domestic oil supply? Other than our domestic sources, Canada is the only place we can get oil without OPEC's monopolistic constraints.

In the past, I have heard that it will take 10 years from the time a lease is let to the time that oil gets to market. If that is true, why are we waiting? The sooner we start drilling, the better. If the primary cause of delay is the EPA, an arm of the government, why doesn't the government get the EPA out of the way? Regardless, local residents have undoubtedly noticed the new oil wells along Murphy Avenue. Any observant person would have to have noticed that the pumps started operating in less than a month from the time the drill pierced the Earth. It may not really take 10 years after all.

Let's consider alternative energy for transportation.

Suppose it is desirable to use electricity to power cars. Then why haven't we authorized another 20-plus nuclear power plants around the country? We are the only technologically advanced nation on earth that intentionally deprives itself nuclear power. Upwards of 90% of France's electricity comes from nuclear power plants. If the French can do it, surely to God, so can we.

If nuclear is unacceptable, we have more coal available to us than we can burn during the remainder of our history as a nation. Coal plants can be built easily and quickly. Why aren't they already under construction?

If we were really serious about alternative energy for transportation, why doesn't the government get out of the way of, heaven forbid it incentivizes, the use of natural gas for cars, trucks, and busses. Although science told us domestic natural gas supplies would be exhausted by 1985, we now have hundreds of years worth of supply based on current usage levels.

What else can we use? Let me think a minute.

We could use ethanol. Whoops, not does it cost more to produce ethanol from grain than energy it yields (unlike sugar), but it significantly effects food prices, particularly in years when farming is disrupted by the weather or other phenomena.

Mr. President, if you want to secure your re-election, why don't you fly up to Ottawa and make a big production of your decision to immediately start construction on the Keystone pipeline. While you are at it, you could also open up more drilling in Alaska, the Gulf of Mexico, the along the Atlantic and Pacific coastlines, and in national parks and other federal land. It wouldn't hurt to approve the construction of more power plants. You may be amazed at what would happen in the futures markets and how that would "trickle down" to voters.

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