Liberals are flailing about looking for some political cover on
energy and gas prices. For decades now, they have supported the
policies of extremists who have systematically sought to shut down
every major energy source for our economy. We can’t drill for oil
offshore, we can’t drill in the frozen tundra of north Alaska, we
can’t even develop oil shale on the mainland. Liberals are even
opposing the development of new oil discoveries in the Plains
states. Meanwhile, China is now producing oil from wells in Cuban
waters off the coast of Florida, selling and reaping enormous
profits from oil that America should be producing.
Nuclear power? Can’t have that. Jane Fonda showed us in a movie
in the 1970s how dangerous that is. France and Japan have produced
most of their electricity for decades through the nuclear power
technology that America developed, and they are now competing to
sell nuclear plant development to China and India.
One of the last U.S. nuclear projects was the Shoreham plant
begun by Long Island Lighting Company in 1973. After years of
ridiculous regulatory delays, the plant was shut down in 1989 by
protests by liberal flower children, before producing any
electricity. Long Island Lighting went bankrupt as a result. New
Hampshire’s Seabrook plant was held up for 14 years by similar
regulatory delays, before finally opening in 1990 (and operating
without harm ever since).
This is why there has been no new nuclear plant construction in
the U.S. since then. Those regulatory delays are due to laws and
policies adopted by liberals, who are willing to let extremists use
them to shut down any such construction.
LIBERALS ARE NOW even opposing the development and even the
maintenance of coal fired electric plants. The energy policy
statement on Barack Obama’s website says, “Obama believes that the
imperative to confront climate change requires that we prevent a
new wave of traditional coal facilities in the U.S.” In Georgia, a
state judge denied a permit for a new coal electricity plant on the
grounds of global warming (which is a figment of the liberal
imagination to justify a big government power grab). Meanwhile,
China opens a new coal plant every week on its way to eventually
pass the U.S. as the number one economy in the world.
The last new oil and gas refinery was built in the U.S. in 1976.
A good example of the reason why is going on right now in Indiana.
BP is constructing a $3.8 billion expansion of its already existing
Whiting refinery in that state. But the National Resources Defense
Council (NRDC) has now brought suit against BP seeking an
injunction against the expansion, and fines of $32,500 for each day
construction has been under way. The NRDC is urging the court to
adopt a new interpretation of state law that would require BP to
get a new state permit first because with the expansion the
refinery would supposedly discharge more “pollution” than the
current state permit allows. If the NRDC has found a liberal enough
judge, it may get its way, to the great detriment of the rest of
us.
Some liberals are even now calling for the elimination of
already built and operating hydroelectric power plants, on the
grounds that the dams in such projects distort the environment too
much. This would require dams to be destroyed and occupied valleys
to be flooded.
The problem for liberals is that we are now running into the
iron logic of the law of supply and demand, which, unfortunately
for them, most voters can understand. Shut down the supply of oil
and you get gas prices starting to run towards $5 a gallon. This
winter, the price of home heating oil will brutalize the budgets of
many families. We are getting to the point where an effective
bumper sticker will be, “Keep the Lights On, Vote Republican.”
THAT IS WHY the bold Republican initiative to expand oil production
and other energy supplies, originally developed by Newt Gingrich,
is so effective, and so threatening to liberals. Polls show
increasingly overwhelming public support.
As a result, liberals are flailing about offering increasingly
absurd distractions. One argument is that even if we started
drilling for oil now, we wouldn’t get any increased supply, and any
reduction in gas prices, for 10 years or more. One popinjay from
the misnamed Center for American Progress was recently spouting on
TV that there would be no effect until 2030.
Well, let’s see. On Friday, July 14, the price of a barrel of
oil hit $147. On Monday, July 17, President Bush withdrew the
Executive Order banning offshore drilling. That doesn’t even start
any new drilling because there is still a Congressional ban in
place. Nevertheless, by Friday, July 21, after 4 straight days of
decline, the price of oil had plummeted to $128, a decline of 13%
on a symbolic action alone. The Center for American “Progress” was
only off by 21 years, 51 weeks.
There are oil wells off the Pacific coast that were capped years
ago when the offshore drilling ban was first adopted. They could be
brought back into production in less than a year. Expert oil
engineers recently interviewed have said other sites could be
producing in 18 months. The standard estimate for production from
new drilling in Alaska is 10 years. But if the government gets the
lawsuits and regulatory delays out of the way, here’s betting the
new wells would be producing in less than 5 years.
