OP ED: Congress all talk, no action when it comes to oil policy

By Frederick J. Wilson III/South Kingstown

Unhappy with the current price of gasoline? Look no further than Congress to find the reason. For the past 30 years, Congress has been burying its head in the sand and hoping past history won’t repeat itself. Politicians hate to make difficult or unpopular decisions because they are always running for reelection. Instead they find scapegoats and utter meaningless statements that sound good but have no real substance behind them. They pander to small special interest groups while ignoring the majority of their constituents. Politicians always hope problems will go away or at least wait until they are out of office. In short, Congress is long on rhetoric and short on action.

Here we are in another gas crunch and everyone is upset, angry or panicked as regular gasoline flies by $4 a gallon with predictions of $9 and $10 on the horizon. Obviously no one learned anything from the last oil fiasco that marked Jimmy Carter’s presidency. For those too young to remember, gas prices were even higher than they are now in terms of constant dollars. At that time, OPEC staged an oil embargo and the government responded with price controls. OPEC didn’t pump any more oil and price controls didn’t work. The end result: long lines at the pump and a shortage of gas.

The United States didn’t have an energy policy 30 years ago and it doesn’t have one now. Instead we have a hodgepodge of incredibly stupid rules and regulations that prevent us from drilling on our own land or building new refineries. Any attempt to start to solve the problem is met with empty rhetoric that “drilling won’t put any more oil in our cars now.” Following that logic, you would never do anything since you have to start somewhere and everything takes time.

If you think the economy is bad now, just wait. Most people focus on gasoline prices because that is what they see directly. Airline, railroad and trucking industries consume almost 60 percent of the oil used in America. As the price of transporting people and products goes up, prices throughout our entire economy go up. This current crisis has the potential to destroy the airline industry, not to mention most of the manufacturing that is left in this country. Our standard of living was built on energy, and energy from oil is the engine that is fueling development in the entire world.

Instead of developing self-sufficiency, we have asked other countries to provide cheap oil for our benefit. Unfortunately, the rest of the world also wants oil and can and will pay for it. It is a free market and cost will go up until demand goes down. Do you really think that China and India, which already have more cars than the United States, are going to stop driving and go back to bicycles? In 10 years they will have twice as many automobiles and demand will continue to expand.

Oil is a global commodity and supply and demand sets the prices, not the oil executives. While it is true OPEC controls about 60 percent of the supply, it doesn’t set the prices, just supply. Some of the current price increase is undoubtedly speculation by investors and commodity traders, but that probably only accounts for about $20 at the current price of $140 per barrel. As far as profit, the oil industry makes about 9 cents per gallon while your federal government takes about 19 cents and individual states take 30 cents or more.

Instead of coming up with solutions, Congress holds hearings and blames its usual scapegoat, the oil industry and its highly compensated executives. The supposed “windfall profits” don’t exist. Oil is a boom-bust business. They already spend huge amounts of money finding new oil and also pay enormous corporate taxes. They also pay dividends to their shareholders, who are for the most part small investors, pension funds and municipal and state governments. If you increase taxes on the oil companies, you reduce the ability to increase supply at a time when you need more.

We have probably reached “peak oil,” which means that we have used up 50 percent of the oil available. Most of the easy oil has been tapped and future oil will be more difficult to find and recover. At best, we have less than another 100 years of oil. The handwriting is on the wall, it is not a question of whether we will run out of oil, it is only a question of when.

We need to develop new technologies for energy sooner than later. In the meantime we should drill for oil both onshore and offshore. We also need to build additional refining capacity to stabilize supplies. France gets more than 90 percent of its electricity from nuclear power, we get 20 percent. It is safe and environmentally friendly. We need to build new nuclear facilities. A very strong “green environment” lobby has prevented Congress from doing anything about energy independence. They want alternative energy sources like wind, solar, wave and hydroelectric facilities to provide our electricity: all very good ideas. Unfortunately, they don’t begin to meet our needs because they are not anywhere as efficient as oil, gas or coal in producing energy. We can’t cover the planet with solar panels or wind farms.

We have been without a real energy policy for too long. If we really want to, we can solve the problem but it involves making hard choices. It is time for Congress to stop talking and start doing.

Frederick J. Wilson III is the former publisher of the Independent.

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