More importantly, if Congress adopted a comprehensive plan to
open up domestic oil production in the U.S., everyone would know
that in the long run the price of oil would be heading down. That
would break the back of the oil panic today that has driven the
price up to ridiculous levels. If the Fed reversed its weak dollar
policy at the same time, within a year the price of oil would drop
by 50% or more, dropping the price of gas down close to $2 a
gallon, which is where it should be. In a competitive market, price
is supposed to equal the marginal cost of production. For a barrel
of oil, that would be $25 to $40 at most, which is where the long
term price of oil would be if the U.S. removed production
restrictions.
ANOTHER DISTRACTION is the argument that even if new oil production
is allowed, there is no guarantee the oil companies won’t sell the
oil to Japan or China rather than to American consumers. This
argument is 100% bad economics. The truth is, it doesn’t matter
where the oil is sold. All the new production would increase
the world supply of oil regardless of where it is sold. With world
supply up, the world price would decline. If new production from
Alaska is sold to Japan, the oil that would have otherwise been
sold to Japan could then be sold to the U.S.
In fact, if you look at a globe, you would see that Alaska is
close to Japan. It would be most efficient, meaning reduced costs
and prices, for the production there to be sold to Japan, and for
production from South America that would otherwise go to Japan to
go to the U.S. instead. That would be the natural result of an
efficient market. But to counter the distracting nonsense of
desperate liberals grasping for power at all costs, the new
production can always be required to be sold in the U.S.
Still another distracting argument is that the oil companies
already have millions of acres in oil leases, so why don’t they
just produce more oil from those areas? The oil companies pay for
those leases for exploration. There is no guarantee that any leased
areas will actually hold producible oil. Given that the oil
companies must pay rent for the term of those leases regardless of
whether any oil is produced, and that the price of oil is at
record, unprecedented, historic levels, any oil company that was
not producing all it could from any of its leases would be subject
to shareholder lawsuits for waste of corporate assets. It is just
like liberals to demand that oil companies produce more from areas
that do not hold any more oil while denying access to areas with
massive proven reserves.
Liberals argue that if we would just sell a small portion of the
oil from the Strategic Petroleum Reserve that the U.S. government
holds in case of emergency, oil and gas prices would fall. So now
all of a sudden liberals recognize that increased supply on the
market would reduce prices. But any such sales would be a drop in
the bucket, and only temporary, likely, indeed, to be reversed
later to restore the reserve. So this would have no significant,
lasting effect.
Yet another distraction is that we should just increase the
required miles per gallon under the CAFÉ standards
for the production of new vehicles. This is no answer to the oil
and gas price problem because it involves only restricting consumer
freedom of choice, and ultimately reducing the American standard of
living. It means that consumers should be prohibited from buying
the vehicles they want, and instead should be allowed to buy only
the vehicles the government wants them to have. The SUV explosion
was all about the American consumer wanting bigger, more powerful
vehicles rather than vehicles with better fuel economy. There have
long been low cost vehicles available for sale in the U.S.
operating with close to 50 miles per gallon in fuel efficiency. But
consumers have failed to choose those cars, while close to half of
sales of new vehicles have been SUVs with low fuel efficiency
exempt from the CAFE standards.
IF NOW WITH HIGHER gas prices American consumers want to abandon
SUVs and buy more fuel efficient cars, that should be their choice.
But the government should not be imposing that choice on them. Yet
Barack Obama says on his website that he wants “to double fuel
economy standards within 18 years.” That involves an assault on the
standard of living of the middle class, which would be forced to
give up the big, powerful vehicles they now enjoy for the tiny,
little sardine cans that most Europeans drive. In fact, there has
been talk precisely of allowing car manufacturers to import into
the U.S. the little fuel efficient vehicles that they now make for
Europe.
Assaulting the standard of living of the middle class is what
Barack Obama is all about. For you can search through all of his
position papers, speeches and talking points and not find a word
about reducing the price of gas or oil. He clearly has no intention
of trying to reduce the price of gas at all. He has said, in fact,
that the high price of gas and oil is good for the environment, and
the only problem is that the prices increased too suddenly. This is
the Marie Antoinette school of energy policy.
Remember Obama’s famous quote:
“We can’t just keep driving our SUVs, eating whatever we want,
keeping our homes at 72 degrees at all times regardless of whether
we live in the tundra or the desert, and keep consuming 25 percent
of the world’s resources with just 4 percent of the world’s
population, and expect the rest of the world to say you just go
ahead. We’ll be fine. That’s not leadership. That’s not going to
happen.”
What he means by this is that the current standard of living of
the American people is unfair. It represents massive inequality in
comparison to the rest of the world. So here we have a leading
Presidential candidate who thinks truth and justice requires a
reduction in our opulent middle class living standards. Good luck,
and good night.
